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A couple points here: - The US federal government cannot sue someone for not following the spirit of the law. Thankfully. - Per Justice Learned Hand: "Over an

by idoh 9y ago

A couple points here: - The US federal government cannot sue someone for not following the spirit of the law. Thankfully. - Per Justice Learned Hand: "Over and over again courts have said that 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." - "Offshoring" isn't the right word, because it implies that the money was in the US and moved offshore. In fact the money is from product that was sold outside of the US, and the money is remaining outside the US.

nautilus12 9y ago
- This is really crazy sounding, but can individual or a group of individuals sue a corporation for what they view as an attempt to sidestep the law in civil court? Since the burden of proof is different in civil court? - Did Justice Learned Hand make this statement with this type of scenario in mind where the amounts of money are on the level of an entire small country? Isn't he just talking about private citizens? - The point is just that they didn't pay taxes, either to Ireland or to the US. To the extent that they could have paid those taxes to the US government, its still dodging taxes.
- idoh 9y ago
  Replying to your points in order: - No, in order to sue you must have standing, which in a super short version means that the plaintiff has to be really close to the harm, not a bystander who witnesses something. - Obviously Apple did not not exist when Justice Hand said that, but I think he would be fine with it. Apple is complying with the letter of the law, and their responsibility on that issue goes no further. Apple is in no way obligated to pay more than what the law requires. If there is a problem with the tax law, then it is up to congress to address that. - I guess I am less bothered by it than you are. Apple paid what it owed under the law. A lot of corporations pay 0 tax because they are set up as pass-through entities, like S Corps. Is it OK to set up a S Corp for tax reasons?
  - nautilus12 9y ago
    Then really I guess we need to work harder to change the letter of the law. I was under the impression when I started the conversation that the tax havens were more of a loophole or ambiguity in the law and that you could prevent this behavior by showing intent to dodge taxes but apparently it is a long standing explicit component of the law. Id be happy to read up more on the existing laws if you would be willing to provide links
    - idoh 9y ago
      I do not have any links, the best I can say is that these pieces usually reward close reading and diagramming of the facts. My understanding (as a person who has taken a couple tax law classes) is that it isn't an explicit law but a combination of things, all of which are reasonable, which yields what could be said to be a surprising result: - companies pay taxes on profits - profits = revenue - expenses - It is OK to expense licensing of IP - It is OK to sell IP to a subsidiary So Apple creates a subsidiary in Jersey, transfers IP to that company, then charges the Irish subsidiary fees which are more or less equal to the revenue for selling the phones. In this way the Irish subsidiary makes no profit, so there is nothing to tax. All the profit goes to Jersey, which happens to have no tax. It needs to be said that the money is stuck there, if Apple wants to get at the money then it would in fact be taxed depending on where it goes. So it is not even really dodging taxes, but more like delaying when they get paid (hoping for a better tax rate in the future, I suppose). I am not even sure if US law is to blame here, it seems like the EU is the one that is upset at Apple, and Jersey is under EU law not US law.
      - nautilus12 9y ago
        This is not an explicit letter of the law. If they are creating a web of complex interactions to avoid paying tax at what point do we throw up our hands and call a spade a spade and say that its clear that they are just avoiding paying a tax.

by idoh 9y ago

nautilus12 9y ago

- This is really crazy sounding, but can individual or a group of individuals sue a corporation for what they view as an attempt to sidestep the law in civil court? Since the burden of proof is different in civil court? - Did Justice Learned Hand make this statement with this type of scenario in mind where the amounts of money are on the level of an entire small country? Isn't he just talking about private citizens? - The point is just that they didn't pay taxes, either to Ireland or to the US. To the extent that they could have paid those taxes to the US government, its still dodging taxes.

idoh 9y ago
Replying to your points in order: - No, in order to sue you must have standing, which in a super short version means that the plaintiff has to be really close to the harm, not a bystander who witnesses something. - Obviously Apple did not not exist when Justice Hand said that, but I think he would be fine with it. Apple is complying with the letter of the law, and their responsibility on that issue goes no further. Apple is in no way obligated to pay more than what the law requires. If there is a problem with the tax law, then it is up to congress to address that. - I guess I am less bothered by it than you are. Apple paid what it owed under the law. A lot of corporations pay 0 tax because they are set up as pass-through entities, like S Corps. Is it OK to set up a S Corp for tax reasons?
- nautilus12 9y ago
  Then really I guess we need to work harder to change the letter of the law. I was under the impression when I started the conversation that the tax havens were more of a loophole or ambiguity in the law and that you could prevent this behavior by showing intent to dodge taxes but apparently it is a long standing explicit component of the law. Id be happy to read up more on the existing laws if you would be willing to provide links
  - idoh 9y ago
    I do not have any links, the best I can say is that these pieces usually reward close reading and diagramming of the facts. My understanding (as a person who has taken a couple tax law classes) is that it isn't an explicit law but a combination of things, all of which are reasonable, which yields what could be said to be a surprising result: - companies pay taxes on profits - profits = revenue - expenses - It is OK to expense licensing of IP - It is OK to sell IP to a subsidiary So Apple creates a subsidiary in Jersey, transfers IP to that company, then charges the Irish subsidiary fees which are more or less equal to the revenue for selling the phones. In this way the Irish subsidiary makes no profit, so there is nothing to tax. All the profit goes to Jersey, which happens to have no tax. It needs to be said that the money is stuck there, if Apple wants to get at the money then it would in fact be taxed depending on where it goes. So it is not even really dodging taxes, but more like delaying when they get paid (hoping for a better tax rate in the future, I suppose). I am not even sure if US law is to blame here, it seems like the EU is the one that is upset at Apple, and Jersey is under EU law not US law.
    - nautilus12 9y ago
      This is not an explicit letter of the law. If they are creating a web of complex interactions to avoid paying tax at what point do we throw up our hands and call a spade a spade and say that its clear that they are just avoiding paying a tax.