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$76 BILLION in cash. Still no dividend?


studiomprd

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The interesting counter argument has been that this loophole has been used for years by lots of companies before Apple and the government knew it. Being a publicly traded company, Apple etc have an obligation to their shareholders to make (legal) profits, and there is no counter argument that it would cheapen the brand because it's not the same as using cheap components.

Congress can play tough on tv and act outraged, but somehow the rest of America has known about this for years.

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The problem is that the big companies bankroll the campaigns of Congress. The average American doesn't totally understand this whole thing, and will forget about this compared to much bigger concerns when they go into the voting booth. They had some hearings, but I don't see this majorly changing anytime soon. Yes, the tax code needs a major overhaul, but Congress is SOOO divided right now that nothing like that will go anywhere.

I was listening to a Mac podcast and they felt Apple was an easy way to "investigate this" because Apple is the least sketchy of the big companies. Again, it's all legal. In a way it's similar to all of us using a CPA to get the most deductions we are (legally) entitled to. Apple doesn't funnel domestic money through a paper division and stash the money in the Cayman Islands, which a lot of big US tech companies do. Apple makes a ton of money overseas and leaves it overseas because it's better for tax purposes. If there wasn't such a huge financial advantage to doing that, then a lot of companies wouldn't do it.

I'm also sure that everyone in Congress is very aware of how much money Apple contributes to the economy. They have tons of employees paying payroll taxes, as well as spending that money. Apple has a web store and incredibly successful physical stores that charge applicable state sales tax. Their retail stores make more money than anyone else, even in this down economy. A lot of the iPhone components are made by American companies. Like Corning making the glass etc. Apple is a company that they should be proud of. They probably brought in Tim Cook for a "what can we do differently" (no pun intended) session. You didn't see them "questioning" somebody from big oil, let alone some of the defense contractors.

Google sells nothing physical per say, so there is no sales tax on (all/most of?) their sales. Amazon resells physical goods, but made it years without charging any sales tax to their customers. While they are all great success stories, in a way they are nothing compared to Apple or Microsoft.

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There's a simple solution that's already used in US taxation policy (for individuals), tax a company's worldwide income at US rates (allowing a deduction for taxes paid to countries where the money is earned). Problem solved!

 

I don't think they can legally do this. For example, Sony sells hundreds of products that aren't even available in North America, and are only sold in Asia. Should the U.S. government go after Sony's profits on these items? 

 

I don't see where Apple is breaking the law, in that it's their overseas sales that are not being taxed, and the money is staying outside of America. The movie studios have done this same thing for many years: for example, if Disney makes $20 million on a film in England, they generally use that money in England to finance a film production over there. Otherwise, if they try to move that money out of England, they wind up paying all kinds of additional taxes on it.

 

And guaranteed, Big Oil will fight this tooth and nail. And I bet their profits are way higher than Apple's. 

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Sony is a good example of why this loophole exists. Maybe even better is somebody like Honda or Toyota. I know, for example, that Honda makes some cars and motorcycles in the USA, but they are a Japanese company. Honda makes the big Goldwing motorcycle here because something like 95% of them are sold in the USA. They sell their cars all over the globe and make them in Japan, USA, Korea etc etc. It's not like the US can tax their global earnings, and I am sure on paper that Honda USA is a somewhat separate company legally. Honda can't pay taxes to every country they have a presence in for products that are not made or sold in that country. Same way that if Apple makes an iPhone in China, and sells it through a store in China, and that money stays in the Apple-Asian division (or whatever), then I can see how the US Government doesn't have a claim to a piece of it *UNLESS* Apple brings that money into the US bank account. Knowing that part of the reason Apple owns the market for things like the newest phone-sized displays because they are the only people paying in advance for high demand components, and Apple actually pays to build some of the overseas assembly plants, it's money made overseas that will be spent overseas. 

 

Especially after WW2, there was a major push to globalize American business. Really, the government created this situation. The tax code is so freaking complicated that you can't really say "this isn't the spirit of the law", you have to go precisely by what the code says, and this is a loophole. Imagine getting audited and saying "i know what the law says, but that's not what I thought the founding fathers would have wanted". Good freaking luck! If the USA wanted to push this globalization, they should have realized it would make the globe a competitive playing field and figured out a way to keep our tax revenue coming in. 

 

The corporate tax rate in the USA is 35%, in Ireland it's 12%. Apple did not invent this, but anyone that's been following Apple for a long time knows that Apple started building computers in Cork Ireland in the 80s and into the 90s. IIRC a lot of the computers built there were for the Euro market, so those machines never crossed US borders. I know my old G4 tower was built in California and intended for the US market (you can run the serial number).  Ireland has no incentive to raise their rate because every big tech company has a presence there. If Ireland jumped their rate to 30%, some other stable country would come in and undercut them. Here's a good 60 Minutes article about the recent Tim Cook in Congress thing and a brief overview of the situation. 

 

"The U.S. Treasury in effect is subsidizing investment in Ireland," Sullivan added. According to the 60 Minutes report, 600 American companies have moved parts of their businesses to Ireland and those companies employ 100,000 workers there.

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Absolutely nothing disgusting about it. It's smart business and so long as they are doing everything legally there isn't anything wrong with how they handle their money.

 

No offense Matthew, but this is the lamest shit flying! For example, the Koch Bros., for over ten years conspired illegally to control the election process in the US via illegally obtained caging lists. When investigations into their activities started to bear fruit, they created the Citizens United case, paid every cent it took to get it to the Supreme Court, had their sharpest staff counsel represent the case before the court, and had it passed due to justices who had been specifically backed in their nominations by the Koch's influence.

Most people think of CU as primarily allowing unlimited donations to political campaigns via non-profit fronts, but the primary reason was to make legal, the previous ten years of patently illegal activity on the part of the Koch's. If a law is passed by illegal influence...

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The difference between Apple and the Koch brothers, in your example, is legality. If Apple is following the tax code then there is nothing illegal about it. Now, if the law makers feel certain laws should be changed, updated, or modified then that is what can and should happen. And at that point hopefully Apple will follow those new laws as well.

The US tax code applied equally to all individuals and corporations. Now, a large, wealthy corporation such as Apple certainly has more money to research ways of reducing their tax liability but there are no special rules or laws set aside for them.

Production Sound Mixing for Television, Film, and Commercials.

www.matthewfreed.com

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The difference between Apple and the Koch brothers, in your example, is legality.

The US tax code applied equally to all individuals and corporations.

Legal does not always equal moral.

 

The US tax code is not applied equally to all individuals and corporations

 

(Best starting at 2:45)

http://www.thedailyshow.com/watch/wed-may-22-2013/tax-men---apple

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I agree that legal does not always equate to moral. However, the tax code absolutely is applied equally (and is available equally) to all individuals and corporations. Some know it better than others and some have deeper pockets to research the nooks and crannies better than others.

However, companies like Apple get audited every single year...thoroughly. We individuals don't get audited every single year.

Production Sound Mixing for Television, Film, and Commercials.

www.matthewfreed.com

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Apple's taxes were covered pretty well by Forbes a few months back. Depending on how you interpret the numbers, they either paid 24% tax or 9.8% tax:

 

http://www.forbes.com/sites/timworstall/2012/11/01/so-how-much-tax-did-apple-pay/

 

They've reportedly paid over $8 billion in taxes, and all I can say is, that's a helluva lot more than most of the oil companies are paying.

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