[News] EC puts Apple on the hook for 13 billion tax bill [Update: Ireland to appeal]

[drmrlordx]

That's incredibly disingenuous and/or untrue. An LLC, S-Corp or sole proprietor will never be taxed twice, unless the owner is a moron.

I must have known a fair number of morons then, as this is a common complaint. Also S-Corps and LLCs have restrictions.

As far as Apple is concerned, I am fairly certain that their earnings are taxed twice, e.g. taxed at the corporate rate and then taxed again when distributed to employees as pay, with exceptions (stock options etc).

I whole heartedly disagree with that statement. Apple has 250 Billion in cash reserves - paying more taxes would not make them non-competitive, nor would playing by the rules inhibit innovation. It would certainly reduce CEO bonuses, but I frankly am ok with that. Taxes come off profits. Our structure literally makes it as beneficial as possible to declare a financial loss.

The US has the third-highest top marginal corporate tax rate in the world:

http://taxfoundation.org/article/cor...und-world-2016

That is exactly why Apple has parked $250 billion overseas. Regardless of whether or not they could afford for over 1/3rd of that money to just disappear into the void, they certainly didn't want that to happen, so they refused to repatriate those assets for a long time. Cook is now making a show of asset repatriation:

https://www.theguardian.com/business...sury-next-year

[zanzabar]

I must have known a fair number of morons then, as this is a common complaint. Also S-Corps and LLCs have restrictions.

As far as Apple is concerned, I am fairly certain that their earnings are taxed twice, e.g. taxed at the corporate rate and then taxed again when distributed to employees as pay, with exceptions (stock options etc).



The US has the third-highest top marginal corporate tax rate in the world:

http://taxfoundation.org/article/cor...und-world-2016

That is exactly why Apple has parked $250 billion overseas. Regardless of whether or not they could afford for over 1/3rd of that money to just disappear into the void, they certainly didn't want that to happen, so they refused to repatriate those assets for a long time. Cook is now making a show of asset repatriation:

https://www.theguardian.com/business...sury-next-year

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the US has one of the lowest net tax rates affter deductions, you also do not pay taxes on expenses so they would not be taxed "twice."

[AliG]

The US has the third-highest top marginal corporate tax rate in the world:

http://taxfoundation.org/article/cor...und-world-2016

That is exactly why Apple has parked $250 billion overseas. Regardless of whether or not they could afford for over 1/3rd of that money to just disappear into the void, they certainly didn't want that to happen, so they refused to repatriate those assets for a long time. Cook is now making a show of asset repatriation:

https://www.theguardian.com/business...sury-next-year

US companies do not pay a fraction of their quoted "tax rate." I'm not going to derail this thread with politics, but the fact of the matter remains that Apple does not pay the 38.9% rate your article suggests.

[StAndrew]

I whole heartedly disagree with that statement. Apple has 250 Billion in cash reserves - paying more taxes would not make them non-competitive, nor would playing by the rules inhibit innovation. It would certainly reduce CEO bonuses, but I frankly am ok with that. Taxes come off profits. Our structure literally makes it as beneficial as possible to declare a financial loss.

Look at its competition. 250 billion is chump change.

[AliG]

Look at its competition. 250 billion is chump change.

False. Apple has the largest cash reserves of any company right now - and it's not even close. This article is a tad outdated, but it shows they hold they lead by over $100 Billion over the next guys (MS and Google).
http://www.economicshelp.org/blog/21...cash-reserves/

[AbortRetryFail?]

You also pay taxes twice in that if when you sell your products in another country and pay their tax, you have to pay an additional tax to bring your earnings back into the US....

Again ... 100% disingenuous and/or untrue.

In the United States, foreign taxes paid are a 100% deduction 'above the line' prior to your statement of adjusted gross income.

[AbortRetryFail?]

I must have known a fair number of morons then, as this is a common complaint. Also S-Corps and LLCs have restrictions.

~~snip of the goal post moving~~

IRS - Disregarded Entity

You sure you want to introduce S-Corps into this discussion? They provide a corporate liability shield for small business & partners and are not intended for accumulation of capital --- that is why cash distributions to partners from an S-Corp are tax-free on the corporate side.

[drmrlordx]

Fine, is Apple an S-corp? Cmon now. Who is moving goal posts?

And if Apple isn't paying the top marginal corporate tax rate in the US, then why is Cook making such a big show about not wanting to pay "40% taxes" in the media? They sheltered their tax income in Ireland because their nominal tax rate is something like 13%, and Apple worked out a deal (which according to the EU is illegal, hence the fines) with the Irish gub'ment to pay less than 1% on earnings claimed there. Whatever rate they ARE paying, it's substantially higher than 13% which is why so many companies favor the "Double Irish": the nominal rate is low, and the Irish gub'ment is willing to bargain.

You better believe that the IRS would have taxed the hell out of that $250 billion repatriated from Ireland since the most Apple ever could have done is claimed a deduction on the pittance they paid to Ireland. Everything else would be taxable.

[AliG]

Fine, is Apple an S-corp? Cmon now. Who is moving goal posts?

And if Apple isn't paying the top marginal corporate tax rate in the US, then why is Cook making such a big show about not wanting to pay "40% taxes" in the media? They sheltered their tax income in Ireland because their nominal tax rate is something like 13%, and Apple worked out a deal (which according to the EU is illegal, hence the fines) with the Irish gub'ment to pay less than 1% on earnings claimed there. Whatever rate they ARE paying, it's substantially higher than 13% which is why so many companies favor the "Double Irish": the nominal rate is low, and the Irish gub'ment is willing to bargain.

You better believe that the IRS would have taxed the hell out of that $250 billion repatriated from Ireland since the most Apple ever could have done is claimed a deduction on the pittance they paid to Ireland. Everything else would be taxable.

I don't think referencing Cook's complaining about paying taxes will get you very far in this argument...

[drmrlordx]

I don't think referencing Cook's complaining about paying taxes will get you very far in this argument...

Firstly I will retract some of what I said about individuals paying twice, but I have known several self-employed people who did pay twice since they apparently classified themselves as corporations rather than disregarded entities for whatever reason. It may just be that they don't understand tax code. Of course things changed back in the 90s. There are a lot more tax dodges available nowadays.

So why is referencing Cook's commentary "not going to get me very far in this argument"? At some point he's right: they will pay 35% federal + state corporate taxes on everything they bring back to the US minus deductions for what they paid to Ireland, which was less than 1%.

The Feds will walk off with over 1/3rd of that money, and Apple does not want that to happen, which is why he's wheeling and dealing to try to stop that. He's also trying to dodge a $13 billion fine from the EU. Sort of threading the needle, so to speak.

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the US has one of the lowest net tax rates affter deductions, you also do not pay taxes on expenses so they would not be taxed "twice."

Who said anything about paying taxes on expenses? Once the corporation pays tax on their income, the remaining profits distributed to employees or equity holders get taxed again according to personal tax rules. You can claim wages as an expense to reduce your tax liability at the corporate level, but you are going to get double-whammied on bonuses, incentive pay, stuff like that. Unless your accounting department weasels out of it, and even then all you are doing is moving from personal income tax to capital gains.

As for the US having one of the lowest net tax rates after deductions . . . that's generally only true thanks to companies that park assets overseas.

To tie it all back into the main discussion at hand (read: the EUC claims that the tax deal between Ireland and Apple violates EU law and is fining Apple for the transgression), all this hand-waving about "major corporations not paying anything near the full tax rate" and "the US having one of the lowest net tax rates after deductions" shows the strange, dystopic view that people have when viewing corporate tax malfeasance.

The accounting department that is tallying your deductions and restructuring your corporate entity to minimize tax liability is the same one advising you to park assets overseas. Which part of gaming the system is good, and which part is bad?

It's the same damn thing. US corporations pay low(er) than expected tax rates (read: less than 35%) because they know how to game the system. The system is specifically set up to be gamed by large groups of accountants. We set an arguably-ridiculous tax rate of 35% with the expectation that people will try to get out of it through deductions, asset reallocation, and other chicanery. And then we get into a snit when they follow the rules to their own advantage.

If we set a rate of 35%, who is actually supposed to pay that? Morons?

[AliG]

Firstly I will retract some of what I said about individuals paying twice, but I have known several self-employed people who did pay twice since they apparently classified themselves as corporations rather than disregarded entities for whatever reason. It may just be that they don't understand tax code. Of course things changed back in the 90s. There are a lot more tax dodges available nowadays.

So why is referencing Cook's commentary "not going to get me very far in this argument"? At some point he's right: they will pay 35% federal + state corporate taxes on everything they bring back to the US minus deductions for what they paid to Ireland, which was less than 1%.

That's exactly the point. I as an average American citizen pay every cent in taxes that I owe the government. Apple, a potential trillion dollar company, does not pay a fraction of its fair share.

You're just not going to win over the support of many people with that attitude. And for the record, I consider myself a political moderate.

[Sparky]

"Fair share"

Sigh I HATE that term because it is primarily used by envious people as a buzzword, and who will never define it because doing so would destroy their argument.

[AliG]

"Fair share"

Sigh I HATE that term because it is primarily used by envious people as a buzzword, and who will never define it because doing so would destroy their argument.

Fair share = the amount defined by the government for their tax bracket.

Boom. Gave you a definition that is fair and does not break my argument. Roasted.

[Sparky]

So by your definition, the government could redefine the brackets so you and I would be taxed at 80% and that would still be our "fair share"? Sorry, your definition sucks

[AliG]

So by your definition, the government could redefine the brackets so you and I would be taxed at 80% and that would still be our "fair share"? Sorry, your definition sucks

That's why we have representatives in Congress. I'm not falling for your straw man.

Facts are facts. Apple is not paying at their allotted bracket.

[drmrlordx]

Apple isn't paying their allotted bracket because they're big and powerful and multinational enough to just leave their money sitting somewhere else until we rethink our tax policy. Many other companies are doing the same thing (just not necessarily on the same scale).

35% is really high for a corporate tax rate no matter how you slice it. We have created a system where you start with a high corporate tax rate, and corporations keep packs of accountants in the wings just to scrimp and pinch and cheat enough to get out of paying that rate (with asset parking being the inevitable conclusion). If our corporate tax rate were the same as Ireland's then WE would be the tax haven, and companies would park their money over here.