Thread: How Apple Sidesteps Billions in Global Taxes

It was interesting read. All the major companies do that, not just Apple.

If anyone has any knowledge on tax planning for small enterprises doing global business selling mostly digital products/services... I am quite sure there would be interested audience on this forum.

Everyone likes a winner until they think they have been winning too much.

It seems the media is on a SLAM Apple crusade.

Thursday it was Apple is horrible because they don't assemble their products in the USA.

Today it is Apple is horrible because they only pay the amount of taxes they are legally required to pay.

Originally Posted by PatrickP

Everyone likes a winner until they think they have been winning too much.

It seems the media is on a SLAM Apple crusade.

Thursday it was Apple is horrible because they don't assemble their products in the USA.

Today it is Apple is horrible because they only pay the amount of taxes they are legally required to pay.

It is the whole pump up the class warfare rhetoric for the election deal.

Sue

There is a lot of interesting reading around why our collective psychology cheers for the 'underdog'/hates a consistent winner. Our brains behave more like dogs running after squirrels than we realize (or care to admit). Hopefully to think about this instinctual reaction moves an individual one step from animals. Or so I would like to believe

This is a hard ethical issue to consider. Apple operates all over the world yet they funnel all their profits into 'tax-havens'. Is that a good thing? Should they be required to pay appropriate tax for every country they operate in? If they manufacture in China, do they pay Chinese tax and get Chinese tax write-offs? As people who are smaller than the Apple corporation, we'd like to see the corporation pay its fair share, simply in principle, but it's truly not that easy.

What about the individuals? Steve Jobs collected $1 in salary; the rest he got in dividends from his stock options. That $1 is tax-exempt, of course, but what about the rest? What should he be required to pay and by what country's jurisdictions? This is a normative question: what SHOULD be done and why is what currently is being done unfair? Trouble is, most people can't answer these questions because they are not willing to think that far. So they just say 'I pay my fair share, he/they should pay his/theirs!' They don't know what the fair share is, so their opinion is as good as dirt.

That is 2 different things.

One is corp taxes

The other is personal income tax. Jobs lived in the USA so he paid taxes according to USA laws. He would pay taxes on the stocks when he sold them and realized income.

Fair is what is set in law. If we don't think it is fair it is our personal responsibility to either do nothing or work to change the law.

I am fine if I pay MORE than my fair share because I live in the best country in the world and if I pay a little extra oh well so be it. I didn't even deduct my mortgage interest when I had a mortg. Just too lazy to figure it for my taxes.

Originally Posted by The-J

This is a hard ethical issue to consider. Apple operates all over the world yet they funnel all their profits into 'tax-havens'. Is that a good thing?... As people who are smaller than the Apple corporation, we'd like to see the corporation pay its fair share, simply in principle, but it's truly not that easy...

What about the individuals? Steve Jobs collected $1 in salary; the rest he got in dividends from his stock options. That $1 is tax-exempt, of course, but what about the rest? What should he be required to pay and by what country's jurisdictions?... So they just say 'I pay my fair share, he/they should pay his/theirs!' They don't know what the fair share is, so their opinion is as good as dirt.

Based on the tax code, Apple is paying their fair share... Could more of it be going to the U.S. than other countries? Most definitely. However, until our tax rates become more reasonable, I don't foresee that in the near or distant future.

As for the individual tax issue, jurisdiction plays no part in this. Jobs still had to pay U.S. taxes. That said, even though his stock is worth a ridiculous amount, I'm sure the difference between the capital gains tax and ordinary income tax is what drove him to collect only a dollar in salary.

If the U.S. individual tax rate was more reasonable, or at least gave more bang for the buck like it does in Europe, I'm sure it would be a different story.

If a company can legally and ethically sidestep any kind of tax, I say more power to them. I used to work for a government agency and I know how that money is spent.

Originally Posted by Sasha

As for the individual tax issue, jurisdiction plays no part in this. Jobs still had to pay U.S. taxes. That said, even though his stock is worth a ridiculous amount, I'm sure the difference between the capital gains tax and ordinary income tax is what drove him to collect only a dollar in salary.

If the U.S. individual tax rate was more reasonable, or at least gave more bang for the buck like it does in Europe, I'm sure it would be a different story.

That is kind of exactly the situation also here in Finland. You pay 29-30% tax for capital gains taxes while your income tax might be even as high as 55% (progressive taxation..). It is no surprise that the C-level dudes in big corporations prefer to get most of their salaries in bonuses and stock options etc.

The Scandinavian countries are of course all pretty much "socialist" countries from US point of view, especially regarding taxation, but the income tax is pretty high also in many other countries (In Germany few friends of mine pay ~35% out of their ~48k euro yearly income).

There are few exceptions of course - Estonia has even tax of 20% I think and Hungary also has even income tax of 25% if I remember it correctly.

Originally Posted by Ivan

If a company can legally and ethically sidestep any kind of tax, I say more power to them. I used to work for a government agency and I know how that money is spent.

lol

Good post!

Personally, I think corporate tax rates should be 0%. Taxing businesses just hurts their ability to compete. This double taxation system is wrong in my opinion.

Why should corporate profits be taxed and then when those profits go to shareholders, they're taxed again? Doesn't make sense for the same profits to be taxed twice, once at the corporate level then again at the individual level.

Corporations shouldn't be taxed, only the shareholders income should be taxed, either through dividends or when they sell off their shares.

This is the same issue that I have with the inheritance tax. You work hard your whole life to earn money which is taxed by the government and then when you want to pass that money onto your children it's taxed again? Once income is taxed, it shouldn't be taxed again.

Proponents of the inheritance tax will say that the money should be taxed because it's like a gift, but in my opinion giving money to your kids isn't the same as giving money to a stranger. Your kids are in a way, an extension of yourself, especially considering that they share half your genes.

Originally Posted by Ivan

If a company can legally and ethically sidestep any kind of tax, I say more power to them. I used to work for a government agency and I know how that money is spent.

Talk about ridiculous. Check out this article: (Here's the link: 30 Stupid Things The Government Is Spending Money On)

The following are 30 incredibly stupid things that the federal government is spending money on….

#1 The U.S. government is spending $750,000 on a new soccer field for detainees held at Guantanamo Bay.

#2 The Obama administration plans to spend between 16 and 20 million dollars helping students from Indonesia get master’s degrees.

#3 If you can believe it, the U.S. government has spent $175,587 “to determine if cocaine makes Japanese quail engage in sexually risky behavior”.

#4 The U.S. government spent $200,000 on “a tattoo removal program” in Mission Hills, California.

#5 The federal government has shelled out $3 million to researchers at the University of California at Irvine to fund their research on video games such as World of Warcraft. Wouldn’t we all love to have a “research job” like that?

#6 The Department of Health and Human Services plans to spend $500 million on a program that will, among other things, seek to solve the problem of 5-year-old children that “can’t sit still” in a kindergarten classroom.

#7 Fannie Mae is about to ask the federal government for another $4.6 billion bailout, and it will almost certainly get it.

#8 The federal government once spent 30 million dollars on a program that was designed to help Pakistani farmers produce more mangos.

#9 The U.S. Department of Agriculture once gave researchers at the University of New Hampshire $700,000 to study methane gas emissions from dairy cows.

#10 According to USA Today, 13 different government agencies “fund 209 different science, technology, engineering and math (STEM) education programs — and 173 of those programs overlap with at least one other program.”

#11 A total of $615,000 was given to the University of California at Santa Cruz to digitize photos, T-shirts and concert tickets belonging to the Grateful Dead.

#12 China lends us more money than any other foreign nation, but that didn’t stop our government from spending 17.8 million dollars on social and environmental programs for China.

#13 The U.S. government once spent 2.6 million dollars to train Chinese prostitutes to drink responsibly.

#14 One professor at Stanford University was given $239,100 to study how Americans use the Internet to find love.

#15 The U.S. Postal Service spent $13,500 on a single dinner at Ruth’s Chris Steakhouse.

#16 The National Science Foundation once spent $216,000 to study whether or not politicians “gain or lose support by taking ambiguous positions”.

#17 A total of $1.8 million was spent on a “museum of neon signs” in Las Vegas, Nevada.

#18 The federal government spends 25 billion dollars a year maintaining federal buildings that are either unused or totally vacant.

#19 U.S. farmers are given a total of $2 billion each year for not farming their land.

#20 The U.S. government handed one Tennessee library $5,000 for the purpose of hosting a series of video game parties.

#21 A few years ago the government spent $123,050 on a Mother’s Day Shrine in Grafton, West Virginia. It turns out that Grafton only has a population of a little more than 5,000 people.

#22 One professor at Dartmouth University was given $137,530 to create a “recession-themed” video game entitled “Layoff”.

#23 According to the Heritage Foundation, the U.S. military spent “$998,798 shipping two 19-cent washers from South Carolina to Texas and $293,451 sending an 89-cent washer from South Carolina to Florida”.

#24 The U.S. Department of Agriculture once shelled out $30,000 to a group of farmers to develop a tourist-friendly database of farms that host guests for overnight “haycations”.

#25 The National Institutes of Health paid researchers $400,000 to find out why gay men in Argentina engage in risky sexual behavior when they are drunk.

#26 The National Institutes of Health also once spent $442,340 to study the behavior of male prostitutes in Vietnam.

#27 The National Institutes of Health loves to spend our tax money on really bizarre things. The NIH once spent $800,000 in “stimulus funds” to study the impact of a “genital-washing program” on men in South Africa.

#28 According to the Washington Post, 1,271 different government organizations work on government programs related to counterterrorism and homeland security.

#29 The U.S. government spent $100,000 on a “Celebrity Chef Fruit Promotion Road Show in Indonesia”.

#30 The feds once gave Alaska Airlines $500,000 “to paint a Chinook salmon” on the side of a Boeing 737.

Originally Posted by Likwid24

#13 The U.S. government once spent 2.6 million dollars to train Chinese prostitutes to drink responsibly.

That has to be my favorite one. Posted the article to my Facebook lol