Steve Wozniak Says Apple Should Pay 50% Tax Rate

[jonnysods]

Exactly. The government will continue to spend more and more regardless of tax policy. They have a spending problem, not an income problem.

I wish everyone had to pay their annual tax in one lump sum in April instead of it being spread over each paycheck. Then maybe people will wake up and see how ridiculously high all taxes are.

Yeah, but not just income tax. Sales tax, hidden tax, property tax too. People would hit the roof!!

I live in Ontario and our provincial debt is so bad that there just can't be any way out of it. The government was asking people to consider giving their income tax return to pay off the debt. What a joke.

 

[dannyyankou]

Steve, there are so many deductions you can take advantage of. It doesn't have to be this way.

 

[macfacts]

I'm educated and still can't seem to get a grasp on how taxes are handled. I have been doing my families taxes for a decade now and we have lived in several countries. The main theme, and the point I am trying to get to, in all the countries was that I felt the taxes should just be a set amount across the board. For example, it doesn't matter if you make 10k a year or 10B a year you would have to pay something like 15%. I'm just throwing out numbers but what I am saying is that if it was a simple tax code with an even percentage for everyone we wouldn't have people escaping tax bills by building in other countries. Again though, I don't understand all the fine print on taxes.

Apple would still pay little taxes if there was a flat rate tax for everyone. You don't understand because everyone describes what Apple does with one word, loophole.

What Apple does is have American workers invent patents in USA. Apple then sells that patent for a penny to an Irish shell company.Total profit made by Apple is a penny and 15% of a penny is still less than a penny.

Apple wants to use those patents in the iPhone so has to pay licensing fees to that she'll company. Profit made by that shell company is billions and Apple gets to use that expense in USA as a tax deduction to further pay less taxes.

The only way to fix this is make it so if companies want to sell their patents cheaply to a shell company, a competitor (like Samsung) should have the opertunity to buy that patent instead. Then we wouldn't get companies like Apple using loopholes to shuffle their assets to Ireland.

Edit: if I regulaly bought brand new cars an sold them for a penny to my brother, I would be under investigation for money laundering. Apple sells their patents for a penny to their shell company and that is regular business.

 

[mytdave]

Apple have a fiduciary responsibility to their shareholders to minimise tax, yes. But Governments have a responsibility to their citizens to raise monies - often by taxation - to fund public goods and services.

My take is that the public good supersedes the desires of private companies.

However, re the figure of 50%, - a nice and easy figure to remember - (Mr Wozniak didn't say 39%, or 57%, he picked a number that nobody could forget) - my sense is that Steve Wozniak wants to start a debate and discussion on this matter - taxation, responsibility of multi national companies, public policy - in the US, and his contribution - which is inevitably guaranteed to garner headlines - is an excellent way of setting about to achieve this.

I can't completely agree. Taxation is necessary, yes, but it should be an absolute minimum. In the US at least, there is really only one Constitutional responsibility the Federal government has: Provide for the common defense. That's it. Other than public utilities and roads, there is arguably no benefits to any other Federal programs. In fact there is vividly apparent evidence that pretty much everything the Federal government touches is an absolute disastrous mess. Most social works are (should be) the responsibility of individual States. The US did much, much better when the government was smaller, and there was no income tax.

The problem with the "public good" argument is that governments (particularly large national ones) rarely accomplish much that is in the actual "public good." The will/rights of private individuals (and companies) does indeed supersede the "public good" and is enshrined in the US Constitution. The Public Good mantra is a cornerstone argument of Socialism/Communism, which has never ever succeeded, not even once in the entire history of the world whenever it has been tried.

 

[Deacon-Blues]

I think paying 50% of your income to the government is insane. I feel bad for him to think that the government is confiscating over half of what the guy makes. It's appalling.

I guess it's good he's happy about it but it's un-American for the government to take half of everything you have. I guess it isn't anymore.

 

[tgara]

But wouldn't you be better off trying to make the government work better for the people rather than depriving it of the means by which it can help people?

I mean, if you actually think government has a role and wish to see it run efficiently for such roles; I don't see how just depriving it of revenue without any political agitation is going to help.

The federal budget is nearly $4 TRILLION! If people are not being "helped" with $4 trillion, there's no hope. Besides, even if the tax rate was raised, there is no guarantee that the increased revenue would go to "helping" people, whatever that means. The government has a poor track record of effective and efficient spending.

http://freebeacon.com/issues/1-48-trillion-government-collects-record-high-taxes-first-half-fy-2016/

Inflation-adjusted federal tax revenues hit a record $1.48 trillion for the first half of fiscal year 2016, but the federal government still ran a $461 billion deficit during that time, according to the latest monthly Treasury Department statement.

I say if they can't get by on $4 trillion, too bad. Not one dime more from the taxpayers, and that means everybody.

 

[Renzatic]

Companies have an obligation to their shareholders to pay as little tax as possible. This doesn't make it right, though it makes it understandable. Nobody willingly pays more than they have to, so you'll have to change the law to prevent it from happening.

Most of our debt is coming from the government borrowing from the programs used to help people in order to fund our military and corporate welfare interests. This, along with the fact that the government isn't taxing corporations as much as it used to, is one great contributors to our debt.

 

[joueboy]

And where part of the other half goes to? To feed the lazy ones and corrupt politicians? They already employed so much people that also pay taxes. Although I don't work for Apple I already paying so much tax in my opinion other than my income taxes, I pay everything taxes of the things that I think I own. When I buy something even used ones that somebody already paid a full sales tax on it like cars. Politicians are funding something to keep their political interests and ended up taking money from another funds. I'm not against asking Apple more money but I prefer if they bring more opportunities back in the US, in return the workers will pay taxes. We keep on asking Apple's money offshore that's the money they made from outside US. Besides the law is double dipping on this, where ridiculous amount of penalty will be charge to Apple if they bring that money back locally. Woz is a reponsible citizen so we need to start electing responsible leaders instead putting somebody who likes to benefit their political agendas. Americans in general has no problem helping others during calamities. Just the citizens itself already contributing so much.

 

[tgara]

Woz needs to ****. He's the same as many other limousine liberals like Bill Gates Sr., Warren Buffet, Michael Bloomberg, and Tom Steyer calling for a variety of higher tax rates. Those guys are multi-millionaires at the very least and paying a higher tax rate won't affect their lives in the slightest. But it will hurt a lot of other people who have kids in college or are caring for aging parents.

 

[AlliFlowers]

Flat tax for all. A higher rate for businesses than individuals. Period.

 

[Renzatic]

Flat tax for all. A higher rate for businesses than individuals. Period.

A flat tax might seem like a good idea on paper, but it could end up screwing over a good chunk of our small businesses and middle class. Sometimes you do need some exceptions in place to help grow the economy.

 

[bonehead]

I'm educated and still can't seem to get a grasp on how taxes are handled. I have been doing my families taxes for a decade now and we have lived in several countries. The main theme, and the point I am trying to get to, in all the countries was that I felt the taxes should just be a set amount across the board. For example, it doesn't matter if you make 10k a year or 10B a year you would have to pay something like 15%. I'm just throwing out numbers but what I am saying is that if it was a simple tax code with an even percentage for everyone we wouldn't have people escaping tax bills by building in other countries. Again though, I don't understand all the fine print on taxes.

The problem with a flat tax for individuals is that it places more burden on those who make the least.
Using your example. the family that makes $10,000 per year now has to live on $8,500. At that level of income, $1,500 makes a big difference. For the family making $10,000,000,000 per year, I'm pretty sure they'll get by just fine taking home $9,850,000,000.

 

[wiz329]

I assume that, being a 6502, you know better than what you are writing, but I know I shouldn't assume.

1) Apple pays taxes as required in the countries where it does business. That applies both inside and outside the US.
2) After paying taxes in such countries above, Apple has excess currency (it's a profitable business, after all).
3) Apple moves that money around between countries that are outside the United States.
4) Apple chooses not to bring those currencies back to the United States because the repatriation taxes are unpalatable.

In the above scenario, Apple is paying all the taxes it owes on earned income. What Apple is not paying is a repatriation tax that it does not have to pay if it does not repatriate foreign currency. If Apple is earning *interest* in some country where it *stores* its money at a favorable rate, that's just plain common sense.

Separate point: Apple does not "tax" its developers. It charges a fee for the right to sell in the App Store. In exchange, Apple provides the infrastructure to make those apps accessible to customers: advertising, sales, logistics. This allows the developers to focus on developing.

As to Woz 50% income tax, that's simply not correct. the maximum for ordinary income is 39.6%.

https://en.wikipedia.org/wiki/Income_tax_in_the_United_States#Marginal_tax_rates_for_2016

And if Woz is paying that on his total annual income (including dividends, capital gains, etc), as another reader has observed, he needs to fire his tax preparer/lawyer.

Thank you. Most rational comment thus far.

 

[AlliFlowers]

A flat tax might seem like a good idea on paper, but it could end up screwing over a good chunk of our small businesses and middle class. Sometimes you do need some exceptions in place to help grow the economy.

As long as the exceptions are for the middle and bottom.

 

[dustinsc]

Apple, with its incredible financial success, is primed to pay at the very least 30% tax for all sales it makes in the country which it has made the sale.

And they do. We're talking about income tax. The only rational thing a publicly traded company whose entire purpose is to make money for its shareholders can do is minimize its tax burden. Personally, I don't see why any country taxes organizations at all. If you want to tax people for the privilege of doing business in your country, tax the transaction (sales tax). If you want your residents on the income they earn, tax the individuals because taxing a corporation just ends up taxing some individual somewhere, but it's unpredictable as to who will end up carrying the economic incidence of the tax.

 

[Chupa Chupa]

We had higher than 50% tax rates in the US before and businesses still flourished. People still made fortunes.

I don't agree that a CORP should be allowed to hide money and pay a lower tax rate. And at the same time enjoy all the benefits in their country that are paid for by taxes of everyone else.

The tax rate and the tax rate after deductions and credits are two different things. The pre 1984 era you speak of had a lot more tax deduction than even the current broken code. No company paid an actual 50% rate. A company would suffocate under that rate unless it received, in return, massive government subsidies.

Also what legitimate companies are hiding their money? If you mean they are not repatriating their $ that is not hiding $ that is not bring back money earned in foreign countries from foreign sales with foreign taxes paid in the respective countries. The U.S. wants these companies to bring back this money that the U.S., in fact, had little to do with, and tax it again at an insane rate. What rationale person would subject their money to that kind of attack? There is zero benefit to depositing that $ in U.S. accounts.

 

[bonehead]

As to Woz 50% income tax, that's simply not correct. the maximum for ordinary income is 39.6%.

https://en.wikipedia.org/wiki/Income_tax_in_the_United_States#Marginal_tax_rates_for_2016

And if Woz is paying that on his total annual income (including dividends, capital gains, etc), as another reader has observed, he needs to fire his tax preparer/lawyer.

Don't forget to add in state tax and sometimes alternative minimum tax. If you make enough money, it's possible to hit 50% or more.

 

[applesith]

Yeah, but not just income tax. Sales tax, hidden tax, property tax too. People would hit the roof!!

I live in Ontario and our provincial debt is so bad that there just can't be any way out of it. The government was asking people to consider giving their income tax return to pay off the debt. What a joke.

All the taxes are out of control. But that's what people clearly vote for over here.

 

[neuropsychguy]

Edit: if I regularly [sic] bought brand new cars an sold them for a penny to my brother, I would be under investigation for money laundering. Apple sells their patents for a penny to their shell company and that is regular business.

I'm going to assume that everything you wrote is accurate. There is nothing illegal about buying a car and selling it to someone else for $1. You might be under investigation for that but as long as you aren't stealing the cars or acquiring your initial money illegally or doing something else illegal, some entity can investigate you all it wants, you're doing nothing wrong. There is nothing illegal about what Apple does. You might not like the laws but that doesn't make what Apple does illegal or even unethical.

 

[2010mini]

The tax rate and the tax rate after deductions and credits are two different things. The pre 1984 era you speak of had a lot more tax deduction than even the current broken code. No company paid an actual 50% rate. A company would suffocate under that rate unless it received, in return, massive government subsidies.

Also what legitimate companies are hiding their money? If you mean they are not repatriating their $ that is not hiding $ that is not bring back money earned in foreign countries from foreign sales with foreign taxes paid in the respective countries. The U.S. wants these companies to bring back this money that the U.S., in fact, had little to do with, and tax it again at an insane rate. What rationale person would subject their money to that kind of attack? There is zero benefit to depositing that $ in U.S. accounts.

When I said hide money I meant using shell companies to hide profits.

 

[AdonisSMU]

That's great and all except that he doesn't pay anywhere near 50% taxes. The investment and related income alone ensures he doesn't pay anywhere near a 50% tax rate on his worst day.

 

[Undecided]

As to Woz 50% income tax, that's simply not correct. the maximum for ordinary income is 39.6%.

https://en.wikipedia.org/wiki/Income_tax_in_the_United_States#Marginal_tax_rates_for_2016

Wrong. You are ignoring social security, medicare, Obamacare medicare premium, and state taxes (13% in California), all of which are taxes on income even if not labeled "income taxes," and which bring his total marginal tax to 50%, if not higher.

 

[neuropsychguy]

Don't forget to add in state tax and sometimes alternative minimum tax. If you make enough money, it's possible to hit 50% or more.

Maybe. The top income tax rate is 39.6% but that's only on income over $415,050 (filing as single, which Woz isn't - filing jointly is $466,950 [off topic but that's the marriage penalty in action - 1 person hits the top bracket at 415K but 2 people hit it at 467K]).

What this means is only income over 415K is taxed at the top rate (using single as example). Your first 9K is taxed at 10%, your next 27K at 15%, your next 40K (I'm rounding) is at 25%, etc. Not all your income is taxed at the top rate. This means that the only way to have your tax as % of income reach 39.6% is to make somewhere in the range of $500 million per year. Woz isn't earning that much (even if he was, much of it would probably come from investments, which are taxed at lower rates).

However, because he lives in CA, if you add in state income tax, property taxes, etc., he could certainly be around 50% total tax burden (assuming his federal effective tax rate is at least 30-35%) but that's the only way he gets to 50%. If that's the case, Apple's tax rate is higher too because we have to factor in all the other taxes they pay (sales, local, utility, import, property, and so forth). This means that just throwing 50% out there is misleading at best.

 

[Rian Gray]

As much as I love him, it clearly shows why he hasn't made CEO of Apple back in the days. He can't distinguish a person from a corporation, and an individual responsibility from a corporate responsibility. Any reasonable companies should thrive to make money, which includes saving money and cutting losses. It would be nice if all corporations paid 50% flat tax (with sarcasm), but you can't possibly call it ethical for a corporation to stand up and pay 50% out of nowhere. There are shareholders to answer to, and there are customers to answer to.

If his argument went along the line of 'Apple should invest more in American companies and infrastructures so that Apple can really innovate again by leading other tech companies,' I would be applauding him by now. Give a company some reasons to follow your words Woz. Seriously.

 

[Undecided]

The corporate tax rate should be zero. Corporations themselves do not pay ANY taxes; the taxes are actually paid by the customers (through higher prices) and employees (through lower wages). And, since the shareholders pay taxes on the dividends, that money is double-taxed.

What we ought to do is reduce corporate taxes to zero, and increase dividend / capital gains taxes to the same rate as earned income. Earned, passive, and portfolio income should all be taxed at the same rate.