Board index » Word on the Street... » News & Debate




Post new topic Reply to topic  [ 40 posts ]  Go to page 1, 2  Next
Author Message
 Post subject: On Apple, and Corporate Taxes.
PostPosted: Tue Jul 24, 2012 12:43 pm 
Offline
User avatar
Unthought Known
 Profile

Joined: Fri Oct 22, 2004 12:47 pm
Posts: 9282
Location: Atlanta
Gender: Male
How Apple's phantom taxes hide billions in profitBy PETER SVENSSON


The Associated Press

9:06 a.m. Tuesday, July 24, 2012

NEW YORK — On Tuesday, Apple is set to report financial results for the second quarter. Analysts are expecting net income of $9.8 billion. But whatever figure Apple reports won't reflect its true profit, because the company hides some of it with an unusual tax maneuver.

Apple Inc., already the world's most valuable company, understates its profits compared with other multinationals. It's building up an overlooked asset in the form of billions of dollars, tucked away for tax bills it may never pay.

Tax experts say the company could easily eliminate these phantom tax obligations. That would boost Apple's profits for the past three years by as much $10.5 billion, according to calculations by The Associated Press.

While investors might rejoice if Apple suddenly added $10.5 billion to its profits, unilaterally erasing a massive U.S. tax obligation could tarnish its reputation as a relatively responsible payer of U.S. taxes. Instead, the company is lobbying to change U.S. law so that it can erase its liabilities in a less conspicuous fashion. The issue has become part of the presidential campaign.

Like other companies, Apple typically keeps profits on overseas sales in overseas accounts. When someone buys an iPad in Paris or Sydney, for instance, the profit stays outside the United States.

Apple may pay some corporate income taxes on that profit to the country where it sells the iPad, but it minimizes these by using various accounting moves to shift profits to countries with low tax rates. For example the strategy known as "Double Irish With a Dutch Sandwich," routes profits through Irish and Dutch subsidiaries and then to the Caribbean.

When it comes to using creative tax techniques, Apple is no different from other multinational corporations, says Robert Willens, an independent accounting expert.

And just like other corporations, Apple leaves cash overseas. If it brought it home to the U.S., it would have to pay federal income taxes on the money (though it would get a credit for foreign taxes already paid). In Apple's case, those overseas accounts have grown to a staggering $74 billion — equal to the market value of Citigroup Inc.

The money is accumulating overseas because corporations are counting on lower U.S. tax rates in the future. At 35 percent, the U.S. corporate tax rate is among the highest for developed countries. In 2004, Congress enacted a one-year "tax holiday" for overseas earnings, and multinationals are hoping for a repeat of that. Presidential candidate Mitt Romney wants to permanently eliminate federal taxes on overseas profits. President Barack Obama attacked that idea last week, saying it won't create U.S. jobs, like the Romney campaign contends.

Where Apple does differ from other companies is that it sets aside a portion of these overseas profits, marking them as subject to U.S. taxes sometime in the future. Essentially, it's saying "this is money that we'll likely have to pay U.S. federal income taxes on" because we intend to repatriate it, says Willens.

But because Apple doesn't actually bring the profits into U.S. accounts, it doesn't pay the taxes. Instead, it records a tax liability. When Apple reports quarterly results, it subtracts these liabilities from its profits, even though it hasn't actually paid the taxes.

The liabilities accumulate, and as Apple's profits grow, they're piling up faster and faster.

"When you capitalize that into the future, it might be tens of billions of dollars," said Martin Sullivan, an economist with Tax Analysts, a nonprofit publisher.

The company had a net $6 billion of tax liabilities at the end of September, the last reported figure. It's had two blow-out quarters since then and is expected to report another one Tuesday. Based on reported and expected profits for the last three quarters, the liabilities can be estimated at around $10.5 billion.

Apple declined to comment on the specifics of its tax strategies or why it records tax liabilities that other multinationals avoid.

"Apple has conducted all of its business with the highest of ethical standards, complying with applicable laws and accounting rules," the Cupertino, Calif., company said in a statement.

Yet Apple has made clear that it has no intention of repatriating its profits from overseas at the current U.S. tax rate. When CEO Tim Cook announced that the company would start paying a dividend this summer, he said the board determined the size of the dividend solely by looking at the amount of cash the company has in U.S. accounts.

"We do not want to incur the tax cost to repatriate the foreign cash at this time," Chief Financial Officer Peter Oppenheimer told investors in March.

Apple's net tax liabilities started building three years ago, when its sales started rocketing because of the iPhone. In that time, the company has reported a total of $69 billion in net income. If it had applied the same accounting practices as other multinational technology companies, and not marked some overseas profits as subject to U.S. taxes, its profits would have been about $78 billion, or 13 percent higher.

The boost to net income could mean a boost to the stock, since companies are usually valued on their earnings. If investors were to value Apple based on the last 12 months of earnings, with the tax liabilities added to earnings, the stock might be 13 percent higher.

Willens and Sullivan say that Apple could erase its liabilities by considering the profits "permanently reinvested" overseas, acknowledging that they will never be brought home. That would erase the tax liability, but it could make Apple look like a less responsible corporate citizen.

"I doubt they're going to do that on their own, because they don't want to be set up for criticism," said Willens.

Groups such as Citizens for Tax Justice compile lists of the tax rates corporations report. Apple looks like a relatively good taxpayer on such lists, with a 24 percent rate. But Apple doesn't actually pay the 24 percent, since it isn't repatriating its overseas profits. The actual taxes Apple pays are 13 percent of profits, as computed by Sullivan. That's a relatively low rate compared with other multinationals.

But keeping the money overseas limits what Apple can do with it. It means, for instance, that Apple can't use it to buy another U.S. company, or give it to shareholders.

To get the money home without paying full U.S. taxes on it, the company advocates a change in U.S. tax law. It's a member of Working to Invest Now in America, or WinAmerica. The coalition is lobbying for two congressional bills that would temporarily reduce the tax rate on such earnings to 5.25 percent. That would encourage the repatriation of some of the $1.4 trillion in cash that U.S. companies have sitting in overseas accounts, the group says.

The temporary tax amnesty enacted in 2004, resulted in hundreds of billions being brought home to the U.S. But according to the Congressional Research Service, it didn't create jobs or stimulate the economy, as had been hoped.
Google Inc., Oracle Corp., Microsoft Corp. and Cisco Systems Inc. are also members of WinAmerica, but none of them stand to gain as much as Apple from a tax amnesty, because they have less cash overseas.

_______________________________________________________________


I found this to be an interesting article. I do wonder what our economy would look like if a lot of this money came back in to the US, but it seems like the 1 year amnesty didn't result in much.

_________________
Attention Phenylketonurics: Contains Phenylalanine


Top
 
 Post subject: Re: On Apple, and Corporate Taxes.
PostPosted: Tue Jul 24, 2012 12:53 pm 
Offline
User avatar
AnalLog
 Profile

Joined: Sun Feb 26, 2006 3:28 am
Posts: 28541
Location: PORTLAND, ME
so the money laundering company likes the money laundering presidential candidate?

_________________
Winner, 2011 RM 'Stache Tournament


Top
 
 Post subject: Re: On Apple, and Corporate Taxes.
PostPosted: Tue Jul 24, 2012 12:55 pm 
Offline
User avatar
Global Moderator
 Profile

Joined: Tue Nov 30, 2004 4:02 am
Posts: 44183
Location: New York
Gender: Male
Electromatic wrote:
How Apple's phantom taxes hide billions in profitBy PETER SVENSSON


The Associated Press

9:06 a.m. Tuesday, July 24, 2012

NEW YORK — On Tuesday, Apple is set to report financial results for the second quarter. Analysts are expecting net income of $9.8 billion. But whatever figure Apple reports won't reflect its true profit, because the company hides some of it with an unusual tax maneuver.

Apple Inc., already the world's most valuable company, understates its profits compared with other multinationals. It's building up an overlooked asset in the form of billions of dollars, tucked away for tax bills it may never pay.

Tax experts say the company could easily eliminate these phantom tax obligations. That would boost Apple's profits for the past three years by as much $10.5 billion, according to calculations by The Associated Press.

While investors might rejoice if Apple suddenly added $10.5 billion to its profits, unilaterally erasing a massive U.S. tax obligation could tarnish its reputation as a relatively responsible payer of U.S. taxes. Instead, the company is lobbying to change U.S. law so that it can erase its liabilities in a less conspicuous fashion. The issue has become part of the presidential campaign.

Like other companies, Apple typically keeps profits on overseas sales in overseas accounts. When someone buys an iPad in Paris or Sydney, for instance, the profit stays outside the United States.

Apple may pay some corporate income taxes on that profit to the country where it sells the iPad, but it minimizes these by using various accounting moves to shift profits to countries with low tax rates. For example the strategy known as "Double Irish With a Dutch Sandwich," routes profits through Irish and Dutch subsidiaries and then to the Caribbean.

When it comes to using creative tax techniques, Apple is no different from other multinational corporations, says Robert Willens, an independent accounting expert.

And just like other corporations, Apple leaves cash overseas. If it brought it home to the U.S., it would have to pay federal income taxes on the money (though it would get a credit for foreign taxes already paid). In Apple's case, those overseas accounts have grown to a staggering $74 billion — equal to the market value of Citigroup Inc.

The money is accumulating overseas because corporations are counting on lower U.S. tax rates in the future. At 35 percent, the U.S. corporate tax rate is among the highest for developed countries. In 2004, Congress enacted a one-year "tax holiday" for overseas earnings, and multinationals are hoping for a repeat of that. Presidential candidate Mitt Romney wants to permanently eliminate federal taxes on overseas profits. President Barack Obama attacked that idea last week, saying it won't create U.S. jobs, like the Romney campaign contends.

Where Apple does differ from other companies is that it sets aside a portion of these overseas profits, marking them as subject to U.S. taxes sometime in the future. Essentially, it's saying "this is money that we'll likely have to pay U.S. federal income taxes on" because we intend to repatriate it, says Willens.

But because Apple doesn't actually bring the profits into U.S. accounts, it doesn't pay the taxes. Instead, it records a tax liability. When Apple reports quarterly results, it subtracts these liabilities from its profits, even though it hasn't actually paid the taxes.

The liabilities accumulate, and as Apple's profits grow, they're piling up faster and faster.

"When you capitalize that into the future, it might be tens of billions of dollars," said Martin Sullivan, an economist with Tax Analysts, a nonprofit publisher.

The company had a net $6 billion of tax liabilities at the end of September, the last reported figure. It's had two blow-out quarters since then and is expected to report another one Tuesday. Based on reported and expected profits for the last three quarters, the liabilities can be estimated at around $10.5 billion.

Apple declined to comment on the specifics of its tax strategies or why it records tax liabilities that other multinationals avoid.

"Apple has conducted all of its business with the highest of ethical standards, complying with applicable laws and accounting rules," the Cupertino, Calif., company said in a statement.

Yet Apple has made clear that it has no intention of repatriating its profits from overseas at the current U.S. tax rate. When CEO Tim Cook announced that the company would start paying a dividend this summer, he said the board determined the size of the dividend solely by looking at the amount of cash the company has in U.S. accounts.

"We do not want to incur the tax cost to repatriate the foreign cash at this time," Chief Financial Officer Peter Oppenheimer told investors in March.

Apple's net tax liabilities started building three years ago, when its sales started rocketing because of the iPhone. In that time, the company has reported a total of $69 billion in net income. If it had applied the same accounting practices as other multinational technology companies, and not marked some overseas profits as subject to U.S. taxes, its profits would have been about $78 billion, or 13 percent higher.

The boost to net income could mean a boost to the stock, since companies are usually valued on their earnings. If investors were to value Apple based on the last 12 months of earnings, with the tax liabilities added to earnings, the stock might be 13 percent higher.

Willens and Sullivan say that Apple could erase its liabilities by considering the profits "permanently reinvested" overseas, acknowledging that they will never be brought home. That would erase the tax liability, but it could make Apple look like a less responsible corporate citizen.

"I doubt they're going to do that on their own, because they don't want to be set up for criticism," said Willens.

Groups such as Citizens for Tax Justice compile lists of the tax rates corporations report. Apple looks like a relatively good taxpayer on such lists, with a 24 percent rate. But Apple doesn't actually pay the 24 percent, since it isn't repatriating its overseas profits. The actual taxes Apple pays are 13 percent of profits, as computed by Sullivan. That's a relatively low rate compared with other multinationals.

But keeping the money overseas limits what Apple can do with it. It means, for instance, that Apple can't use it to buy another U.S. company, or give it to shareholders.

To get the money home without paying full U.S. taxes on it, the company advocates a change in U.S. tax law. It's a member of Working to Invest Now in America, or WinAmerica. The coalition is lobbying for two congressional bills that would temporarily reduce the tax rate on such earnings to 5.25 percent. That would encourage the repatriation of some of the $1.4 trillion in cash that U.S. companies have sitting in overseas accounts, the group says.

The temporary tax amnesty enacted in 2004, resulted in hundreds of billions being brought home to the U.S. But according to the Congressional Research Service, it didn't create jobs or stimulate the economy, as had been hoped.
Google Inc., Oracle Corp., Microsoft Corp. and Cisco Systems Inc. are also members of WinAmerica, but none of them stand to gain as much as Apple from a tax amnesty, because they have less cash overseas.

_______________________________________________________________


I found this to be an interesting article. I do wonder what our economy would look like if a lot of this money came back in to the US, but it seems like the 1 year amnesty didn't result in much.



I guess it depends on where the money goes. If it just sits in a speculative closed loop rather than really getting invested in things that are likely to stimualte demand/produce jobs it wouldn't matter.

_________________
"Better the occasional faults of a Government that lives in a spirit of charity than the consistent omissions of a Government frozen in the ice of its own indifference."--FDR

The perfect gift for certain occasions


Top
 
 Post subject: Re: On Apple, and Corporate Taxes.
PostPosted: Tue Jul 24, 2012 2:04 pm 
Offline
User avatar
Unthought Known
 Profile

Joined: Fri Oct 22, 2004 12:47 pm
Posts: 9282
Location: Atlanta
Gender: Male
EllisEamos wrote:
so the money laundering company likes the money laundering presidential candidate?



I don't think it's that simple. Afterall Romney is just making campaign promises even if he does plan to follow through I don't think Apple would put all thier eggs in that basket for numerous reasons.

This may have more to do with congress than the President anyway given that quite a bit is about corporate tax rates, but Obama has spoken on trying to bring this money home as well on a few occasions.

Obviously they have a better economic situation keeping the money where they are holding it now, but it would be nice for the US if we could find a way to get that money to come back here and work in our economy.
__________________________________


Agreed, Stip. Where the money goes (see TARP) may have a lot to do with what happens politically too. I just don't believe if they find a way to get it here, that it will sit in that closed loop. I think businesses have been extremely cautious since 2008 and are ready to spend, if the environment is right.

_________________
Attention Phenylketonurics: Contains Phenylalanine


Top
 
 Post subject: Re: On Apple, and Corporate Taxes.
PostPosted: Tue Jul 24, 2012 11:32 pm 
Offline
User avatar
Unthought Known
 Profile

Joined: Tue Apr 19, 2005 4:49 pm
Posts: 9495
Location: Richie-Richville, Maryland
So, if you raise taxes,capital stays out of the country. That's a shocking revelation that I will need to sit down to process.

_________________
you get a lifetime, that's it.


Top
 
 Post subject: Re: On Apple, and Corporate Taxes.
PostPosted: Tue Jul 24, 2012 11:56 pm 
Offline
User avatar
Global Moderator
 Profile

Joined: Tue Nov 30, 2004 4:02 am
Posts: 44183
Location: New York
Gender: Male
Electromatic wrote:
EllisEamos wrote:
so the money laundering company likes the money laundering presidential candidate?



I don't think it's that simple. Afterall Romney is just making campaign promises even if he does plan to follow through I don't think Apple would put all thier eggs in that basket for numerous reasons.

This may have more to do with congress than the President anyway given that quite a bit is about corporate tax rates, but Obama has spoken on trying to bring this money home as well on a few occasions.

Obviously they have a better economic situation keeping the money where they are holding it now, but it would be nice for the US if we could find a way to get that money to come back here and work in our economy.
__________________________________


Agreed, Stip. Where the money goes (see TARP) may have a lot to do with what happens politically too. I just don't believe if they find a way to get it here, that it will sit in that closed loop. I think businesses have been extremely cautious since 2008 and are ready to spend, if the environment is right.



people need money to spend, though, to justify investment here.

_________________
"Better the occasional faults of a Government that lives in a spirit of charity than the consistent omissions of a Government frozen in the ice of its own indifference."--FDR

The perfect gift for certain occasions


Top
 
 Post subject: Re: On Apple, and Corporate Taxes.
PostPosted: Wed Jul 25, 2012 12:28 am 
Offline
User avatar
Supersonic
 Profile

Joined: Thu Nov 04, 2004 2:43 am
Posts: 10694
stip wrote:
Electromatic wrote:
EllisEamos wrote:
so the money laundering company likes the money laundering presidential candidate?



I don't think it's that simple. Afterall Romney is just making campaign promises even if he does plan to follow through I don't think Apple would put all thier eggs in that basket for numerous reasons.

This may have more to do with congress than the President anyway given that quite a bit is about corporate tax rates, but Obama has spoken on trying to bring this money home as well on a few occasions.

Obviously they have a better economic situation keeping the money where they are holding it now, but it would be nice for the US if we could find a way to get that money to come back here and work in our economy.
__________________________________


Agreed, Stip. Where the money goes (see TARP) may have a lot to do with what happens politically too. I just don't believe if they find a way to get it here, that it will sit in that closed loop. I think businesses have been extremely cautious since 2008 and are ready to spend, if the environment is right.



people need money to spend, though, to justify investment here.


This isn't a one legged stool. It's a three legged stool. You can't just give people money or else you end up with collapsed economies like Greece and Spain. For people to have money they need skills worth investing in. That way investments pay off. Educational attainment and skill levels for the bulk of our population have stagnated. We do not have enough in STEM and business. The more I read and think about this, the more I'm concluding that it's results are devastating. Instead of investing in Americans, the rich are investing in foreign markets. Instead of people moving forward, they're expecting handouts. Instead of addressing structural economic issues we're filling the gap with debt spending and quantitative easing in some feigned hope that it'll work out.

This nation desperately needs a shift or we will reach our own Greek moment. We need rich people investing in us, not foreigners. We need a technology and information based economy - not a brute manufacturing economy. We need to forget about the jobs of the 60s and 70s. It's regressive economics. We need to move into pre-eminent domains within the global economy. Instead of building factories where workers stand around bolting on doors onto cars, we should have workers fully automating not just our production lines, but the rest of the world's as well. We should be dominating the world in medicine, drugs, and software. What manufacturing we do needs to be centered pre-eminent products.

None of our approaches to economics encourages this shift. Both progressive and conservatives do things that are anti-thetical to this shift. And it's irresponsible leadership for short term gain at the expense of long term vitality and growth.

Asia is going to leave us, and Europe, behind if we don't have an attitude shift.

_________________
Its a Wonderful Life


Top
 
 Post subject: Re: On Apple, and Corporate Taxes.
PostPosted: Wed Jul 25, 2012 1:40 am 
Offline
User avatar
AnalLog
 Profile

Joined: Sun Feb 26, 2006 3:28 am
Posts: 28541
Location: PORTLAND, ME
can someone explain to me how paying into the US coffers what is actually/truly owed and having those funds spent on the country (infrastructure, students (preK-MBA), manufacturing, etc.) doesn't benefit a company like apple? i ask myself this question about 1%ers like Mittens Romney and his off-shore & swiss accounts, too.

i understand they themselves get to save more personally by hiding/shifting their money, but how does it not benefit them (by expanding the population that can then afford more of what they're selling) to actually let the money trickle-down as it is purported to?

_________________
Winner, 2011 RM 'Stache Tournament


Top
 
 Post subject: Re: On Apple, and Corporate Taxes.
PostPosted: Wed Jul 25, 2012 2:17 am 
Offline
User avatar
Global Moderator
 Profile

Joined: Tue Nov 30, 2004 4:02 am
Posts: 44183
Location: New York
Gender: Male
EllisEamos wrote:
can someone explain to me how paying into the US coffers what is actually/truly owed and having those funds spent on the country (infrastructure, students (preK-MBA), manufacturing, etc.) doesn't benefit a company like apple? i ask myself this question about 1%ers like Mittens Romney and his off-shore & swiss accounts, too.

i understand they themselves get to save more personally by hiding/shifting their money, but how does it not benefit them (by expanding the population that can then afford more of what they're selling) to actually let the money trickle-down as it is purported to?


this is not their only market? no major corporation like that is really American in the sense we think about it so they're not dependent on us buying their shit (which we seem to do anyway) if they can find someone else to do it

_________________
"Better the occasional faults of a Government that lives in a spirit of charity than the consistent omissions of a Government frozen in the ice of its own indifference."--FDR

The perfect gift for certain occasions


Top
 
 Post subject: Re: On Apple, and Corporate Taxes.
PostPosted: Wed Jul 25, 2012 10:32 am 
Offline
User avatar
Supersonic
 Profile

Joined: Thu Nov 04, 2004 2:43 am
Posts: 10694
EllisEamos wrote:
can someone explain to me how paying into the US coffers what is actually/truly owed and having those funds spent on the country (infrastructure, students (preK-MBA), manufacturing, etc.) doesn't benefit a company like apple? i ask myself this question about 1%ers like Mittens Romney and his off-shore & swiss accounts, too.

i understand they themselves get to save more personally by hiding/shifting their money, but how does it not benefit them (by expanding the population that can then afford more of what they're selling) to actually let the money trickle-down as it is purported to?


It's a free rider problem.

If you can use loopholes in the tax code to avoid paying taxes, while other companies and citizens pay to support the things that support your company, why not?

The second part of your argument isn't so salient. You want to take money from them, so that they can produce stuff for people to buy. I think I've done the lemonade stand analogy here. I have a lemonade stand and I want to sell lemonade. But you have no money. You're po'. So Stip comes in and says, "LW, Ellis is po', and he needs money, so I'm gonna take a dollar away from you and give it to Ellis." So Stip takes my dollar, and then he gives it to you, and you buy some lemonade from me. Great arrangement right? No - not really. I've just lost the value of the materials to make the lemonade, and I'm back to square one on the currency I have. You've lost the will to work because Stip has given you something for nothing, and I've lost my will to work because I'm laboring and actually LOSING wealth. Our little economy moves forward when you wash my car, or mow my lawn for your cup of lemonade. Not through redistribution of wealth so people can buy stuff.
'

_________________
Its a Wonderful Life


Top
 
 Post subject: Re: On Apple, and Corporate Taxes.
PostPosted: Wed Jul 25, 2012 11:10 am 
Offline
User avatar
AnalLog
 Profile

Joined: Sun Feb 26, 2006 3:28 am
Posts: 28541
Location: PORTLAND, ME
i appreciate your responses, and i'd ask that you don't take my next post to be a full endorsement of our current tax system or how the federal reserve currently operates.

LittleWing wrote:
It's a free rider problem.

If you can use loopholes in the tax code to avoid paying taxes, while other companies and citizens pay to support the things that support your company, why not?
why not? b/c at a certain point you lose business b/c the other companies and citizens can no longer support themselves and buy your luxury item (planned obsolescence be damned). i think we're seeing this type of thing now, where our economy is very dependent on people going to the mall and buying stuff. only, they don't have the funds to get the items our businesses create. so our businesses aren't contributing to the FED what they normally would, so more things that used to be more commonplace become luxuries for citizens and businesses and they now have less and less to spend on the products our companies are making.

LittleWing wrote:
The second part of your argument isn't so salient. You want to take money from them, so that they can produce stuff for people to buy. I think I've done the lemonade stand analogy here. I have a lemonade stand and I want to sell lemonade. But you have no money. You're po'. So Stip comes in and says, "LW, Ellis is po', and he needs money, so I'm gonna take a dollar away from you and give it to Ellis." So Stip takes my dollar, and then he gives it to you, and you buy some lemonade from me. Great arrangement right? No - not really. I've just lost the value of the materials to make the lemonade, and I'm back to square one on the currency I have. You've lost the will to work because Stip has given you something for nothing, and I've lost my will to work because I'm laboring and actually LOSING wealth. Our little economy moves forward when you wash my car, or mow my lawn for your cup of lemonade. Not through redistribution of wealth so people can buy stuff.
'
you've used this story before, but it seems to suit your intention of returning to serfdom more than it serves to find a sustainable balance for business and a growing tax base. afterall, wouldn't you want 3 customers (you, me, & stip) instead of 2 (you & stip)? i never said that taxes should cover the whole cost of your product for me. also, you'd be benefiting from the taxes on others going towards supporting you & your business. i never said people shouldn't demonstrate some initiative in order to maintain their status, but i wonder how i ever get to a point where i don't have to "wash your car" for your lemonade. lastly, could we use milkshake from now on, the idea of saying "i drink your milkshake" w/o reference to There Will Be Blood appeals to me.

_________________
Winner, 2011 RM 'Stache Tournament


Top
 
 Post subject: Re: On Apple, and Corporate Taxes.
PostPosted: Wed Jul 25, 2012 1:44 pm 
Offline
User avatar
Unthought Known
 Profile

Joined: Fri Oct 22, 2004 12:47 pm
Posts: 9282
Location: Atlanta
Gender: Male
EllisEamos wrote:
can someone explain to me how paying into the US coffers what is actually/truly owed and having those funds spent on the country (infrastructure, students (preK-MBA), manufacturing, etc.) doesn't benefit a company like apple? i ask myself this question about 1%ers like Mittens Romney and his off-shore & swiss accounts, too.

i understand they themselves get to save more personally by hiding/shifting their money, but how does it not benefit them (by expanding the population that can then afford more of what they're selling) to actually let the money trickle-down as it is purported to?



Because Apple is multi national and a lot of people in the rest of the world like buying Apple stuff too.. They do pay a lot of US taxes. It's the sales outside of the US that they are not bringing home. Think of a company like Kia, or Mercedes Benz or Toyota When we buy a Mercedes, or a Kia some of that money they reinvest into US manufacturing because in many cases it's economical and or beneficial to them to build thier products here because the consumer then pays less in shipping and probably tarriffs and they get the good will out of the deal. I'm assuming here, but I believe that they would bring that most of the profits back into Korea or Germany or Japan because their corporate tax rates are not as high as they are here but I'm willing to bet some of their moneys are held in tax advantaged locations too. What US companies are doing is keeping thier foreign interests foreign rather than paying the tax on thier foreign investments here in the US because it is more advantageous to do so. Essentially our tax code is so punitive toward corporations that they would rather not bring that money back into the US. (I think) The reason the Caymans and Bermuda get to use all this capital or have it reside there is because they don't have huge tax rates on it. My queston is how do we make it advantageous to get them to bring that money back here and start using it and investing in the US?

The other questions might be, how free are we willing to go with trade? Tarriffs can protect jobs, but they make goods cost more too.

_________________
Attention Phenylketonurics: Contains Phenylalanine


Top
 
 Post subject: Re: On Apple, and Corporate Taxes.
PostPosted: Wed Jul 25, 2012 2:11 pm 
Offline
User avatar
Global Moderator
 Profile

Joined: Tue Nov 30, 2004 4:02 am
Posts: 44183
Location: New York
Gender: Male
LittleWing wrote:
EllisEamos wrote:
can someone explain to me how paying into the US coffers what is actually/truly owed and having those funds spent on the country (infrastructure, students (preK-MBA), manufacturing, etc.) doesn't benefit a company like apple? i ask myself this question about 1%ers like Mittens Romney and his off-shore & swiss accounts, too.

i understand they themselves get to save more personally by hiding/shifting their money, but how does it not benefit them (by expanding the population that can then afford more of what they're selling) to actually let the money trickle-down as it is purported to?


It's a free rider problem.

If you can use loopholes in the tax code to avoid paying taxes, while other companies and citizens pay to support the things that support your company, why not?

The second part of your argument isn't so salient. You want to take money from them, so that they can produce stuff for people to buy. I think I've done the lemonade stand analogy here. I have a lemonade stand and I want to sell lemonade. But you have no money. You're po'. So Stip comes in and says, "LW, Ellis is po', and he needs money, so I'm gonna take a dollar away from you and give it to Ellis." So Stip takes my dollar, and then he gives it to you, and you buy some lemonade from me. Great arrangement right? No - not really. I've just lost the value of the materials to make the lemonade, and I'm back to square one on the currency I have. You've lost the will to work because Stip has given you something for nothing, and I've lost my will to work because I'm laboring and actually LOSING wealth. Our little economy moves forward when you wash my car, or mow my lawn for your cup of lemonade. Not through redistribution of wealth so people can buy stuff.
'


If it takes you a dollar to make lemonade and then you sell it for a dollar you may want to rethink your business model.


Yes, when those jobs are available and they pay enough to enable people to buy things that's ideal (it's one reason I am in favor of living wage laws).


Economies grow when money is fluid. It needs to be spent. Even in your above scenario (which is of course a ridiculous oversimplification of my position) you're too narrow (although this is also a ridiculous oversimplification)

Lets say we take that dollar that you had and give it to Ellis.

Ellis now goes to my store and buys some candy. I take the profits from that and go to Electro's store to get some french fries. Electro takes those profits and goes to Thodok's house to sniff some gold bars. Thodoks then decides to use the money he just made to go buy some lemonade.

that dollar you had just became 5 dollars due to it circulating in the economy, and you made it back in a new customer. Even if Thodoks decided to not get some lemonade the economy has still grown because the money moved through it (which is why the most important people/organizations to tax heavily are the ones that aren't spending their money). that may be worse for you, but the economy will be stronger as a result.

_________________
"Better the occasional faults of a Government that lives in a spirit of charity than the consistent omissions of a Government frozen in the ice of its own indifference."--FDR

The perfect gift for certain occasions


Top
 
 Post subject: Re: On Apple, and Corporate Taxes.
PostPosted: Wed Jul 25, 2012 4:02 pm 
Offline
User avatar
Supersonic
 Profile

Joined: Thu Nov 04, 2004 2:43 am
Posts: 10694
Doks, you salivating over Stips post?

Gotta get back to work, sadly I can't post now...

_________________
Its a Wonderful Life


Top
 
 Post subject: Re: On Apple, and Corporate Taxes.
PostPosted: Wed Jul 25, 2012 4:12 pm 
Offline
User avatar
AnalLog
 Profile

Joined: Sun Feb 26, 2006 3:28 am
Posts: 28541
Location: PORTLAND, ME
LittleWing wrote:
sadly I can't post now...
but you just did?!!

Image

_________________
Winner, 2011 RM 'Stache Tournament


Top
 
 Post subject: Re: On Apple, and Corporate Taxes.
PostPosted: Wed Jul 25, 2012 6:45 pm 
Offline
User avatar
Unthought Known
 Profile

Joined: Tue Apr 19, 2005 4:49 pm
Posts: 9495
Location: Richie-Richville, Maryland
EllisEamos wrote:
can someone explain to me how paying into the US coffers what is actually/truly owed and having those funds spent on the country (infrastructure, students (preK-MBA), manufacturing, etc.) doesn't benefit a company like apple? i ask myself this question about 1%ers like Mittens Romney and his off-shore & swiss accounts, too.


It's because we spend our tax money on boner pills for grandpa, new sneakers for Trayvon and his twelve kids, and blowing up brown people in far away lands. If we did spend the money on education, infrastructure, and government sponsored R&D, that would be a completely different story, but the 1% know the general populace is too self-serving and stupid to do the right thing if it even minorly inconveniences them.

_________________
you get a lifetime, that's it.


Top
 
 Post subject: Re: On Apple, and Corporate Taxes.
PostPosted: Wed Jul 25, 2012 7:36 pm 
Offline
User avatar
AnalLog
 Profile

Joined: Sun Feb 26, 2006 3:28 am
Posts: 28541
Location: PORTLAND, ME
broken iris wrote:
EllisEamos wrote:
can someone explain to me how paying into the US coffers what is actually/truly owed and having those funds spent on the country (infrastructure, students (preK-MBA), manufacturing, etc.) doesn't benefit a company like apple? i ask myself this question about 1%ers like Mittens Romney and his off-shore & swiss accounts, too.


It's because we spend our tax money on boner pills for grandpa, new sneakers for Trayvon and his twelve kids, and blowing up brown people in far away lands. If we did spend the money on education, infrastructure, and government sponsored R&D, that would be a completely different story, but the 1% know the general populace is too self-serving and stupid to do the right thing if it even minorly inconveniences them.
that seems WAY too self-fulfilling.

1%er: you're uneducated, just going to blow any money i invest in you on crap, you wouldn't build roads or researching & developing anything useful, you'd probably start another war w/ it... so i'm going to hide my money elsewhere so i can swim laps in it like scrooge mcduck.

peasants: why don't you just support groups that promote education, infrastructure, government sponsored R&D, and are anti-war?

1%er: b/c i'm too busy making sure the elected officials that win will make it easier for me to hide/keep my money b/c, like i said, you're too stupid to know what to do w/ it.

peasants: i...i...

1%er: CANNONBALL!!

_________________
Winner, 2011 RM 'Stache Tournament


Top
 
 Post subject: Re: On Apple, and Corporate Taxes.
PostPosted: Wed Jul 25, 2012 9:09 pm 
Offline
User avatar
Supersonic
 Profile

Joined: Thu Nov 04, 2004 2:43 am
Posts: 10694
EllisEamos wrote:
i appreciate your responses, and i'd ask that you don't take my next post to be a full endorsement of our current tax system or how the federal reserve currently operates.

LittleWing wrote:
It's a free rider problem.

If you can use loopholes in the tax code to avoid paying taxes, while other companies and citizens pay to support the things that support your company, why not?
why not? b/c at a certain point you lose business b/c the other companies and citizens can no longer support themselves and buy your luxury item (planned obsolescence be damned). i think we're seeing this type of thing now, where our economy is very dependent on people going to the mall and buying stuff. only, they don't have the funds to get the items our businesses create. so our businesses aren't contributing to the FED what they normally would, so more things that used to be more commonplace become luxuries for citizens and businesses and they now have less and less to spend on the products our companies are making.

LittleWing wrote:
The second part of your argument isn't so salient. You want to take money from them, so that they can produce stuff for people to buy. I think I've done the lemonade stand analogy here. I have a lemonade stand and I want to sell lemonade. But you have no money. You're po'. So Stip comes in and says, "LW, Ellis is po', and he needs money, so I'm gonna take a dollar away from you and give it to Ellis." So Stip takes my dollar, and then he gives it to you, and you buy some lemonade from me. Great arrangement right? No - not really. I've just lost the value of the materials to make the lemonade, and I'm back to square one on the currency I have. You've lost the will to work because Stip has given you something for nothing, and I've lost my will to work because I'm laboring and actually LOSING wealth. Our little economy moves forward when you wash my car, or mow my lawn for your cup of lemonade. Not through redistribution of wealth so people can buy stuff.
'
you've used this story before, but it seems to suit your intention of returning to serfdom more than it serves to find a sustainable balance for business and a growing tax base. afterall, wouldn't you want 3 customers (you, me, & stip) instead of 2 (you & stip)? i never said that taxes should cover the whole cost of your product for me. also, you'd be benefiting from the taxes on others going towards supporting you & your business. i never said people shouldn't demonstrate some initiative in order to maintain their status, but i wonder how i ever get to a point where i don't have to "wash your car" for your lemonade. lastly, could we use milkshake from now on, the idea of saying "i drink your milkshake" w/o reference to There Will Be Blood appeals to me.


Big government or nihilism. Minimum wages, or nihilism. Redistribution, or nihilism. This false dichotomy does not impart gravitas into your argument. Your first mistake is thinking that you can have a central planner adequately manage the economy to achieve a sustainable balance for business and a growing tax base. Balance and a growing tax base isn't a function of these things. It's a function of what we can do, and what we're willing to do. And redistribution harms both ends of the economic ladder - resulting a net harm both for business and the tax base. Most of all you impart economic dislocations and completely disrupt the economic balance.

Of course I want both Stip and you to be my customers. But I don't want to be taxed for you to be my customers. I want you to be productive members of society so you can rightfully buy my lemonade if you'd like it. All you're doing is creating a free rider - a zombie consumer. And by creating a zombie consumer you are devaluing the currency held by those that earned it.

Quote:
If it takes you a dollar to make lemonade and then you sell it for a dollar you may want to rethink your business model. - Stip


Okay, I'm running on 10% margins. I've lost ninety cents instead of a buck. I still lost.

Quote:
Yes, when those jobs are available and they pay enough to enable people to buy things that's ideal (it's one reason I am in favor of living wage laws). - Stip


But this ignores the concepts of value and economic signals that exist within the marketplace. You're still harming both ends of the ladder and spinning yourself towards a Greek moment. You cannot just artificially make jobs pay enough - and nor should you if mutually exclusive alternatives exist for workers within any given economy. Creating fiat living wages ultimately ends up in a situation with increased unemployment - where those who are unemployed are subsidized by the producing classes. As you overly punish the producers, reduce their reward, they leave. Without any producers folks like you then resort to debt spending under the premise that it will actually create a return on investment. Yes, you just give people money to consume stuff and the mechanations of the economy turn forward! But this isn't the case, because the VALUE of the economy has been sapped. You just have zombie consumers withdrawing resources from the economy with ever diminishing contributions. Eventually you reach a point like Spain, Greece, Italy, and Portugal where bond purchasers realize they'll never get a return on their investment. The currency stream for the zombie consumers ceases, and your economy collapses.

We shouldn't artificially create incentives for people to do the minimum amount of work at the expense of someone else. We need to encourage people that if they want the comforts of a modern life, that they most produce labor of value that is consummate with the things they desire.

Quote:
Economies grow when money is fluid. It needs to be spent. Even in your above scenario (which is of course a ridiculous oversimplification of my position) you're too narrow (although this is also a ridiculous oversimplification) - Stip


While currency crisis can occur - such as a deflationary crisis from supply mismanagement, that's not what economies are predicated on. Economies are predicated on production, and currency is but a division of our contributions to that production. You can't simply give money to people to spend so its fluid and expect any net positive impact to occur, as all you are doing in that situation is devaluing the labor of those that are equitably producing within the economy.

Quote:
Lets say we take that dollar that you had and give it to Ellis.

Ellis now goes to my store and buys some candy. I take the profits from that and go to Electro's store to get some french fries. Electro takes those profits and goes to Thodok's house to sniff some gold bars. Thodoks then decides to use the money he just made to go buy some lemonade.

that dollar you had just became 5 dollars due to it circulating in the economy, and you made it back in a new customer. Even if Thodoks decided to not get some lemonade the economy has still grown because the money moved through it (which is why the most important people/organizations to tax heavily are the ones that aren't spending their money). that may be worse for you, but the economy will be stronger as a result. - Stip


if this were really the case, then all we'd have to do is spend our money faster and Robert Mugabe would be an economic genius. Sorry, but this isn't an economic reality. Economies are functions of production, and currency is but a division of that production. The prices you see are a reflection of this function.

_________________
Its a Wonderful Life


Top
 
 Post subject: Re: On Apple, and Corporate Taxes.
PostPosted: Wed Jul 25, 2012 9:17 pm 
Offline
User avatar
Unthought Known
 Profile

Joined: Tue Apr 19, 2005 4:49 pm
Posts: 9495
Location: Richie-Richville, Maryland
EllisEamos wrote:
broken iris wrote:
EllisEamos wrote:
can someone explain to me how paying into the US coffers what is actually/truly owed and having those funds spent on the country (infrastructure, students (preK-MBA), manufacturing, etc.) doesn't benefit a company like apple? i ask myself this question about 1%ers like Mittens Romney and his off-shore & swiss accounts, too.


It's because we spend our tax money on boner pills for grandpa, new sneakers for Trayvon and his twelve kids, and blowing up brown people in far away lands. If we did spend the money on education, infrastructure, and government sponsored R&D, that would be a completely different story, but the 1% know the general populace is too self-serving and stupid to do the right thing if it even minorly inconveniences them.
that seems WAY too self-fulfilling.

1%er: you're uneducated, just going to blow any money i invest in you on crap, you wouldn't build roads or researching & developing anything useful, you'd probably start another war w/ it... so i'm going to hide my money elsewhere so i can swim laps in it like scrooge mcduck.

peasants: why don't you just support groups that promote education, infrastructure, government sponsored R&D, and are anti-war?

1%er: b/c i'm too busy making sure the elected officials that win will make it easier for me to hide/keep my money b/c, like i said, you're too stupid to know what to do w/ it.

peasants: i...i...

1%er: CANNONBALL!!


To follow my analogy you need to use 1%'s and Government, not 'peasants'.

_________________
you get a lifetime, that's it.


Top
 
 Post subject: Re: On Apple, and Corporate Taxes.
PostPosted: Wed Jul 25, 2012 11:19 pm 
Offline
User avatar
Global Moderator
 Profile

Joined: Tue Nov 30, 2004 4:02 am
Posts: 44183
Location: New York
Gender: Male
LWing, I agree that the productive capacity of an economy is critical, arguably the most critical thing, but production is meaningless if the benefits of that production are not distributed in a way that, all questions of fairness aside, result in money moving through that system. Americans are so heavily in debt right now not because we buy so much stupid stuff (thank god we do, since that's partly what drives our economy) but because the productivity benefits of the last several decades have been so narrowly concentrated at the top of our economic ladder. Which means we're slowly asphyxiating ourselves. We've tried to cope by having two family wage earners (with the attendant social costs), artificially inflating the value of homes, and working longer and longer hours (with the attendant social costs). But we're tapped out. Ideally I actually agree with a bit of what you're describing, but we're stuck right now. Even if I have something I can do that is of productive value if no one has the money to pay me for it I'm sunk and society has wasted human capital.


In an ideal world I support 'workfare' over welfare, and when jobs don't exist I think public employment should be created to insure that people who want to work have work. We are a poorer nation when people sit at home, and if you are deriving social benefits you have an obligation to give something back. As far wage stuff goes, if people work full time they should be able to count on a certain level of material comfort, ideally one that gives them the opportunity to develop their own talents and enrich society. The safety net, when operating appropriately, is an investment in ourselves, and something likely to pay off bigger dividends for society as a whole in the long term. It is also why you and I should be taxed to pay for infrastructure, R+D, education, etc. All of this feeds into a vibrant and productive citizenry that can in turn grow an economy in a meaningful way (its innovation and productive capacity) rather than the made up paper economy we have right now.

Things like capital flight, etc. can be addressed through the legislative process, if that really is a fear (I wonder how much of this is speculative), and while you can no doubt point to any number of failed European economies, the successful ones also have generous welfare states, and in many cases more generous than the struggling ones. there's something else going on here than the European equivalent of public sector unions.

_________________
"Better the occasional faults of a Government that lives in a spirit of charity than the consistent omissions of a Government frozen in the ice of its own indifference."--FDR

The perfect gift for certain occasions


Top
 
Display posts from previous:  Sort by  
Post new topic Reply to topic  [ 40 posts ]  Go to page 1, 2  Next

Board index » Word on the Street... » News & Debate


Who is online

Users browsing this forum: No registered users and 14 guests


You cannot post new topics in this forum
You cannot reply to topics in this forum
You cannot edit your posts in this forum
You cannot delete your posts in this forum
You cannot post attachments in this forum

Search for:
Jump to:  
cron
It is currently Thu Mar 28, 2024 1:06 pm