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How would it benefit society? Reduced state income that could be used to invest in infrastructure and people? Will the companies invest that money with society'

How would it benefit society? Reduced state income that could be used to invest in infrastructure and people? Will the companies invest that money with society's interest at best better than the govt would? I don't think so. What do Apple do with their money? They horde it, waiting for a windfall to bring it back to the States and pay low/no corporate tax on the repatriated profits.

improbable22 9y ago
It would benefit society because we could all spend our outrage on things more productive than pushing on a rope. The profits were taxed as VAT or something on the way into Apple. They will be taxed again as income tax or something on their way out again. We are free to adjust these rates as we wish. But trying to tax intermediate steps which seem to be largely accounting fictions (like exactly which puzzle piece of the global empire actually made that profit) seems like a fool's errand.
valuearb 9y ago
You tax things you want less of, not more if. Taxing corporate profits is a tax on investment. Apples actual income tax rate is in excess of 60% if they repatriate. First, they have to pay corporate income taxes in all their foreign countries. Then, they owe 9% to state of California on what’s left. Then they owe 35% to the US treasury on what’s left. Then they pay the remainder as dividends, and shareholders owe up to 10% to their stars, and then 15-20% to the federal government. We could likely generate as much or more in tax revenues by eliminating the corporate income tax and treating individual dividend payments as regular income (taxed at 28-38% normally). This way reinvested profits aren’t taxed, leading to more investment, which leads to more profits and more dividends. And the return on investing for individuals increases, leading to more investment. More investment means more jobs, higher productivity and higher pay. And hundreds of thousands of corporate tax accountants can now actually be switched to work that benefits society.
- jamesblonde 9y ago
  But you know that even if you eliminated corporate tax, companies would not pay out profits as dividends, if there was a loophole around it. And there are loads, of course. Share buybacks, for example.
  - tengbretson 9y ago
    From the perspective of an investor, there's really not all that much difference between a buyback and dividends.
  - valuearb 9y ago
    Yes, you'd have to also tax capital gains at ordinary rates to capture this. I think capital gains should only have inflation adjustments to their basis, they don't need their own special rates.
- pwinnski 9y ago
  This is not accurate. Currently they are paying between 1 and 7% on income, as the Paradise Papers document. If they re-patriated every bit of income to the U.S., they would owe an additional 35%. That brings the tax rate to 36-42% (actually slightly less since the 35% would be on the 99-93% remaining), and that's that. What they then choose to do with the money after that, and what taxes individuals pay on their own investments, are not part of Apple's tax rate. Also, good luck getting dividends taxed as normal income rather than capital gains!
  - valuearb 9y ago
    Nope, Apple pays a world-wide rate of 24.6%. https://www.apple.com/newsroom/2017/11/the-facts-about-apple-tax-payments/ https://www.apple.com/newsroom/2017/11/the-facts-about-apple... And the real rate is actually higher because it doesn't count the deferred taxes they owe and will pay when they repatriate.
    - pwinnski 9y ago
      The statement from Apple includes "Apple’s effective tax rate on foreign earnings is 21 percent" but that is not the rate they've actually paid. They state elsewhere that they believe the majority of taxes should be paid in the U.S., but they're not actually paying them here, either. Instead they're holding the income off-shore to avoid paying the taxes where they say they should be paid, and waiting for the rate to be lowered or even eliminated in a one-time holiday. IOW, that 24.6% absolutely does include the money they say they expect to owe when they eventually repatriate those earnings. In the meantime, they earn returns on the money they've set aside that they "owe" for taxes they aren't actually paying, so deferring the payments is very profitable for them. They've even taken out large loans in the U.S. to pay dividends, because it was cheaper for them to borrow money and pay it back with interest than repatriate this money. It's fair to say I love Apple, and I've been described as too ardent a defender of their, but they're being ridiculously disingenuous here, and it's clearly working, as you took that sentence from their statement at face value.
      - mercutio2 9y ago
- Retra 9y ago
  Taxes are not a punitive fee. Apple is paying for the public infrastructure and services used in the US. Military, police, fire protection. Health services. Roads. Foreign diplomacy. Legislative access. Executive function. Judicial expertise. All of which they reap a disproportionate reward from. You could just as well argue that anything Apple sells should be free on account of them wanting more sales, not less. And the goal of government is not to maximize corporate income. For that matter, companies don't really have a right to make more money, only to participate in a fair economy.

improbable22 9y ago

It would benefit society because we could all spend our outrage on things more productive than pushing on a rope. The profits were taxed as VAT or something on the way into Apple. They will be taxed again as income tax or something on their way out again. We are free to adjust these rates as we wish. But trying to tax intermediate steps which seem to be largely accounting fictions (like exactly which puzzle piece of the global empire actually made that profit) seems like a fool's errand.

valuearb 9y ago

You tax things you want less of, not more if. Taxing corporate profits is a tax on investment. Apples actual income tax rate is in excess of 60% if they repatriate. First, they have to pay corporate income taxes in all their foreign countries. Then, they owe 9% to state of California on what’s left. Then they owe 35% to the US treasury on what’s left. Then they pay the remainder as dividends, and shareholders owe up to 10% to their stars, and then 15-20% to the federal government. We could likely generate as much or more in tax revenues by eliminating the corporate income tax and treating individual dividend payments as regular income (taxed at 28-38% normally). This way reinvested profits aren’t taxed, leading to more investment, which leads to more profits and more dividends. And the return on investing for individuals increases, leading to more investment. More investment means more jobs, higher productivity and higher pay. And hundreds of thousands of corporate tax accountants can now actually be switched to work that benefits society.

jamesblonde 9y ago
But you know that even if you eliminated corporate tax, companies would not pay out profits as dividends, if there was a loophole around it. And there are loads, of course. Share buybacks, for example.
- tengbretson 9y ago
  From the perspective of an investor, there's really not all that much difference between a buyback and dividends.
- valuearb 9y ago
  Yes, you'd have to also tax capital gains at ordinary rates to capture this. I think capital gains should only have inflation adjustments to their basis, they don't need their own special rates.
pwinnski 9y ago
This is not accurate. Currently they are paying between 1 and 7% on income, as the Paradise Papers document. If they re-patriated every bit of income to the U.S., they would owe an additional 35%. That brings the tax rate to 36-42% (actually slightly less since the 35% would be on the 99-93% remaining), and that's that. What they then choose to do with the money after that, and what taxes individuals pay on their own investments, are not part of Apple's tax rate. Also, good luck getting dividends taxed as normal income rather than capital gains!
- valuearb 9y ago
  Nope, Apple pays a world-wide rate of 24.6%. https://www.apple.com/newsroom/2017/11/the-facts-about-apple-tax-payments/ https://www.apple.com/newsroom/2017/11/the-facts-about-apple... And the real rate is actually higher because it doesn't count the deferred taxes they owe and will pay when they repatriate.
  - pwinnski 9y ago
    The statement from Apple includes "Apple’s effective tax rate on foreign earnings is 21 percent" but that is not the rate they've actually paid. They state elsewhere that they believe the majority of taxes should be paid in the U.S., but they're not actually paying them here, either. Instead they're holding the income off-shore to avoid paying the taxes where they say they should be paid, and waiting for the rate to be lowered or even eliminated in a one-time holiday. IOW, that 24.6% absolutely does include the money they say they expect to owe when they eventually repatriate those earnings. In the meantime, they earn returns on the money they've set aside that they "owe" for taxes they aren't actually paying, so deferring the payments is very profitable for them. They've even taken out large loans in the U.S. to pay dividends, because it was cheaper for them to borrow money and pay it back with interest than repatriate this money. It's fair to say I love Apple, and I've been described as too ardent a defender of their, but they're being ridiculously disingenuous here, and it's clearly working, as you took that sentence from their statement at face value.
    - mercutio2 9y ago
Retra 9y ago
Taxes are not a punitive fee. Apple is paying for the public infrastructure and services used in the US. Military, police, fire protection. Health services. Roads. Foreign diplomacy. Legislative access. Executive function. Judicial expertise. All of which they reap a disproportionate reward from. You could just as well argue that anything Apple sells should be free on account of them wanting more sales, not less. And the goal of government is not to maximize corporate income. For that matter, companies don't really have a right to make more money, only to participate in a fair economy.