3 ms·

That money is mostly Apple intellectual property that's been sold to a foreign apple company and then relicensed to Apple USA... they are just paying themselves

• valuearb 10y ago
  Not true. Apple has to justify how the profits on it's operations are calculated, it's not so easy as that. Apple spends hundreds of millions of dollars designing the iPhone 7 in Cupertino, and then billions marketing it. It makes it in China, spending tens of billion to make it for an average unit cost of $300. It has subsidiaries in many foreign countries that sell it for an average of $600. Where should the profits be calculated? Should all net profits accrue to Cupertino, so that no foreign subsidiary makes any money? That doesn't make sense at all and no US tax authority has ever tried to make Apple account for profits that way. And think about what happens under a system where foreign subsidiaries have to be rolled into the US tax calculations. Apple has to pay 40%+ of that net margin to the US and CA in income taxes. So their effective unit cost of the iPhone 7 is now $420. It now only has $180 in net margin to pay for world wide sales, marketing and R&D, so they have to be tempted to raise their prices substantially. But Samsung gets to make a very similar phone using very similar parts for $300. They don't have to deal with world wide tax systems, so if they price their phones at $600 their Korean taxes will only be on a fraction of the $300. They can even cut prices if they don't need margins as high as Apple. This is the perfect tax system if your goal is to sell more Samsung phones and fewer iPhones. I'm sure it would be great for the US economy.