Obama proposes a 14% tax on Apple's overseas earnings

Discussion in 'Politics, Religion, Social Issues' started by firewood, Feb 2, 2015.

  1. firewood macrumors 604

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    #1
    Article today in the Wall Street Journal:

    http://www.wsj.com/articles/obama-proposes-one-time-14-tax-on-overseas-earnings-1422802103

    14% tax on Apple's earning currently overseas.
    19% of future overseas earnings.
    No further tax on bringing the money back to the U.S.

    Note that Apple currently owes more (in bonds) than it has in U.S. based cash and equivalents, but has over $100B in cash-equivalents held overseas.

    14% of that is a huge tax bill!
     
  2. jkcerda Suspended

    jkcerda

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  3. Muscle Master macrumors 6502a

    Muscle Master

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    #3
    Neither do I... Last time I checked, the tax rates for us is still higher! Tax them all to hell like I am
     
  4. thekev macrumors 604

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    #4
    I suspect they're hyping it to improve the story. The actual bill wouldn't be that high due to various credits and adjustments, even if this somehow made it through Congress.
     
  5. CEmajr macrumors 601

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    #5
    That's a much lower tax rate than most of us are paying. Obama is letting them off easy I'd say.
     
  6. vvswarup macrumors 6502a

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    #6
    If you feel like Apple is paying less than you do, why does raising Apple's taxes have to be the answer? Why aren't you calling for your taxes to be lowered?
     
  7. kendall69 macrumors regular

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    #7
    Amazing

    All the tax mongers here the word TAX on a business and start salivating. If only people would read more than the headlines or listen to Oblunder- maybe, just maybe we could have a solid debate.
    Let me wipe the drool from you chin for one moment.
    Apple pays 26% tax when the make $1.00 profit OVERSEAS in the U.K.. Now Oblunders want 14% of what's LEFT OVER from that dollar. OR......wait for it, a total of nearly 40% of the profit Apple makes.
    Where was the government when Jobs had to sell his VW in order to fund Apple? How much time did the government spend on R&D on Apple products?
    The government is quick to hold out their hand to steal money but no where to be found when a corporation needs money to develop products.
    So any of you that think it's brilliant to pay 40% of every dollar you make, send it to the government then. Send in 40% of your tips, your wages, c'mon, where are all the cheers now? OH THAT'S RIGHT....it's just to punish big bad corporations, not EVERYONE.
     
  8. vrDrew macrumors 65816

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    #8
    But the thing is, Apple doesn't pay 26% UK corporation tax on its earnings in the UK.

    Through a series of complicated intra-company transactions, it essentially pays next to zero tax (ie. about £10 million on approx. £6 billion of UK profit in 2012) in Britain. Thats a whopping 0.17%

    Have the Republicans really conned people that badly, that they really think of corporations with earnings in the tens of billion; with armies of tax lawyers and bank accounts in Ireland and Luxembourg - as "victims" struggling to make an honest dollar?
     
  9. thekev macrumors 604

    thekev

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    #9
    Once again you don't understand your own words. I've explained these things before, but your numbers are completely inaccurate.
     
  10. CEmajr macrumors 601

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    #10
    14% is a very low tax number is the point I'm making. Not to complain that they're too high but to show how comparatively low they are. Some people hear the word "tax" and lose their minds. A corporation paying only 14% on corporate profits is extremely low compared to other developed nations. That's why I was saying this is a pretty good deal for Apple. Especially since by the actual tax laws in place they're supposed to really be paying over 30% to repatriate those funds.
     
  11. vrDrew macrumors 65816

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    #11
    Apple is currently selling 30-year bonds to raise cash to pay dividends, fund share buybacks, etc.

    Thanks to historically low interest rates, Apple is able to sell these 30-year bonds a price about 125 basis points above comparable US Treasury securities. A 30-year US Treasury security currently pays about 2.25% - meaning Apple can borrow money for thirty years at an annual interest rate of about three and a half percent.

    What is cheaper? Borrowing money at 3.5% - or paying taxes on overseas earnings at 14%?

    You don't need to be a Finance MBA to figure out which is the better deal.
     
  12. DonJudgeMe macrumors regular

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  13. nebo1ss macrumors 68030

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    #13
    Don't think you understood or read the proposal. It involves taxing profits not repatriated at 14 percent so it would not be an alternative or help to avoid the need for Apple to sell bonds.

    Apple would have two options repatriate and pay the full corporate rate which I think might be 30 percent or keep the profits overseas and pay 14 percent anyway. Perhaps, that might encourage them to repatriate the funds, since the net rate of repatriating becomes 16 percent.
     
  14. sk1wbw Suspended

    sk1wbw

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    #14
    Why do people think that a company's money doesn't belong to them?
     
  15. DonJudgeMe macrumors regular

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    #15
    Who said that?

    Do you not think that multibillion dollar corporations should be taxed by the countries that they do business in? Why?
     
  16. vrDrew macrumors 65816

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    #16
    The proposal is just that: A proposal for a one-time tax deal on foreign earnings. One that is unlikely to get passed by the Republican-controlled congress.

    We've had tax holidays on international earnings before. And they always end up producing a lot less revenue than they were supposed to, and spur far less investment and jobs than people thought.

    Because why? Because the money "parked" overseas is already here. And US companies - including Apple - aren't short of cash to invest. Rather the opposite, in fact.

    Apple, presumably the "poster child" of a cash-rich US company that ought to be cheering this proposal to its lobbyists in Washington isn't going to do that. Because its a bad deal for Apple.

    For the reason I explained.
     
  17. sim667 macrumors 65816

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    #17
    It barely pays anything on its UK (an possibly even european earnings) because its UK/european headquarters are based in Ireland. Ireland basically kickstarted its economy for having massive tax breaks for companies, convincing them to set up and employ there. Its a loop hole that needs to be shut for many companies in the UK, not exclusively apple. Amazon are just as bad.
     
  18. 808? macrumors 6502a

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    #18
    Apple should move its domicile to the Caymans and convert the US holdings into a branch office.

    A bit like what Li Ka-shing has done here with his listed companies in HK.
     
  19. tbrinkma macrumors 68000

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    #19
    If you work in, and earn money in New York, how much should Texas be able to tax it? New Hampshire? California? Indiana? Utah? Canada?

    If every country where a company like Apple, Google, Microsoft, IBM, etc. has a presence gets to tax that company (even a pittance) on its earnings across *all* countries, the company will be taxed on the order of 150% of its profits.
     
  20. thewitt macrumors 68020

    thewitt

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    #20
    The deal that Ireland made in order to get Apple to invest there is really not interesting. That's between Ireland and Apple.

    If Ireland doesn't want Apples offices there, they don't have to make a deal. They can let some other country get the business.
     
  21. thewitt macrumors 68020

    thewitt

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    #21
    The issue here is should the US be able to tax Apple on money earned abroad, not whether Apple should pay income tax in the country where the income is earned.

    Apple and other countries who earn money AND pay taxes overseas, are reinvesting overseas because the US tax system imposes confiscatory taxes on foreign earnings repatriated to the US.

    Sure, this 14% one-time deal is better than the 30% standard rate, but how does this encourage Apple to spend that money in the US and not spend it in India or Vietnam, where they get to keep that 14% as well?

    It's a straw argument. Apple won't bite.
     
  22. DrewDaHilp1 macrumors 6502a

    DrewDaHilp1

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    #22
    Got excited because I saw @jkcerda posting. Realized it was a zombie thread. :(
     
  23. b0fh666 macrumors 6502a

    b0fh666

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    #23
    well, fellow europeans, you know that by supporting this you are basically just increasing the price of apple stuff in your countries by 14%, right?

    very clever :)
     
  24. VulchR macrumors 68020

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    #24
    Dear IRS,

    Can I set my own tax rate? Thanx, bye...
     
  25. Gutwrench macrumors 65816

    Gutwrench

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    #25
    We need a plan to repatriate money companies have parked off shore.
     

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