Taxes
"Poor old Apple, no what which way it turns, some government is starting to take away its hard-earned cash."
Yes, and the terrible government will no doubt throw it away on schools and hospitals and roads.
Apple CEO Tim Cook may pull billions of dollars in profit out of Europe and bring them home to the US, less than a month after he vowed he wouldn't. In the aftermath of the massive €13 billion ($14.5 billion) back tax claim that the European Commission landed on the electronics giant and the Irish tax authorities, Cook has …
Apple seems to think the state of the art is products that lack certain compelling standardised functions unless they have a plethora of reassuringly expensive adaptors dangling off them (e.g. Lightning to Ethernet, Lightning to 3.5mm jack, Optical drive).
To clarify: 1. GbE is preferable to Wifi because it doesn't suffer the same contention as Wifi does from other adjacent users and networks. 2. The 3.5mm jack port may be an old standard but unlike floppy disks it isn't obsolete. Some may consider swapping passive headphones for Bluetooth equivalents that need regular charging to be a retrograde step. 3. Just because you paid again to stream everything from iTunes over your ubiquitous 5 bar 4G LTE connection doesn't mean we all can or want to.
The ploy to try to get USA to fight Eu for a fair share is extremely cute.
Ain't going to work though. USA may throw as many toys out of the pram as it likes - it will not stop the knitting lady. She already nailed Fiat, BP, Starbucks and 40+ other multinationals using the same method. Every single one of them paid up (albeit the bills were smaller - up to a few 100M). So will Apple. And Google. And Amazon. And Facebook. And everyone else. The cosy days of the Barrosso Eu commission when competition inquiries were launched only upon complaint and terminated when the complaints were withdrawn are done. The direction has changed and in a way which is good for all of us (in the long term - even Apple shareholders).
I have no sympathy for Tim. Money is like manure, you need to spread it around to make new things grow. The state collecting it and using it on fundamental science R&D, education, infrastructure, etc is the order of things. Without it, we get a perverted "innovation" scenario where the sole innovations are yet another round of social sharing economy w*nking. The mere fact that we went to the moon when we paid taxes and we cannot even contemplate it today when we allow companies to Leprechaun them, should say everything there is to be said on the matter.
The story does not end with lack of money for education, science, etc. It starts there. When money is taken out of circulation and Leprechauned, inflation drops leading to overall economy stagnation, states using defibrillation techniques like quantitative easing which do more harm than good, destruction of savings which pretty much equates to destruction of middle class and social stability - you name it. The list of effects from Lepperchauning money comparable to countries GDPs out of circulation goes on for quite a while and none of the macroeconomic effects are pretty (to say the least).
So frankly, Tim, pay up - same as we do. I may cringe when I see the 40% rate Her Majesty Revenue and Customs asks me to pay, but I pay. There are two inevitable things in life - you die and you pay taxes.
""and medical science is working to eliminate death.""
"That's just so you can keep on paying taxes"
Meanwhile Accounting 'Science' is applying to the Supreme Court to repeal the laws of physics and mathematics...
i.e.
The wave function of a Head Office does not collapse even when someone looks for it.
1+1 = whatever we say it is..
I may cringe when I see the 40% rate Her Majesty Revenue and Customs asks me to pay, but I pay. There are two inevitable things in life - you die and you pay taxes.
That would be OK if that tax indeed went to the benefit of all, instead of wasted on "friends" like consultancies blowing it on projects that never deliver. It may seem strange, but I disagree with the idea of taxing high end earners more: if we taxed them the same it would offer less of an incentive to go creative on ways to save tax. Just my two cents ex VAT.
"When Trump is President, Apple will not pay anything near a 35 per cent repatriation tax. More like 15 per cent. Good timing Tim!"
i suspect this move is nothing more than a paper tiger threat to try to encourage the European Commission to think again...which just won't happen. The idea that in real life Apple is going suddenly turn over a new leaf and start voluntarily paying corporate tax at 35% in the USA is quite risible.
BTW, one Gary Johnson (who's a far more credible candidate anyway) will end up splitting the centre right vote in November thus ensuring that Trump never gets near the White House to reduce that 35% corporate tax rate.
They really should not be letting this stay in the headlines in the run up to their next product launch. Agree to pay, though perhaps with some negotiations, promise to be a good corporate ciitzen and get out of the headlines. Otherwise, this will still be in people's minds when next week. And, when they're supposed to be thinking "must have shiny, shiny", they may still be thinking: so 0.0005 % of the $ 900 is all the tax Apple pays?
Trying to fight this is lose-lose for Apple: it's back tax on sales in the EU that have already happened through an Irish-based tax shelter so repatriation isn't an offer and all the precedents are against appealing. Apple has hundreds of billions in cash so even this massive bill will hardly effect them. Hell, if they're accountants get them to offset share buybacks against tax, then I'm sure they can come up with a suitable scheme to minimise the actual pain.
And get lobbying for tax reform in the US: not just the corporate rate, but on taxing only where sales are made. A simpler tax system will benefit Apple almost as much as wheezes like this.
I read an article on this very tome, that quite convincingly argued that corporation tax is a stupid idea - and that this type of mess is what happens in the transition (and EU was setup to assist in pushing it down to zero).
When you buy your device you pay tax where you bought it (e.g. VAT), then the people who made this possible pay tax (income tax on the Irish/UK/wherever employees) and finally the company should pay tax through their shareholders (you get a dividend, or sell your shares, you pay your local tax on your profits in the same way you would on any other income).
Taxing a company for having more money in the bank just seems bizarre. A company isn't a person, despite some countries best-effort in making a corporation such an entity (yes, I read that book).
And taxing private income does exactly the same (although most private citizens have a little less budget to pay tax-avoidance lawyers).
Apart from simply collecting money, another role of taxation is to keep the money flowing to productive use. That's why there are investment tax breaks. Again, that's not so different for private and company capital.
Taxes pay for things that companies and people need - security, clean water, fast network access and the infrastructure to support civilized life. If Tim Cook really feels that taxes are bad why doesn't he simply move to Mogadishu ... I'm sure that with only a tiny kickback he could pay even less tax there.
>Taxing a company for having more money in the bank just seems bizarre.
Corporations aren't taxed on "money in the bank" any more than people are. They are taxed on net income.
With zero corporation tax, you can store money above your needs in a corporation, go traveling for a year (becoming non-resident) and then bring your money back into the country as "wealth" rather than income, or simply retire and never go back to the US. Think of it as adding 35-40% to your pension every year.
The US may think its jurisdiction is "the world" but other countries do not.
Sorry, but have to correct you there from an "international" perspective; I don't know about companies, but there are indeed countries where people are taxed on "money in the bank", or more broadly, just having capital like savings, or property (e.g. house). This then isn't "new" money (aka income), but just money that is sitting there year after year, and the tax office is taking a piece of every year...
That isn't what is happening. Apple are allocating overheads disproportionately to revenue and using high international transfer prices that ensure their profits are not made where the revenues are. The financial engineering of indirect costs andtransfer prices and "Corporate charges" ensures profits are made in the lowest tax regime, artificially.
VAT is a sales tax, not a tax on the business of manufacture and sale to the final retail channel, why it is not levied on essentials . It transfers taxation from income tax to actual consumption and has little effect in the manufacturer/supply chain, who only pay VAT on their net profit, not sales value. All obvious basics. . And everything Apple make is a de facto overpriced luxury item, no one needs to pay that much to do what they do.
Tim is annoyed but not half as much as the people who have finally started to wake up that the system in place for the past 40 odd years has actually not benefited them, just the rich.
Hence we have Brexit , Trump and similar politicians emerging around the world. Many of them barking mad or incompetent but desperate people try desperate remedies.
The 'Establishment' needs to do a quick review and actually get on with serving the people as they claim to do but have not.
"Poor old Apple, no what which way it turns, some government is starting to take away its hard-earned cash".
Now they know how employees feel. Except that in the UK we pay much more, because National Insurance contributions allow high tax on employees' pay and a more modest rate on "investors" (who can move their money elsewhere).
(Anonymous because this won't be popular)
Whatever the moral rights and wrongs of how much tax Apple did or didn't pay, the problem here is about the law. Ireland and Apple entered into an agreement - which you may disagree with, and now it is being upended.
What does this mean for future investors anywhere in Europe? That they can't be sure that anything that the host government says to them will actually hold water?
If they said: "naughty children, start paying more taxes now", that would be less damaging than to do it retroactively.
And if Ireland was 'guilty' too, why don't they get a 'fine'?