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

[Saladinos]

Your example/rant makes NO sense..! You're comparing a company doing business/selling products in the UK, but NOT paying taxes there(Starbucks)... with a company doing business/selling products in a foreign company, but NOT paying taxes thousands of miles away, back in their home country. Huh? What? Are you making sense to yourself, even? Lol, you can't have it both ways! Are you saying that they SHOULDN'T have to pay taxes in the foreign countries? Yeah, that'd go over REALLY well with those countries... or are you saying that these companies should pay taxes first in the foreign country, and then again a SECOND time in their home country? Equally ludicrous.. Maybe if the U.S. had a "repatriation allowance window", where for a brief period of time during each year large multinational corporations could bring profits realized in other countries back into the U.S. at a discounted tax rate, they could then count on a huge economic stimulus at the same time each year. *boom* Problem solved. =)

No, I'm not.

Like I said, Apple's sales in China are taxed by the Chinese and that money can stay in China for all anybody else cares.

The problem is with softer goods, like IP royalties (which can be awfully, awfully broad - see Starbucks). Theoretically, there's no need for them to be taxed in the US and so the companies move that revenue overseas.

It's immoral because those are usually American IP rights (to be enforced in a US court), the inventions took place in the US, by an American company, and goods involving that IP are sold the world over. Yet none of those Governments get a share of those royalties.

The USA used to collect that money. Now it has a stupendously large budget deficit.

Here's 3 WSJ articles which highlight the absurdity of the current situation:

More U.S. Profits Parked Abroad, Saving on Taxes

A Wall Street Journal analysis of 60 big U.S. companies found that, together, they parked a total of $166 billion offshore last year. That shielded more than 40% of their annual profits from U.S. taxes, though it left the money off-limits for paying dividends, buying back shares or making investments in the U.S.

The amount of money at stake is significant, particularly when the U.S. budget deficit is high on the political agenda. Just 19 of the 60 companies in the Journal's survey disclose the tax hit they could face if they brought the money back to their U.S. parent. Those companies say they might have to pay $98 billion in additional tax—more than the $85 billion in automatic-spending cuts triggered this month after the White House and Congress couldn't agree on an alternative.

In its report, the Senate committee said Microsoft had shifted intellectual property to subsidiaries in Singapore, Ireland and Puerto Rico, to avoid roughly $4 billion in U.S. taxes in 2011. Licensing rights, and revenue, sometimes traveled through more than one subsidiary to minimize the tax bill.

"Microsoft complies with the tax rules in each jurisdiction in which it operates and pays billions of dollars in U.S. federal, state, local and foreign taxes each year," Bill Sample, Microsoft's corporate vice president for world-wide taxation, told the Senate committee in September.

Including this gem:

Congress enacted a temporary tax holiday in 2004, prompting companies to repatriate $312 billion in foreign earnings. The law was intended to stimulate the U.S. economy, but studies found that few jobs were created and most of the money was used to repurchase shares and pay dividends. Another such holiday is considered unlikely in the next few years.

How Firms Tap Overseas Cash

U.S. companies say much of their cash is trapped overseas. But that doesn't mean they can't put it to use at home.

With some careful structuring, companies including Hewlett-Packard Co. and General Electric Co. have set up ways to borrow money from their foreign subsidiaries. In some cases, the firms use the funds for daily operations or to buy back stock.

The loans have to be short term. Yet when the borrowing is carefully set up to comply with Internal Revenue Service rules and U.S. auditing standards, the funds can be used over and over without incurring taxes.

Firms Keep Stockpiles of 'Foreign' Cash in U.S.

There's a funny thing about the estimated $1.7 trillion that American companies say they have indefinitely invested overseas: A lot of it is actually sitting right here at home.

Some companies, including Internet giant Google Inc., software maker Microsoft Corp. and data-storage specialist EMC Corp., keep more than three-quarters of the cash owned by their foreign subsidiaries at U.S. banks, held in U.S. dollars or parked in U.S. government and corporate securities, according to people familiar with the companies' cash positions.

 

[AnalyzeThis]

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.

BS, none of it taxed. If any portion was taxed locally, Apple would not pay tax in US on that portion. Same rule applies to individual income. Do not mix retail sales taxes paid by consumers with corporate tax on profit.

BTW, last time I checked, Apple is incorporated in US, so China or anyone else for this matter gets extended middle finger instead of fat tax checks out of Apple profit.

Congress after internet state sales tax already, so businesses are next, as it should be.

 

[HardRain]

Don't worry, the party will be over very soon.

 

[Verbatim Cookie]

How long until this thread goes into the PRSI forum?

It still hasn't been moved! Somebody's asleep at the switch.

No one wants to pay more than they are legally entitled to under the current US tax codes...

That's not entirely true. (By the way, you mean required, not entitled, unless you're being sarcastic.)

...but individuals think that business should be charities instead and give money away.

But businesses do give money to charity.

Solution:
1. Flat tax for everyone with no loopholes whatsoever.

I disagree. I believe in progressive, not flat, taxation.

For any real change to happen it will take a major financial meltdown where everyone starts from scratch.

We Wall Street had a major financial meltdown in 2008 and people thought it would lead to substantive banking reforms but nooooooo.

 

[AaronEdwards]

As a corporation, Apple has an obligation to its shareholders to pay only the taxes it owes and to maximize its profits.

If slave or child labor became legal, and it was cheaper than any other kind of labor, and the quality of work was just as good, does that mean that because of this obligation that Apple has to start with slave or child labor?

If it became legal to dump industrial waste everywhere, does that mean that Apple now has to dump its waste everywhere since it's a lot cheaper than to actually take care of it and Apple has an obligation to maximize its profits?

 

[ericthered]

Quick head count. How many here pay greater taxes than they're legally obligated to?

Yes, I pay what I'm legally obliged to pay. The difference is that I don't pay millions of $$ to lobbyists and paid hacks to change the tax code so that I pay less.

 

[iHEARTcartoons]

When will Apple be offering the Tax Genius service?

 

[topper24hours]

Including this gem:



Quote:
Congress enacted a temporary tax holiday in 2004, prompting companies to repatriate $312 billion in foreign earnings. The law was intended to stimulate the U.S. economy, but studies found that few jobs were created and most of the money was used to repurchase shares and pay dividends. Another such holiday is considered unlikely in the next few years.

Wow, thank you for the edification. I did not know that. =/
Hmm, maybe they could do it again.. adding the stipulation that in be used for hiring new employeesor building new facilities (I'm sure building new Apple stores gives a nice boost to the builders, also creates quite a few new jobs, etc.)

 

[ericthered]

This mentality is disgusting. The government spending is the problem....

This money is APPLE's money, not the governments or the "takers" in American society (also know as the liberal base). How about the government stop throwing away $500M here, $1B here to crap like Fisker, and green energy. Stop throwing away millions on discovering how shrimp do running on treadmills. The money this administration is stealing and spending is criminal...

Unfortunately, there are so may takers and lemmings voting for the liberals in America, we are doomed to crash and burn before anything gets better. There is not enough of other peoples money and other companies money to give away.

No.

The disgusting part is that corporations take very free advantage of the education and infrastructure available in the 1st world but don't think they need to help to sustain the people that make it possible.

BTW: without research $$ none of your lifestyle would be possible.

 

[AaronEdwards]

LOL!!!! 50% of this country pays ZERO taxes and the top 1% pay about 30% of ALL TAXES.

I agree with the statement, folks need to step up and pay their fair share!!

I wonder how these 50% are able to live in the US without ever have to pay any sales tax. That's just amazing!

The other possibility might be that you're wrong.

What do you think?

 

[ThunderSkunk]

13 billion in taxes they should have paid in the first place...

Don't worry, corporate profits are safe.
We just tax the 100million individual taxpayers on their labor instead.
Good old fashioned american priorities.

Who reads the tax code these days anyway?

 

[AaronEdwards]

Wow, thank you for the edification. I did not know that. =/
Hmm, maybe they could do it again.. adding the stipulation that in be used for hiring new employeesor building new facilities (I'm sure building new Apple stores gives a nice boost to the builders, also creates quite a few new jobs, etc.)

If so, then companies will complain and refuse to move the money into the US.
Or they will find loopholes.

 

[MegamanX]

LOL!!!! 50% of this country pays ZERO taxes and the top 1% pay about 30% of ALL TAXES.

I agree with the statement, folks need to step up and pay their fair share!!

oh you bought the lie the right wing shoves out in droves. A lie proven wrong so many times.

lets see most of that bottom 50% pays payroll tax
Sales tax,
Property tax (either directly or indirectly threw rent)
gas tax ect.

Yet you keep shoving that same lie time and time again.

top 1% also own a lot more than 30% of the wealth in this country so you will not see me shed a tear for them.

But then again you are shoving out the same lie that has been proven wrong multiple times over which tells me you are just spreading FUD you have ZERO understanding.

 

[sualpine]

oh you bought the lie the right wing shoves out in droves. A lie proven wrong so many times.

lets see most of that bottom 50% pays payroll tax
Sales tax,
Property tax (either directly or indirectly threw rent)
gas tax ect.

Yet you keep shoving that same lie time and time again.

top 1% also own a lot more than 30% of the wealth in this country so you will not see me shed a tear for them.

But then again you are shoving out the same lie that has been proven wrong multiple times over which tells me you are just spreading FUD you have ZERO understanding.

You have no business knowing what others own.

 

[vvswarup]

Wow, thank you for the edification. I did not know that. =/
Hmm, maybe they could do it again.. adding the stipulation that in be used for hiring new employeesor building new facilities (I'm sure building new Apple stores gives a nice boost to the builders, also creates quite a few new jobs, etc.)

Or they could cut the marginal tax rate to bring it more in line with other countries. No one pays the marginal rate anyway but companies lower their tax burden only after hiring an army of accountants and lawyers. Cutting the marginal tax rate will remove the advantage that multinationals enjoy over smaller companies by virtue of their global operations and deep pockets since smaller companies will have a lower tax burden right off the bat. Multinationals can still pay those tax pros but the law of diminishing returns kicks in.

It will also curb such behavior since companies will no longer feel a need to hoard cash overseas.

 

[Canaan]

The thing is that even if the government got that 13ish Billion, they'd piss it away in a mere second, and it'd be a one time deal. Before we talk about taxing more, let's start cutting all the ridiculous spending. The government hasn't slowed spending in our current economy, which essentially means they will never slow it. If they can't do it when this many people are struggling than they will never do it. To put things simply, they are spending at a rate that no matter who or how much is taxed, it wouldn't be enough.

 

[Saladinos]

LOL!!!! 50% of this country pays ZERO taxes and the top 1% pay about 30% of ALL TAXES.

I agree with the statement, folks need to step up and pay their fair share!!

Exactly - there is a huge wealth gap and its growing.

Warren Buffet sheds some light on that 1% of individuals:

http://www.nytimes.com/2012/11/26/opinion/buffett-a-minimum-tax-for-the-wealthy.html

The Forbes 400, the wealthiest individuals in America, hit a new group record for wealth this year: $1.7 trillion. That’s more than five times the $300 billion total in 1992. In recent years, my gang has been leaving the middle class in the dust.

A huge tail wind from tax cuts has pushed us along. In 1992, the tax paid by the 400 highest incomes in the United States (a different universe from the Forbes list) averaged 26.4 percent of adjusted gross income. In 2009, the most recent year reported, the rate was 19.9 percent. It’s nice to have friends in high places.

The group’s average income in 2009 was $202 million — which works out to a “wage” of $97,000 per hour, based on a 40-hour workweek. (I’m assuming they’re paid during lunch hours.) Yet more than a quarter of these ultrawealthy paid less than 15 percent of their take in combined federal income and payroll taxes. Half of this crew paid less than 20 percent. And — brace yourself — a few actually paid nothing.

Has the minimum wage increased 5x since 1992? What about the average wage? Wikipedia this time:

While the median household income had increased 30% from 1990 to 2006, it has increased only slightly when considering inflation. In 1990, the median household income was $30,056 or $44,603 in 2003 dollars. While personal income has remained relatively stagnant over the past few decades, household income has risen due to the rising percentage of households with two or more income earners. Between 1999 and 2004 household income stagnated showing a slight increase since 2004.

So median personal income has been stagnant while the top 400 individuals I creased their wealth more than 5x to $1.7Tn.



When you hear figures like the bottom 50% pay nothing and the top 1% pay a third of the income tax receipts, it sounds like a bunch of losers having a feast on the backs of those hard-working rich folk.

Actually, those rich folk are still paying a lower rate than the average person.

Buffet again:

http://www.nytimes.com/2011/08/15/opinion/stop-coddling-the-super-rich.html?_r=1&ref=opinion

Last year my federal tax bill — the income tax I paid, as well as payroll taxes paid by me and on my behalf — was $6,938,744. That sounds like a lot of money. But what I paid was only 17.4 percent of my taxable income — and that’s actually a lower percentage than was paid by any of the other 20 people in our office. Their tax burdens ranged from 33 percent to 41 percent and averaged 36 percent.

If you make money with money, as some of my super-rich friends do, your percentage may be a bit lower than mine. But if you earn money from a job, your percentage will surely exceed mine — most likely by a lot.

To understand why, you need to examine the sources of government revenue. Last year about 80 percent of these revenues came from personal income taxes and payroll taxes. The mega-rich pay income taxes at a rate of 15 percent on most of their earnings but pay practically nothing in payroll taxes. It’s a different story for the middle class: typically, they fall into the 15 percent and 25 percent income tax brackets, and then are hit with heavy payroll taxes to boot.

Back in the 1980s and 1990s, tax rates for the rich were far higher, and my percentage rate was in the middle of the pack. According to a theory I sometimes hear, I should have thrown a fit and refused to invest because of the elevated tax rates on capital gains and dividends.

The man pays $7 million in tax and feels he should pay more because he can afford it. An entire generation of a family won't pay anywhere near that sum, but what they do pay they can much less easily afford.

 

[MacinDoc]

No, I'm not.

Like I said, Apple's sales in China are taxed by the Chinese and that money can stay in China for all anybody else cares.

The problem is with softer goods, like IP royalties (which can be awfully, awfully broad - see Starbucks). Theoretically, there's no need for them to be taxed in the US and so the companies move that revenue overseas.

It's immoral because those are usually American IP rights (to be enforced in a US court), the inventions took place in the US, by an American company, and goods involving that IP are sold the world over. Yet none of those Governments get a share of those royalties.

The USA used to collect that money. Now it has a stupendously large budget deficit.

Here's 3 WSJ articles which highlight the absurdity of the current situation:

More U.S. Profits Parked Abroad, Saving on Taxes



Including this gem:



How Firms Tap Overseas Cash



Firms Keep Stockpiles of 'Foreign' Cash in U.S.

The problem with this argument is that IP royalties and licensing, unlike companies like Starbucks, make up a miniscule amount of Apple's revenue. Just look at Apple's quarterly statements if you doubt this. You can't compare Apple with Starbucks or Walmart, because the business model, production pipelines, and sales and distribution are different.

Apple's overseas cash stash is from products that are produced, distributed, and purchased overseas. Period. I suppose you could argue that because most of those products are designed in the U.S., Apple's foreign subsidiaries should pay royalties (which would be taxable in the U.S.) to the parent company for using the parent company's designs, but how could you define how high those royalties should be?

 

[JoEw]

This mentality is disgusting. The government spending is the problem....

This money is APPLE's money, not the governments or the "takers" in American society (also know as the liberal base). How about the government stop throwing away $500M here, $1B here to crap like Fisker, and green energy. Stop throwing away millions on discovering how shrimp do running on treadmills. The money this administration is stealing and spending is criminal...

Unfortunately, there are so may takers and lemmings voting for the liberals in America, we are doomed to crash and burn before anything gets better. There is not enough of other peoples money and other companies money to give away.

lol trolling hard

frankly, your ignorance is very clear from this post.

 

[Tiger8]

Watch - Samsung will soon announce they have been talking to the US Senate about their tax practices "for months" now.

S-tax

 

[jrsower]

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

Who said it's unfair? So Apple shouldn't take advantage of legal means to save money because someone else's company can't either. Good grief.

Do you own a nicer car than someone on your street? You should sell it, and buy the exact same car as your neighbor and then distribute the remaining money to everyone in your neighborhood equally so everything is "fair".

Yeah, didn't think so...

Small companies can grow with hard work and good business practices just like everybody else.

 

[the8thark]

How long until this thread goes into the PRSI forum?

I HAVE THE RIGHT TO DEFEND MYSELF, MY FAMILY, AND MY HOME WITH SEMIAUTOMATIC FIREARMS AND INCENDIARY WEAPONRY!

:looks at watch:

...give it about 5 minutes.

Yep. The mods here are fast to clamp down on good debates like this. And most debates sort themselves out without the need for censorship.

 

[AppleMark]

Apple can afford to pay tax. And their home nation needs it...

And so do the other nations in which Apple conducts business...

Last year it was reported that Apple made £6bn in the UK the previous year and paid only £10m tax. It is a big problem and not exclusive to Apple, as Google and Amazon also use aggressive tax policies to the extreme, to avoid paying a fair rate of taxation.

They complicate company holding 'rights' liability whilst funneling money through countries like, Ireland, Holland and the Caribbean to do this.

 

[OLDCODGER]

As long as Cook can show that Apple pays the amount that the law says it should, all is fine. The state of America's finances is not Apple's problem, but the govt's. Spend only what you earn, and you'll be solvent.

The sad fact that half of the people want to take other people's money - without themselves paying any Federal income taxes, is irrelevant.

 

[gnasher729]

Apple can afford to pay tax. And their home nation needs it...

They also make lots of money in Britain, and I'd hate to see that money siphoned off to the USA, where it doesn't benefit anybody I care for.