I don't know why I find this funny:
Senate investigators accuse Apple of wiring together a complicated system to shield billions of dollars in international profits from both U.S. and foreign tax collectors.
A report released ahead of Apple CEO Tim Cook’s inaugural Capitol Hill appearance Tuesday alleges the tech giant took advantage of numerous U.S. tax loopholes and avoided U.S. taxes on $44 billion in offshore, taxable income between 2009 and 2012 — a characterization Apple flatly rejects.
From "Senate investigators: Apple sheltered $44 billion from taxes"
What do you think?
Apple has done nothing illegal and the article states so. Their tax strategies are aggressive, but not any more so than GE or any of the other global F100s. Worst case, they get slapped with an immaterial fine and it's back to business as usual. Our tax system is so fucked up...
Rand Paul's testimony was hilarious. Hope to have a video to post tomorrow.
http://www.youtube.com/embed/hi0m0w1kBOQ
and
http://www.youtube.com/embed/9rjLhjxQTws
Good stuff.
Gotta love how the government makes tax laws incredibly complicated and then complains when people follow it to their benefit. Maybe the US government should consider reducing their spending instead of shaking companies and citizens down.
Read somewhere that Apple is both the biggest taxpayer and the largest tax avoider. Pretty funny if true!
I don't know why people get all worked up about tax avoidance. It's completely legal and essentially what the law is designed to promote...
People get pissed off when they see someone having a better situation/advantage than they do. So when they see a company/person (i.e. Apple or Mitt Romney) getting away with paying less in taxes than they are in some way (percentage wise, amount wise, ect.), they complain in the name of "fairness". Doesn't matter if it's legal, doesn't matter if it's what the law was designed to do (intentional or not), it's about their perception of whether or not someone is getting a deal better than they are.
You just summed up the committee's argument. It basically came down to, "Other companies aren't as big as you and can't afford tax teams to minimize their exposure, so you shouldn't either." It was asinine. And I don't even like Apple.
AAPL doesn't even have the largest offshore cash stash and I've heard they're not even the most aggressive at (legally) avoiding taxes. They're just a great brand name for politicians to parade around.
What do these politicians want? If they're going to try to push something crazy here on AAPL it should apply to GE, Google, Microsoft, etc, etc, etc.....as well. Then congress will get to explain why the market crashed and where grandma's retirement savings went.
I haven't seen any of it, but just based on Eddie's tweets I want to see Rand Paul.
If AAPL or any of the hundreds of other corporations repatriates their overseas cash, they'll pay another 35% to the US Gov't. (They've already paid tax in various tax domiciles like Ireland.)
Times have changed, and a 35% is just flat out greedy for a corporate tax in 2013. Especially so as a double taxation.
If the US had a more reasonable corporate tax rate like 20%, then this multi-country tax tomfoolery wouldn't be necessary or, more importantly, economical. Until then, the USG will get nothing, but boy will they whine about it.
Rand Paul said 5%. A 5% repatriation tax with all the money earmarked for infrastructure. Levin almost had a stroke.
Would they even repatriate at 5%? Why pay any tax at all? Also, a one-time repatriation doesn't solve the problem going forward.
If Ireland is willing to give AAPL a special 2% tax deal, there's not much the US can do to compete with that.
One thing I want some of the less experienced folks here to realize is how important repatriating cash is. In a nutshell these corporations have to pay tax on cash they bring into the US whether they paid tax on that income somewhere else or not.
What do restrictions on repatriating cash do: - Limit Dividends. This is almost never talked about, but in practice it is often a limiting factor on dividends that a company is willing to pay. - Encourage investments outside of the US. Currently investments in the US (new plants, M&A, data centers, R&D, etc....) that would require cash from outside the US have a ~30% cost premium just due to the taxes on that cash.
I'm not saying that there should be no taxes on repatriated cash, I just want to give a VERY quick explanation of why all large companies would have an OUS cash stash.
@accountingbyday Purely a show trial. I'm sure they're pissed they were upstaged by a tornado.
It's hilarious to read the comments at the bottom of articles involving corporations legally avoiding taxes.
As if people don't use EVERY DEDUCTION POSSIBLE to limit the amount of tax they pay themselves.
It's not the company's fault the government cannot put together a tax plan that DOES NOT have loopholes. If I were an Apple shareholder, I would want the tax team over there to utilize every tool to pay as little tax as possible.
The majority of Americans are clueless.
I got a proverbial erection from Rand Paul's speech here. He is so right on.
Rand Paul for President!
Its a non story. So theyre sheltering money from coming back in to the us. Whoopdie doo dah. So are 33 trillion other dollars worth of money thats owned by americans/american corporations thats in off shore accounts that could POTENTIALLY be repatriated.
I say, one time unlimited repatriation of money.
When will corporate executives stand up to Congress?
Sure, corporate executives are viewed as over-paid, shareholder-serving, legal fringe operatives, but isn't it time for someone to stand up to the bullying of Congressional incompetents such as Carl Levin?
Unfortunately Tim Cook failed to do what someone desperately needs to do in one of these ridiculous public charades, where Levin and his colleagues rant about this and that without and blame everyone but themselves.
Now, I truly have little opinion either way of Rand Paul (don't know much about him), but this would have been perfect if it were to come from Cook's mouth.
""I am offended by the spectacle of dragging in here executives from an American company that is not doing anything illegal. If anyone should be on trial here, it should be Congress.
I frankly think the Committee should apologize to Apple. I frankly think Congress should be on trial here for creating a bizarre and byzantine tax code." (Read Paul's complete statement.)"
Now, before people jump on me, I'm not saying what Apple is doing is "good" per say, but it is in the best interest of its shareholders to limit taxes, particularly since those shareholders will get taxed again at the individual level. I just think someone needs to grow some balls and publicly embarrass Congress, as it attempts to do to others.
Since I started caring about politics, I've seen Levin attempt to bully and embarrass all sorts of parties, particularly Wall St. executives, despite his lack of fundamental understanding in the financial world. After years of wasted time and money investigating the financial crisis, we came to Dodd-Frank. That's the best you could do Carl and your band of idiots?
Now, he's expanded his sights to Corporate America. God help the next unnecessary and ineffective piece of legislation we can expect to come from this hearing.
I agree with your sentiment, but that's not practical. Tim Cook (or any other CEO) is there representing his company's best interest. They are not necessarily there to give their political opinion. If Cook decided to use this Kangaroo Court as a soap box on taxes and the result was an extra $X million in fines for Apple he failed as a CEO.
Tim Cook serves his shareholders, he's not defending the common practice of all US based multinationals. Given the constraints of this hearing I think his message was received loud and clear.
Agree 100% with you. If Tim Cook said what Rand Paul said, they would have a PR nightmare on their hands. Imagine all the people saying they would not buy any Apple products because the corp. is "cheating" on their taxes. I think Tim Cook handled it very well. Listening to his answers, I realized the guy is really smart and knows what he is talking about. It made me confident that Apple has a very good CEO at the moment. I think he wanted Congress to move forward with a better corporate tax code, and they wanted to have an open conversation about what Apple's team proposal were. Tim Cook said their proposal was revenue neutral, and that Apple would pay more in corporate taxes than they do with the current code, while other companies would pay less. From the following article:
"As part of its proposal, Apple will suggest four key points that the company believes comprehensive tax reform should include. Those points are: -Be revenue neutral -Eliminate all corporate tax expenditures -Lower corporate income tax rates -Implement a reasonable tax on foreign earnings that allows free movement of capital back to the U.S."
From my point of view, it seems like Apple's recommendations are sound and would result in a more competitive corporate tax code. Here's the Apple written report, all 17 pages of it for those with more time than me:
http://www.apple.com/pr/pdf/Apple_Testimony_to_PSI.pdf
I’m in the midst of reading Altas Shrugged, and find it truly remarkable that the book is 56 years old. The attitude of congress has not changed; they try and impede the success of others rather than thanking them for the work and jobs they have created.
I'm assuming that it's just for show. The tax code is the way it is because major corporations have paid lobbyists to get politicians to do what they want. The politicians have to make it seem like they're acting in their constituents' best interest when they are really keeping the money happy. So they'll make a show and then do nothing about it. It won't hurt Apple's business and the people will think they're getting something out of it.
I mean, the only way to fix something like this is to fix the tax code. Apple didn't do anything illegal. Congress has already said it's too much work for them, so why else would they be doing this?
My hat's off to Cook, actually. I think he handled the whole thing expertly. I inwardly cringe when I think about how Jobs would have handled it (much more in line with douchey outrage, methinks). By the end of the hearing Cook had them eating out of his hand. They were actually asking him what he thought they should do about tax policy.
I didn't sit and watch it but saw a lot of coverage and read about it last night. Cook did very well for himself. However, he was still topped by Rand Paul......that was excellent.
I've tried finding some hard stats. It's mostly hearsay and observation. For example, most of my right-wing friends are totally turned off by the idea of Apple. My not necessarily liberal but artsy and cigarette smoking musician friends all use Apple computers. That's a lot of what I'm finding out there--observation.
Yea, generally my liberal-leaning friends use Macs while the conservatives use PCs.
I can understand buying a $1500 laptop if you're making 80k/year, but why the fuck are you shelling that out when you make $35k/year?
How else will you get cool points making 35k a year?
Be a drug dealer? The high school kids will think you're super duper cool. drug dealing > apple
Liberals: Macs :: Conservatives: Thinkpads
Also, before RIMM's implosion: Liberals: iPhone :: Conservatives: Blackberry
It's sad and funny how much that says
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