Might as well give up...it's like trying to teach logic to a wall...they'll never get it. Some people think the USA is the center of the universe and deserve everything..even things that aren't theirs (like Apple's oversea's profits).
Actually, it's the same the other way around. All of you people banging your head against the wall talking about overseas sales are
totally missing the point.
Where are IP royalties paid? In which country are they "sold"? The answer: from wherever the hell you like!
That's right: Apple is selling licenses to US patents (which are only enforceable in US courts), covering inventions that were created in the US, by a US company, a lot of the time to other US companies. It's signing those deals from shell subsidiaries based in tax havens and paying no tax on all the royalties they earn from them.
It turns out, there's a lot of stuff that can be covered by IP. In fact, you can even have your own subsidiaries (in places like the UK, Germany, and everywhere else in the world) take out licenses for essential things like branding. That's what Starbucks do in order to avoid tax in the UK (so Starbucks UK has to license the name, logo, store decoration, etc from the 'Starbucks Cayman Islands, Inc.'). Do Apple do it, too? Who knows? It's impossible to examine corporate accounts in that much detail because it gets combined with other things and stuck in to abstract accounting concepts before it makes Apple's financial statements.
A similar thing happens with iTunes - where are digital goods sold from? Also from wherever you like! Every time I buy a song from iTunes while I'm in the UK or Germany, I'm paying (a tiny amount of) tax to the Irish Government.
Now, you might think that's OK, but you can't deny that it has real negative effects on you.
iTunes has been putting music and video stores out of business, for example. Those stores did pay taxes. So now as iTunes grows, the UK and German governments lose the ability to tax music and movie purchases. That's real money they used to have which is now lost thanks to the way Apple structures its business.
Microsoft moved their patent licensing operations outside of the US in 2011. That move cost the US Government $4Bn per year. Again, those were US patents (only meaningful to US courts) invented by a US company in the USA.
That move didn't really cost the Government $4Bn per year - it cost the
American people $4Bn per year, since they're ultimately going to foot the bill (with interest).
Apple also have it so that in some countries, when you buy an Apple product, you're not really buying it from that country, but from a salesperson who represents an Apple subsidiary in a tax haven. Apple's local division technically doesn't see any income from the sale, so no tax is paid is there (where's this double-taxation? Apple isn't even subject to single taxation in many countries!)
There are plenty of other extremely dodgy tax moves that other companies (including Apple) use to rob the people of their money. Apple deserves some special praise for actually inventing a lot of those practices (like the "Double Irish").
It gets ridiculously complicated, so it's too much to go in to all of them in detail here.
Some of the techniques are well known, others we may never fully unravel.
Seriously - anybody who wants to reply to me, read the Wikipedia link about the Double Irish before you do. See what it involves. There's no way you can look at that and say that Apple is morally in the clear for following the law.
As somebody mentioned in another thread, Apple are not passive beneficiaries of a generous tax system. They create multiple shell companies in various countries to twist the tax laws in to complicated manoeuvres which are extremely difficult to understand, and even more difficult to fix (it relies on lots of interlocking legislation in different countries which does serve a valid purpose but was never intended for this kind of use).
They are abusing the tax law. You cannot absolve all their responsibility for that because they want to make money.
Apple has a tax rate of something like 9.8%. Companies like Wal-Mart, who despite their overseas subsidiaries, can't take advantage of much of Apple's clever accounting because of the nature of their business, pay closer to 30/35%. Why is that? Is that just?
Anybody who is more interested can read the
NYT's excellent piece on this.
Again, I just want to emphasise that none of this is about overseas sales. Nobody is claiming the US should receive tax revenue for MacBooks sold in, say, Japan.This is about the more easily transferrable stuff (like IP), and how companies rearrange their businesses so that almost all of their local profits get caught up in easily transferrable internal costs. Those profits are effectively shifted across the world (e.g. Starbucks UK makes £10Bn in profit, then has to pay £12Bn in licensing costs for the Starbucks logo to the Cayman islands, which means Starbucks Cayman Islands makes a profit on which it pays no tax, and Starbucks UK makes a pre-tax loss and also pays no tax).
It doesn't just apply to Apple, of course, but they are just as much to blame as anybody else. In fact, you could argue that because they invented many of these techniques, they are historically more responsible.
), but it's been proven time and time again that the simpleton view of taxing big business and high earning individuals has a negative impact on tax revenue. Morals don't have much sway when your legal options are either paying a government loads of money....or not.
