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New Zealand (or any other country) would like to say that you pay tax equal to some percentage of the profit on iPhones sold in New Zealand (or whatever country
by ubernostrum 10y ago
New Zealand (or any other country) would like to say that you pay tax equal to some percentage of the profit on iPhones sold in New Zealand (or whatever country is trying to tax them). Apple would like to route the money around between its subsidiaries in order to say "well, we actually made zero dollars of profit from selling iPhones in New Zealand this year, so we won't be paying you any tax".
The fact that the money ends up in places where Apple pays very little tax or even zero tax on the profit is just rubbing salt in the wound.
This is the kernel of usefulness in the border adjustment tax Trump has tried to propose a few times. His version of it is way off from the original idea, but the original idea -- to replace "tax profit made here" with "tax sales made here" -- is sound. You can hide the existence of profit all sorts of ways, but it's much harder to hide the existence of a sale, and bordering on impossible to hide the existence of millions of sales.
- gozur88 10y agoThat's opening quite a can of worms, though, isn't it? If I were selling a product that was barely breaking even, would you have the government tax me into a loss?
- ubernostrum 10y agoMany countries already have VAT. And in the US, state and local governments levy taxes on a percentage of sales, which are paid by the buyer. If this were going to massacre gigantic numbers of businesses, or cause the number of people willing to go into business to drop to zero, it would have already and we'd have noticed. So if a tax on money made from selling products is what's desired, this -- rather than an avoidable tax on profit -- is a way to do it.