Senate goes after tax-cheating Apple

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Glad I'm not the only one who thinks its an outrage that the world's most valuable company, with vast revenues and huge cash surpluses, is looking for ways to avoid paying federal taxes. A US Senate committee is going after Apple, with the chair, Carl Levin, saying the company created "ghost corporations" in Ireland to hide profits and cheat the US out of $9 billion.

Now, just for the record: What Apple is doing is probably legal. The federal tax code is, to put it mildly, all fucked up, and it allows US companies to get away with all sorts of gimmicks.

But remember: Somebody has to pay for all the debt that GW Bush racked up in his foolish wars, and all the other (much smaller) expenses that the federal government incurs. So if Apple hids $9 billion, then you and me -- or, as the late, great Jonathan Kwitny put it, "the millions of lathe operators, clerks, computer programmers, dirt farmers, druggists, and hod carriers who are harnessed collectively as the American taxpayer" -- have to make up the difference.

I'm glad Sen. Levin is on this.

 

Comments

I bet you cannot name one company on the planet that paid more taxes than that.

It's not clear that Apple broke any tax law here - they merely utilized tax allowances and rules that Congress made, and now suddenly Congress doesn't like it?

Anyway, all corporate taxes are passed thru to you and I anyway, as ultimately only people can pay taxes not things. So it's really not a big deal at all.

Or do you think that if companies paid enough taxes, the rest of us wouldn't need to pay any?

Posted by Guest on May. 21, 2013 @ 2:50 pm

Once again, the 1% gets a pass while lying to a Senate panel. What you consider legal is just fascism. Psychopaths always return to their dysfunctional roots.

Posted by steelhead on May. 21, 2013 @ 4:18 pm

And as long as the US has a very high rate of corporate tax, we can hardly whine when US companies refuse to repatriate profits. I find Apple ot be blameless here.

Posted by Guest on May. 21, 2013 @ 6:18 pm

It always gets me when they say corporate taxes are high. What's the effective tax rate for these behemoths? I think even Uncle Sam gave GE money back!

Posted by Johnny Venom on May. 21, 2013 @ 7:27 pm

that is higher thanso-called socialist Europe.

But the rules say that overseas earnigns are only taxed where when they are repatriated here, and so corporations naturally leave the money overseas.

If you don't like that change the rules, and of course hope that the major US corporations don't all move to Switzerland.

Posted by Guest on May. 22, 2013 @ 6:42 am

You know that when Rand Paul sounds like the most reasonable person in the room there's something terribly wrong. Carl Levin is one of the key leaders of the tax writing committee and either he's really stupid that he doesn't know how his tax system works, or this a made-up dog and pony show to make it seem that folks like Rand Paul and Tim Cook are the smartest guys in the room. Perhaps the end game is Rand Paul and Tim Cook shaking hands next year after a "hard-fought battle" over a new corporate tax code that will shovel even more billions of profits to officers and shareholders of the largest corporations. If Congress (and the states) give corporations a sweet 30-40% tax decrease after "corporate tax reform" is enacted, you better buy those stocks now since they'll be even more valuable after "reform" is passed.

Thousands of Bay Area lawyers and accountants make million-dollar incomes ensuring that their wealthy clients and the largest companies pay as little tax as possible. Many of these same lawyers, accountants and economists help politicians like Levin and McCain write those tax laws. For the politicians to now cry "foul" is beyond belief. Of course companies shift their expenses to high-tax locations such as the US and Europe, and of course they shift income to low or no-tax locations such as Cayman, Barbados, Ireland, Netherlands and Hong Kong. This has been going on forever. And ever since air travel has made it very easy to move people and profits all over the globe, it's only become more commonplace with high-wealth individuals now shifting their "tax homes" to low tax locations even though they may live most of the time in high-tax locations.

Apple shareholders should be very happpy with Mr. Cook's performance under the glare of the congressional witch hunt. He should have reminded the panel about Facebook, Google and other newer technology companies that have a far lower "effective" tax rate than Apple since they were able to plan their tax strategy before actually incorporating. Apple is stuck as a "US company" forever, which means its only stategy is to leave untold billions offshore until Congress gives them the tax break they want before they'll repatriate those earnings back to the US. Facebook and Google don't have this problem (as much) since most of their profits will never be taxed in the US. good tax planning can reap millions of future payoffs, year after year.

Using "profits" as a method to tax businesses is the sham that deserves SFBG outrage, not the fact taxpayers plan their activities as best as possible to reduce their tax burden, just as every person does wherever they live. To rely on complicated "transfer pricing" rules to allocate "profits" to the correct location is a waste of the smartest IRS agents and the smartest lawyers and accountants. But since billions of profits can be shielded from tax by using these complicated transfer pricing rules, one of the most senseless shawdow dances in world history continues.

Let's start a SFBG list:

Companies should plan their operations to pay the most tax.

Landlords should charge tenants the least rent.

Businesses should make as little profit as possible.

Banks and bondholders should lend their money for free.

Unicorns and dragons will return to earth when the White Walkers awaken.

Posted by Guest on May. 21, 2013 @ 5:50 pm

flat rate taxes on income, gains and a VAT. I'd guess 105 each should do it, with no deductions, exemptions or allowances.

The best taxes are broadly based so everyone has some skin in the game. And at the lowest rate possible.

Posted by Guest on May. 21, 2013 @ 6:35 pm
Posted by Guest on May. 22, 2013 @ 7:04 am

It's perfectly legal, in fact. Sorry, Tim, no free stuff for you in this case.

Posted by Chromefields on May. 22, 2013 @ 7:04 am

following the laws that Congress speicifically passed for corporations like Apple.

This is a tempest in a teacup.

Posted by Guest on May. 22, 2013 @ 7:16 am

The US has the third-lowest effective corporate tax rate in the OECD (Mexico and Chile are lower), according to the Office of Management and Budget.

That official 35% tax rate means nothing. Nobody pays it. After deductions (loopholes), the maid at the Motel Six pays higher taxes.

We need a VAT, as noted above. Tax at the point of sale. The United States is almost the only country in the world where you must file an annual tax return. Under the VAT system, there are no entitlements, no loopholes.

http://thinkprogress.org/economy/2011/07/05/260535/graph-corporate-tax-s...

Posted by Troll the XIV on May. 22, 2013 @ 7:17 am

is low only because the nominal rate is so high, and so companies like Apple have to jump thru hoops to make that effective rate ebarable.

Better to lower or abolish corporate tax and all those monies will return to the US.

As you say, a VAT would be a much fairer and broader tax.

Posted by Guest on May. 22, 2013 @ 7:35 am

Okay, I see your point. The VAT would be equitable for all. Our current system is riddled with entitlements that mostly favor wealthier people (according to The Economist)

If you consider what the real tax rate is (GDP/total tax revenue), the USA is in the middle of the pack:

http://en.wikipedia.org/wiki/List_of_countries_by_tax_revenue_as_percent...

Posted by Troll the XIV on May. 22, 2013 @ 7:52 am