While Apple likely isn't breaking the law (at least not seriously) what you seem to be missing is that as an American, you are liable to pay income tax regardless of where in the world you earn it. 'Technicalities' are allowing Apple (and many many many other companies) to avoid a large amount of the income tax fairness suggests they ought to pay. The article states that Apple pays little to no income tax to _any_ foreign government.
Tough shit. Our tax laws are a disgrace and need to be totally rewritten. This goes for personal taxes too (or even especially).
Good for Apple for making this into a public issue.
See, governments try to fool people into thinking they're paying less than they are. By creating such a pathetically convoluted tax code and taking loads of money here while giving you a "deduction" there, they think that you're too befuddled to be pissed at any particular rip-off.
If the government gets statements from my employer and banks and brokerage, why the hell am I filling out forms? And if we have to fill out forms, why are we not entering data into them on a government Web site and filing that way?
The whole thing is a sham, and Apple has simply paid someone enough to figure out how to avoid as much of it as possible. GOOD.
But those "technicalities" are the law, as it was written. The rules say "if you meet these conditions, then use this algorithm to calculate your tax bill". The inevitable result is that every company with a halfway competent accounting department pores over the tax code to find the algorithm that results in the lowest tax bill, then figures out how to meet the necessary requirements to use it.
Please note that in no way do I think this is a good thing to do, or that I'm remotely in favor of the current situation. It sucks and I'm not. But Congress made that game, and they completely lack the moral authority to complain about others playing it.
Put this in coding terms, where each tax code requirement is a conditional branch in a `calculateTax()` function. If you write a function with 50,000 conditionals, you simply can't be surprised that someone figures out a way to call the function with arguments that give the best possible output for them. Even worse, you can't close those loopholes by adding more conditionals. By definition, you're only creating more optimization paths for them to choose from.
> Even worse, you can't close those loopholes by adding more conditionals. By definition, you're only creating more optimization paths for them to choose from.
One thing they try are schemes like alternative minimum taxes:
Would like to add that the senior management in charge of running the company are expected to perform their fiduciary duties i.e. optimize for minimizing taxes for the benefit of the company.
Yes, and that's only possible by removing many exemptions, deductions, special cases, etc. Congress should absolutely reform the tax code, and it must be by reducing the number of ways it can be worked around.
You're not familiar with tax law. What you just said is emphatically NOT true, even for private citizens. As an American citizen you are not liable to pay federal income taxes on income earned overseas until it exceeds a specified amount (>$100,000) - even if you aren't paying any local taxes on it.
"If you are a U.S. citizen or resident alien, the rules for filing income, estate, and gift tax returns and paying estimated tax are generally the same whether you are in the United States or abroad. Your worldwide income is subject to U.S. income tax, regardless of where you reside."
"If you are a U.S. citizen or resident alien, you must report income from all sources within and outside of the U.S. This is true whether or not you receive a Form W-2 Wage and Tax Statement, a Form 1099 (Information Return) or the foreign equivalents."
Not sure what is 'emphatically not true' with the OP.
Americans are required to state global income over some threshold (I believe it was around $91K this tax year). Few other countries apply a tax to wages earned overseas by citizens. After passing a minimum threshold, tax treaties are applied to determine precise tax liability for the year.
There is a lot more going on that simply avoiding double tax. I'm not saying I blame them for taking advantage of the prevailing laws to pay as little tax as possible, but for them to claim it's simply avoiding double tax is very disingenuous.
> "What they often leave out is the second part of the story, that Apple is one of the largest tax avoiders," said Sen. John McCain (R., Ariz.), who described Apple as the "most egregious offender" among U.S. corporations trying to avoid tax bills.
That's ludicrous. Apple followed the byzantine tax rules that Congress put in place to benefit their friends and punish their enemies. The correct interpretation of McCain's statement is that Apple is the best at obeying the law in a way most favorable to themselves.
I don't think anyone has a moral obligation to pay more taxes than the law says they owe. If the tax codes are poorly written - as ours most obviously are - then fix those instead of blaming the entities who are working within that framework.
Apple dodged all the taxes they could, and saved $1.9 trillion overseas. When they got called out on it, they hit it right back and said "go right on ahead, fix the loopholes we're using, tax us more, let us help."
Somewhat relevant talk by Milton Friedman that I found enlightening when thinking about these tax matters (economics of tax shelters, tax cuts being the "product" politicians "sell", etc.): http://www.youtube.com/watch?v=TruCIPy79w8 (I strongly recommend watching all of it, but around 5:50 in he talks about why the tax system will remain complicated if you have an internet attention span).
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[ 2.8 ms ] story [ 65.7 ms ] threadGood for Apple for making this into a public issue.
See, governments try to fool people into thinking they're paying less than they are. By creating such a pathetically convoluted tax code and taking loads of money here while giving you a "deduction" there, they think that you're too befuddled to be pissed at any particular rip-off.
If the government gets statements from my employer and banks and brokerage, why the hell am I filling out forms? And if we have to fill out forms, why are we not entering data into them on a government Web site and filing that way?
The whole thing is a sham, and Apple has simply paid someone enough to figure out how to avoid as much of it as possible. GOOD.
Please note that in no way do I think this is a good thing to do, or that I'm remotely in favor of the current situation. It sucks and I'm not. But Congress made that game, and they completely lack the moral authority to complain about others playing it.
Put this in coding terms, where each tax code requirement is a conditional branch in a `calculateTax()` function. If you write a function with 50,000 conditionals, you simply can't be surprised that someone figures out a way to call the function with arguments that give the best possible output for them. Even worse, you can't close those loopholes by adding more conditionals. By definition, you're only creating more optimization paths for them to choose from.
One thing they try are schemes like alternative minimum taxes:
http://en.wikipedia.org/wiki/Alternative_minimum_tax
Computationally, they solve this problem. But, as far as tax terms, who knows.
Should Congress not try to fix structural problems in the tax code which allow plenty of corporations avoid tax obligations?
"If you are a U.S. citizen or resident alien, the rules for filing income, estate, and gift tax returns and paying estimated tax are generally the same whether you are in the United States or abroad. Your worldwide income is subject to U.S. income tax, regardless of where you reside."
"If you are a U.S. citizen or resident alien, you must report income from all sources within and outside of the U.S. This is true whether or not you receive a Form W-2 Wage and Tax Statement, a Form 1099 (Information Return) or the foreign equivalents."
Americans are required to state global income over some threshold (I believe it was around $91K this tax year). Few other countries apply a tax to wages earned overseas by citizens. After passing a minimum threshold, tax treaties are applied to determine precise tax liability for the year.
There is a lot more going on that simply avoiding double tax. I'm not saying I blame them for taking advantage of the prevailing laws to pay as little tax as possible, but for them to claim it's simply avoiding double tax is very disingenuous.
That's ludicrous. Apple followed the byzantine tax rules that Congress put in place to benefit their friends and punish their enemies. The correct interpretation of McCain's statement is that Apple is the best at obeying the law in a way most favorable to themselves.
I don't think anyone has a moral obligation to pay more taxes than the law says they owe. If the tax codes are poorly written - as ours most obviously are - then fix those instead of blaming the entities who are working within that framework.
Google, Microsoft, GE, etc.
"General Electric Paid No Federal Taxes in 2010"
http://abcnews.go.com/m/story?id=13224558
"GE's CEO, Jeff Immelt Heads Obama's Council On Jobs And Competitiveness"
http://www.huffingtonpost.com/mobileweb/2011/01/21/jeffrey-i...
"Former Google Exec Turns Whistleblower On Company’s Tax Avoidance Machinations In The UK"
http://techcrunch.com/2013/05/19/former-google-exec-turns-wh....