5 ms·

Pretty sure Apple is following existing tax laws.

by whatok 9y ago

PeterStuer 9y ago
Pretty sure Apple and their 'class' is writing the existing tax laws.
- abritinthebay 9y ago
  Apple has actually argued for better tax laws (that they'd pay more under!) but the problem here is that the US is absolutely a complete anomaly in how it handles this issue. It's literally cheaper for Apple to store the cash outside the US and then get loans for the money they can't bring into the country. That's just wacky. For a country that is incredibly pro-business and pro-corporate the USA is very strange on this front.
mrguyorama 9y ago
That depends if you believe tax law should be about checkboxes or about keeping to the spirit of giving back to the community that made you
- koenigdavidmj 9y ago
  Yes, I prefer a law where I can take a possible action and judge by the text whether that action is legal or not, rather than always trying to avoid pissing off a fickle public, like trying to avoid waking a husband who drinks too much so you don't get a black eye.
  - sliverstorm 9y ago
    Except tax law is not always capable of being totally black and white. Have you ever had to work through small business or rental deductions on your taxes? Grey areas, grey areas everywhere, at least if you want to take all the deductions & credits you are entitled to. Nobody including the IRS can give you a black and white answer. (Repairs vs improvements, which are deducted differently, is a good toy example) Part of this I think may actually be intentional, to prevent the accidental creation of technically-legal-but-obviously-exploitative loophole tax strategies. If it's fuzzy, you have to weight your risk of audit, your ability to justify your choice, and so on. Anyway, in the corporate case there are also fundamentally difficult-to-define areas. For example: Company A transfers its global IP portfolio to Subsidiary B. B is incorporated in Ireland, but is controlled and managed by directors based in a low corporate tax jurisdiction such as Bermuda, the Cayman Islands or Andorra; crucially, under Irish law, this characteristic renders B tax resident in these havens and therefore subject to their relevant tax legislation. Subsequently, B grants licences to exploit the IP portfolio to Subsidiary C which is incorporated and tax resident in Ireland; it is this link between two Irish subsidiaries which yielded the name “Double Irish”. C is the actual operative unit of the Company A: it owns real estate, it employs workers, it exploits the IP portfolio, it sells advertising and collects payments, ultimately generating earnings. Nevertheless, C does not make profits, as it has to pay royalties to B for the IP licences; crucially, B pays very little corporate taxes because it is based in a tax haven. Thus this structure allows A to shift all profits emerging from its IP portfolio to a jurisdiction where they will not be subject to a significant rate of taxation. This scheme depends in part upon the ability of the company to set royalties and IP transfer costs at whatever they like, independent of the real value of the IP. Clearly this is not quite right, but what is the real value? Who determines it?
    - nautilus12 9y ago
      This is exactly my point, if the company can create a complex web of interactions to the point that it creates a grey area at what point to we as a society throw our hands up, call a spade a spade and instead pursue a determination that they are clearing trying to avoid paying taxes, regardless of what the specific technical interpretation of the scenario they have set up. For example, what if they said that the taxable location of the entity was a function of the output of a quantum state? This is a grey area, but is even this enough for us to say that they are clearly just trying to pull the wool over the governments eye?
    - deleted 9y ago
      [deleted]
- madeofpalk 9y ago
  In our society, taxation laws are a system of rules. I think its important that if companies and people are following the law that they're then not held to some other second arbitrary standard.
nautilus12 9y ago
mrguyorama I agree 1000% and most reasonable people should as well. The technical letter of the law should not matter as much as the spirit of the law!
- lucio 9y ago
  Then you're at the mercy of the judge. That's a very bad scenario. With literal interpretation, the legal system is way more previsible. What if the literal interpretation create unfair loopholes? Then you change the law.
  - nautilus12 9y ago
    Not in this case. They have created a complex tax haven out of juggling around entities and IP's. We should NOT expect the law to have a specific technical description of this, and they shouldn't be around to get around the law just because they created a new scenario. In this case we should just use the obvious determination that its clearly they are trying to dodge taxes, rather than try to change to law to account for every possible scenario they could come up with. Specific laws don't preclude the ability to use common sense and judgement, and the law shouldn't be expected to explicate every possible permutation in order to be enforceable.
- __blockcipher__ 9y ago
  The spirit of the law is not clearly defined. In fact, by definition it means "person X's interpretation of what the law was trying to achieve". How could that be the basis for an intelligent taxation system?

Pretty sure Apple is following existing tax laws.

by whatok 9y ago

Pretty sure Apple is following existing tax laws.

PeterStuer 9y ago

Pretty sure Apple and their 'class' is writing the existing tax laws.

abritinthebay 9y ago
Apple has actually argued for better tax laws (that they'd pay more under!) but the problem here is that the US is absolutely a complete anomaly in how it handles this issue. It's literally cheaper for Apple to store the cash outside the US and then get loans for the money they can't bring into the country. That's just wacky. For a country that is incredibly pro-business and pro-corporate the USA is very strange on this front.

mrguyorama 9y ago

That depends if you believe tax law should be about checkboxes or about keeping to the spirit of giving back to the community that made you

koenigdavidmj 9y ago
Yes, I prefer a law where I can take a possible action and judge by the text whether that action is legal or not, rather than always trying to avoid pissing off a fickle public, like trying to avoid waking a husband who drinks too much so you don't get a black eye.
- sliverstorm 9y ago
  Except tax law is not always capable of being totally black and white. Have you ever had to work through small business or rental deductions on your taxes? Grey areas, grey areas everywhere, at least if you want to take all the deductions & credits you are entitled to. Nobody including the IRS can give you a black and white answer. (Repairs vs improvements, which are deducted differently, is a good toy example) Part of this I think may actually be intentional, to prevent the accidental creation of technically-legal-but-obviously-exploitative loophole tax strategies. If it's fuzzy, you have to weight your risk of audit, your ability to justify your choice, and so on. Anyway, in the corporate case there are also fundamentally difficult-to-define areas. For example: Company A transfers its global IP portfolio to Subsidiary B. B is incorporated in Ireland, but is controlled and managed by directors based in a low corporate tax jurisdiction such as Bermuda, the Cayman Islands or Andorra; crucially, under Irish law, this characteristic renders B tax resident in these havens and therefore subject to their relevant tax legislation. Subsequently, B grants licences to exploit the IP portfolio to Subsidiary C which is incorporated and tax resident in Ireland; it is this link between two Irish subsidiaries which yielded the name “Double Irish”. C is the actual operative unit of the Company A: it owns real estate, it employs workers, it exploits the IP portfolio, it sells advertising and collects payments, ultimately generating earnings. Nevertheless, C does not make profits, as it has to pay royalties to B for the IP licences; crucially, B pays very little corporate taxes because it is based in a tax haven. Thus this structure allows A to shift all profits emerging from its IP portfolio to a jurisdiction where they will not be subject to a significant rate of taxation. This scheme depends in part upon the ability of the company to set royalties and IP transfer costs at whatever they like, independent of the real value of the IP. Clearly this is not quite right, but what is the real value? Who determines it?
  - nautilus12 9y ago
    This is exactly my point, if the company can create a complex web of interactions to the point that it creates a grey area at what point to we as a society throw our hands up, call a spade a spade and instead pursue a determination that they are clearing trying to avoid paying taxes, regardless of what the specific technical interpretation of the scenario they have set up. For example, what if they said that the taxable location of the entity was a function of the output of a quantum state? This is a grey area, but is even this enough for us to say that they are clearly just trying to pull the wool over the governments eye?
  - deleted 9y ago
    [deleted]
madeofpalk 9y ago
In our society, taxation laws are a system of rules. I think its important that if companies and people are following the law that they're then not held to some other second arbitrary standard.

nautilus12 9y ago

mrguyorama I agree 1000% and most reasonable people should as well. The technical letter of the law should not matter as much as the spirit of the law!

lucio 9y ago
Then you're at the mercy of the judge. That's a very bad scenario. With literal interpretation, the legal system is way more previsible. What if the literal interpretation create unfair loopholes? Then you change the law.
- nautilus12 9y ago
  Not in this case. They have created a complex tax haven out of juggling around entities and IP's. We should NOT expect the law to have a specific technical description of this, and they shouldn't be around to get around the law just because they created a new scenario. In this case we should just use the obvious determination that its clearly they are trying to dodge taxes, rather than try to change to law to account for every possible scenario they could come up with. Specific laws don't preclude the ability to use common sense and judgement, and the law shouldn't be expected to explicate every possible permutation in order to be enforceable.
__blockcipher__ 9y ago
The spirit of the law is not clearly defined. In fact, by definition it means "person X's interpretation of what the law was trying to achieve". How could that be the basis for an intelligent taxation system?