7 ms·

I still don't understand why companies avoid local taxes. It doesn't make any sense to me. Their fiduciary duty is to act in the best interests of their investo

by cryptoz 10y ago

I still don't understand why companies avoid local taxes. It doesn't make any sense to me. Their fiduciary duty is to act in the best interests of their investors. Unless the investors all consider their best-case-scenario to live in a world of anarchy and lawlessness, it is obviously in everyone's best interest (financially and otherwise) to pay taxes as expected. Anything else is an affront to the structure of modern civilization. It is not in the best interest of Apple shareholders for the quality of life in the US/California/etc to deteriorate due to missing tax dollars. Long-term, stable societies are much more useful for making money than a few billion in secret stash tax havens.

zyxley 10y ago
https://en.wikipedia.org/wiki/Tragedy_of_the_commons https://en.wikipedia.org/wiki/Tragedy_of_the_commons
s_m_t 10y ago
You are assuming that the government is going to use those resources better than the company avoiding the taxes. Not everyone agrees with this. From this point of view everyone is acting rationally, they only might disagree about one specific assumption.
- kartan 10y ago
  Maybe government is not as efficient providing citizens with firefighters, teachers, and other services. Maybe that companies are extremely efficient giving money to their shareholders. But I don't see your point.
  - aianus 10y ago
    Both of those things are paid by municipalities out of property taxes. They would not be affected in any way by Apple's corporate tax dodges.
    - tormeh 10y ago
      This... is not about the US. Things work slightly different elsewhere.
      - icebraining 10y ago
        cryptoz post (the parent of this whole thread) was about the US & California.
        heroprotagonist 10y ago
        To be fair, the only place a jurisdiction was mentioned was the phrase "US/California/etc", and "etc" would seem to include other locations.
aianus 10y ago
I'd rather pay taxes to Apple, Tesla, and Google than the US government. At least they're competent.
- oconnore 10y ago
  So, in case anyone else hadn't noticed, we have reached peak libertarian techie madness.
  - bitJericho 10y ago
    What op doesn't realize is that he already does. It's called the CEOs salary and its sometimes 30000 times that of the lowest paid worker, who of course survives with welfare.
  - s_kilk 10y ago
    It's almost as if none of these guys have ever read any nightmarish dystopian cyber-punk fiction. Megacorps as stand-in for governments == bad.
    - icebraining 10y ago
      Or they don't happen to think that cheap sci-fi pulp, which is the vast majority of cyber-punk, are a good argument for or against anything.
      - Apocryphon 10y ago
        "We live on an internet created by corporate persons, our government is hacked by Russian spies, and virtual reality is real now, dear." - https://www.youtube.com/watch?v=gazACJ0R1Hc https://www.youtube.com/watch?v=gazACJ0R1Hc
- jamroom 10y ago
  Really? At least with taxes your money is likely to stay local (whether you agree with how it is spent or not), whereas with a multinational corp like Apple, Tesla or Google your money is just as likely to go somewhere outside the country.
rrggrr 10y ago
Here is an amazingly well written explanation as to why, how and whats likely to come of it. http://www.cumber.com/the-euro-dollar-riot/ http://www.cumber.com/the-euro-dollar-riot/ Excerpt: The US has peculiarities in its income tax code that create these incentives for companies to avoid repatriation. The last time those peculiarities were lifted was in 2004 when then-President Bush allowed a one-year repatriation tax break. Over $300 billion flowed back into the US. Discussions about repeating that tax break are stymied in the current administration. Estimates are that as much as $1 trillion in repatriation would potentially occur if the Congress and the White House could agree on this issue. With the election approaching this is one issue on which Trump speaks eloquently.
- omegaworks 10y ago
  >The last time those peculiarities were lifted was in 2004 when then-President Bush allowed a one-year repatriation tax break. What a disastrous moral hazard. The Bush family truly failed this country; they've left scars that will be felt for generations.
- balls187 10y ago
  > With the election approaching this is one issue on which Trump speaks eloquently. For those curious. http://www.bloomberg.com/news/articles/2016-08-24/trump-s-offshore-tax-cut-pitch-falls-flat-in-silicon-valley http://www.bloomberg.com/news/articles/2016-08-24/trump-s-of...
jasode 10y ago
> a few billion in secret stash tax havens. Fyi, Apple's stash of billions in foreign corporate structures is not "secret".[1] The IRS, the California State government, and all the Wall Street analysts know the money is over there in Ireland. In any case, Apple is complying with the law and paying the relevant foreign taxes (which are lower than the USA rates). Since their revenue shuffling is not illegal, the more accurate criticism is if Apple is abusing legal loopholes. A lot of people feel they are. [1]https://en.wikipedia.org/wiki/Double_Irish_arrangement https://en.wikipedia.org/wiki/Double_Irish_arrangement
- justincormack 10y ago
  The money is not in Ireland. It goes to Bermuda. The shuffling was illegal, that is why they are going to be made to repay billions. It was illegal for the Irish to not charge them the standard rate, not illegal for Apple to try to do a deal.
  - nodamage 10y ago
    Bermuda? Can you provide a reputable source for this? As far as I am aware, Apple does not have any subsidiaries in the Caribbean.
    - jasode 10y ago
      The Bermuda connection is explained in the wiki link I cited.
      - nodamage 10y ago
        That Wikipedia article describes the general strategy of the "double Irish arrangement" as employed by many multinational corporations, but does not actually describe Apple's international corporate structure specifically, and to the extent that it mentions Apple, is actually rather misleading. I'm just going to go ahead and state, as a matter of fact, that Apple does not have any subsidiaries in Bermuda or any other Caribbean country, and anyone who believes otherwise is mistaken. Apple's international tax structure was thoroughly documented when they were called up to testify before the Senate, which you can read about in the Senate Subcommittee Memo on Offshore Profit Shifting and Apple[1], and while they do have several Irish subsidiaries, they do not have any subsidiaries in the Caribbean or move any money into the Caribbean. This is further reinforced in Apple's testimony before the Senate[2]: > 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”). [1] http://www.hsgac.senate.gov/download/?id=CDE3652B-DA4E-4EE1-B841-AEAD48177DC4 http://www.hsgac.senate.gov/download/?id=CDE3652B-DA4E-4EE1-... [2] https://www.apple.com/pr/pdf/Apple_Testimony_to_PSI.pdf https://www.apple.com/pr/pdf/Apple_Testimony_to_PSI.pdf
alexbecker 10y ago
This is precisely the tragedy of the commons. Apple's share of the tax base, while enormous compared to say mine, is still small. Furthermore, Apple's investors are a very small portion of the population, so only see a small part of the benefit of tax spending. So it's clearly worth saving a giant pile of money in exchange for very slightly worse gov't services.
eridius 10y ago
By your logic, everybody should pay far more than the taxes they owe. The honorable judge Learned Hand (yes, really) once said > There is nothing sinister in so arranging one's affairs as to keep taxes as low as possible. Everybody does so, rich or poor; and all do right, for nobody owes any public duty to pay more than the law demands: taxes are enforced exactions, not voluntary contributions. To demand more in the name of morals is mere cant. As long as companies are staying within the bounds of the law, it's perfectly reasonable for them to keep their tax bill as low as possible, and one might even argue that (for public companies) they're required to do so in order to perform their fiduciary duty to their shareholders. If you have a problem with the "loopholes" that companies use to lower their tax bill, you should take it up with the people who make the law, not the companies that follow the law.
- Analemma_ 10y ago
  Stop posting this damn quote. Just stop it. It's disingenuous and dishonest in the extreme, and whatever relevance it may once have had is long gone. I'm so sick of hearing it in every Hacker News discussion of corporate tax, by ostensibly intelligent people. Here's why: for tax regulations created through a transparent democratic process and a popular mandate, this quote might be proper, but that's not what happens. The kinds of tax loopholes that allow for companies like Apple to dodge their obligations are created through corruption and regulatory capture, and would be choked off in a heartbeat if the general public actually had any say in the matter. Worse, they're simply not available to schlubs like you and me, so it's not a level playing field. To set up these loopholes in a corrupt way, and then use this quote (and the broader attitude of "It's legal, so it's OK!") to gag people from complaining about it, is despicable.
  - sverige 10y ago
    > created through corruption and regulatory capture Who is corrupt, who creates the regulatory capture, and how do the people in a democracy correct that? Or do we just throw up our hands?
    - Analemma_ 10y ago
balls187 10y ago
> I still don't understand why companies avoid local taxes. I would invite you to sit in local legislation and see how local taxes are enacted. Specific to this scenario, you have a Sovereign nation (Ireland) that has it's tax laws, which Apple (presumably) is complying with. Then comes a bigger body, the EU, challenging Ireland's original tax laws. If you're Apple, what do you do? You're doing business in Ireland, so why not follow their tax laws which have obvious benefits. > Their fiduciary duty is to act in the best interests of their investors. And if you paid every bill collector who came up with their hand out without first doing due diligence, you would be in breach of that duty. Apple specifically did business in Ireland because of tax break incentives. Apple, You, Me, and anyone else have no obligation to pay anymore than the barest minimum taxes legally allowed.

by cryptoz 10y ago

zyxley 10y ago

https://en.wikipedia.org/wiki/Tragedy_of_the_commons https://en.wikipedia.org/wiki/Tragedy_of_the_commons

s_m_t 10y ago

You are assuming that the government is going to use those resources better than the company avoiding the taxes. Not everyone agrees with this. From this point of view everyone is acting rationally, they only might disagree about one specific assumption.

kartan 10y ago
Maybe government is not as efficient providing citizens with firefighters, teachers, and other services. Maybe that companies are extremely efficient giving money to their shareholders. But I don't see your point.
- aianus 10y ago
  Both of those things are paid by municipalities out of property taxes. They would not be affected in any way by Apple's corporate tax dodges.
  - tormeh 10y ago
    This... is not about the US. Things work slightly different elsewhere.
    - icebraining 10y ago
      cryptoz post (the parent of this whole thread) was about the US & California.
      - heroprotagonist 10y ago
        To be fair, the only place a jurisdiction was mentioned was the phrase "US/California/etc", and "etc" would seem to include other locations.

aianus 10y ago

I'd rather pay taxes to Apple, Tesla, and Google than the US government. At least they're competent.

oconnore 10y ago
So, in case anyone else hadn't noticed, we have reached peak libertarian techie madness.
- bitJericho 10y ago
  What op doesn't realize is that he already does. It's called the CEOs salary and its sometimes 30000 times that of the lowest paid worker, who of course survives with welfare.
- s_kilk 10y ago
  It's almost as if none of these guys have ever read any nightmarish dystopian cyber-punk fiction. Megacorps as stand-in for governments == bad.
  - icebraining 10y ago
    Or they don't happen to think that cheap sci-fi pulp, which is the vast majority of cyber-punk, are a good argument for or against anything.
    - Apocryphon 10y ago
      "We live on an internet created by corporate persons, our government is hacked by Russian spies, and virtual reality is real now, dear." - https://www.youtube.com/watch?v=gazACJ0R1Hc https://www.youtube.com/watch?v=gazACJ0R1Hc
jamroom 10y ago
Really? At least with taxes your money is likely to stay local (whether you agree with how it is spent or not), whereas with a multinational corp like Apple, Tesla or Google your money is just as likely to go somewhere outside the country.

rrggrr 10y ago

Here is an amazingly well written explanation as to why, how and whats likely to come of it. http://www.cumber.com/the-euro-dollar-riot/ http://www.cumber.com/the-euro-dollar-riot/ Excerpt: The US has peculiarities in its income tax code that create these incentives for companies to avoid repatriation. The last time those peculiarities were lifted was in 2004 when then-President Bush allowed a one-year repatriation tax break. Over $300 billion flowed back into the US. Discussions about repeating that tax break are stymied in the current administration. Estimates are that as much as $1 trillion in repatriation would potentially occur if the Congress and the White House could agree on this issue. With the election approaching this is one issue on which Trump speaks eloquently.

omegaworks 10y ago
>The last time those peculiarities were lifted was in 2004 when then-President Bush allowed a one-year repatriation tax break. What a disastrous moral hazard. The Bush family truly failed this country; they've left scars that will be felt for generations.
balls187 10y ago
> With the election approaching this is one issue on which Trump speaks eloquently. For those curious. http://www.bloomberg.com/news/articles/2016-08-24/trump-s-offshore-tax-cut-pitch-falls-flat-in-silicon-valley http://www.bloomberg.com/news/articles/2016-08-24/trump-s-of...

jasode 10y ago

> a few billion in secret stash tax havens. Fyi, Apple's stash of billions in foreign corporate structures is not "secret".[1] The IRS, the California State government, and all the Wall Street analysts know the money is over there in Ireland. In any case, Apple is complying with the law and paying the relevant foreign taxes (which are lower than the USA rates). Since their revenue shuffling is not illegal, the more accurate criticism is if Apple is abusing legal loopholes. A lot of people feel they are. [1]https://en.wikipedia.org/wiki/Double_Irish_arrangement https://en.wikipedia.org/wiki/Double_Irish_arrangement

justincormack 10y ago
The money is not in Ireland. It goes to Bermuda. The shuffling was illegal, that is why they are going to be made to repay billions. It was illegal for the Irish to not charge them the standard rate, not illegal for Apple to try to do a deal.
- nodamage 10y ago
  Bermuda? Can you provide a reputable source for this? As far as I am aware, Apple does not have any subsidiaries in the Caribbean.
  - jasode 10y ago
    The Bermuda connection is explained in the wiki link I cited.
    - nodamage 10y ago
      That Wikipedia article describes the general strategy of the "double Irish arrangement" as employed by many multinational corporations, but does not actually describe Apple's international corporate structure specifically, and to the extent that it mentions Apple, is actually rather misleading. I'm just going to go ahead and state, as a matter of fact, that Apple does not have any subsidiaries in Bermuda or any other Caribbean country, and anyone who believes otherwise is mistaken. Apple's international tax structure was thoroughly documented when they were called up to testify before the Senate, which you can read about in the Senate Subcommittee Memo on Offshore Profit Shifting and Apple[1], and while they do have several Irish subsidiaries, they do not have any subsidiaries in the Caribbean or move any money into the Caribbean. This is further reinforced in Apple's testimony before the Senate[2]: > 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”). [1] http://www.hsgac.senate.gov/download/?id=CDE3652B-DA4E-4EE1-B841-AEAD48177DC4 http://www.hsgac.senate.gov/download/?id=CDE3652B-DA4E-4EE1-... [2] https://www.apple.com/pr/pdf/Apple_Testimony_to_PSI.pdf https://www.apple.com/pr/pdf/Apple_Testimony_to_PSI.pdf

alexbecker 10y ago

This is precisely the tragedy of the commons. Apple's share of the tax base, while enormous compared to say mine, is still small. Furthermore, Apple's investors are a very small portion of the population, so only see a small part of the benefit of tax spending. So it's clearly worth saving a giant pile of money in exchange for very slightly worse gov't services.

eridius 10y ago

By your logic, everybody should pay far more than the taxes they owe. The honorable judge Learned Hand (yes, really) once said > There is nothing sinister in so arranging one's affairs as to keep taxes as low as possible. Everybody does so, rich or poor; and all do right, for nobody owes any public duty to pay more than the law demands: taxes are enforced exactions, not voluntary contributions. To demand more in the name of morals is mere cant. As long as companies are staying within the bounds of the law, it's perfectly reasonable for them to keep their tax bill as low as possible, and one might even argue that (for public companies) they're required to do so in order to perform their fiduciary duty to their shareholders. If you have a problem with the "loopholes" that companies use to lower their tax bill, you should take it up with the people who make the law, not the companies that follow the law.

Analemma_ 10y ago
Stop posting this damn quote. Just stop it. It's disingenuous and dishonest in the extreme, and whatever relevance it may once have had is long gone. I'm so sick of hearing it in every Hacker News discussion of corporate tax, by ostensibly intelligent people. Here's why: for tax regulations created through a transparent democratic process and a popular mandate, this quote might be proper, but that's not what happens. The kinds of tax loopholes that allow for companies like Apple to dodge their obligations are created through corruption and regulatory capture, and would be choked off in a heartbeat if the general public actually had any say in the matter. Worse, they're simply not available to schlubs like you and me, so it's not a level playing field. To set up these loopholes in a corrupt way, and then use this quote (and the broader attitude of "It's legal, so it's OK!") to gag people from complaining about it, is despicable.
- sverige 10y ago
  > created through corruption and regulatory capture Who is corrupt, who creates the regulatory capture, and how do the people in a democracy correct that? Or do we just throw up our hands?
  - Analemma_ 10y ago

balls187 10y ago

> I still don't understand why companies avoid local taxes. I would invite you to sit in local legislation and see how local taxes are enacted. Specific to this scenario, you have a Sovereign nation (Ireland) that has it's tax laws, which Apple (presumably) is complying with. Then comes a bigger body, the EU, challenging Ireland's original tax laws. If you're Apple, what do you do? You're doing business in Ireland, so why not follow their tax laws which have obvious benefits. > Their fiduciary duty is to act in the best interests of their investors. And if you paid every bill collector who came up with their hand out without first doing due diligence, you would be in breach of that duty. Apple specifically did business in Ireland because of tax break incentives. Apple, You, Me, and anyone else have no obligation to pay anymore than the barest minimum taxes legally allowed.