How Apple Minimizes its Corporate Tax Burden

[faroZ06]

Couldn't agree more.

Taxes are created and collected for good reason, and companies/people who dodge them are cheating that system. This puts pressure on those who do pay taxes, and/or causes governments to have less funds to achieve their goals.

Bad Apple, bad.

It's the government's fault. If there is a loophole for less taxes that is legal, every company is going to (and they do) take it.

It's even more stupid when people try to fix the problem by increasing taxes on the rich. That does nothing except for penalizing those who don't take loopholes. To fix the problem, you have to remove the loopholes!

 

[FloatingBones]

Hence my use of the word 'Personally'. Besides, I am not so humble.

Your label "tax avoidance" was a pejorative. Apple strives for tax minimization -- as does every single Fortune 500 company.

It's the government's fault. If there is a loophole for less taxes that is legal, every company is going to (and they do) take it.

For publicly-traded companies in the US, one could well argue that it's the company's legal obligation to minimize taxes.

It's even more stupid when people try to fix the problem by increasing taxes on the rich. That does nothing except for penalizing those who don't take loopholes. To fix the problem, you have to remove the loopholes!

Bingo. Most Americans have no idea of the difference between a tax increase and a tax rate increase.

 

[rdlink]

Couldn't agree more.

Taxes are created and collected for good reason, and companies/people who dodge them are cheating that system. This puts pressure on those who do pay taxes, and/or causes governments to have less funds to achieve their goals.

Bad Apple, bad.

BullS*&t!!

This is an indicator of a seriously broken tax system that penalizes companies for "doing the right thing." Don't be pissed at Apple, Exxon, WalMart or anyone else who follows the laws. What they do is just a bigger scale version of those of you who lease cars to write them off on your home "business", or take out loans to make last minute IRA contributions, or calculate the costs of the "home office" to deduct taxes.

We have an oppressive tax system that penalizes those who do well, so that the panderers can have money to throw at the "victim" votes. So successful people and companies find ways to get around the stupid, broken system legally, because spending the money to do so is more beneficial to their bottom line than giving the money to a wasteful, incompetent government. I would do it to, if I had the resources (or wealth that needs to be protected from the parasites).

Good on you, Apple, and every other corporation who finds a way to get around this unfair and stupid tax system. Damn the Warren Buffets of the world who do the same crap while making half true statements for political gain.

 

[faroZ06]

95% of the citizens will never utilize the US patent office. Should we disband it because it's not serving everyone? Apple consumes much more of those patent resources than they pay for. At the same time, I as a citizen will consume more from the healthcare system than Apple will as a corporation.

The patents do serve everyone. They protect from unfair capitalism and allow a more equal opportunity for anyone to start a business.

 

[reedmartin]

yes...because anyone arguing the pros v cons have multi-national corporations that use off-shore tax avoidance schemes.

Glad you could stop by and offer some input Mr Gates

Huh? Don't put words in my mouth. If you're going to try to be smart, at least understand what you're reading. Ethics has no place if you're doing something legal. Only someone who's looking for a failed business would say "i know i can legally do this, but I'll pass because it's not right"

Apple is doing nothing wrong. leave the ethics arguments in the schoolyard.

 

[KPOM]

I wonder what Apple's market cap and profit would have to come down to for the NY Times et al to consider their work done? It's no coincidence this story comes out the weekend after Apple had a record quarter.

Who knows? The NY Times hates success (except their own). It's part of their culture. Remember their readership consists of 1%ers who act like they care about the 99% because they vote a certain way. Note that they came out with their last set of revelations the day after Apple's last earnings release.

 

[NunoBerny]

In self defense. Sure. It's legal. Otherwise, no it isn't. Merely failing to get arrested does not make the act legal as there are still legal grounds to arrest you. A corporation that does not break any legal statutes in the course of doing business is not doing anything illegal. Period.

So, if someone spews out a law saying, specifically, that I can kill you...I can kill you.

Because this is what happens. Big companies have laws made for them to bypass. As simple as that.

 

[Mac'nCheese]

Our tax rates in the US are higher than most other countries. I don't blame companies for trying to minimize their tax bills. Ultimately, corporate taxes get passed along to people, either in higher prices, lower wages, or lower returns on investment.

But maybe if we closed the loop holes that allows profitable companies like GE from paying nothing, we could lower the rates for everybody. I'd rather get less % from more companies and people if its adds up to more $.

 

[notanalien]

Businesses do not pay taxes, ever.

The costs are merely added to the prices of goods and services.

Instead, we should be looking at Apple's payroll. How many hundreds of millions of dollars do their employees get paid?

THEY pay taxes.

What if they're paid in stocks? Then the stocks can be sold at a low tax rate. Or even more devious - you can take loans out against the value of the stock and pay no taxes.

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It's the government's fault. If there is a loophole for less taxes that is legal, every company is going to (and they do) take it.

It's even more stupid when people try to fix the problem by increasing taxes on the rich. That does nothing except for penalizing those who don't take loopholes. To fix the problem, you have to remove the loopholes!

Congress doesn't control the tax rates in Luxembourg. How do we close that loophole?

 

[cadillac1234]

Ethics has no place if you're doing something legal.

You are 100% right!

I pity those silly Rotarians, Realtor Associations, Medical Advisory Boards and millions of other professional associations with their outdated ethics codes.

BTW isn't the entire neo-capitalist concept based on the fact that businesses will self-regulate based on ethics and competition and there is no need for laws?

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Congress doesn't control the tax rates in Luxembourg. How do we close that loophole?

By forcing an alternative minimum tax scheme on corporations based in the US.

Don't like it....Have fun incorporating in China and enjoying their patent protection system

 

[lilo777]

The U.S. should LOWER corporate taxes, that way companies like Apple would route more of their money to the U.S. instead of overseas and the U.S. would earn more revenue than it does now.

Good luck with that. My little state Umba Yumba is happy to host all corporations for a fixed tax of $50 per year.

Seems the only thing Apple is guilty of is being smart.

Yeah legal and smart. It would also be legal and probably smart to start boycotting Apple products. Or perhaps even throw a brick or two into those glass cubes Apple erected all over the country. We'll see if local police has money to react or perhaps they will be smart to care about someone who actually payed their taxes (like me).

 

[cadillac1234]

The patents do serve everyone. They protect from unfair capitalism and allow a more equal opportunity for anyone to start a business.

On the whole, maybe...the US patent system has turned a bit anti-capitalist and parasitic over the last decade or two. More because of poor court decisions than the system itself

Patents definitely help corporations more than citizens but that was not my point. The healthcare system benefits both citizens and corporations by keeping all citizens healthy and productive, which makes for more $ to spend which means more profit potential.

Corporations ain't exactly lining up to pump money into healthcare.Would it benefit citizens if they did the same thing to patent enforcement in the US?

 

[reedmartin]

You are 100% right!

I pity those silly Rotarians, Realtor Associations, Medical Advisory Boards and millions of other professional associations with their outdated ethics codes.

BTW isn't the entire neo-capitalist concept based on the fact that businesses will self-regulate based on ethics and competition and there is no need for laws?

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By forcing an alternative minimum tax scheme on corporations based in the US.

Don't like it....Have fun incorporating in China and enjoying their patent protection system

No company on the planet would say "let's take the hit on taxes so we can be ethical". Silly that people are even suggesting that Apple should do that!

They're doing something completely within the laws. bringing ethics into this shows a lack of business sense

 

[NunoBerny]

If you are going to use an analogy, please use one that works. If you kill a person LEGALLY, then yes, that would be legal. Self-defense comes to mind. Or an officer on duty, or many other things.

Being "arrested" has nothing to do with a determination of "legal".

Was there an actual point here?

The point is: we all pay taxes. Big companies don't because they can bypass the laws (that were made to be bypassed).

 

[clibinarius]

Do you own a business?

No, but do you? And here's the point: If you lose customers due to the recession, do you think raising prices will increase your consumer base? No.

You're thinking inflationary. Like most businesses. Chicken goes up in price? Pass costs to consumer. Taxes go up? Pass costs. You need to protect YOUR profit, your salary line, whatever, due to the fact you don't deserve to take a loss. Someone ELSE has to pay the cost. But when the economy goes down the toilet? Guess what: You get laid off, even if you own the business. The notion that businesses are risk free and can't take losses goes against capitalism. This culture is one of inflation and expansion, the "just raise prices"-people don't keep prices low out of the goodness of their hearts and anyone who says otherwise is lying. They price things to where they think they can make the most profit.

 

[vrDrew]

The problem, such as it is, involves the way US corporate taxes are levied on foreign earnings.

Because US corporate taxes are, in general, nominally somewhat higher than in other industrialized nations, there is a strong incentive for multinational companies like Apple to assign a large share of their earnings to foreign subsidiaries. There have been periodic "tax holidays" created by Congress that allow corporations to repatriate foreign earnings at a lower tax rate. The last of these was in 2004, the "American Job Creation Act of 2004", the results of which were decidedly mixed. The top twelve participants repatriated approximately $100 billion in offshore profits tax-free, saving themselves (but costing the US Treasury) some $32 billion in taxes. However, these companies, rather than creating additional jobs, instead cut their payrolls by more than 60,000 in the two years following.

Companies (like Apple, but also Google, Cisco, and just about every other large firm) "park" their foreign earnings in the belief that another "tax holiday" will be passed by Congress.

Learn more about the previous "tax holiday" legislation and decide for yourself. But simply passing another one would be a very bad idea. Much better, IMHO, to lower and simplify, US corporate taxes - but make them applicable to ALL earnings, regardless of where the actual money is sitting.

 

[Macclone]

Good for Apple. Until the government stops wasting money, no one should pay taxes. Why do we pay for the GSA waste, the Obama constant vacations and campaigning, failed green job money that is outright cronyism, etc. Until the code gets changes, companies have the right to minimize what they pay if it is done in a legal way.

 

[3282868]

Seriously though, off topic, but I wish MacRumors would get rid of the voting system. What purpose does it serve? I could understand giving a comment positive votes if it helps others, but negative votes? C'mon Arn, it makes discourse less civil for some.

(watch, now I'll get -1000 votes LOL )

No company on the planet would say "let's take the hit on taxes so we can be ethical". Silly that people are even suggesting that Apple should do that!

They're doing something completely within the laws. bringing ethics into this shows a lack of business sense

I think people agree with you, they just hate that this is happening. Human beings are flawed, we all are, and as such we'll do what benefits us the most. Does it make it right ethically? No, but it would be nice if businesses and humanity did the right thing. Yes, I know, I'm dreaming.

 

[rdlink]

Yeah legal and smart. It would also be legal and probably smart to start boycotting Apple products. Or perhaps even throw a brick or two into those glass cubes Apple erected all over the country. We'll see if local police has money to react or perhaps they will be smart to care about someone who actually payed their taxes (like me).

Yeah, that's the way to handle a broken tax system. Incite violence, and take it out on the people who follow it's rules. I wouldn't mind seeing your tax return, and what deductions you take. For instance, do you have an HSA? Yes? Well there you go, taking advantage of a tax loophole. Do you deduct your home loan interest? Loophole. Buy a green car and take a tax deduction? Loophole.

 

[cadillac1234]

No company on the planet would say "let's take the hit on taxes so we can be ethical". Silly that people are even suggesting that Apple should do that!

They're doing something completely within the laws. bringing ethics into this shows a lack of business sense

Companies do take ethical stances all the time.

That's why the create mission statements, have ethics training courses, quality assurance departments, etc.

This shareholder value all else be damned is a relatively newer concept, or actually an older one rearing it's ugly head again and will not be shown very favorably in history.

 

[FloatingBones]

It would also be legal and probably smart to start boycotting Apple products.

Why stop there? Why not boycott every company that strives to minimize its taxes?

Or perhaps even throw a brick or two into those glass cubes Apple erected all over the country.

That would not be legal. As a practical matter, I don't think a brick would do much to Apple's cubes.

 

[Mal]

Yeah legal and smart. It would also be legal and probably smart to start boycotting Apple products. Or perhaps even throw a brick or two into those glass cubes Apple erected all over the country. We'll see if local police has money to react or perhaps they will be smart to care about someone who actually payed their taxes (like me).

Are you serious? You really think that Apple utilizing the tax laws in order to reduce the amount of money they throw away (i.e. send to the government) is morally equivalent to you throwing a brick through the glass of their front window?

Go ahead, try it. I'll be laughing my ass off as you're carted off to jail, happy that you've stuck it to the man.

jW

 

[reedmartin]

Companies do take ethical stances all the time.

That's why the create mission statements, have ethics training courses, quality assurance departments, etc.

This shareholder value all else be damned is a relatively newer concept, or actually an older one rearing it's ugly head again and will not be shown very favorably in history.

Of course they take ethical stances, but that's not my point. In a discussion of minimizing taxes, ethics has no place. In any discussion where a company is utilizing legal venues to protect their bottom line, ethics has no place.

No company would reject protecting their bottom line legally because of ethics. But yes, I'm sure Apple has an ethics code for its employees too. Does that code have anything to do with taxes and their bottom line? No way.

If you ran a company you're telling me you'd pay more taxes when you don't have to legally, because of ethics? That's why i said you'd be heading towards a failed business!

 

[lilo777]

Good for Apple. Until the government stops wasting money, no one should pay taxes. Why do we pay for the GSA waste, the Obama constant vacations and campaigning, failed green job money that is outright cronyism, etc. Until the code gets changes, companies have the right to minimize what they pay if it is done in a legal way.

Yeah. And when we elect e republican, we'll drop our taxes even lower (we always do) and start wasting even more money. We always do, compare this GSA conference - $800K - just the same amount as under Bush and probably not more than $100K of it is actual waste, two wars started by Bush - 2 trillion dollars wasted (still waiting for Iraqi oil to cover all our expenses - can you here me Cheney? You (Cheney) are a moron.

 

[thekev]

First off, it's not tax avoidance or evasion if what they are doing is legal.
Second, its sounds to me like you're describing welfare recipients. The only difference being that they never, ever, contribute to society, whilst the rich worked to get their fortune and have the right to retire and enjoy the fruits of their labor.

You should consider learning the difference. One is a felony. The other is legal. As to the other portion of your statement, you assume too much.

Please show me anyone scrupulously checking out the facts, with expert ability to analyze the numbers, and holding the newspaper responsible. I'm assuming you are refering to my earlier post, as well, despite not quoting it.

And I have never made up any statistic for the purposes of publication. Can't you tell? I'm part of the 11%.

I was only referring to one post. It's a fairly long thread for a new topic. You still made up your own statistic there to look ironic. Newspapers do use fact checkers. They would prefer not to be sued for libel. They should mention sources and an estimated margin of error on the figure given that the corporate tax return would not be a matter of public record. Anyway your figure is still silly.