4 ms·

Please explain how Apple a company that made a computer in china, and then sells that same compute run china, and keeps the profits from selling the computer in

by MCRed 11y ago

Please explain how Apple a company that made a computer in china, and then sells that same compute run china, and keeps the profits from selling the computer in China is "stashing its profits overseas". This argument presumes that all money made worldwide should be taxed in the USA. No country does that.

kobayashi 11y ago
Exactly. The people arguing to "close tax loopholes" don't understand that it's not loopholes being used by companies who haven't yet repatriated large sums of money. It's a product of sovereignty. Those companies need to be incentivized to patriate their money, but the current tax regime simply makes keeping money abroad the financially responsible decision.
- gozo 11y ago
  Well, I literally (literally) slept trough this discussion, but for the record please tell me how the "check the box" rule is not a loophole. It was a mistake from trying to make the tax rules simpler which wasn't supposed to happen and they've tried to repeal it multiple times without success. http://www.reuters.com/article/2013/05/31/us-usa-tax-checkthebox-insight-idUSBRE94T17K20130531 http://www.reuters.com/article/2013/05/31/us-usa-tax-checkth...
  - kobayashi 11y ago
    Hmm, that's an interesting article. Although I'm familiar with the commonplace tactic of oversees shifting of profits, I never knew that the legal principle described in the article as "check the box" was widely considered to be a tax loophole.
istjohn 11y ago
The value of Apple's products is in the design and other intellectual property development, which is created in the US by American workers.
Eridrus 11y ago
This isn't really what happens though, they avoid paying taxes in China too by running everything through their Irish subsidiary. And then it gets parked there while they demand a tax holiday so that they can distribute these profits to their shareholders.
JacobAldridge 11y ago
Worth researching the concept of "Controlled Foreign Corporation". If I live in Missouri [1], have a manufacturer make a computer in China, sell it China, and run everything through my Chinese company ... the IRS would still tax me as if the profits came through the USA because the foreign company is deemed "controlled" through the USA. So Apple, due to their size and structure (many more shareholders) can create subsidiaries and shelter revenue to avoid tax in a way that I cannot. [1] I'm not 100% au fait with US Tax Law in this regard. Being an Australian and UK Citizen I know those jurisdictions more intimately, but understand the US is similar. This is separate to the USA's "citizen-based" (rather than residency or territory based) tax system, which chases income/tax for citizens around the world. The FEIE alleviates some of this, but Eritrea is the only other country that "does that".

by MCRed 11y ago

kobayashi 11y ago

Exactly. The people arguing to "close tax loopholes" don't understand that it's not loopholes being used by companies who haven't yet repatriated large sums of money. It's a product of sovereignty. Those companies need to be incentivized to patriate their money, but the current tax regime simply makes keeping money abroad the financially responsible decision.

gozo 11y ago
Well, I literally (literally) slept trough this discussion, but for the record please tell me how the "check the box" rule is not a loophole. It was a mistake from trying to make the tax rules simpler which wasn't supposed to happen and they've tried to repeal it multiple times without success. http://www.reuters.com/article/2013/05/31/us-usa-tax-checkthebox-insight-idUSBRE94T17K20130531 http://www.reuters.com/article/2013/05/31/us-usa-tax-checkth...
- kobayashi 11y ago
  Hmm, that's an interesting article. Although I'm familiar with the commonplace tactic of oversees shifting of profits, I never knew that the legal principle described in the article as "check the box" was widely considered to be a tax loophole.

istjohn 11y ago

The value of Apple's products is in the design and other intellectual property development, which is created in the US by American workers.

Eridrus 11y ago

This isn't really what happens though, they avoid paying taxes in China too by running everything through their Irish subsidiary. And then it gets parked there while they demand a tax holiday so that they can distribute these profits to their shareholders.

JacobAldridge 11y ago

Worth researching the concept of "Controlled Foreign Corporation". If I live in Missouri [1], have a manufacturer make a computer in China, sell it China, and run everything through my Chinese company ... the IRS would still tax me as if the profits came through the USA because the foreign company is deemed "controlled" through the USA. So Apple, due to their size and structure (many more shareholders) can create subsidiaries and shelter revenue to avoid tax in a way that I cannot. [1] I'm not 100% au fait with US Tax Law in this regard. Being an Australian and UK Citizen I know those jurisdictions more intimately, but understand the US is similar. This is separate to the USA's "citizen-based" (rather than residency or territory based) tax system, which chases income/tax for citizens around the world. The FEIE alleviates some of this, but Eritrea is the only other country that "does that".