Tim Cook Pens Open Letter on Tax Evasion Claims, Says Apple is Confident Decision 'Will be Reversed'

[adamneer]

It's funny how people are always saying "it's not the corporations' fault—the government is corrupt!"

Because apparently people think government officials are just like "man, I really like Sony and Pfizer products. I'm going to write up a bill that will grant them special privileges that the average citizen doesn't get." And the billion-dollar corporations are just like "oh, wow, thanks for being so nice to us. We hope this thank-you note will suffice."

It's also strange how Americans can support the idea that corporate tax-rates are too high, as if there's some magical number that will get corporations to stop looking for loopholes and just pay up. It's one thing to argue against double-taxation (which is something I think we can all agree is wrong), but to think that paying ultra-low tax rates will benefit anyone other than the executives flying private jets to their 3rd vacation homes is just naive.

 

[KPOM]

Gotta love the completely clueless Apple zealots screaming for Ireland to exit while having zero knowledge of the EU, what it is, and what Ireland would lose if they left.

??? This looks like a shakedown by bureaucrats in Brussels.

 

[cube]

UK's most successful export: Brexit propaganda.

 

[miniyou64]

It's funny how people are always saying "it's not the corporations' fault—the government is corrupt!"

Because apparently people think government officials are just like "man, I really like Sony and Pfizer products. I'm going to write up a bill that will grant them special privileges that the average citizen doesn't get." And the billion-dollar corporations are just like "oh, wow, thanks for being so nice to us. We hope this thank-you note will suffice."

It's also strange how Americans can support the idea that corporate tax-rates are too high, as if there's some magical number that will get corporations to stop looking for loopholes and just pay up. It's one thing to argue against double-taxation (which is something I think we can all agree is wrong), but to think that paying ultra-low tax rates will benefit anyone other than the executives flying private jets to their 3rd vacation homes is just naive.

So what's your threshold for too low?
Why do corporations get these special rights? And what gives you the right to steal money from someone who is successful? Why don't you build a company and become successful and stop asking the government to use their force to take money from others?

 

[Alenore]

Anyway, Apple already lost. People now know how little tax Apple pays.
1) They pay and simply prove they're guilty of it.
2) They don't pay and they look like they're most likely guilty since they *don't* want to pay.

Both cases, public opinion about Apple will be much, much lower. People paying taxes (or people) don't like companies that avoid paying taxes when they charge a premium.

 

[cube]

What the graph in the other thread seems to show is that from the main consumer platforms, the lesser evil is Google.

 

[simonmet]

1) Apple is a publicly traded company, and as such, has a fiduciary responsibility to its shareholders to use any legal means to minimize its tax liabilities.

2) Ireland's current tax laws that Apple is taking advantage of may or may not need to be updated based on how things have changed since they were first written. Whether they should be or not is a subjective matter that can be discussed by all stakeholder parties, and any changes made need to be in line with other Ireland and EU governing policies.

3) However, the EU simply cannot retrospectively change Ireland tax laws on what they think they should have been. The only relevant question is did Apple follow existing Ireland tax law correctly? If so, they cannot impose a retroactive tax on Apple. The EU does have leverage to drive changes to Ireland's tax policies moving forward, though.

4) This type of ham-handed extra-legislative action by the EU is exactly the type of thing that got the "Brexit" stuff started (and even passed). If the EU bureaucrats continue to overstep their boundaries and supersede the legislatures and courts of the member countries, they're going to continue to find themselves with fewer member countries (and more to the point, the net tax-paying countries that can both afford to leave and have the biggest impact when they do).

1. That is no doubt a belief of the way some shareholders would like their company to behave but there's no evidence to suggest how many and it's certainly not based on any legal requirement. Have shareholders ever been asked: Would you like us to engage in a complex web of tax arrangements using offshore tax havens and shill companies in order to pay as little tax as possible? Or would you like us to have a more socially responsible view of tax responsibility that sees us pay more than a tiny fraction of a percent in tax to the jurisdictions in which our profits were earnt? To impose the former as being the wishes of all (or even a majority) of shareholders without evidence is offensive to those who share an alternative view.

The funny thing is, Ireland doesn't even have any retail stores as far as I'm aware. Bizarre and hilarious way for Apple to "reward" Ireland for letting them get away with such criminally-low* rates of tax.

Tim Cook claims Apple is the largest tax payer in the world but I'd love to know on what this claim is based because no figures or basis for the claim are presented. Are they including the taxes paid by employees because, no Apple, that is NOT you paying the tax. Using that to bolster your figures is downright pathetic. If Apple wishes to make claims like this they should back them up, else their suspicious claims are meaningless.

2. Couldn't make sense of what you're trying to say here...

3. The EU can do this, or at least attempt to do so. Governments enact retroactive legislation all the time. It'll be up to the courts to determine whether the law will apply in Apple's case, but it's unlikely to work out in Apple's favour. There's nothing inherently illegal with retroactive legislation. I'm inclined to agree that it's not a good look and may not even be "fair", but if the intent is to fix or "correct" something that's broken or patch loopholes then I don't have a problem with it. Certainly Apple's (and Google's and Microsoft's et al) tax arrangements have been anything but "fair" either.

4. Corporate tax law had very little if anything to do with UK's decision to leave EU, but if it did it would've been so they could have a greater ability to assert their right to claim the taxes the EU are now trying to claim rather than the reverse. More so it's so those taxes would go to where they were being earnt (i.e. stay within UK) rather than being channeled elsewhere, which is exactly what Apple are doing. Many Britons probably felt they were getting a bum deal out of the money they were sending the EU. At least that's what was argued by the pro Leave side, however immigration and population control were also big factors. You certainly can't lump a vague defence of Apple's tax practises as a reason for the exit, as you appear to be trying to do.

* metaphorical

 

[vannibombonato]

150 posts and still working from out of context numbers without a hint at why the tax rate appears so low.

HINT: Apple pays the same 12.5% corporate tax rate as everyone else in Ireland.

Hint number one: out of the total profits coming from Euro+india+etc. that flow through Ireland, what's the % of these profits that is taxed at the "regular" 12.5% of Ireland, as Apple does not pay taxes in EU because they say the value is generated in Ireland (and let's not even begin talking about why profits made in Rome should be taxed in Ireland...)?

Hint number two: What is the taxation on the remaining of the profits? Where is Apple paying taxes on them? Hints: -it's not in the countries where the product is sold (EU). -it's not in the country where the product is built (China). -it's not in the country where the product is designed and the coompany managed (US). -it's not in the country where the company is saying the profits are generated (Ireland).
Any suggestion?

It may or may not be legal, but anyone implying that it is somehow even remotely "right" must have never paid a dime of taxes in his life.

Apple can do whatever it wants to maximise profits, but can't do it while charging a premium AND marketing itself as an ethical, value-driven company. It just does not work, because they look ridiculous.

 

[leroypants]

??? This looks like a shakedown by bureaucrats in Brussels.

It only looks that way to the Apple cultists who don't care about facts, laws, or reality.

 

[simonmet]

Apple can do whatever it wants to maximise profits, but can't do it while charging a premium AND marketing itself as an ethical, value-driven company. It just does not work, because they look ridiculous.

This.

Assuming the tax bill stands it calls into question Tim Cook and the entire Apple board's leadership. Aside from looking ridiculous and hypocritical, they are trashing Apple's reputation, brand and image by making them look like the Scrooge McDuck of the corporate world.

Spending huge amounts to fight a virtually unwindable case instead of taking the opportunity to score a massive boost to your reputation with subsequent flow-on effects to your business is about the worst kind of management possible in this situation. They should've copped the loss on the chin and taken it as an opportunity to tell the world they're happy to pay a fairer rate of tax that they can easily afford and use it as a major marketing tool.

 

[BaldiMac]

Hint number one: out of the total profits coming from Euro+india+etc. that flow through Ireland, what's the % of these profits that is taxed at the "regular" 12.5% of Ireland, as Apple does not pay taxes in EU because they say the value is generated in Ireland (and let's not even begin talking about why profits made in Rome should be taxed in Ireland...)?

Yep.

Hint number two: What is the taxation on the remaining of the profits? Where is Apple paying taxes on them? Hints: -it's not in the countries where the product is sold (EU). -it's not in the country where the product is built (China). -it's not in the country where the product is designed and the coompany managed (US). -it's not in the country where the company is saying the profits are generated (Ireland).
Any suggestion?

The majority of the profits are attributed to the main Apple, Inc. in the United States. The U.S. is entitled to collect taxes on those profits when the funds are repatriated.

It may or may not be legal, but anyone implying that it is somehow even remotely "right" must have never paid a dime of taxes in his life.

I've paid my taxes and think that with taxes, legal is right.

Apple can do whatever it wants to maximise profits, but can't do it while charging a premium AND marketing itself as an ethical, value-driven company. It just does not work, because they look ridiculous.

Apple pays an effective tax rate of 25% globally. None of their competitors pay significantly more, and most of them pay significantly less. And their effective tax rate goes up if and when they repatriate their foreign profits.

Most of the value IS generated in the U.S. It's not unethical that the U.S. receives a vast majority of the tax revenue.

 

[s2mikey]

So what's your threshold for too low?
Why do corporations get these special rights? And what gives you the right to steal money from someone who is successful? Why don't you build a company and become successful and stop asking the government to use their force to take money from others?

Well - thats fine. Did the successful person or corporation ever use any taxpayer-funded services or things? Hmmm. I bet they did. Roads, police, internet and a zillion other things. They also enjoy the military protection that is provided. Costs money to run all that stuff. Look, I hate taxes too and they are too high for EVERYONE.

But the notion that anyone built anything by themselves without any help from the general funding items is simply wrong.

Bear in mind too that when some company or person evades taxes then those of us on W2 payrolls end up payng more. Screw that. Sure, lower taxes across the board but until that happens, Apple can absorb it a helluva lot easier than some working class family can.

 

[KPOM]

It only looks that way to the Apple cultists who don't care about facts, laws, or reality.

Would that include the WSJ Editorial Board?

 

[nocturnum]

Would that include the WSJ Editorial Board?

The voice of corpo-shenanigans, well, you may be quite right.

 

[Col4bin]

Can't say you're getting much sympathy here, Timmy.

You've been hosing customers for years with high prices and (still expensive) entry-level products that just don't perform to an Apple standard. You've been making ludicrous profit margins on every product and building up a wall of cash to sit on. You've been smashing down on suppliers to lower the costs even further, yet maintain those same high prices and margins on products.

You raise prices in countries when the exchange rate is having a few hiccups, when if anything, they should be lowered due to the age of the tech. As you're not an engineer or even a Mac user, you have no appreciation of how much difference even a simple Fusion drive can make in entry-level Mac Minis, for an utterly negligible cost. You do all this and still sniff your own farts about Apple being the best company in the world and make products that enrich people's lives.

Even with all this considered, I've been defending Apple left, right, and centre where I believe it's applicable.

But now that we find out Apple have been paying 0.005% tax on European sales? The deep realisation has hit me that you couldn't give a damn about your customers' experience, and no amount of money or profits will ever be enough for you, or convince you to appropriately put back into the products you sell.

For what utterly little it's worth (and it is very, very, very little to you, I'm sure), you've turned this passionate Apple fan and defender into a jaded, listless user, praying that his 2012 MBP won't die.

Bravo, man. Take a bow!

 

[adamneer]

So what's your threshold for too low?
Why do corporations get these special rights? And what gives you the right to steal money from someone who is successful? Why don't you build a company and become successful and stop asking the government to use their force to take money from others?

Your first question is very easy: too low is anything less than the percentage the average citizen pays in income tax. After all, the Koch brothers ensured that corporations are to be treated as citizens in the eyes of the law, so why should they be any different when it comes to paying taxes?

Your second question makes no sense at all. The only people stealing are the corporations paying <25% in taxes. They are stealing from the millions of citizens that have no choice but to pay effective rates up to 40% of their income to subsidize all these companies that don't feel they should have to contribute to the economy of the country that makes their business successful.

Your third question assumes that there is a linear progression of success and wealth (basically the fundamental idealology of the American Dream). It also assumes that a successful company rewards/compensates their own employees directly proportional to the contribution they've made to their success. We don't live in a linear, point to point, A leads to B world. We live in a world where some people are born on second base and think they hit a double, while others can't even afford tickets to the game. Government intervention is absolutely necessary to ensure that opportunity and quality of life is equally accessible to all, because there are too many greedy people out there that believe they deserve a bigger piece of the earth than their fellow man.

 

[BaldiMac]

Your first question is very easy: too low is anything less than the percentage the average citizen pays in income tax. After all, the Koch brothers ensured that corporations are to be treated as citizens in the eyes of the law, so why should they be any different when it comes to paying taxes?

Your second question makes no sense at all. The only people stealing are the corporations paying <25% in taxes. They are stealing from the millions of citizens that have no choice but to pay effective rates up to 40% of their income to subsidize all these companies that don't feel they should have to contribute to the economy of the country that makes their business successful.

Your third question assumes that there is a linear progression of success and wealth (basically the fundamental idealology of the American Dream). It also assumes that a successful company rewards/compensates their own employees directly proportional to the contribution they've made to their success. We don't live in a linear, point to point, A leads to B world. We live in a world where some people are born on second base and think they hit a double, while others can't even afford tickets to the game. Government intervention is absolutely necessary to ensure that opportunity and quality of life is equally accessible to all, because there are too many greedy people out there that believe they deserve a bigger piece of the earth than their fellow man.

1) The median income in the U.S. is around $55,000, which puts the federal income tax rate of most Americans well below 25%.
2) Apple pays the U.S. federal corporate tax rate of 35% on income generated in the Americas.
3) The will also pay U.S. tax on any foreign income that the repatriate to the U.S. However, current tax law makes it more beneficial to leave that money overseas.

 

[unlinked]

Gotta love the completely clueless Apple zealots screaming for Ireland to exit while having zero knowledge of the EU, what it is, and what Ireland would lose if they left.

Gotta love clueless people everywhere.
You would think the EU would know better than to possibly collapse the Irish government and lead to a general election where the EU is the central issue.

 

[LizKat]

Oh, of course he's confident the decision will be reversed. When you hold more $40 billion in cash, it's not hard to influence people...

Bottom line it's Tim Cook's job to say exactly what he said at this time, regardless of what he or Apple's house counsel may think about the situation. "Keep calm and carry on" is an expected front-facing response to just about any situation a publicly traded company may wake up to on any day. First steady the ship, then find out whether it has hit a reef or just another wave.

 

[adamneer]

1) The median income in the U.S. is around $55,000, which puts the federal income tax rate of most Americans well below 25%.
2) Apple pays the U.S. federal corporate tax rate of 35% on income generated in the Americas.
3) The will also pay U.S. tax on any foreign income that the repatriate to the U.S. However, current tax law makes it more beneficial to leave that money overseas.

1) I will admit to mistakenly including SS and Medicare taxes in my comparative figures, as well as including the additional percentage many Americans pay in State income taxes, which brings the average household tax rate up considerably. So yes, technically this number should be around the 25% mark. But then there are self-employed/freelancers, such as myself, who pay higher percentages because typically employers pay a certain percentage of their employees' taxes and obviously when you work for yourself, you are both the employee and employer. I'd also ask, if a corporation is to be seen as a citizen in the eyes of the law, should they not also be paying into the SS and Medicare systems as well?

2) Apple may very well pay 35% on income generated in the Americas on a technical level but that doesn't mean that they are reporting their income in the same direct manor as a typical citizen would. The wonderful part about having hordes of cash is being able to pay expensive accountants and lawyers to make your tax burden as small as possible. Again, something not available to the average citizen.

3) You can't just include a hypothetical situation as though it should contribute to Apple's perceived tax burden. The fact is, unless the government allows a very unlikely tax holiday for repatriation, Apple and many other corporations will continue to hold their cash off-shore indefinitely. I don't know the legalities of what they can and can't do with that money while still off-shore, but I have to assume that their expensive accountants and lawyers are able to come up with ways that they can utilize parts of it within their operation. If this wasn't true, off-shore funds wouldn't be included in their valuation, as I assume they are.

 

[BaldiMac]

1) I will admit to mistakenly including SS and Medicare taxes in my comparative figures, as well as including the additional percentage many Americans pay in State income taxes, which brings the average household tax rate up considerably. So yes, technically this number should be around the 25% mark. But then there are self-employed/freelancers, such as myself, who pay higher percentages because typically employers pay a certain percentage of their employees' taxes and obviously when you work for yourself, you are both the employee and employer. I'd also ask, if a corporation is to be seen as a citizen in the eyes of the law, should they not also be paying into the SS and Medicare systems as well?

I don't agree with your argument, but I also don't agree with the corporation is a person thing.

2) Apple may very well pay 35% on income generated in the Americas on a technical level but that doesn't mean that they are reporting their income in the same direct manor as a typical citizen would. The wonderful part about having hordes of cash is being able to pay expensive accountants and lawyers to make your tax burden as small as possible. Again, something not available to the average citizen.

That's not a real argument. There is no evidence that Apple is hiding any income generated in the Americas.

3) You can't just include a hypothetical situation as though it should contribute to Apple's perceived tax burden. The fact is, unless the government allows a very unlikely tax holiday for repatriation, Apple and many other corporations will continue to hold their cash off-shore indefinitely. I don't know the legalities of what they can and can't do with that money while still off-shore, but I have to assume that their expensive accountants and lawyers are able to come up with ways that they can utilize parts of it within their operation. If this wasn't true, off-shore funds wouldn't be included in their valuation, as I assume they are.

Again, simply assuming they are doing something wrong without any evidence isn't a real argument. If they do anything with the foreign income, it will be taxed.

 

[miniyou64]

Your first question is very easy: too low is anything less than the percentage the average citizen pays in income tax. After all, the Koch brothers ensured that corporations are to be treated as citizens in the eyes of the law, so why should they be any different when it comes to paying taxes?

Your second question makes no sense at all. The only people stealing are the corporations paying <25% in taxes. They are stealing from the millions of citizens that have no choice but to pay effective rates up to 40% of their income to subsidize all these companies that don't feel they should have to contribute to the economy of the country that makes their business successful.

Your third question assumes that there is a linear progression of success and wealth (basically the fundamental idealology of the American Dream). It also assumes that a successful company rewards/compensates their own employees directly proportional to the contribution they've made to their success. We don't live in a linear, point to point, A leads to B world. We live in a world where some people are born on second base and think they hit a double, while others can't even afford tickets to the game. Government intervention is absolutely necessary to ensure that opportunity and quality of life is equally accessible to all, because there are too many greedy people out there that believe they deserve a bigger piece of the earth than their fellow man.

It's about equal opportunity not that we need a forceful government to redistribute wealth so everyone has equal things. Work hard and be successful. It's clear you like communism but I don't. I'd give to anyone in need, but it rubs me the wrong way when government steals my money - you don't have a choice to pay taxes after all - and uses it for wasteful things that I have no say in.

 

[adamneer]

I don't agree with your argument, but I also don't agree with the corporation is a person thing.

That's not a real argument. There is no evidence that Apple is hiding any income generated in the Americas.

Again, simply assuming they are doing something wrong without any evidence isn't a real argument. If they do anything with the foreign income, it will be taxed.

This is becoming a "prove God exists - prove God doesn't exist" argument. But based on what's been reported and the general actions of large corporations with regards to taxes, I feel there's substantial enough reason to believe Apple takes advantage of various loopholes that allow them to pay less taxes (as a percentage) than the average person would be able to. They can claim 35% effective rate all they want, but I have no reason to believe that they're either just selectively honest depending on the country, or that America's tax system is that bulletproof.

It's about equal opportunity not that we need a forceful government to redistribute wealth so everyone has equal things. Work hard and be successful. It's clear you like communism but I don't. I'd give to anyone in need, but it rubs me the wrong way when government steals my money - you don't have a choice to pay taxes after all - and uses it for wasteful things that I have no say in.

I don't really understand why you use the word "forceful" other than to exaggerate the actions of the U.S. government. Obviously you feel like the government is to blame for anything wrong with the country and a "free market" would be free of corruption and disparity. I also don't really understand how you made the leap to communism based solely on my advocating for governmental regulations that hold corporations equally responsible for taxes as the common citizen. My guess is you were being hyperbolic again. I agree with you that being forced to pay taxes while having no control over how they're spent is not exactly ideal, but what alternative would you suggest? You say you would give to those in need, but taxation is essentially this, just on a large scale. I feel like what you, and others with your mentality, really want is the ability to filter out precisely who you believe deserves assistance—an impossible proposition. The only real option is to accept that taxes will always make their way into the hands of a few undeserving people and some deserving causes that you simply disagree with. But they are essential to society as a whole and when the ones most capable of contributing actively avoid paying them, its on the less capable to pay the difference.

 

[Sonmi451]

To both of you, hypothetical conceptual conversation topic: Would you personally hand out money and special treatment to Apple or any other big company with those profit margins?

Knowing that, if the EU represents its people, and most people disagree with handouts to big companies that won't often hire there but place money there for the sole purpose of not paying due taxes (the whole of government and what it pays for, even purportedly protecting Apple and its interests abroad)...

?

Or, like the song goes, "Money for nothing ♪ ♫"
[doublepost=1472577236][/doublepost]

Especially when those same people think it's A-OK when they take other peoples' money (e.g. what goes into 401k plans, corporate welfare, etc) and squander it on their personal selves instead of reinvesting in the company... Kinda sad, actually...

Irelands corporate taxes for Apple are way too low. They should be paying more taxes - in USA, not Ireland. I can't really control what they tax, but obviously it's really really way low. It's not illegal. Maybe somewhat ethically dubious, but they are a company. I am not pro-Apple in the sense they shouldn't pay taxes, but that dude's argument was a little out of touch.

 

[miniyou64]

Government exists solely based on force. Its really not that complicated: I believe people should be free to voluntarily spend their own money on whatever they choose to do with it. People should also pay for what they use. You may think it's a good idea for the government to steal capital from some people to use it to develop something else, but if there was value in that new development, people would be smart enough to spend their money on it with our goverment stealing it. There's no avoiding the laws of a free market. They always work despite government distortion.

I don't really understand why you use the word "forceful" other than to exaggerate the actions of the U.S. government. Obviously you feel like the government is to blame for anything wrong with the country and a "free market" would be free of corruption and disparity. I also don't really understand how you made the leap to communism based solely on my advocating for governmental regulations that hold corporations equally responsible for taxes as the common citizen. My guess is you were being hyperbolic again. I agree with you that being forced to pay taxes while having no control over how they're spent is not exactly ideal, but what alternative would you suggest? You say you would give to those in need, but taxation is essentially this, just on a large scale. I feel like what you, and others with your mentality, really want is the ability to filter out precisely who you believe deserves assistance—an impossible proposition. The only real option is to accept that taxes will always make their way into the hands of a few undeserving people and some deserving causes that you simply disagree with. But they are essential to society as a whole and when the ones most capable of contributing actively avoid paying them, its on the less capable to pay the difference.