Tim Cook to Testify In Front of Senate Committee Over Apple's Tax Practices

[Saladinos]

Enlighten me. You have products that are built oversees, shipped overseas with local tariffs, put in stores overseas, and purchased overseas as well as taxed by the local sales tax there. Why does the US deserve any of that, when it's been taxed already, and exactly who is the freeloader?

Why don't you enlighten me as to how a company's employees in Cupertino can create inventions, enjoying the protection of US Patent Law, and then book the licensing revenue to an offshore account in the Bahamas, pay no tax, and not be a freeloader?

The issue isn't overseas sales income. It's about the huge number of things you can classify as overseas income in order to avoid tax.

Starbucks in the UK, for example, buy their coffee from a Starbucks subsidiary based in Luxembourg or somewhere, and then pay all their profits as license fees to use the Starbucks logo and related intellectual property. It's not a franchise, either - those Starbucks companies in the UK have the same parent company as the ones they supposedly need to license their existence from.

Microsoft recently moved their licensing operations from the US to Singapore. That one move avoided $4Bn in tax. That's all tax money that the Government used to get. American people are going to have to make up that new, $4bn shortfall. Oh, did I mention that was $4Bn per year? Best get saving, all you Americans!

This kind of crap is literally eating the western economy.

 

[needfx]

Except the money was already taxed when they made it overseas by the local governments. The U.S. wants to tax them a second time just for the privilege of moving the money here.

I was just referring to the percentage. usually a medium sized venture pays twice as much in tax.

I agree though both with you & kingtj. it is the way of global business.

 

[toaster64]

We let them do those things because they are supposed to pay a fair rate for those benefits. They don't. They are freeloading.

How is it unfair if every big company does it?

 

[GFLPraxis]

This kind of crap is literally eating the western economy.

Literally?

 

[toaster64]

The government and their welfare voters are the real freeloaders here. Makes me sick.

At least in California, the government taxes smartphone sales almost twice. That is, they sales tax you at the unsubsidized price ($700 for an iPhone) then sales tax you for the service that subsidizes it. And the California sales tax is about 10%... retarded.

 

[AppleScruff1]

US law allows it. Every major corporation takes advantage of it. Vote new people into Congress and get it changed.

 

[MagnusVonMagnum]

They're operating legally in order to maximise profit - that's what a business is supposed to do. If you don't like the law, then petition to have it changed; a company exploiting a legal - and not malicious - advantage is not them "freeloading." Hopefully hearings like this can illuminate that to the people who actually make law.

Bullcrap. It's time to start calling a spade a spade. Companies actively looking for any and every loophole to avoid paying their fair share of taxes (General Electric comes firmly to mind) are nothing but SCUMBAGS that should be removed from U.S. soil. If you enjoy the opportunities and military and financial protections of the United States you should pay your fair share for those services and not try to get out of paying your fair share.

We need a total tax overhaul. There are far too many lobbied exceptions and deals made. The problem is that people like to say they are for tax reform until it is clear they might be personally affected and then suddenly it's a horrible idea. Well, the Corporate Lobby is a big one and they will oppose ANYTHING that will result in them paying MORE taxes. And lets face it, the uber-rich and the Corporations are going to be MOST affected by that kind of tax reform and therefore they will oppose it with everything they have, even if that means paying hundreds of millions in lobbying money out instead of taxes.

Patriotism is a bad word in this country. Various groups like to throw that word around, but when it comes to supporting this country, they are suddenly anarchists and government is an overspending socialist piece of garbage. And yet when cuts are offered to reduce that spending and they are asked to take cuts like everyone else, suddenly it's a HORRIBLE IDEA. In other words, people volunteer everyone else to pay taxes but them. Government reform never gets done because NO ONE wants to take cuts or pay more taxes personally and everyone will have to in order to reduce spending and the debt. They don't want to leave debt for their grandchildren and yet they organize into groups that claim we are overtaxed even though they spend 2x what they are taxed. Sooner or later it all looks like greed and little else. That's companies' job? To be greedy? THAT is the problem right there. Individuals like to pretend to put ethics and morals first, but legal entities like corporations can be greed machines with no responsibilities to society what-so-ever and your comment that laws must FORCE them to be responsible shows exactly how deep OUR collective EVIL really is. We don't want anyone pointing the finger at us personally so we make up legal entities to take the blame instead and we are just a stockholder. It's not OUR fault the company acts irresponsibly. THEY did it. We demanded profit, but it's THEIR fault. Yeah, I'd society in general is sick and it's time we admitted it and called it for what it is: GREED AT ANY COST. Unfortunately, the long term effects of such greed will be costly indeed.

 

[SPUY767]

They're operating legally in order to maximise profit - that's what a business is supposed to do. If you don't like the law, then petition to have it changed; a company exploiting a legal - and not malicious - advantage is not them "freeloading." Hopefully hearings like this can illuminate that to the people who actually make law.

Not to mention that Apple pays tens of billions in taxes every year. They don't have huge factories sitting around, like GE, that they can write off as depreciation and pay nothing.

 

[toaster64]

They may pay more in than I ever will, but they also do more damage than I ever could.

What damage does Apple do to the US economy? I'd be interested to hear. I'd also be interested in seeing what would happen to the US economy if AAPL dropped to $0 tomorrow or if you managed to occupy Wall Street.

 

[ToddClemmer]

Want a free nation? Keep people like "Saladinos" out of it.

 

[toaster64]

Bullcrap. It's time to start calling a spade a spade. Companies actively looking for any and every loophole to avoid paying their fair share of taxes (General Electric comes firmly to mind) are nothing but SCUMBAGS that should be removed from U.S. soil. If you enjoy the opportunities and military and financial protections of the United States you should pay your fair share for those services and not try to get out of paying your fair share.

Then do what he said. Vote to close the loopholes.

----------

US law allows it. Every major corporation takes advantage of it. Vote new people into Congress and get it changed.

Winner. ^^^

 

[Rogifan]

What about his labor practices?

What about them?

 

[Dmunjal]

Too right. I hope the Government clamp down on these freeloaders!

Pay your fair share!

The same government that put these loopholes in the tax code in the first place?

 

[nostaws]

Seriously, the problem here is the government tax code -- not Apple...

I disagree a little bit. The tax system was set up, and these companies go looking for ways around it. I do agree that the laws need to catch up, but it is because businesses are always looking for ways to not pay the tax.

 

[tdtran1025]

Why not? Overseas sales account for nearly 1/2, and China gives Apple favorable tax rate. Cook is a good bookkeeper so let him do his job.

 

[Saladinos]

What damage does Apple do to the US economy? I'd be interested to hear. I'd also be interested in seeing what would happen to the US economy if AAPL dropped to $0 tomorrow.

The cost of Apple suddenly disappearing would be huge. The cost of Apple never existing is debatable.

Again, I'll take Starbucks in the UK as an example. They've come from the US and swallowed up a large part of the coffee-house market. They are required to license their logo, the store design, the apron design, etc from "Starbucks licensing" which is based in a tax haven. They are also required to buy their coffee from that same subsidiary.

Now no profits are being made by the UK unit - they're all being paid as licensing fees in to a tax haven which probably doesn't even have a Starbucks on its tiny island. So that's where the taxes get "paid", not in the UK.

So that is money that has been stolen by Starbucks.

If that money had been paid to a company without internal transfers, a portion of it would have gone to the UK government and more money would stay in the UK. In that way, Starbucks are doing active damage to the UK economy. Apple are doing the same thing. There is an enormous opportunity cost that is of comparable magnitude to the national debt of these countries.

Also, by shipping away money that UK shoppers spent to the Bahamas or somewhere, they are extracting wealth from the UK economy. Normally the government would get some of that back. That shrinks the economy, and in the kinds of scales we're seeing (billions of dollars a year from most major multinationals) can cause recession.

These companies should not be welcome abroad. Governments (including the US government) need to put their foot down and say, "if you're not going to pay the same rates for the same services as local non-multinational businesses do, you're not welcome here".

These government are also very good to these companies - they work on trade deals, negotiating more favourable trading environments in foreign countries, etc.

The US government does all kinds of stuff to promote and support "American businesses". Unfortunately, American businesses like Apple would bankrupt the USA tomorrow if it made them more money, and not give two shiznits about it.

 

[nostaws]

How is it unfair if every big company does it?

It isn't unfair to other companies, it is unfair to the tax paying citizens (you and me) who have to pay more because "every big company" doesn't pay their fair share.

 

[zin]

Seriously, explain to me how they are freeloading. If they build a product in China and sell it in Germany, and pay German taxes on it, why should they have to pay U.S. taxes on it too?

You'd think from the way you were writing that they were avoiding taxes on products sold in the U.S.. They're not. They are paying all fair taxes on U.S. income.

The U.S. wants to tax post-tax money.

You don't make a profit without taking more from an economy than you invest. Are you saying 1.9% is a fair contribution that Apple makes to all of its combined international markets (most of which they don't even pay any tax in as revenue is channeled to other countries)?

1.9% is not tax, it's spare change. I would call that freeloading, especially considering all of the subsidies and tax relief arrangements they are given.

 

[mbh]

Too right. I hope the Government clamp down on these freeloaders!

Pay your fair share!

Apple paid 1/40th (2.5%) of all corporate taxes collected in the US in 2012. Source

They're playing by the same rules as every other company in the US. If you don't like the rules, take it up with congress. Some huge companies get away with paying hardly any taxes each year.

 

[Krazy Bill]

If it [Apple] were to repatriate that cash to the U.S., it would need to pay a more than $13 billion tax bill.

Well... duh. What dumb-ass would inflict that kind of loss on shareholders?

As already mentioned... it's the tax code that's at fault. If Congress wants to stop corporations from using legal loopholes they themselves are responsible for creating, then they need to pass legislation that changes said loopholes.

 

[Dmunjal]

It isn't unfair to other companies, it is unfair to the tax paying citizens (you and me) who have to pay more because "every big company" doesn't pay their fair share.

It is also unfair to small companies who don't have a global presence.

 

[Saladinos]

It is also unfair to small companies who don't have a global presence.

Not to mention companies that can't shift where their sales are booked that easily.

For example, I read recently that Wal-Mart pays a rate of tax nearly double what Apple pay. Wal-Mart can't move their patent licensing operations overseas and stash the profits there.

I also read recently that US companies have over $1.3 Trillion stashed overseas for "overseas investments". Nearly half of that money is cash, which means it isn't really being used for any investments; it's just sitting there to avoid tax.

 

[Macmoney]

Too right. I hope the Government clamp down on these freeloaders!

Pay your fair share!

Our government has already proven they are not fiscally responsible to
pay off their own national debt tax bill...They go after companies but who goes after them and hold them accountable for chronic inept mismanagement and misappropriation of finances ?

 

[alexgowers]

The problem is the rules are set by politicians who know that they are creating or allowing tax evasion to happen. The only reason the politician is in a power position is because he was helped there by corporations. The political powers then have to back the corporation line and allow tax loopholes.

It's a mobius strip or chicken and egg situation. It's a shame and it's got worse.

There is a reason no one has money and it's not because the rich are to blame but the super super rich who have more money that you can even imagine, it's that elusive 1% or perhaps less that are hoarding it all. They have more money that everyone put together. They can shift a little money here and there are cause stock market crashes and booms, you need to gently take their money but it needs to be a reversal in the weird trend.

Currently poor people are many, happy middle of the road people are many and there are a tonne of well off people as well, the problem is that non of them are actually rich or comfortable at all.

 

[SPUY767]

It isn't unfair to other companies, it is unfair to the tax paying citizens (you and me) who have to pay more because "every big company" doesn't pay their fair share.

If companies had to pay tax like individuals, you wouldn't be able to afford anything because the cost of goods would be so damned high.