14 ms·

If passed, and for a brief period of time, Trump's dollar repatriation tax scheme brings home some of the +2 trillion dollars sequestered abroad - including som

by rrggrr 9y ago

If passed, and for a brief period of time, Trump's dollar repatriation tax scheme brings home some of the +2 trillion dollars sequestered abroad - including some of the billions Apple has parked offshore. http://www.businessinsider.com/trump-gop-tax-reform-plan-bill-text-details-rate-2017-10 http://www.businessinsider.com/trump-gop-tax-reform-plan-bil... There's something to be said for Apple's efforts to level the playing field against the favorable tax & public policies under which Samsung and Huawei Technologies operate. I'm not crying 'boo hoo' for Apple, but their tax strategies are understandable.

tooltalk 9y ago
Can you elaborate on Samsung and Huawei's favorable tax and public policies under which they operate? Are you saying that their tax rates rates are lower?
ali_af 9y ago
Note that Cook has been vocal about repatriation and has suggested that it be mandatory to all corporations, then taxed specifically for infrastructure development.
pasbesoin 9y ago
This was offered/done around 2004-2005, with the proviso that it would be a one-time deal. Fool me once, shame on you. Fool me twice, shame on me. Investigate. Confiscate. Incarcerate. I'm done with the "business" line of rhetoric.
aagha 9y ago
What's the benefit to Apple or anyone else if the money is here in the US?
canuckintime 9y ago
Or the US Congress could just change the law, close the loophole and require corporations to bring the money home anyway without any tax holidays...
- charlesdm 9y ago
  Or Apple could reincorporate abroad?
- marcoperaza 9y ago
  It seems that you're suggesting that we tax corporations on overseas income, even when reinvested overseas. That would put American companies at an extreme disadvantage compared to those from other countries, by forcing them to pay double taxes, US and foreign corporate taxes, on all income. The logical solution is to get rid of the corporate tax altogether. The only reason why it exists is to be a plank for politicians who want to tax the "greedy corporations." All corporate income is either paid as dividends, paid as salaries, or reinvested. When it is paid as dividends, it is taxed as capital gains. When it is paid as salaries, it is taxed as income. When it is reinvested, it is either lost, or eventually becomes income and capital gains. There is no need to have another layer of taxation that just makes a giant accounting mess and creates all sorts of ridiculous incentives to use tax shelters.
  - jfoutz 9y ago
    That's fine, but all other things remaining equal, there's not as much revenue coming in. So, you need to raise capital gains tax and income tax in some proportion to retain the balance. Does that still seem easier? Alternatively, we could cut a bunch of spending, but that turns into its own dogfight.
    - marcoperaza 9y ago
      The corporate tax is actually a small (but not negligible) portion of tax revenue. Part of the logic for capital gains tax being lower than income tax is to account for the double taxation of the corporate tax. So I would be in favor of raising the capital gains tax to make up for eliminating the corporate tax. I also happen to think that taxes should be lower overall, but I think it’s best to divide the two issues: 1) how much we should be taxed, from 2) how we should be taxed.
- valuearb 9y ago
nautilus12 9y ago
So you are saying that rather than taxing the middle class more that we should simply make large corporations like Apple actually follow the existing tax laws? Owing to its source it doesn't sound like this idea is going to be popular on hacker news, in spite of its blatant rationality.
- osteele 9y ago
  My understanding of the economics (via popular-press reporting [1,2]) is that corporate taxes are effectively paid by workers and shareholders. In the case of Apple, many employees are high-income individuals. One way to tax them is to raise Apple's effective tax rate, by closing loopholes. Another would to move these individuals to a higher bracket, and tax them directly on income. The latter would allow the tax system to target only those employees who actually are high-income individuals. I don't know how that plays on Hacker News, but it doesn't seem to be politically feasible. Apple's individual investors are probably mostly high-net-worth individuals. (Apple might have more non-rich investors than a blue chip like GE does. I know quite a few middle class individuals whose only outside of funds are in APPL or TSLA. They have brand loyalty even if [with TSLA] they don't own the product. It's like playing fantasy football.) (The individual investors with the greatest number of shares are super-high-net-worth, of course[3].) To a progressive, it seems fair to tax them more, which taxing Apple effectively does. Those individuals aren't going to pay taxes on stock appreciation unless the capital gains exemption is rolled back. Now that Apple is paying dividends instead of just appreciating, raising the income bracket could be an alternative to closing the loophole. My understanding is that institutional investors in general are largely funds, endowments, and pensions. Apple seems to be mostly funds[4]. Funds are probably held by middle and middle-upper class individuals with mutuals or indices in their portfolios. (The poor don't own stocks. The rich own them directly.) The loophole benefits them. [Big disclaimer: I'm a novice in how to interpret this, and I wouldn't be surprised to be wrong.] [1] "Who Pays the Corporate Income Tax", Bruce Bartlett, New York Times, Feb 19, 2013. https://economix.blogs.nytimes.com/2013/02/19/who-pays-the-corporate-income-tax/?_r=0 https://economix.blogs.nytimes.com/2013/02/19/who-pays-the-c... [2] "Who Ultimately Pays the Corporate Income Tax?", Uwe E. Reinhardt (Economics @ Princeton), New York Times, July 23, 2010. https://economix.blogs.nytimes.com/2010/07/23/who-ultimately-pays-the-corporate-income-tax/ https://economix.blogs.nytimes.com/2010/07/23/who-ultimately... [3] "Top Apple Shareholders for 2017", John Edwards, Investopedia, October 6, 2017. http://www.investopedia.com/articles/markets/120115/top-5-apple-shareholders.asp http://www.investopedia.com/articles/markets/120115/top-5-ap... [4] "Apple Inc. Institutional Ownership", NASDAQ. http://www.nasdaq.com/symbol/aapl/institutional-holdings http://www.nasdaq.com/symbol/aapl/institutional-holdings
oh_sigh 9y ago
What exactly is that money doing right now? What would the ramifications be of transferring that money back into the US economy?
- delinka 9y ago
  If you mean "back into the US," then indeed there is the potential to continue sitting on that money and maybe it won't enter the US economy. If, however, you do mean to ask "...back into the US economy," then ... jobs. How they choose to place the money into the economy is definitely a question, but ultimately any use should indeed support employment of the labor force. Loan the money out? The borrower puts someone to work. Use it for R&D? Hire humans to perform the research.
  - sliverstorm 9y ago
    Unless it's paid out in dividends and executive compensation and stock buybacks. Which is what happened with the last tax holiday under Bush. https://theintercept.com/2017/04/27/bush-already-tried-trumps-proposed-corporate-tax-holiday-and-it-was-a-total-failure/ https://theintercept.com/2017/04/27/bush-already-tried-trump...
    - delinka 9y ago
      I would argue that's not "...back to the US economy."
      - sliverstorm 9y ago
        Yes, exactly the point. Sorry.
exelius 9y ago
As I look at schemes to prevent this, it's pretty obvious that a low gross tax rate on exported goods is a net positive for a nation. But that leaves the question of how/whether to tax companies with comparatively few exports (think of telecoms as an example, where the majority of a company's total capital is physically located and impossible to move). I don't think there's much argument that a near-zero corporate tax rate is ideal; unfortunately wealthy individuals would simply take advantage of that to lower their individual taxes and the country would end up with a revenue crisis. I would actually argue that the largest contributing factor to the success of the US over the last 80 years has been our ability to consistently collect tax revenue. Many other countries are not nearly as successful at enforcing and collecting on their tax code as the US is (but then, their tax agencies don't have nearly as much power as the IRS).
- osteele 9y ago
  There actually is a fair amount of argument [1-4] that a near-zero corporate tax rate is ideal. [5-6] argue that it isn't. (These are all, except [2], popular press articles. I imagine that there's more considered discussion in the academic literature.) [1] "Six Policies Economists Love (And Politicians Hate)", Planet Money (podcast). http://www.npr.org/sections/money/2012/07/19/157047211/six-policies-economists-love-and-politicians-hate http://www.npr.org/sections/money/2012/07/19/157047211/six-p.... This contains interviews with Dean Baker (co-director of the Center for Economic and Policy Research in Washington, D.C.); Russ Roberts (George Mason University economics professor); Katherine Baicker (professor of health economics at Harvard University's Department of Health Policy and Management); Luigi Zingales (professor of entrepreneurship and finance and the University of Chicago's Booth School of Business); and Robert Frank (professor of management and economics at Cornell University's Johnson Graduate School of Management). [2] "Simulating the Elimination of the U.S. Corporate Income Tax", Hans Fehra, Sabine Jokischb, Ashwin Kambhampatic and Laurence J. Kotlikoff. NBER Working Paper No. 19757. Issued in December 2013, Revised in April 2014. [3] "Abolish the Corporate Income Tax", Laurence J. Kotlikoff (Economics @ U. Boston), New York Times, Jan 5, 2014. https://www.nytimes.com/2014/01/06/opinion/abolish-the-corporate-income-tax.html https://www.nytimes.com/2014/01/06/opinion/abolish-the-corpo... [4] "Let's Abolish The Corporate Income Tax", John C. Goodman, Forbes. Aug 26, 2014. https://www.forbes.com/sites/johngoodman/2014/08/26/lets-abolish-the-corporate-income-tax/#397ac4682793 https://www.forbes.com/sites/johngoodman/2014/08/26/lets-abo... [5] "Why Do We Tax Corporations?: Wouldn't it be easier just to tax individuals?", Christopher Beam, Slate, Oct 17 2008. http://www.slate.com/articles/news_and_politics/explainer/2008/10/why_do_we_tax_corporations.html http://www.slate.com/articles/news_and_politics/explainer/20... [6] "10 reasons we should tax corporations", Nicholas Shaxson, The Guardian, March 15 2011. https://www.theguardian.com/commentisfree/2011/mar/15/tax-corporations-treasury-large-companies https://www.theguardian.com/commentisfree/2011/mar/15/tax-co...

by rrggrr 9y ago

tooltalk 9y ago

Can you elaborate on Samsung and Huawei's favorable tax and public policies under which they operate? Are you saying that their tax rates rates are lower?

ali_af 9y ago

Note that Cook has been vocal about repatriation and has suggested that it be mandatory to all corporations, then taxed specifically for infrastructure development.

pasbesoin 9y ago

This was offered/done around 2004-2005, with the proviso that it would be a one-time deal. Fool me once, shame on you. Fool me twice, shame on me. Investigate. Confiscate. Incarcerate. I'm done with the "business" line of rhetoric.

aagha 9y ago

What's the benefit to Apple or anyone else if the money is here in the US?

canuckintime 9y ago

Or the US Congress could just change the law, close the loophole and require corporations to bring the money home anyway without any tax holidays...

charlesdm 9y ago
Or Apple could reincorporate abroad?
marcoperaza 9y ago
It seems that you're suggesting that we tax corporations on overseas income, even when reinvested overseas. That would put American companies at an extreme disadvantage compared to those from other countries, by forcing them to pay double taxes, US and foreign corporate taxes, on all income. The logical solution is to get rid of the corporate tax altogether. The only reason why it exists is to be a plank for politicians who want to tax the "greedy corporations." All corporate income is either paid as dividends, paid as salaries, or reinvested. When it is paid as dividends, it is taxed as capital gains. When it is paid as salaries, it is taxed as income. When it is reinvested, it is either lost, or eventually becomes income and capital gains. There is no need to have another layer of taxation that just makes a giant accounting mess and creates all sorts of ridiculous incentives to use tax shelters.
- jfoutz 9y ago
  That's fine, but all other things remaining equal, there's not as much revenue coming in. So, you need to raise capital gains tax and income tax in some proportion to retain the balance. Does that still seem easier? Alternatively, we could cut a bunch of spending, but that turns into its own dogfight.
  - marcoperaza 9y ago
    The corporate tax is actually a small (but not negligible) portion of tax revenue. Part of the logic for capital gains tax being lower than income tax is to account for the double taxation of the corporate tax. So I would be in favor of raising the capital gains tax to make up for eliminating the corporate tax. I also happen to think that taxes should be lower overall, but I think it’s best to divide the two issues: 1) how much we should be taxed, from 2) how we should be taxed.
valuearb 9y ago

nautilus12 9y ago

So you are saying that rather than taxing the middle class more that we should simply make large corporations like Apple actually follow the existing tax laws? Owing to its source it doesn't sound like this idea is going to be popular on hacker news, in spite of its blatant rationality.

osteele 9y ago
My understanding of the economics (via popular-press reporting [1,2]) is that corporate taxes are effectively paid by workers and shareholders. In the case of Apple, many employees are high-income individuals. One way to tax them is to raise Apple's effective tax rate, by closing loopholes. Another would to move these individuals to a higher bracket, and tax them directly on income. The latter would allow the tax system to target only those employees who actually are high-income individuals. I don't know how that plays on Hacker News, but it doesn't seem to be politically feasible. Apple's individual investors are probably mostly high-net-worth individuals. (Apple might have more non-rich investors than a blue chip like GE does. I know quite a few middle class individuals whose only outside of funds are in APPL or TSLA. They have brand loyalty even if [with TSLA] they don't own the product. It's like playing fantasy football.) (The individual investors with the greatest number of shares are super-high-net-worth, of course[3].) To a progressive, it seems fair to tax them more, which taxing Apple effectively does. Those individuals aren't going to pay taxes on stock appreciation unless the capital gains exemption is rolled back. Now that Apple is paying dividends instead of just appreciating, raising the income bracket could be an alternative to closing the loophole. My understanding is that institutional investors in general are largely funds, endowments, and pensions. Apple seems to be mostly funds[4]. Funds are probably held by middle and middle-upper class individuals with mutuals or indices in their portfolios. (The poor don't own stocks. The rich own them directly.) The loophole benefits them. [Big disclaimer: I'm a novice in how to interpret this, and I wouldn't be surprised to be wrong.] [1] "Who Pays the Corporate Income Tax", Bruce Bartlett, New York Times, Feb 19, 2013. https://economix.blogs.nytimes.com/2013/02/19/who-pays-the-corporate-income-tax/?_r=0 https://economix.blogs.nytimes.com/2013/02/19/who-pays-the-c... [2] "Who Ultimately Pays the Corporate Income Tax?", Uwe E. Reinhardt (Economics @ Princeton), New York Times, July 23, 2010. https://economix.blogs.nytimes.com/2010/07/23/who-ultimately-pays-the-corporate-income-tax/ https://economix.blogs.nytimes.com/2010/07/23/who-ultimately... [3] "Top Apple Shareholders for 2017", John Edwards, Investopedia, October 6, 2017. http://www.investopedia.com/articles/markets/120115/top-5-apple-shareholders.asp http://www.investopedia.com/articles/markets/120115/top-5-ap... [4] "Apple Inc. Institutional Ownership", NASDAQ. http://www.nasdaq.com/symbol/aapl/institutional-holdings http://www.nasdaq.com/symbol/aapl/institutional-holdings

oh_sigh 9y ago

What exactly is that money doing right now? What would the ramifications be of transferring that money back into the US economy?

delinka 9y ago
If you mean "back into the US," then indeed there is the potential to continue sitting on that money and maybe it won't enter the US economy. If, however, you do mean to ask "...back into the US economy," then ... jobs. How they choose to place the money into the economy is definitely a question, but ultimately any use should indeed support employment of the labor force. Loan the money out? The borrower puts someone to work. Use it for R&D? Hire humans to perform the research.
- sliverstorm 9y ago
  Unless it's paid out in dividends and executive compensation and stock buybacks. Which is what happened with the last tax holiday under Bush. https://theintercept.com/2017/04/27/bush-already-tried-trumps-proposed-corporate-tax-holiday-and-it-was-a-total-failure/ https://theintercept.com/2017/04/27/bush-already-tried-trump...
  - delinka 9y ago
    I would argue that's not "...back to the US economy."
    - sliverstorm 9y ago
      Yes, exactly the point. Sorry.

exelius 9y ago

As I look at schemes to prevent this, it's pretty obvious that a low gross tax rate on exported goods is a net positive for a nation. But that leaves the question of how/whether to tax companies with comparatively few exports (think of telecoms as an example, where the majority of a company's total capital is physically located and impossible to move). I don't think there's much argument that a near-zero corporate tax rate is ideal; unfortunately wealthy individuals would simply take advantage of that to lower their individual taxes and the country would end up with a revenue crisis. I would actually argue that the largest contributing factor to the success of the US over the last 80 years has been our ability to consistently collect tax revenue. Many other countries are not nearly as successful at enforcing and collecting on their tax code as the US is (but then, their tax agencies don't have nearly as much power as the IRS).

osteele 9y ago
There actually is a fair amount of argument [1-4] that a near-zero corporate tax rate is ideal. [5-6] argue that it isn't. (These are all, except [2], popular press articles. I imagine that there's more considered discussion in the academic literature.) [1] "Six Policies Economists Love (And Politicians Hate)", Planet Money (podcast). http://www.npr.org/sections/money/2012/07/19/157047211/six-policies-economists-love-and-politicians-hate http://www.npr.org/sections/money/2012/07/19/157047211/six-p.... This contains interviews with Dean Baker (co-director of the Center for Economic and Policy Research in Washington, D.C.); Russ Roberts (George Mason University economics professor); Katherine Baicker (professor of health economics at Harvard University's Department of Health Policy and Management); Luigi Zingales (professor of entrepreneurship and finance and the University of Chicago's Booth School of Business); and Robert Frank (professor of management and economics at Cornell University's Johnson Graduate School of Management). [2] "Simulating the Elimination of the U.S. Corporate Income Tax", Hans Fehra, Sabine Jokischb, Ashwin Kambhampatic and Laurence J. Kotlikoff. NBER Working Paper No. 19757. Issued in December 2013, Revised in April 2014. [3] "Abolish the Corporate Income Tax", Laurence J. Kotlikoff (Economics @ U. Boston), New York Times, Jan 5, 2014. https://www.nytimes.com/2014/01/06/opinion/abolish-the-corporate-income-tax.html https://www.nytimes.com/2014/01/06/opinion/abolish-the-corpo... [4] "Let's Abolish The Corporate Income Tax", John C. Goodman, Forbes. Aug 26, 2014. https://www.forbes.com/sites/johngoodman/2014/08/26/lets-abolish-the-corporate-income-tax/#397ac4682793 https://www.forbes.com/sites/johngoodman/2014/08/26/lets-abo... [5] "Why Do We Tax Corporations?: Wouldn't it be easier just to tax individuals?", Christopher Beam, Slate, Oct 17 2008. http://www.slate.com/articles/news_and_politics/explainer/2008/10/why_do_we_tax_corporations.html http://www.slate.com/articles/news_and_politics/explainer/20... [6] "10 reasons we should tax corporations", Nicholas Shaxson, The Guardian, March 15 2011. https://www.theguardian.com/commentisfree/2011/mar/15/tax-corporations-treasury-large-companies https://www.theguardian.com/commentisfree/2011/mar/15/tax-co...