4 ms·

Maybe the problem is in trying at all to tax something you can't pin down, like this IP transfer between (say) Apple Germany and Apple US. I mean what should it

Maybe the problem is in trying at all to tax something you can't pin down, like this IP transfer between (say) Apple Germany and Apple US. I mean what should its value be? Clearly Apple Germany is nothing at all like an independent company importing phones from China to sell. Much of what they sell is the software, the image, the brand... these things don't have open-market prices. So who gets to decide what their price is? Apple's accountant? Some bureaucrat? The much simpler solution is not to bother taxing these things you can't see. Why don't we set the corporate profit tax to zero, and then this whole argument goes away. Tax is collected every time they sell a computer in Germany. Tax is collected every time they employ someone. Tax is collected every time someone sells shares and profits. These seem like good things to tax, as they involve actual people and take place unambiguously in particular countries. If you'd like to collect more tax, then by all means adjust the rates.

johannes1234321 9y ago
This would mean that immaterial things won't have a worth in the book keeping way and can't be billed. In simple terms what happens is that Apple Europe, Inc. has to pay a lot for the license to use the Apple logo and trademark to Apple Paradise, Inc. Thus Apple Europe, Inc. doesn't have profits, while Apple Paradise, Inc. has all the profits. Now the value of the logo and trademark are artificial ... What's needed are international agreements how to handle those licenses, that you can't simply push them to tax heavens, but tax has to be paid where they are created or used or whatever.
- improbable22 9y ago
  But this is exactly what happens now. And this is what the letter is upset about. He thinks Apple Europe Gmbh. made profit, and Apple's accountants say Apple Paradise Inc. made the profit, and we all think Apple Cupertino made the profit. And I don't see a good way to settle the argument, thus I suggest not having it. "tax has to be paid where they are created or used" Yes exactly. When they sell a cool computer for E2000, they have used their brand to sell it, and there tax is collected. The sale took place in an apple store in Berlin. Angela can adjust the tax rate to anything she pleases. And to create that brand, they had to pay some guy $200K to write jingles, and this transaction is also taxed. This guy works in a spaceship which has landed in San Francisco. Donald can adjust this rate to anything he pleases. Neither of these ends can easily move to a tax haven. Everything in between happens in the financial equivalent of the cloud. It seems to me a fool's errand to argue about which bits of that cloud were in whose territory. Anyway I will shut up now!
  - toyg 9y ago
    > Apple's accountants say Apple Paradise Inc. made the profit ... because they offset all local profits to expenses incurred in licensing the brand. > When they sell a cool computer for E2000, they have used their brand to sell it, and there tax is collected. But tax is supposed to be collected there and it's not, because Apple accountants immediately declare all profits as debits towards AParadise, so there is $0 profit. That $2000 laptop is now sold at cost, so there is nothing to tax - unless you start taxing expenses, and good luck with that (you'll kill half the economy overnight). All profit goes to AParadise, and the European economy is now at net negative: it pays for the roads that Apple trucks use to deliver their China-made wares, it pays for the social security that frees disposable income for Euro citizens to buy laptops, and in exchange it gets a big fat $0. The solution is to do away with the "IP licensing" regime altogether, or tax it at absurd rates to discourage these moves. Otherwise you might as well give up and turn into Somalia.
    - improbable22 9y ago
      Of the E2000 the customer paid, about E400 is tax right away. That's far from nothing. You could argue it should be higher, or lower. It's frequently adjusted. My point is that this transaction is what certainly happened in Germany. Taxing this is very clear, transparent, and fair. Whether or not the global empire turned a profit that quarter (maybe you bought a Samsung!), and which bits of the global empire were losing money or making money... and which bits are independent or not really independent... these are much harder to pin down, perhaps impossible. And attempting to do so (as we do now) encourages all sorts of strange behaviour, which requires lots of fancy lawyers, and can't be copied by smaller competitors. I don't know why we do this. I'm very much not arguing for zero taxes, I do not want to live in Somalia. I'm arguing for a tax system which doesn't reward stupid tricks --- the financial equivalent of moving your email server 100m across some border. Instead of ever stricter rules about where your server is located, we just have to get used to the idea that the cloud exists, and if the cloud is in Somalia or on the moon who cares? It's where the human beings are that matters.
      - euyyn 9y ago
- toyg 9y ago
  You don't even need an international agreement - each country should just tax the shit out of any outgoing capital movement if based on any sort of licensing. This would likely have the positive side-effect of protecting smaller national brands from foreign competition, but might make the country less appealing to foreign investors, so it can't be done willy-nilly - but it's the only way. This is not unlike what China does - money goes in but it's not allowed to go out.
rtpg 9y ago
Here's a solution: if you sell your IP to someone else, that other person has to be independent. This is done a lot in anti-trust settlements. You can sell your IP to Apple Germany, but then Apple Germany is independent and could go sell that/licence that however they see fit. Including selling to competitors of Apple US. If you're transferring IP but the receiving organisation is basically under your control.... are you really transferring anything?

johannes1234321 9y ago

This would mean that immaterial things won't have a worth in the book keeping way and can't be billed. In simple terms what happens is that Apple Europe, Inc. has to pay a lot for the license to use the Apple logo and trademark to Apple Paradise, Inc. Thus Apple Europe, Inc. doesn't have profits, while Apple Paradise, Inc. has all the profits. Now the value of the logo and trademark are artificial ... What's needed are international agreements how to handle those licenses, that you can't simply push them to tax heavens, but tax has to be paid where they are created or used or whatever.

improbable22 9y ago
But this is exactly what happens now. And this is what the letter is upset about. He thinks Apple Europe Gmbh. made profit, and Apple's accountants say Apple Paradise Inc. made the profit, and we all think Apple Cupertino made the profit. And I don't see a good way to settle the argument, thus I suggest not having it. "tax has to be paid where they are created or used" Yes exactly. When they sell a cool computer for E2000, they have used their brand to sell it, and there tax is collected. The sale took place in an apple store in Berlin. Angela can adjust the tax rate to anything she pleases. And to create that brand, they had to pay some guy $200K to write jingles, and this transaction is also taxed. This guy works in a spaceship which has landed in San Francisco. Donald can adjust this rate to anything he pleases. Neither of these ends can easily move to a tax haven. Everything in between happens in the financial equivalent of the cloud. It seems to me a fool's errand to argue about which bits of that cloud were in whose territory. Anyway I will shut up now!
- toyg 9y ago
  > Apple's accountants say Apple Paradise Inc. made the profit ... because they offset all local profits to expenses incurred in licensing the brand. > When they sell a cool computer for E2000, they have used their brand to sell it, and there tax is collected. But tax is supposed to be collected there and it's not, because Apple accountants immediately declare all profits as debits towards AParadise, so there is $0 profit. That $2000 laptop is now sold at cost, so there is nothing to tax - unless you start taxing expenses, and good luck with that (you'll kill half the economy overnight). All profit goes to AParadise, and the European economy is now at net negative: it pays for the roads that Apple trucks use to deliver their China-made wares, it pays for the social security that frees disposable income for Euro citizens to buy laptops, and in exchange it gets a big fat $0. The solution is to do away with the "IP licensing" regime altogether, or tax it at absurd rates to discourage these moves. Otherwise you might as well give up and turn into Somalia.
  - improbable22 9y ago
    Of the E2000 the customer paid, about E400 is tax right away. That's far from nothing. You could argue it should be higher, or lower. It's frequently adjusted. My point is that this transaction is what certainly happened in Germany. Taxing this is very clear, transparent, and fair. Whether or not the global empire turned a profit that quarter (maybe you bought a Samsung!), and which bits of the global empire were losing money or making money... and which bits are independent or not really independent... these are much harder to pin down, perhaps impossible. And attempting to do so (as we do now) encourages all sorts of strange behaviour, which requires lots of fancy lawyers, and can't be copied by smaller competitors. I don't know why we do this. I'm very much not arguing for zero taxes, I do not want to live in Somalia. I'm arguing for a tax system which doesn't reward stupid tricks --- the financial equivalent of moving your email server 100m across some border. Instead of ever stricter rules about where your server is located, we just have to get used to the idea that the cloud exists, and if the cloud is in Somalia or on the moon who cares? It's where the human beings are that matters.
    - euyyn 9y ago
toyg 9y ago
You don't even need an international agreement - each country should just tax the shit out of any outgoing capital movement if based on any sort of licensing. This would likely have the positive side-effect of protecting smaller national brands from foreign competition, but might make the country less appealing to foreign investors, so it can't be done willy-nilly - but it's the only way. This is not unlike what China does - money goes in but it's not allowed to go out.

rtpg 9y ago

Here's a solution: if you sell your IP to someone else, that other person has to be independent. This is done a lot in anti-trust settlements. You can sell your IP to Apple Germany, but then Apple Germany is independent and could go sell that/licence that however they see fit. Including selling to competitors of Apple US. If you're transferring IP but the receiving organisation is basically under your control.... are you really transferring anything?