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Web of Tax Shelters Saved Apple Billions, Inquiry Finds

Unknown Lamer posted about a year ago | from the where-else-would-you-put-it dept.

Businesses 716

mspohr writes with news that Apple might be in a bit of hot water over its policy of offshoring revenues to favorable tax jurisdictions. Only they take it a step further, from the article: "Apple relied on a 'complex web of offshore entities' and U.S. tax loopholes to avoid paying billions of dollars in U.S. taxes on $44 billion in offshore income over the past four years ... The maker of iPhones and iPads used at least three foreign subsidiaries that it claims are not 'tax resident in any nation' to help it avoid paying billions in 'otherwise taxable offshore income,' the Senate Permanent Subcommittee on Investigations said in a statement yesterday."

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The maker of iPhones? (-1)

Anonymous Coward | about a year ago | (#43780131)

Apple does that? How informative!

Did they break any laws? (4, Insightful)

Anonymous Coward | about a year ago | (#43780143)

If what they did is legal, so what? I take every tax deduction I can legally find, why shouldn't Apple?

Re:Did they break any laws? (5, Insightful)

Anonymous Coward | about a year ago | (#43780163)

If everything legally permissible is deemed morally acceptable then humanity is doomed.

Re:Did they break any laws? (3, Interesting)

khallow (566160) | about a year ago | (#43780185)

Nobody has shown that what Apple has done shouldn't be morally acceptable.

Re:Did they break any laws? (0, Flamebait)

dmbasso (1052166) | about a year ago | (#43780305)

Nobody needs to show anything that is openly obvious.
As I write this I can hear you say 'obvious to whom?'
To anybody non-retarded and non-sociopath, obviously.

Re:Did they break any laws? (2, Insightful)

Anonymous Coward | about a year ago | (#43780347)

I for one applaud Apple on using the all the help provided by the US government in the way of tax loopholes to minimize its tax liabilities.

If the US government takes issue with any of the legal mechanisms used by Apple they need only change the laws to make them illegal.

Re:Did they break any laws? (5, Interesting)

Anonymous Coward | about a year ago | (#43780383)

Define morally acceptable. I find that companies literally sucking money out of the economy, then letting it sit, thereby starving the economy of capital, thereby adding to high unemployment, lower wages, less benefits, less job security, less public services, etc... is pretty bad for society. But maybe things that are bad for the overall society are still considered morally acceptable. ... But I digress, they're re not breaking any laws... Then again, I'm sure they spent loads of money to lobby to make our current system of laws beneficial to them. They used their huge pocketbook to game the system to make their pocketbook massive!

Re:Did they break any laws? (3, Insightful)

Cenan (1892902) | about a year ago | (#43780455)

Cannot be done, moral is per definition a subjective concept - you can only prove it to yourself, your conclusion is not valid for anyone else. We may arrive at similar conclusions with regard to certain actions, and word them into law, but they remain subjective. Most of us might agree that murder is not acceptable, and thus we write it into law that in order to participate in our society, you cannot murder people.

What the big corporations are doing, to me at least, is morally questionable. Short story is that they buy services and goods from branches located in places where the income tax is lower than where the actual revenue is generated. This shows a blatant disregard for the fact that, to generate the revenue, they make use of infrastructure, labor and the market that buys their shit - not only a disregard for the services offered to the corporation in order to help it create said revenue, but a decision that paying society back for those services is not necessary.

Another side of the story are governments who decide that they would like a bit of the cut in aforementioned revenue, and undercut their neighbors corporate tax (hello Ireland, various piece of shit Island states in the Pacific, and so on), thereby creating the tax havens Apple is raking in the dough from. This to me is equally morally questionable.

Re:Did they break any laws? (5, Insightful)

Joce640k (829181) | about a year ago | (#43780479)

Nobody has shown that what Apple has done shouldn't be morally acceptable.

Jobs/Woz grew up in the USA, they were educated there and used the resources/facilities/opportunities of the USA to earn their fortunes. Many of those resources/facilities/opportunities were provided using taxpayer money.

Not giving back to the young people growing up today is morally acceptable to you?

Re:Did they break any laws? (1, Flamebait)

smash (1351) | about a year ago | (#43780191)

Corporations aren't people with morals, etc. And unless you voluntarily pay taxes you don't legally need to, you are a hyprocrite.

Re:Did they break any laws? (3, Insightful)

Barsteward (969998) | about a year ago | (#43780241)

"Corporations aren't people with morals, etc." - this is one of the biggest bollox arguments. If the corporation could run without people then this may be an argument,

Re:Did they break any laws? (1)

smash (1351) | about a year ago | (#43780263)

The people who work in the corporation pay their own taxes - and what they do with regards to minimizing their tax is their own choice. The money the corporation makes is owned by the shareholders - throwing that money away needlessly is not in the best interests of the shareholders.

Re:Did they break any laws? (2)

cyber-vandal (148830) | about a year ago | (#43780425)

Paying for the nice first world infrastructure that allows the company to exist is "throwing money away"?

Re:Did they break any laws? (0)

zieroh (307208) | about a year ago | (#43780451)

Paying for the nice first world infrastructure that allows the company to exist is "throwing money away"?

Let's be absolutely clear here: In Apple's case, they are probably the largest corporate taxpayer in the US.

Re:Did they break any laws? (1)

Glith (7368) | about a year ago | (#43780481)

They're third. Exxon pays more than double what Apple pays, and Chevron beats them by a comfortable margin as well.

Re:Did they break any laws? (2)

bio_end_io_t (2771123) | about a year ago | (#43780413)

People aren't necessarily people with morals either.

Re:Did they break any laws? (-1)

TheCarp (96830) | about a year ago | (#43780283)

I agree but, isn't the opposite also true? Just because its tax doesn't mean its good either.

I applaud them for every dollar they save from the grubby hands of the warmongering, US government that gleefully cuts education before its murder machine. This country doesn't deserve loyal taxpayers. This country deserves to take on the population of greece so they can show us how to really avoid tax like champs.

If they sold something other than crappy walled gardens, this might make me want to buy their products.

Re:Did they break any laws? (-1)

Anonymous Coward | about a year ago | (#43780193)

If what they did is legal, so what? I take every tax deduction I can legally find, why shouldn't Apple?

Its legal to shove your dick up a black man's arese but that doesn't mean ..... oh wait were taliking about Apple here.

Re:Did they break any laws? (5, Insightful)

telchine (719345) | about a year ago | (#43780203)

If what they did is legal, so what? I take every tax deduction I can legally find, why shouldn't Apple?

Because the world is changing and it's no longer socially acceptable to just pay what's legal, it's considered inappropriate to pay less than what people would consider to be a fair amount. If you're paying $1 of tax on $1000 of earnings because you've cleverly nested your business assets overseas in a complex web of tax avoidance schemes, then most people would consider that unfair, even if it is legal.

Tax avoidance (NB not the same thing as tax evasion) was once considered socially acceptable. Of late there's been a swing the other way and national governments are now putting pressure on organisations to pay their fair share of tax (as opposed to just their legal obligation). Companies that don't conform get "outed" in the media. This bad publicity can cause the companies involved to suffer a punishment of a loss in revenue - the public are less likely to do business with companies they see as not paying their fare share of tax.

Sort of like an extortion racket, except it's okay because it's the government doing it :p

Re:Did they break any laws? (1, Insightful)

smash (1351) | about a year ago | (#43780275)

Because the world is changing and it's no longer socially acceptable to just pay what's legal, it's considered inappropriate to pay less than what people would consider to be a fair amount. If you're paying $1 of tax on $1000 of earnings because you've cleverly nested your business assets overseas in a complex web of tax avoidance schemes, then most people would consider that unfair, even if it is legal.

A company is doing its shareholders a dis-service if they pay more tax than legally required.

If you don't like the amount of tax a corporation pays, due to their corporate structure, petition your government to close the loophole.

Re:Did they break any laws? (1)

sonamchauhan (587356) | about a year ago | (#43780331)

Or cutback on the custom that you give that corporation

Re:Did they break any laws? (0)

smash (1351) | about a year ago | (#43780341)

... but beware. If you make the tax burden in your country too high, business will simply relocate completely - to somewhere more financially competitive.

Re:Did they break any laws? (2)

tbannist (230135) | about a year ago | (#43780435)

What, by off-shoring production of their smart phones to China? Imagine the horror if Apple did that!

Re:Did they break any laws? (4, Insightful)

jeffmeden (135043) | about a year ago | (#43780385)

Because the world is changing and it's no longer socially acceptable to just pay what's legal, it's considered inappropriate to pay less than what people would consider to be a fair amount. If you're paying $1 of tax on $1000 of earnings because you've cleverly nested your business assets overseas in a complex web of tax avoidance schemes, then most people would consider that unfair, even if it is legal.

A company is doing its shareholders a dis-service if they pay more tax than legally required.

If you don't like the amount of tax a corporation pays, due to their corporate structure, petition your government to close the loophole.

No one is challenging that, you just keep restating the obvious. The point of the scrutiny is to shine enough light on the loophole that there will be political will to close it without just the usual one-sided "they are raising taxes!!!".

Re:Did they break any laws? (1)

zieroh (307208) | about a year ago | (#43780477)

The point of the scrutiny is to shine enough light on the loophole that there will be political will to close it without just the usual one-sided "they are raising taxes!!!".

Last I checked, Apple doesn't write the laws. They don't even spend that much money lobbying. In fact, it is Congress that writes the laws.

Re:Did they break any laws? (-1)

mysidia (191772) | about a year ago | (#43780285)

This bad publicity can cause the companies involved to suffer a punishment of a loss in revenue - the public are less likely to do business with companies they see as not paying their fare share of tax.

I'm not less likely to buy any Apple product because of this.

What seems unfair is the US government attempting to lay a claim to revenues that were generated by Apple's related entity in another country.

This is because the "income tax" itself is immoral. The only country that should fairly have any ability to be able to tax the revenues is the country that they were generated in.

The so called "social acceptability" is just an attempt at manipulating companies into fiscally irresponsible behavior to prop up the poor behavior of fiscally irresponsible governments.

Re:Did they break any laws? (1)

tbannist (230135) | about a year ago | (#43780475)

Except, according to the shell company game that Apple is playing, revenues generated in the U.S. are actually generated in "no country" at all. In fact, the U.S. branch of Apple probably has gigantic expenses that it owes to another branch of the company that operates in international waters (or the Cayman Islands, or Ireland) for the use of the trademark "Apple". It's a shame, if that other part of the company operating out of international waters weren't so darn greedy, the American branch of Apple might be able to turn a profit*.

* This may be a slight exageration, but it's an example of one of the tricks that Apple, Google, Microsoft, and other companies use to hide local revenues from local jurisdictions.

Re:Did they break any laws? (0)

Anonymous Coward | about a year ago | (#43780487)

Let me get this straight... the operations are headquartered in the USA. Therefore, the products are developed and created in the USA. They use US infrastructure to build these products.

So you're saying the company shouldn't give back to the infrastructure of the US?

What kind of infrastructure goes into these products?
- Education is likely #1. If companies that benefit from this education don't pay back into the system, then how well does our education program do in the future?
- Police / Fire / Social Services / Welfare / Courts / Laws / etc. All things that benefit all of society, and make our society safe to bring up our future workers. Apple should just let our society fall into anarchy?
- Transportation. Yes, people do need to go to work. Yes, we do need to ship products.
- Military. Keeping the US safe so that we can stay productive. Or do you think we shouldn't pay for military and let the next lunatic invade our country, trap and monopolize our much needed resources, etc..
- Competition. Many other countries have substantial direct intervention from governments. Last I checked, private companies like Apple have substantial freedom in our country to run their business how they want. We have a free market economy for the most part.
- Banking sector. Without bank loans, where would Apple be now? Didn't the entire banking sector nearly go under? Who bailed them out again? Oh right, the government.

So you're saying Apple could have existed without all of the above?

Re:Did they break any laws? (1)

C0R1D4N (970153) | about a year ago | (#43780293)

I think this would upset me more if our govt was actually being responsible with the massive budget it already has.

Re:Did they break any laws? (5, Insightful)

Twanfox (185252) | about a year ago | (#43780299)

It isn't just that tax avoidance has lost favor. It's that most people have come to the realization (I think) that big money interests work with legislators, whether obviously or covertly, to see to it such loopholes and 'special perks' exist in the first place. It's like playing poker and stacking the deck in your favor every time. It isn't hard to see how that puts the corporations on the 'wrong side' and how it comes off as unfair in most people's minds.

If the perception was that big money does not have a hand in the creation of laws and receives the same "bad treatment" everyone else does, then I imagine you'd see tax avoidance come back into favor.

Re:Did they break any laws? (2, Interesting)

jbmartin6 (1232050) | about a year ago | (#43780321)

Can you please define what "fair share" means?

Re:Did they break any laws? (1, Insightful)

smash (1351) | about a year ago | (#43780373)

Sure. What the law requires them to pay. Which they paid... unless someone has proven otherwise?

Re: Did they break any laws? (1)

JWW (79176) | about a year ago | (#43780361)

If the government really gave a shit about "fair share" for taxes, then they'd charge a flat rate percentage for everyone.

Instead they set up a Byzantine network of policies, tax breaks, and incentives and are shocked, shocked when people and companies actually use them or even modify their behavior to get around them.

I'm getting pretty sick of our government complaining about how poor it is and how everything would be better if us taxpayers, Apple included, would just give them a "fair share" of our money.

If you look at the balance sheet of the US, the money it takes in in taxes makes it by a good margin the richest entity in the entire world. To here members of our government continually bemoaning how the richest people and companies "owe" it more makes me sick. The richest person has two orders of magnitude less net worth than what the government makes in taxes each year. The richest companies are a full order of magnitude smaller in full valuation than the governments annual take.

Our goverment is poor (in debt) only because it sees fit to spend way more than the truly massive amount of money it takes in an effort to exert its power to make us (the citizens, and the world at large) act in the way it wants us too. Enforcing a nanny state and a global Pax Americana is a very expensive undertaking.....

Re:Did they break any laws? (1)

K. S. Kyosuke (729550) | about a year ago | (#43780365)

Sort of like an extortion racket, except it's okay because it's the government doing it :p

That's funny, I've always called it "peer pressure". What's the difference?

Did they break any laws that they wrote? (5, Insightful)

gtbritishskull (1435843) | about a year ago | (#43780379)

I do not have a problem with them not paying more than they are legally required to, but only to a certain extent. And that extent is when they start pumping money into lobbyists and political donations to KEEP those laws unfairly in their favor. If businesses stay out of politics, then they cannot be blamed when they get advantages from it. But, when they essentially buy our politicians and laws, I have a lot less tolerance for the "I was just following the law" excuse.

For example, I had a big problem with Mitt Romney's tax rate, but not necessarily because it was low. The rate was so low because there is a preferential tax rate for carried interest [wikipedia.org] . I had a problem with it because he was on owner of Bain Capital and they had spent millions of dollars lobbying Washington to keep "carried interest" at a preferential rate. When you have bought and paid for a law, then you become responsible for whether it is fair or not.

Re:Did they break any laws? (0)

Anonymous Coward | about a year ago | (#43780393)

Companies that don't conform get "outed" in the media. This bad publicity can cause the companies involved to suffer a punishment of a loss in revenue - the public are less likely to do business with companies they see as not paying their fare share of tax.

Sort of like an extortion racket, except it's okay because it's the government doing it :p

Looks like it's not the government that is doing it, but the public at large.

Re:Did they break any laws? (1)

grasshoppa (657393) | about a year ago | (#43780395)

Because the world is changing and it's no longer socially acceptable to just pay what's legal, it's considered inappropriate to pay less than what people would consider to be a fair amount. If you're paying $1 of tax on $1000 of earnings because you've cleverly nested your business assets overseas in a complex web of tax avoidance schemes, then most people would consider that unfair, even if it is legal.

I'm curious; how do you define "fair", and how would you go about forcing companies to "be fair" when they are not? Think about it for a bit. I think you'll find that's exactly what the law is intended to be, of which ( I'm guessing ) Apple is not in violation of. Our government setup this game, and now it is mad that someone dare play by the rules. Doesn't that seem hypocritical to you?

The problem isn't companies like apple. There will always been companies like Apple. They are a symptom of the underlying problem; government doesn't know how to make tax law.

Re: Did they break any laws? (2)

sabbede (2678435) | about a year ago | (#43780363)

What they did was not only legal, it was rational! The senate is unhappy, but they shouldn't direct their ire at apple for the fault lies with the law that unintentionally encouraged the behavior. I suppose the only way to prevent the exploitation of national tax laws by those operating internationally is by establishing an international tax regime. And good luck with that!

Re:Did they break any laws? (2)

Dunbal (464142) | about a year ago | (#43780377)

I do believe that corporations have to be resident somewhere. Even if it's Panama or the Cayman Islands. You cannot claim that your corporation is not resident anywhere in the world.

Re:Did they break any laws? (2, Insightful)

beelsebob (529313) | about a year ago | (#43780447)

I actually don't understand what the issue is... It seems to be "wha wha wha, apple leaves the money it makes in other countries in those countries, rather than bringing it into the US"... It seems to me that apple is perfectly entitled to do that.

It's certainly nothing compared to google's "We don't sell anything in the UK, it's all in Ireland, honest" bullshit.

Re:Did they break any laws? (1)

leuk_he (194174) | about a year ago | (#43780463)

Laws can change. And that is what your government will do. However Also note that such compannies might be highly mobile, and the production might move to china/india/africa very fast, it that will generate 1% more profit.

The real news is... (5, Insightful)

bmo (77928) | about a year ago | (#43780145)

...Apple isn't the only one that does this.

Taxes are for little people. They aren't for the rich or corporations. Taxes are for you and small-business, not for people and corporations that can hire the best people who know the best methods of tax avoidance (legal) and tax evasion (it's only illegal if you get caught).

--
BMO

Re:The real news is... (0)

Anonymous Coward | about a year ago | (#43780233)

The Apple accountants all passed the Accounting class - Enron Taxation 4500 - can't see what's the problem here

Re:The real news is... (1, Flamebait)

Charliemopps (1157495) | about a year ago | (#43780271)

I don't like Apple, and Steve Jobs was a dick. But... I applaud Apple for not paying into our tax system. What our government does with the money it collects is immoral and often unconstitutional. If Apple had paid their taxes the feds would have likely just used the money to build another domestic spy agency. Fuck the IRS, fuck the government, thank you Apple, even though I'm sure your primary goal was greed, at least your money will get re-invested in some new apple toy and not used to send hellfire missiles into funerals around the world.

Re:The real news is... (5, Insightful)

bmo (77928) | about a year ago | (#43780405)

>But... I applaud Apple for not paying into our tax system.

So instead of the load being distributed properly, you want the government to shift most of the load to your back?

Good to know.

--
BMO

Re:The real news is... (0)

Anonymous Coward | about a year ago | (#43780403)

This loophole seems to be useable for little people too. Anyone can set up a (small) corporation while on a trip to Ireland. And then hold the board meetings at home.

Doing so is the best way to close such loopholes. You earn untaxable money for a little while - but government will wake up if Joe's Garage and Bob's plumbing become untaxable "international corporations". And when the loophole eventually closes, it closes for apple too. Then the little people won't be so alone in paying taxes.

Re:The real news is... (0)

Anonymous Coward | about a year ago | (#43780427)

Don't need to sig your username when it's the same AS your username that is at the top of your comment.

Re:The real news is... (0)

Anonymous Coward | about a year ago | (#43780457)

...Apple isn't the only one that does this.

Taxes are for little people. They aren't for the rich or corporations. Taxes are for you and small-business, not for people and corporations that can hire the best people who know the best methods of tax avoidance (legal) and tax evasion (it's only illegal if you get caught).

-- BMO

I don't agree with this "everybody are doing it" argument. There are degrees,and if the accusations are correct, Apple is doing much more aggressive tax evasion than most others. That deserves legal review and criticism, even if all companies obviously are doing some level of tax planning.

A win for me (0, Interesting)

Anonymous Coward | about a year ago | (#43780149)

My relationship with government is a net loss. Therefore, anything that impedes government on its natural course of continuous expansion is a win in my book -- and that includes both legal and illegal tax avoidance.

Before you get your accusations on, I make less than the national average salary and don't have anything of value to hide in the first place. Regardless, I pay my taxes in full, not because I believe it's morally right, but because I understand the consequences of disobeying coercive authority.

In any event, when others do it -- especially big corporations -- I will be right there cheering them on.

Re:A win for me (5, Insightful)

bmo (77928) | about a year ago | (#43780169)

So all government is evil?

There are plenty of places on the planet with ineffective/nonexistent government. They are all hellholes.

Please move to one of them.

--
BMO

Re:A win for me (1)

schwit1 (797399) | about a year ago | (#43780269)

Government is a necessary evil. Much of it is more evil than necessary.

Re:A win for me (1, Flamebait)

hackula (2596247) | about a year ago | (#43780297)

Somalia is a great example of libertarianism, minarchism, etc. in action.

Re:A win for me (0)

walterbyrd (182728) | about a year ago | (#43780417)

No, the government of Somilia, like all Islamic governed countries, is much more like totalitarianism, than libertarianism.

Re:A win for me (0)

Charliemopps (1157495) | about a year ago | (#43780301)

So all government is evil?

There are plenty of places on the planet with ineffective/nonexistent government. They are all hellholes.

Please move to one of them.

--
BMO

Yes, all government is evil. A necessary evil. If our only protection from wolves at night were a vicious wild dog, would we keep it? Yes... but we'd keep it tied up good and tight (the constitution) and we certainly wouldn't let it roam the countryside marauding every other village whenever it liked. Best thing for it is to deprive it of its food (taxes) to keep it good and weak.

Re: A win for me (1)

JWW (79176) | about a year ago | (#43780449)

Love your analogy.

It too bad our vicious dog that protects is is off the leash and has bred an entire pack and now has us backed into a corner....

Re:A win for me (2, Insightful)

Anonymous Coward | about a year ago | (#43780483)

This is a good analogy up until the "deprive it of food..." bit, since a weak wild dog can't do its job, and, arguably, that is exactly what happened here - a smart wolf came in, stole some of the dog's food, and the dog couldn't do anything about it. Keep developing the analogy though. If you can make the argument of limiting the "dog" without limiting its effectiveness against "wolves" you have a useful rhetorical tool.

Re:A win for me (1)

mysidia (191772) | about a year ago | (#43780343)

So all government is evil?

1. No government is terrible.

2. A little limited government is good.

3. A little more government than a tiny limited government is extremely good

4. A little bit more government is a tiny bit better

5. A lot of government is really no better -- there are diminishing benefits at this point.

6. A big government is a bit worse than (4) -- too costly, too controlling, few advantages over (5).

7. A huge government is much worse than (3) -- massive cost, drain.

8. A massive tyrannical government is terrible -- worse than (1).

Re:A win for me (0)

Anonymous Coward | about a year ago | (#43780355)

Exactly the response I would expect from somebody who refuses to understand his opponent's position. I said that my relationship with government is a net loss. This means that although I benefit from certain government programs, the upside is overpowered by the downside, and the result is a net loss. Therefore, any reduction in the total size of government, measured either in revenue or power over the people, is a win for me -- at least until government is reduced to my break-even point. (I do realize this will never happen, as history shows that governments only expand over time.)

But hey, your tough-guy knockdown of the tiny minority will get you to +5 on slashdot in no time. Congrats!

Re:A win for me (1)

little1973 (467075) | about a year ago | (#43780367)

This is FUD and the general response if someone suggest government is evil.

However, those hellholes which you suggest are basically governed. So, they have government because the definition of government 'is an organization exerting centralized control over a community' (from wikipedia). It is an entirely different issue that those governments wages war against each other and if they are recognized by other governments or not.

Re:A win for me (0)

Anonymous Coward | about a year ago | (#43780179)

Your conclusion does not follow from your premise. If the reduction of tax income to the government translates to a reduction in the budget allocated to the portion of its activities that are a net gain to you (presumably not all of the government's activities are a loss to you), instead of the portion that are a net loss to you, then the reduction in tax money is still detrimental to you.

Mind you, that may not be the case; I'm just pointing out that you can't make the assumption that the budget change will affect everything equally.

Re:A win for me (4, Insightful)

Sockatume (732728) | about a year ago | (#43780181)

You understand that the government offsets lost or unavailable corporate tax revenue by increasing the taxes it does collect, i.e. yours, right?

Re:A win for me (1)

jbmartin6 (1232050) | about a year ago | (#43780339)

No it doesn't it just prints the money.

Re:A win for me (2)

gewalker (57809) | about a year ago | (#43780345)

You understand that corporations don't pay taxes, people do. Either in the form of higher prices on products, reduced income from investments or a combination of these. Government like corporate taxes since this obscures the tax burden from the voters and the popular politics of envy.

All taxes are evil, but they are a necessary evil in that governments do things that make life better (provide for the common defense, establish courts, etc.). However, it is very common for governments to overspend (i.e., in things not for the common good) and likewise overtax. Overtax and over regulation results in reduced liberty and economic growth, under tax and regulate and you have reduced liberty and economic growth as well.

So, while I expect Apple to minimize their tax burden legally it is not fair. What would be so terrible about replacing the tax system with something simple and fair so that the little company does not pay higher rates than large companies that can afford complex tax schemes, etc. My company pays rates much higher than Apple, Google, etc. because I can't play their games.

Re:A win for me (5, Insightful)

pod (1103) | about a year ago | (#43780381)

Judging by the deficit... I'm gonna go ahead and disagree with you.

Re:A win for me (1)

TrollstonButterbeans (2914995) | about a year ago | (#43780441)

You understand that the government offsets lost or unavailable corporate tax revenue by increasing the taxes it does collect, i.e. yours, right?

That's hilarious. Then how do we have a $17 trillion debt in the USA?

What you are saying is absolutely untrue. And money is not a "fixed supply", George Washington's government didn't have $17 trillion dollars --- and they had coins like the "Half-Cent". There isn't even $17 trillion dollars in the entire world --- the circulated physical currency for the USA is about $900 billion, so the other $30 to $50 trillion or so lives inside computers and with some frequency the US government decides just to "make some up" and they use it buy debt.

Re:A win for me (0)

Anonymous Coward | about a year ago | (#43780209)

My relationship with government is a net loss.

I make less than the national average salary

lol. Why are poor people always so delusional?

Re:A win for me (1)

Vanderhoth (1582661) | about a year ago | (#43780313)

lol. Why are poor people always so delusional?

I think it's a contributing factor to why they're poor in the first place.

Re:A win for me (2)

K. S. Kyosuke (729550) | about a year ago | (#43780401)

I pay my taxes in full, not because I believe it's morally right, but because I understand the consequences of disobeying coercive authority.

You must be religious. You know, one of those people whose brain works along the lines of "It's good that we have God to send us to hell if we murdered someone; imagine how many people would go on a killing rampage if there were no God - I know I would!".

Re:A win for me (1)

beelsebob (529313) | about a year ago | (#43780491)

So you don't ever use any of the services provided by government then? You never use a road, a railway, an airport, the education system, water, trade with other countries, defence against foreign invaders, and tons of other stuff?

If you don't, then fair play to your "net loss", but frankly... get using those services!

But was it illegal? (1, Troll)

frdmfghtr (603968) | about a year ago | (#43780171)

Ok, so Apple took advantage of tax loopholes and routed income offshore. The real question is: was it illegal?

How many other companies do the same thing? Is Apple being targeted just because they're Apple? Did they not make the right p

When other international companies do the same thing?

Re: But was it illegal? (1)

frdmfghtr (603968) | about a year ago | (#43780177)

Darned mobile entry, posted before I was done...

That fragment should read:

Did Apple not make the right political donations?

Re:But was it illegal? (4, Insightful)

smash (1351) | about a year ago | (#43780239)

Yes, apple are being targeted. In australia, we have a term for this. It is called "tall poppy syndrome".

Yes, other companies do it. Any company that does NOT do everything within the law to minimize their tax burden is both not doing the right thing by their shareholders, and handing their competitors a competitive advantage.

If apple have been avoiding tax like this, and you disagree with it, petition your government to get the loopholes tightened. If it is possible to structure their business to minimize the amount of tax they pay, then why shouldn't they?

If Tim Cook or whoever wants to donate their own money to charity or pay more tax than they need to that is their decision. However the money apple makes isn't owned by apple. It is owned by the company shareholders - who will pay tax on any dividends or capital gains from sold shares in any case.

Re:But was it illegal? (1, Insightful)

CastrTroy (595695) | about a year ago | (#43780467)

Or possibly many of the shareholders are smart enough (or can pay someone smart enough) to find their own tax loopholes. The is the real problem as you pointed out. The tax system is too complicated. Making things too complicated allows for loopholes. Also Apple employs more than 50,000 Americans [apple.com] . Mind you those are Apple's numbers, so take them as you will, but I'm sure there's no denying that Apple is a doing a lot of good for the US economy.

Re:But was it illegal? (0)

Anonymous Coward | about a year ago | (#43780245)

They're the fifth largest US-based company by revenue, and the only one in the top five that isn't an oil company or Walmart.

On the other hand I'm not sure that the US has a special right to levy taxes on money earned in other nations.

Re:But was it illegal? (1)

Stormthirst (66538) | about a year ago | (#43780443)

But it's rarely earned in another country. It's earned in western countries - America, Canada, Europe.

No shit! (1)

ta_gueule (2795275) | about a year ago | (#43780173)

They do that?
What's news is that someone in the government has just learned what everybody knows. Wake me up when they do something about it.

blahblah (1, Insightful)

smash (1351) | about a year ago | (#43780183)

If it is legal, and apple DIDN'T do it, then they are not doing what is in the best interest of their sharheolders.

Don't like it? Get the law changed. Corporations exploiting the rules for profit is just what they do. I'm sure every single person here tries to ensure they get the biggest tax refund / avoids paying as much tax as they legally can.

Re:blahblah (2)

jbmartin6 (1232050) | about a year ago | (#43780357)

You forget that when someone else does this, it/they are not paying their "fair share". When I do it it is perfectly reasonable.

Re:blahblah (1)

jkflying (2190798) | about a year ago | (#43780423)

The shareholders are already paying tax on that profit in the dividends they get, so I don't really see why they should pay twice.

Good (0)

Anonymous Coward | about a year ago | (#43780195)

As an AAPL investor, Good. They should be taking every LEGAL means to make money. If congress is so upset, they should change the laws. Or better yet, how about not putting the loopholes in there in the first place. I hope Tim stands up to those idiots and calls them out for their stupidness.

Re:Good (1)

inode_buddha (576844) | about a year ago | (#43780265)

And how much would you like to bet that aple is just one of many companies that paid congress top put those loopholes there in the first place, via campaign "contributions" and general lobbying?

Re:Good (4, Insightful)

smash (1351) | about a year ago | (#43780399)

If this is the case, the root cause of the problem is your government, not Apple/Google/GM/whoever.

If you suspect the government is doing this (from the outside, it's pretty clear actually) why the fuck haven't you guys had another revolution yet?

Too much time on Xbox? Complaining about it on the internet is more attractive?

Intellectual property (1)

Anonymous Coward | about a year ago | (#43780229)

This is what you get when you allow people to own and trade intangibles. That stuff can move anywhere, and then it's rented back to siphon off the actual profits into a tax haven. The people who develop, build and sell the devices in the real world apparently all work for naught, because no matter how hard they work, they can't make a dime over the cost of the intellectual property that they have to rent from an offshore letter box, which makes all the profit with no people except a handful of lawyers working for it.

No tax, no law? (5, Interesting)

PhilHibbs (4537) | about a year ago | (#43780235)

If these foreign subsidiaries aren't "tax resident in any nation", are they protected by the laws of any nation? It seems odd that a company can exist and be recognized as an entity that can hold property without being incorporated in a recognized nation. Can't we just take their stuff and see who they turn to for the protection of law?

Re:No tax, no law? (0)

Anonymous Coward | about a year ago | (#43780359)

Sure, but they don't have any physical property either. There is no "office building in no-mans land" to freely pillage. Apparently, these nowhere companies hold "apple intellectual property". So if you somehow get your hands on OSX source code - perhaps you can share it without punishment. But how would you get that without breaking into apple headquarters - which is still illegal?

Re:No tax, no law? (1)

Dunbal (464142) | about a year ago | (#43780461)

You can't not be a resident of any nation. You are automatically resident in the nation where your corporation was drawn up and "incorporated", and you can provide documentation to substantiate a change of residence for tax purposes. If you say, become resident of Costa Rica for tax purposes (Costa Rica currently has no income tax on income derived outside of Costa Rica), you don't have to pay tax on foreign income. If you earn one penny in Costa Rica, you have to pay tax on it. If you earn in the US, you pay tax on it before it leaves the country. You can't just "renounce" your residence and pretend that's a "Get out of Taxes Free" card. That's not tax avoidance, that's tax evasion.

Re:No tax, no law? (1)

bio_end_io_t (2771123) | about a year ago | (#43780445)

If these foreign subsidiaries aren't "tax resident in any nation", are they protected by the laws of any nation? It seems odd that a company can exist and be recognized as an entity that can hold property without being incorporated in a recognized nation. Can't we just take their stuff and see who they turn to for the protection of law?

I think this is a great idea. It would be especially ironic since Apple banned the drone strike tracking app from their app store.

Re:No tax, no law? (1)

rroman (2627559) | about a year ago | (#43780469)

You can take their stuff if you find it. I imagine this as a boat with gold sailing in international waters. This boat is not protected by any country, but you can't steal it, because you don't know, where it is.

Why do we still bother with corporate taxes? (0)

Loco3KGT (141999) | about a year ago | (#43780237)

I'm hoping someone with some econ knowledge can enlighten me, although I fear since this is the Internet and Slashdot comments it's probably not going to happen ;-) I've never heard of a situation where companies tried to pay taxes because they like them and if they're publicly traded they had a fiduciary responsibility to avoid them in order to maximize returns to the shareholders, and when forced to pay them they just try to find ways to force the cost down to the customer.

So why do we bother at all? Personally, I'd rather pay higher property/income taxes and abandon corporate taxes so that money comes back into the country for reinvestment and so that the companies don't leave the country and expand their business elsewhere.

Re:Why do we still bother with corporate taxes? (1)

smash (1351) | about a year ago | (#43780307)

Why do we bother? It wins votes. The little guy (i.e., the masses) likes that the government is seemingly "taxing the big boys".

Taxes (3, Insightful)

shellster_dude (1261444) | about a year ago | (#43780243)

With the recent IRS debacle and large corporations like Apple and Facebook avoiding billions in taxes, it should be obvious to everyone that taxes are not about fairness. They are a weapon to be wielded by government to attack opposition and to grant favors to business cronies who elect them and donate to them. If ever there was an argument for a simple tax system, like a flat tax, this is it.

Re:Taxes (1)

mrego (912393) | about a year ago | (#43780437)

Flat tax is so fair and sooo simple. Until you need to define what income is so you can take a percentage of that. Then suddenly the reality sinks in that it is NOT simple. Like avoiding sales tax, soon everyone is claiming to be a wholesaler, not a retailer. Soon everyone says their revenue is different and thus not income, etc. And the essential complexity of what will or won't be considered income leads to unfairness. Hate to burst the fantasy bubble of the flat taxers, but that is the reality. Just as people think, oh, let's just legalize drugs so there's no enforcement costs or extra crime on top of the underlying drug crime.... and we can even make money on tax revenue. So simple. So easy. Another fantasy. "Legalization" means regulation: where the product can be sold, how, when, checks for purity, insurance, worker's comp, safety requirements, disabled access, and of course taxes...which many will evade by, surprise!....crime. Why sell in a legal shop under expensive legal conditions and pay legal taxes when you can conduct illegal business as usual? Once again, "legalization" is not so simple and easy and does not remove the problem. So please stop the simplistic pontificating... "If only we had a flat tax." "If only..." Real life does not have easy solutions, unfortunately.

Hehehe... (0)

Anonymous Coward | about a year ago | (#43780261)

I can't wait for Apple's new product, the iShore account!

Apple’s side: (5, Informative)

Udo Schmitz (738216) | about a year ago | (#43780287)

Why not link to their answer as well?

http://images.apple.com/pr/pdf/Apple_Testimony_to_PSI.pdf [apple.com]

“Apple does not move its intellectual property into offshore tax havens and use it to sell products back into the US in order to avoid US tax; it does not use revolving loans from foreign subsidiaries to fund its domestic operations; it does not hold money on a Caribbean island; and it does not have a bank account in the Cayman Islands. Apple has substantial foreign cash because it sells the majority of its products outside the US. International operations accounted for 61% of Apple’s revenue last year and two-thirds of its revenue last quarter. These foreign earnings are taxed in the jurisdiction where they are earned (“foreign, post-tax income”).”

Re:Apple’s side: (1)

smash (1351) | about a year ago | (#43780419)

The US market isn't the centre of the universe! Who knew! (/sarcasm)

Expect this trend to continue as the chinese market explodes.

Re:Apple’s side: (0)

Anonymous Coward | about a year ago | (#43780421)

I think it's because that's counter to the finding that "The maker of iPhones and iPads used at least three foreign subsidiaries that it claims are not “tax resident in any nation” to help it avoid paying billions."

“Apple wasn’t satisfied with shifting its profits to a low-tax offshore tax haven,” Sen. Levin said in today’s statement. “Apple sought the Holy Grail of tax avoidance. It has created offshore entities holding tens of billions of dollars, while claiming to be tax resident nowhere."

Source is link from the article: http://www.forbes.com/sites/connieguglielmo/2013/05/20/apple-used-loopholes-to-skip-paying-44-billion-in-u-s-taxes-senate-committee-claims/

This is what consumers support (1)

Anonymous Coward | about a year ago | (#43780349)

On the whole, consumers stand 100% behind Apple and their practices.
http://www.aljazeera.com/programmes/activate/2011/09/201194144739197637.html
http://www.aljazeera.com/programmes/activate/2011/09/20119994239791675.html
It does not wash from those who claim Apple has no idea what is going on. Do you think they would give away their trade secrets and manufacturing to complete strangers blindly? You would think that Apple would reward their biggest clients (USA) by having a larger manufacturer presence there, as a thank you. There is a point you get so rich, that you cannot really lose. I am sure US Senators would bend over backwards for them to help establish a serious manufacturing presence in the USA. This tax fiasco in one more thing. Sure Apple does lawful tax evasion, why not? It is the citizens who should take them to task, but don't. Apple can use harmful DRM, exploit labor, evade taxes (for a cash-strapped nation), even though they have all the money--as long as people have their Apple products, it's fine.

Apple is one example of a populace's willful blindness in order to get at what they want. Sort of like shopping at Walmart, a company that does tremendous harm to US national interests http://vimeo.com/52359213
The populace continue to willfully ignore. Nobody cares. "Give me my Apple", "The Chinese are lucky to have jobs, who cares about their conditions", etc, etc. This sort of thing is standard US corporate operating procedure. It should not really be the courts who punish, but a conscious, informed populace.

Actually only one "loophole" matters. (4, Informative)

guidryp (702488) | about a year ago | (#43780369)

All the foreign "loopholes" actually only help Apple avoid paying foreign taxes, those aren't about US taxes at all. These seem more about adding to the political theater of the government going after tax dodgers.

The entirety of Apples foreign cash horde earned on foreign sales, is subject to US taxation. Not one of those foreign shell games protects those earnings from US taxation. In fact they make the cash horde larger, making it potentially sweeter for US taxation.

But here is the one "loophole" that really counts. US Taxation doesn't come into effect until Apple repatriates the cash, which there is no requirement that Apple (or any other US corporation) ever actually do.

This is why US corporations have 1.45 Trillion dollars parked outside the USA.
http://www.forbes.com/sites/afontevecchia/2013/03/19/u-s-companies-stashing-more-cash-abroad-as-stock-piles-hit-record-1-45t/ [forbes.com]

Outrage! (5, Funny)

paiute (550198) | about a year ago | (#43780429)

Congress needs to mount an investigation to find the batch of idiots who wrote these tax laws which allow corporations to do this!

Consumers stand 100% behind Apple's practices (1)

ikhider (2837593) | about a year ago | (#43780439)

Apple pursued lawful tax evasion, so it is acceptable. It does not matter if Apple use exploited labor to achieve their goals, harmful DRM, (lawfully) evade taxes, and not thank their biggest customer (USA) by establishing a larger manufacturing presence. http://www.aljazeera.com/programmes/activate/2011/09/201194144739197637.html [aljazeera.com] http://www.aljazeera.com/programmes/activate/2011/09/20119994239791675.html [aljazeera.com] Apple are not much different from Walmart, who harm US national interests by their practices: http://vimeo.com/52359213 [vimeo.com] Consumers do not care. Ideally, a well informed populace would take Apple and any other corporate entity who harms US interests to tasks. They could boycott, organize protests. Instead, consumers reward this behavior, so why should Apple not do whatever it wants?
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