Nobel-Winning Economist Calls Apple's Irish Tax Arrangement 'Fraud'

[leroypants]

Gotcha

When anyone disagrees with you, you call them a complete liar or insult them. I understand since it must be so painful for you to come up with a coherent argument .

As long as it gets you through the day and it keeps you from thinking too much, I suppose it's good.

I love it when someone cries like a little baby about being insulted, which wasn't even an insult, then spends the rest of a post resorting to insults. Pot meet kettle.

I called someone a liar who made a baseless claim and refused to back it up with any sort of facts or proof. That's how this works, he made a claim and it was his job to back up the claim with some sort of proof. Not really sure why you are having such a hard time grasping such a simple concept.

 

[Speedy2]

"But this company that claims to be morally "better" than all the others,"

What is moral for a corporation? Is it moral "giving money to the government so they can waste it?" Is it moral to enrich the owners of the company?

Why should any company answer to anyone besides its shareholders?

If the shareholders want Apple to change its behavior, they can vote on it.

I never claimed that morality is even possible in the corporate space.
I agree with you, there's no place for it. The system wasn't built that way.

My criticism was that Apple CLAIMS to have morality. They tell us how morally great they are at every keynote.
But it's nothing but a PR lie.
If Tim Cooks tells us with a straight face that they "pay every tax dollar they owe" and that's all he says about the issue, he's a perfect example of that lie. Of course, technically and legally he's right. But the outrage has always been about the ridiculous tax code that allows the most profitable corporations to magically reduce their tax rate to almost zero. And of course Tim Cook knows that, he's not stupid. It's the government's job to make the tax code, but the reason why it's so bad to begin with are the corporations themselves who lobbied for it!
Tim Cook could try and lobby for a better tax code like Warren Buffet does it, but he chooses not to.

 

[leroypants]

Apple's employees do pay for those services: through income and sales tax. Any tax levied on a corporation is simply paid by the consumer. If Apple was forced to pay their "fair share", do you think they would simply eat the cost of their lost profits?

More than likely Apple would just raise their prices to maintain the massive amounts of profits they are making, and more than likely those prices would be so high that all but the cultists and zealots would switch to a more economical solution.

Funny how Apple doesn't point that out when bragging about the insignificant and minuscule amounts they have "donated" to charity.

 

[macfacts]

What tax is Apple not legally paying?

Taxes on Intellectual Property created in USA. Apple uses (invented) what's called double irish Dutch sandwich to shift ownership and profits of patents to Ireland.

Each iPhone sold has part of its cost go to royalty payments, which end up as profits in Ireland, which get taxed at something like 2%.

Normal businesses can't do what Apple is doing because their assets are physical. Mostly software companies use the loophole Apple is using.

 

[jaymzuk]

I am very much Apple critic... BUT:

I wouldn't pay more money than I absolutely had to neither.

Especially if it wasn't mine, but someone elses (shareholder) money I spend.
Apple - like any stock market-listed company - has an obligation to keep their spendings low.

Don't hate the player, hate the game.

The problem is that people see taxes as being something that is just sunk, not used to fund things like schools, public services etc.

The more taxes that are avoided, legally or otherwise, by corporations or high net wealth individuals with the means to do so, the more the tax burden is moved onto people that do not have such luxury.

 

[tgara]

Taxes on Intellectual Property created in USA. Apple uses (invented) what's called double irish Dutch sandwich to shift ownership and profits of patents to Ireland.

Each iPhone sold has part of its cost go to royalty payments, which end up as profits in Ireland, which get taxed at something like 2%.

Normal businesses can't do what Apple is doing because their assets are physical. Mostly software companies use the loophole Apple is using.

Loopholes are not illegal under the law. The fact that Apple structured their affairs in a way to take advantage of this does not make it illegal.

 

[Rocketman]

Economist not tax lawyer - so who cares his Nobel prize does not come from understanding the law. Basically he is just expressing his fundemental sentiment - "I want Apple's money". Ahh. So 20th century of him.

I want Apples money too. I want Stiglitz money! I hope I can convince President Clinton to pass laws which tax economists at 90% so I can get some of his money. I really want that money! I mean, so bad. In fact his having it and not me is oppressive and inequality and probably fraud! He is a fraud! I need his money.

That's actually an intellectually sound point.
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The problem is that people see taxes as being something that is just sunk, not used to fund things like schools, public services etc.

The more taxes that are avoided, legally or otherwise, by corporations or high net wealth individuals with the means to do so, the more the tax burden is moved onto people that do not have such luxury.

Schools and roads are paid for ar the county and state level. Fedgov spends it on a bunch of stuff very few agree with.

 

[TallManNY]

The tax code of nearly every other country would allow Apple to achieve the same results without any complicated structuring. The US Congress knows this. They know US tax system is weird in that it tries to tax profit earned entirely from overseas sales and operations. Congress also knows that if they didn't allow some loopholes, then Apple and other US organizations would move their operations out of the U.S. to a much more significant extent. Calling this a fraud is based on some moral position that the basic idea that the US government should be able to tax global activities in nearly the exact same way as it taxes US based activities is inherently correct. Many people do not agree with that. Hence we have loopholes.

 

[juanm]

Having a cash repatriation "holiday" in the USA perhaps once a year would be an incredible boon to our economy; why would we choose to punish our companies by double taxation, then complain that it discourages repatriation??

- You're taxing us 35%, we want 30%
- Okay, here you are, 30% (reduces tax rate)
- You're taxing us 30%, we want 25%

Hence the name infinite loop.

 

[Jax44]

Well said Sir. Apple's behavious is a total disgrace. Its time for a change in the law to prevent this. In my view Apple has immorally evaded $150bn in taxes. An absolute disgrace

And my study shows Jambalaya owes $34 million in back taxes.
What a disgrace!.

 

[leroypants]

- You're taxing us 35%, we want 30%
- Okay, here you are, 30% (reduces tax rate)
- You're taxing us 30%, we want 25%

Hence the name infinite loop.

Except it would more likely be

You're taxing us at 35% we want 2%.

 

[macfacts]

Loopholes are not illegal under the law. The fact that Apple structured their affairs in a way to take advantage of this does not make it illegal.

Slavery use to be legal too. Just cause it is legal doesn't make it right. Apple is just leeching off of America.

 

[mossy]

Varoufakis got kicked out and is now under investigation by the Greek people. They destroyed the Greek economy.

Really? How did 'they" destroy anything? Did "they" not inherit an economy destroyed by the previous right winged government (you know the one who wouldn't tax the shipping magnets and oligarchs). Wasn't it "they" who wanted to renegotiate a more sustainable deal but were brow beaten by the unelected technocrats who answer to much higher powers than governments (aka the markets).

The Greek (along with Irish, Portuguese and Spanish) economy was destroyed in part - the biggest part in my opinion - by cheap liquidity from German and French banks flooding the Eurozone, and the negligence of the politicians both in government and main opposition in their respective parliaments of the day, along with the European Central Bank and central banks (of said countries) and not by parties like Syria. Fair is fair. Syria were no where near power or main opposition in parliament when it all went belly-up. To say Syria destroyed the Greek economy is an untruth.

The 'big banks' needed to give the 'big' dividends at the end of the year to the shareholders - so recklessly flooded many countries with their cheap money. Remember - private debt became sovereign. Imagine that - private debt created by speculators in the banking system suddenly became the debt of the citizens. Total joke. Nothing but a ponzi scheme.

Why not put all the debt into a 'toxic' account' in the ECB - and pay it off in 50 years time? Not a chance - because of the austerity theory of Dr Merkel. Yes - it is just a theory - proven not to work by the Americans in the last century. How in a capitalist system (that we all live in in the West) is 'penny pinching' going to work? It is bound to fail. The old saying 'you've got to spend money to make money' is exactly what capitalism is about. Now - whether you believe in capitalism or not is something for another day - but we have to work within it's system.

Austerity has hindered the growth of countries like Greece. What is the rush to pay back the debt? Ohh ya - it was German and French banking debt. Those banks had to be paid immediately. It all makes sense now. Squeeze the living daylights out of the economy and make sure the debts to the banks are paid. Paid off the backs of the ordinary citizen. Mass unemployment was something I read about in books. Even writing this - I don't know whether to laugh or cry. It is unbelievable how things play out sometimes. And still the charade continues.

 

[briloronmacrumo]

The US needs to lower its corporate rate, preferably to zero. This way the authoritarians can't use the corporate tax code to collect extra taxes from the guilible who really believe that "corporations" are paying the tax and not people. Admittedly, it is a good way to demogague by complaining about corporations to deflect from the fact that they are just using corporations to collect extra taxes from everyone else.

Just wanted to say thank you for writing that. As you say, costs simply get passed through to the end user, so this fallacious idea that taxing corporations benefits a common taxpayer is dissembling at best.

 

[tgara]

Slavery use to be legal too. Just cause it is legal doesn't make it right. Apple is just leeching off of America.

I'm glad you finally realized what Apple is doing is not illegal. We're making progress!

Is it leeching off America when you take itemized deductions at tax time? What about the standard deduction? Mortgage interest deduction? How about deductions for charitable contributions? Are those leeching off America? Child care tax credits? I think you need to stop the SJW nonsense, put on your big boy pants, and take an economics class at the local community college.

Oh and if you still feel that what you are paying in taxes is not "right", you're free to voluntarily pay more. Take it from me, the IRS is very good at cashing checks.

 

[wigby]

There is a difference between claiming medical expense tax credits and the double irish dutch sandwich.
One is a way for the government to provide a bit of tax relief to common people like you and I, and the other is one of the reasons why the government cannot afford to keep having those said reliefs.

Not at all the same.

They're both legal. If the government really can't afford to take the tax "hit" from Apple not paying their share, perhaps they should change the law and stop expecting Apple to throw money at them. Personally, I think the U.S. government owes Apple a lot more than the other way around.
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I dont and I do.
Whoo, ethical high ground.
If you game the system then fine.
Just don't act like Jesus when doing so.

Who's really acting like Jesus here? You're casting moral judgements on Apple. Meanwhile, they are doing what every taxpayer I know of legally does. They never have said anything except they've paid their fair share. I think you're acting more like Jesus than anyone here.

 

[firewood]

A lot of people here seem to think that Apple should give more money to various governments.

Of those people here, how many donate some cash to their government, above and beyond what's required on their tax statements or tax return?

How many do not list all the tax deductions they know about that legally apply to them?

 

[macs4nw]

By lowering the corporate tax rate in the US, the Apples of the world would likely repatriate most of their huge overseas cash hoards, and would then be able to spend it here creating jobs for us, rather than being forced to build research centres etc. abroad, as Apple has been doing.

A win-win for both the country as well as domestic job creation.

 

[Tech198]

Why do businesses get "of the hook" ?

 

[Rocketman]

By lowering the corporate tax rate in the US, the Apples of the world would likely repatriate most of their huge overseas cash hoards, and would then be able to spend it here creating jobs for us, rather than being forced to build research centres etc. abroad, as Apple has been doing.

A win-win for both the country as well as domestic job creation.

Ignore the man behind the curtain. The government owns everything one cannot prove is theirs to begin with.

Let's return to 90% marginal tax rates even Kennedy opposed.

 

[niun]

Who's really acting like Jesus here? You're casting moral judgements on Apple. Meanwhile, they are doing what every taxpayer I know of legally does. They never have said anything except they've paid their fair share. I think you're acting more like Jesus than anyone here.

Not I.
Read other posts in the thread. You can't deny Apple holds itself to a higher moral standard than other companies .
Apple fan boys champion that fact and Apple can do no wrong.
They are no better than any other big Corp. The second everyone is honest about that and Apple get back to making decent products the less issue I have.

 

[Stewie]

Not fraud by the letter of the law. It's perfectly legal. Quite obviously fraud by the spirit of the law. But then who would willingly pay more than they legally have to?

Sort out the law so you don't have a reason to complain.

There is no such thing as the sprit of the law. Either you are breaking the law or you are not. Apple is not.
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Slavery use to be legal too. Just cause it is legal doesn't make it right. Apple is just leeching off of America.

But they changed the laws to make Slavery illegal. What apple is doing is legal, if you don't like it get them to change the law.
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The problem is that people see taxes as being something that is just sunk, not used to fund things like schools, public services etc.

The more taxes that are avoided, legally or otherwise, by corporations or high net wealth individuals with the means to do so, the more the tax burden is moved onto people that do not have such luxury.

Apple is not avoiding paying taxes. Not sure why this concept is so hard for so many people to understand.

 

[Yojimbo007]

He can go F himself...and his Nobel prize

Has Apple brocken any laws... Or this pompous guy thinks his opinion is the law.

If the Law is screwed up.. Fix the law.. Dont insult/defame those who act according to it!
Kapish Stglitz ?

 

[ucfgrad93]

Slavery use to be legal too. Just cause it is legal doesn't make it right. BApple is just leeching off of America.

What a complete load of crap. Apple is operating within the law. If you don't like the results of that then lobby Congress to change the laws.

 

[teknikal90]

They never have said anything except they've paid their fair share..

that's what's being questioned here. That's actually the topic of conversation. What's 'fair'?
It's not just what's legal.