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

[gsmornot]

If Apple paid what everyone thought was fair, what would the money be used for? Would it be waisted in some way or would it be put to good use?

 

[Wiesenlooser]

Or, conversely, if the law is perfect.

In your case and mine, nobody said perfection exists.

I see it everyday in the mirror

 

[applesith]

Have you looked up tax rates between 1950 and now? In 1950, or arguably even before, it was to death and more. Now it's arguably too little, on top of everything else.

Also, if Apple is an American company then it shouldn't be putting taxes into Ireland and be a wannabe Irish company. I mean, you can't put money into someone else's system and enjoy all the benefits America gives you, right? I mean, if you are getting stuff you didn't pay for, isn't that like stealing?

How is it at all like stealing?

 

[leroypants]

Then expect to pay higher prices for anything you buy from these companies.

Yeah because Apple is barely making any profit....

 

[Zirel]

Has this guy left his desk to actually build something or does he decide to call fraud just from his ivory tower without ever getting his hands dirty?

In Wiki:

Stiglitz was born in Gary, Indiana, to Charlotte (née Fishman), a schoolteacher, and Nathaniel David Stiglitz, an insurance salesman.[11][12] From 1960 to 1963, he studied at Amherst College, where he was a highly active member of the debate team and president of the student government. He went to the Massachusetts Institute of Technology (MIT) for his fourth year as an undergraduate, where he later pursued graduate work. His undergraduate degree was awarded from Amherst College. From 1965 to 1966, he moved to the University of Chicago to do research under Hirofumi Uzawa who had received an NSF grant. He studied for his PhD from MIT from 1966 to 1967, during which time he also held an MIT assistant professorship. Stiglitz stated that the particular style of MIT economics suited him well – simple and concrete models, directed at answering important and relevant questions.[13] From 1966 to 1970 he was a research fellow at the University of Cambridge: he arrived at Fitzwilliam College, Cambridge as a Fulbright Scholar in 1965 and then won a Tapp Junior Research Fellowship at Gonville and Caius College.[14] In subsequent years, he held academic positions at Yale, Stanford, Oxford, and Princeton.[15] Stiglitz is now a professor at Columbia University, with appointments at the Business School, the Department of Economics and the School of International and Public Affairs (SIPA), and is editor of The Economists' Voice journal with J. Bradford DeLong and Aaron Edlin. He also gives classes for a double-degree program between Sciences Po Paris and École Polytechnique in 'Economics and Public Policy'. He has chaired The Brooks World Poverty Institute at the University of Manchester since 2005

Nope.

Not a single day, as it seems...

 

[applesith]

are you joking??
the guy's a Nobel laureate in economics and is calling out apple from _stealing_ from people like YOU and I and you're defending APPLE?????? what the hell???

Are you being sarcastic?

 

[FactVsOpinion]

If Apple paid what everyone thought was fair, what would the money be used for? Would it be waisted in some way or would it be put to good use?

I agree that this is a concern, but I also think it's besides the point.

We don't get to decide if we're going to pay tax based on whether we agree with how it's used.

 

[applesith]

Yeah because Apple is barely making any profit....

They price things with a certain margin in mind. If their taxes go up, they will raise their prices to keep that margin. That's how businesses work. What do you suggest? Laws dictating profit margins?

 

[briloronmacrumo]

cheering on a corporation worth billions that evades taxes

Apple is NOT(AFAIK) evading and it annoys the politicians because Apple avoids paying USA's high corporate taxes legally. If Apple were evading there would be harsh legal ramifications ( of course, lately it seems that breaking the law is not a reason to prosecute someone, but I digress ).

The terms "tax avoidance" and "tax evasion" are often used interchangeably, but they are different concepts. Also, tax avoidance is legal, while tax evasion is not.

Tax avoidance is the legitimate minimizing of taxes, using methods approved by the IRS. Businesses avoid taxes by taking all legitimate deductions and by sheltering income from taxes by setting up employee retirement plans and other means, all legal and under the Internal Revenue Code or state tax codes.

Tax avoidance examples:

• Taking legitimate tax deductions to minimize business expenses and thus lowerer a business tax bill.
• Setting up a tax deferral plan such as an IRA, SEP-IRA, or 401(k) plan to delay taxes until a later date.
• Taking tax credits for spending money for legitimate purposes, like taking a Work Opportunity Tax Credit
• Setting up an office in another country as the company headquarters

Tax Evasion, on the other hand, is the illegal practice of not paying taxes, by not reporting income, reporting expenses not legally allowed, or by not paying taxes owed.

Excerpts from a column by J. Murray http://biztaxlaw.about.com/od/businesstaxes/f/taxavoidevade.htm

 

[Wiesenlooser]

In Wiki:



Nope.

Not a single day, as it seems...

Yeah screw that guy with his oxford/ Cambridge experience and his degrees. I'd say he is a fraud.

 

[John Mcgregor]

I disagree.

And why change the law if their behavior is just perfect ?

Then don't change i'm not the one whining about companies legally avoiding taxes. Make up your mind.

 

[jonnysods]

And yet it's totally legal.

Also I bet this guy with his nobel peace prize winnings found a way to avoid paying a ton of tax on it.

 

[jimbobb24]

But what would be low enough? It's a race to the bottom. Apple uses a lot of the US infrastructure and Gov't protections for it's business. That is expensive for the US to maintain...something Ireland or other small countries do not have to fund.

If the US lowers their rate, then some other small country will just undercut the US again...because the small country does not have the infrastructure expense the US has....that Apple is using!

This is 1) Illogical on its face. 2) Factually wrong.
1) Countries have infrastructures relative to their size and per population and square mile for countries of similar wealth we would expect similar infrastructure costs. Dense countries may have more or less - plumbing in New York is hard and expensive but they have less roads, but building long roads in Canada and Australia is expensive. We would not expect the % of state expenditures on infrastructure to differ between countries dramatically or explain in any way their tax rates.

2) A relatively tiny fraction of most countries expenditures go to infrastructure. Most of the US budget goes to wealth transfers (#1, and I am not arguing for or against them, as above I want dramatically increased wealth transfers from Apple and economists to me), military, government employees, and servicing our debt. Businesses frequently go to countries WITHOUT infrastructure and build their own roads because infrastructure is relatively tiny cost compared to taxes.

 

[applesith]

That may be true. But is their profit margin what it is only because they save on taxes? I didn't think so. I thought those were all pretax calculations.

Taxes are a cost of doing business- it's part of their calculations.

 

[Wiesenlooser]

They price things with a certain margin in mind. If their taxes go up, they will raise their prices to keep that margin. That's how businesses work. What do you suggest? Laws dictating profit margins?

Is is not how business work. They price ist accordingly to the market. Even with higher taxes they just can only price it accordingly to people's willingness to pay. They might raise the price. They might keep the price. What ever maximizes their profit.

 

[FactVsOpinion]

Well I just read the article again, and since Apple is already paying 36-37% in tax, I don't feel quite as gypped by now.

 

[jimbobb24]

Actually, fair would be raising my taxes and the taxes of every American citizen while lowering the cooperate tax rate to zero.

Removes the double taxation problem. I am on board.

 

[H2SO4]

Lowering your taxes through legal means and obeying the law is not fraud, no matter what this guy says.

‘……we abide by the SPIRIT of the law…….’
Remember that? Tim Crook is a deceitful charlatan.

 

[cocky jeremy]

That's because it IS fraud. Apple doesn't want to pay it's share of taxes and never will because nobody cares to hold them accountable. Worse yet, this thread WILL have fanboys being apologetic about it and defending Apple....

Think about that; cheering on a corporation worth billions that evades taxes.

What they're doing is inside the law, so it isn't fraud, or illegal. Sorry.

 

[leroypants]

They price things with a certain margin in mind. If their taxes go up, they will raise their prices to keep that margin. That's how businesses work. What do you suggest? Laws dictating profit margins?

Youare right and have conceived me, Apple and all other corporations should pay 0% taxes ever. The average middle class worker should be more considerate of Apple's need to profit and less concerned with their individual tax rate and in fact should be willing to pay more taxes so Apple can maintain the billions and billions of the Profit they make.

 

[applesith]

Is is not how business work. They price ist accordingly to the market. Even with higher taxes they just can only price it accordingly to people's willingness to pay. They might raise the price. They might keep the price. What ever maximizes their profit.

It's a combination of market and margin. Margin is very important with Apple. They don't make products for markets with low margins.
[doublepost=1469809772][/doublepost]

Youare right and have conceived me, Apple and all other corporations should pay 0% taxes ever. The average middle class worker should be more considerate of Apple's need to profit and less concerned with their individual tax rate and in fact should be willing to pay more taxes so Apple can maintain the billions and billions of the Profit they make.

That's not what I said. but ok.

 

[H2SO4]

Instead of asking why we're cheering on a corporation that "evades" taxes, you should be asking why a corporation is expected to pay such a high percentage of its own money to an entity that didn't earn it.

Jesus H. These people are clueless. The entity that didn’t earn it is the government. WTF do you think pays for the police, ambulances, roads, schools etc. etc?
Wow. What it means is that Apple and their employees get full benefit from the use of public services without paying anywhere near their share. Get your head out of your butt man.

 

[ksnell]

That's because it IS fraud. Apple doesn't want to pay it's share of taxes and never will because nobody cares to hold them accountable. Worse yet, this thread WILL have fanboys being apologetic about it and defending Apple....

Think about that; cheering on a corporation worth billions that evades taxes.

Nothing about being a fanboy here, but think about it from all angles. Their obligation is not to the moral police; it is to their shareholders. They are required to make as much money as possible for them, and the second they are not, the elected board (by the shareholders) will replace the executives on behalf of the shareholders. That is how it works for every public company.

There is no room for donating tax dollars if you don't have to. Why do you think so many companies are moving to TX or FL? No state income tax makes it cheaper for companies to operate there rather than CA or any of the other highly taxed states.

 

[BaldiMac]

This thread really needs some perspective!

1. The US government is hardly the one to be complaining here. Apple pays the 35% tax rate on all income from the Americas. The US government just wants a share of taxes on other foreign income that they aren't currently entitled to tax. They are free to change the laws to tax this income.

2. Apple pays vastly more than their competitors. Effective tax rates: Apple 26%, Alphabet 17%, Samsung 16%.

 

[leroypants]

Is is not how business work. They price ist accordingly to the market. Even with higher taxes they just can only price it accordingly to people's willingness to pay. They might raise the price. They might keep the price. What ever maximizes their profit.

It's too bad the poster you are quoting doesn't understand this. Apple can only price their good at what consumers are willing to pay, while a portion of its consumer base will always pay anything with an Apple logo and larger portion would find a more cost effective solution.