9 ms·

To Understand the Benefits of Tax Reform, Start by Understanding Apple's Taxes

81 points by amatheus 9y ago

bediger4000 9y ago
While we may all be free marketeers and capitalists here, I think we do have to recognize that large corporations have very different interests than workers, managers and small business owners. We should also recognize that Fortune is not going to print anything that's not in a large corporation's very best interests. I didn't read this article, but it would seem that by recognizing the source, and reading the title, we can decide not to bother with large corporation propaganda.
- maxxxxx 9y ago
  You are probably right but I think it's good form to at least skim an article before commenting on it. Without that we just reinforce our preconceived notions.
- jmh530 9y ago
  There's a difference between pro-business and pro-market. There's nothing inconsistent with believing in free markets/rule of law and at the same time believing that a tax system should be fair. Scandinavian countries that people refer to as socialist are actually free market economies (in that they score just as well as the U.S. in the Heritage Index of Economic Freedom), but have more extensive tax and redistribution programs than the U.S.
cletus 9y ago
So if you're a US citizen or permanent resident or even just a tax resident (which includes working here on a temporary visa), the US taxes you on worldwide income. Any income from overseas needs to be reported (up to 3 times!) and taxed. With most countries you get credit for any taxes you paid in those countries. State taxes work the same in that you may have to file in more than one state and credit is given from taxes in one state to the others. This is actually all pretty sensible albeit tedious (particularly the part about reporting foreign assets and income). Where it starts to go bonkers is for US citizens and PRs who live overseas. They still have to file taxes with the IRS for all worldwide income and report foreign assets and income as if they were present in the US. They get a certain amount of income (<$100k) each yeah exempted from US income taxes. Most countries do not do this. My first problem is this: why exactly can't we treat companies the same way? I would be all for a 20% corporate tax rate if it meant a tax on worldwide income with credits for any taxes paid to foreign governments... exactly like individuals are treated. Why isn't this on the table? Is it that hard? Second problem: in this world of multinationals and particularly when dealing with IP, companies seem to have free reign to book income in any country they like. Like any sales in the UK (and probably the EU as a whole) are reported to Irish subsidiaries. To me this is fundamentally wrong. In other instances this is called transfer pricing and is illegal. For completeness, the classic case of transfer pricing is this: Acme Inc buys a sofa from China for $200 in China and sells it in the US for $1000. That's $800 taxable profit right? Not so fast. Acme Inc instead forms a subsidiary in the Cayman Islands who buys that sofa from China for $200 and then sells it to the parent company for $990. Now only $10 is taxable in the US and $790 is taxed in the Cayman Islands at a zero or near-zero rate. Now if that money is ever repatriated it's taxed. Thing is, it never is. Not until an ill-advised tax holiday and then the whole cycle repeats. This brings me to the third problem: to get around the fact that all their money is offshore, companies borrow money in the US, which up until 1-2 years ago was at zero or near-zero levels. This debt covers their expenses and saves them from repatriating foreign profits and paying tax on them. So why exactly don't we treat ever $1 borrow as repatriating $1 in foreign profits and tax it? Now that would be true tax reform. Well, if we also got rid of the noticeably absent carried interest tax credit. What a joke.
- gok 9y ago
  Why won’t the US tax unrepatriated foreign income of corporations like they do for people? One answer is that the only reason they can get away with citizens is that they are a captive audience. Renouncing your US citizenship is painful. Corporate re-headquatering isn’t so hard. Since a corporation can pick a home country, why would they pick the only country in the world that taxes money made both overseas and domestically?
  - cletus 9y ago
    It's not a question of picking a home country. If you operate in the US, you're subject to US laws. Give companies the choice of not operating here in the US at all or paying (at least) the US corporate tax rate on all profits either by paying the US or by paying some foreign government (which with double taxation would be credited towards US taxes owed). Imagine if the EU also did this. It would go a damn long way to ending this absurd practice of offshoring profits.
    - gok 9y ago
      So if you’re legitimately based in a country with low or no corporate income tax and you make $1 of profit in the US and $1b overseas, you pay the US tax on your entire income? Who would agree to that? It would also be a flagrant violation of world trade rules.
      - cletus 9y ago
        This is an example of where the perfect is the enemy of the good. The point here is to capture the (now) trillions of multinationals that are made almost exclusively in the developed world but aren't taxed anywhere near reasonably anywhere in the developed world. Laws can be written to say things like "substantial operations" in the US. Software engineers tend to have a problem with the discretionary and subjective language that is common in the law. But such language would allow the likes of the IRS to capture most of the squirrelled trillions. And if some of it isn't who cares? In case you're not from or familiar with the US system, there are countless examples of this. Take sales tax. By the US constitution, the Federal government has the right to tax interstate commerce. The states don't. This led to a problem in the Internet era where people were shopping online and Internet retailers were under no obligation to collect state sales taxes. Technically consumers were liable for them anyway (so-called "use taxes") but many never reported them. Companies with a presence in the state however were obligated to collect those sales taxes as their presence made them subject to state laws. This is why if you shop from B&H or Adorama you only pay taxes if you live in the state of New York (NJ too for Adorama IIRC). But some years ago the state of New York went after the likes of Amazon with a so-called "Amazon tax". Such a move by the states was inevitable and I believe now Amazon collects sales taxes everywhere. This puts them on the same footing as the likes of Walmart. So there are still retailers around that are small enough they don't merit the Amazon treatment but who cares? The point was to get to a "good enough" solution rather than a perfect solution.
deleted 9y ago
[deleted]
Isamu 9y ago
FTA: > But the U.S. code provides ample room for sheltering and avoiding taxes on foreign income, a major reason it needs an overhaul. The rules essentially divide foreign profits into three categories. One bucket of profits is more or less taxed at the full rate of 35%. On a second bucket, the multinational can defer paying the U.S. tax due. And a third category is excluded from all U.S. taxation, amounting to corporate America’s biggest loophole. > Apple generates more foreign income that any other U.S. company. In FY’16, it booked $41.1 billion pre-tax profits outside the U.S., or 67% of the $61.4 billion total. > It’s the third category that amounts to a big tax break, and explains why Apple’s effective rate is well below the statutory 35%. > Once again, if Apple had faced the full 35% rate, it would have paid $21.46 billion in federal taxes (as well as another $990 million to the states). Instead, it paid $10.444 billion in cash, and accrued $5.241 billion in U.S. tax owed on foreign profits, but deferred to be paid later. That’s the total of $15.685 billion that it booked in tax expense on its income statement. The difference between that number and the approximately $21.5 billion it would have paid at the 35% rate is the almost $5.6 billion attributed “indefinitely invested foreign earnings under the GAAP rules.”
jaredhansen 9y ago
The best way to think of the tax code is as an enormous legacy codebase whose authors were largely unaware of one another, often working at cross purposes, and subject to an ever changing set of requirements -- which requirements, importantly, are at least as much about social engineering as they are about raising money. There is a constant tension between: - backward compatibility ("we built our business around [tax provision]! you can't remove it now!"), - expansion of the codebase to accommodate new requirements ("we must get more $activity; let's add a tax credit to incentivize it!") - refactoring to better serve existing organizational goals ("we are leaking billions of dollars because of [loophole]! we have to close it now!") This is why things like the "flat tax" or other simplification schemes are perennially floated, and also why they continue to get shot down: desires to simplify and refactor run into desires to support existing worfklows as well as current and anticipated future social goals, and they just can't get off the ground. This is also why I end up posting basically the same thing in every tax thread, from the late great Martin Ginsburg, from whom I was lucky enough to take corporate tax: "Everything in the tax code is simultaneously a trap for the unwary, and an opportunity for the well-advised." So your own interactions with the tax code should be considered similar to, say, an SAP deployment or something. Theoretically it's all documented and you can figure it out on your own, but in real life an expensive consultant will pay for herself over and over.
- corey_moncure 9y ago
  Another thing that has always bothered me about tax code (and criminal code but that's another story) is the explicit use of constant dollar amounts. For instance, how the child tax credit should be $1,000, the minimum wage should be $9.15, and the penalty for illegally parking your car should be $52.13. All of these numbers are completely arbitrary, and if they had any justification when they were decided, they lose their relationship to reality quickly over time as the money supply and other economic factors shift over time. We have computers now. Why can't we write a code where the incentives and disincentives stay where we intend them to relative to the state of the economy?
  - ptx 9y ago
    In Swedish law these numbers are often specified as some multiple of the "price base amount" (prisbasbelopp), so there is a single constant that can be updated from time to time, which indirectly adjust all these other amounts in various laws.
matt4077 9y ago
The only actual argument this article makes is: Multinationals could often put foreign cash to more profitable use in the U.S. by making acquisitions, building plants, paying special dividends or repurchasing stock. But that quickly falls apart: First, Apple is in no way constrained by cash in its investments. And even financially weaker companies could still use foreign cash reserves as collateral to get credit at almost insignificantly low interest rates. More importantly: investments can be expensed. If you hire employees, their wages reduce your profit, and therefore your tax burden. The corporate tax only applies to profit, not revenue. Apple could repatriate those $200 billion, hire ten million employees, and wouldn't pay a dime in taxes. Other than that, it almost seems like an effort to use these corporations' tax-avoidance schemes as an argument to reward them. The logic in that is the same as striking murder from the criminal code to reduce crime
- valuearb 9y ago
  Investments can’t be expensed for tax purposes. If they repatriate $200B, they owe the state of CA roughly $20B and the US $63B in income taxes, no matter what they invest it in. They could invest in hiring tons of employees and their salaries would be expenses (mostly future expenses) l. But that’s no free ride, those employees need to increase sales to cover their costs or the money is wasted. If my business makes $1M this year and i pay a contractor $1M so I don’t owe taxes this year, that contractor better build something worth more than a million or it was s huge waste. Losing $1M to save $350K is really bad business. Imagine if the contractors project sold for $900k next year. Great, you deferred taxes a year, but still owe $315K on the contractor sale next year, and you lost $100k. Net loss $65,000. Dumb, dumb dumb. What Apple would actually do if it repatriated the $200B is a) pay the $80B in state/federal taxes, b) pay $117B in dividends, so its shareholders would have to pay at least $20B in state/federal dividend taxes, for a total tax of around $100B. But it’s worse than that. Remember, the $200B is only what’s left after paying about $25B in income taxes to foreign governments. Your company earns $225B, and can only pay about 45% to you, and 55% ends up going to various taxes (note we ignored VAT/Excise/Payroll taxes too). Now do you understand why Apple doesn’t repatriate?
flippyhead 9y ago
I recently read an excellent book on this subject: https://www.amazon.com/Fine-Mess-Global-Simpler-Efficient/dp/1594205515 https://www.amazon.com/Fine-Mess-Global-Simpler-Efficient/dp... I was kind of amazed that a book about the tax system could be page turner -- it was very interesting!
- bob_theslob646 9y ago
  What was so good about the book? What didn't you know before that you do know now?
  - flippyhead 9y ago
    How ingenious the VAT is.
mftf 9y ago
Not choosing a side, what is the justification for taxing foreign profits?
- onlyrealcuzzo 9y ago
  Agreed. I'm being serious, I can't understand why corporations are taxed at all. The money going to US citizens already gets taxed as income (although at capital gains rates). Even if the money funnels through a few corporations before it gets to the individual. Money that would go to foreign shareholders (or foreign corporations) should be taxed at the same rate. If we didn't tax businesses, they'd be more incentivized to stay in the US or even move here. What would we lose from not taxing corporations (and adjusting capital gains tax to make up for that)?
  - jandrese 9y ago
    You could also argue that income tax makes no sense, because the people are going to pay sales tax or property tax with it anyway. The more you concentrate the tax in one area of the economy, the more you incentiveize people to try to find a way around that specific tax. Spreading it out reduces the risk of making people behave otherwise irrationally just to avoid paying tax.
lend000 9y ago
Many of the same people who get angry about the complex tax acrobatics used by big corporations also deride people like Rand Paul who have suggested a one page tax code. But what about my deduction for this? What about the deduction for that? Hundreds of thousands of pages later, that's how you end up with loopholes that only the savvy/wealthy are able to find. That's the kind of thinking that led to this mess. Like good developers, we should abstract the tax code to simply define the acceptable conditions for something to be deducted. Then, the Treasury can provide a list of 'standard' deductions somewhere that won't attract any extra scrutiny, and which will suffice for most purposes. Things like a minimum rent amount, minimum food expenses, etc.
- maxxxxx 9y ago
  I would be with Rand Paul but his proposals would mainly reduce taxes for the wealth without making much of a difference for the average guy.
  - lend000 9y ago
    I see nothing wrong with only agreeing with a subset of a person's politics. I support some of his tax reform ideas (especially the common theme of simplifying the current system) not because they are perfect, but because they would be a large non-incremental improvement on the current system.
    - maxxxxx 9y ago
      I don't think his plans would be an improvement because they would just make inequality even larger. I don't think we need that.
- rrhd 9y ago
  > Many of the same people who get angry about the complex tax acrobatics used by big corporations also deride people like Rand Paul who have suggested a one page tax code. because that's equally absurd and harmful.
fastaguy88 9y ago
What a bunch of propaganda. The central theme of the article is that if Apple could repatriate its $200 Billion, it would have more money to invest and create more jobs. But this assumes that Apple is not investing as much as it would like. There is no reason to believe that Apple feels it needs to invest more. And, if it did, it could borrow the money from its foreign subsidiaries and spend it without paying any taxes (and charge itself whatever it wanted in interest since it's borrowing from itself). As the past 9 years since the Great Recession have shown, companies do not make investments just because they have more money. They invest for business reasons. It is true that Apple investors will be worth more if the money is repatriated, but more jobs?? not so much.
- valuearb 9y ago
  So if repatriated, the money disappears? It’s not reinvested in Apple or other companies, put in the bank to be loaned out to other businesses, nor spent on goods and services? Cause all three of those things create jobs.
  - mholmes680 9y ago
    I think OP's point is that its not "guaranteed" to do any of the things you listed. If the FED raises rates, the companies may want to hold it, as an example. Or if the best business application is to do a buyback or dividend, you're bypassing the jobs part. We're also talking two buckets of money. The money coming back in to the US, and the taxes the govt collects. I think this one-time tax money in this case is already spent with these tax cuts?
    - valuearb 9y ago
      both buybacks and dividends create jobs. in fact without buybacks and dividends no one would ever start a business and no jobs whatever be created, Other than sole proprietors.
      - namlem 9y ago

81 points by amatheus 9y ago

While we may all be free marketeers and capitalists here, I think we do have to recognize that large corporations have very different interests than workers, managers and small business owners. We should also recognize that Fortune is not going to print anything that's not in a large corporation's very best interests. I didn't read this article, but it would seem that by recognizing the source, and reading the title, we can decide not to bother with large corporation propaganda.

maxxxxx 9y ago
You are probably right but I think it's good form to at least skim an article before commenting on it. Without that we just reinforce our preconceived notions.
jmh530 9y ago
There's a difference between pro-business and pro-market. There's nothing inconsistent with believing in free markets/rule of law and at the same time believing that a tax system should be fair. Scandinavian countries that people refer to as socialist are actually free market economies (in that they score just as well as the U.S. in the Heritage Index of Economic Freedom), but have more extensive tax and redistribution programs than the U.S.

cletus 9y ago

So if you're a US citizen or permanent resident or even just a tax resident (which includes working here on a temporary visa), the US taxes you on worldwide income. Any income from overseas needs to be reported (up to 3 times!) and taxed. With most countries you get credit for any taxes you paid in those countries. State taxes work the same in that you may have to file in more than one state and credit is given from taxes in one state to the others. This is actually all pretty sensible albeit tedious (particularly the part about reporting foreign assets and income). Where it starts to go bonkers is for US citizens and PRs who live overseas. They still have to file taxes with the IRS for all worldwide income and report foreign assets and income as if they were present in the US. They get a certain amount of income (<$100k) each yeah exempted from US income taxes. Most countries do not do this. My first problem is this: why exactly can't we treat companies the same way? I would be all for a 20% corporate tax rate if it meant a tax on worldwide income with credits for any taxes paid to foreign governments... exactly like individuals are treated. Why isn't this on the table? Is it that hard? Second problem: in this world of multinationals and particularly when dealing with IP, companies seem to have free reign to book income in any country they like. Like any sales in the UK (and probably the EU as a whole) are reported to Irish subsidiaries. To me this is fundamentally wrong. In other instances this is called transfer pricing and is illegal. For completeness, the classic case of transfer pricing is this: Acme Inc buys a sofa from China for $200 in China and sells it in the US for $1000. That's $800 taxable profit right? Not so fast. Acme Inc instead forms a subsidiary in the Cayman Islands who buys that sofa from China for $200 and then sells it to the parent company for $990. Now only $10 is taxable in the US and $790 is taxed in the Cayman Islands at a zero or near-zero rate. Now if that money is ever repatriated it's taxed. Thing is, it never is. Not until an ill-advised tax holiday and then the whole cycle repeats. This brings me to the third problem: to get around the fact that all their money is offshore, companies borrow money in the US, which up until 1-2 years ago was at zero or near-zero levels. This debt covers their expenses and saves them from repatriating foreign profits and paying tax on them. So why exactly don't we treat ever $1 borrow as repatriating $1 in foreign profits and tax it? Now that would be true tax reform. Well, if we also got rid of the noticeably absent carried interest tax credit. What a joke.

gok 9y ago
Why won’t the US tax unrepatriated foreign income of corporations like they do for people? One answer is that the only reason they can get away with citizens is that they are a captive audience. Renouncing your US citizenship is painful. Corporate re-headquatering isn’t so hard. Since a corporation can pick a home country, why would they pick the only country in the world that taxes money made both overseas and domestically?
- cletus 9y ago
  It's not a question of picking a home country. If you operate in the US, you're subject to US laws. Give companies the choice of not operating here in the US at all or paying (at least) the US corporate tax rate on all profits either by paying the US or by paying some foreign government (which with double taxation would be credited towards US taxes owed). Imagine if the EU also did this. It would go a damn long way to ending this absurd practice of offshoring profits.
  - gok 9y ago
    So if you’re legitimately based in a country with low or no corporate income tax and you make $1 of profit in the US and $1b overseas, you pay the US tax on your entire income? Who would agree to that? It would also be a flagrant violation of world trade rules.
    - cletus 9y ago
      This is an example of where the perfect is the enemy of the good. The point here is to capture the (now) trillions of multinationals that are made almost exclusively in the developed world but aren't taxed anywhere near reasonably anywhere in the developed world. Laws can be written to say things like "substantial operations" in the US. Software engineers tend to have a problem with the discretionary and subjective language that is common in the law. But such language would allow the likes of the IRS to capture most of the squirrelled trillions. And if some of it isn't who cares? In case you're not from or familiar with the US system, there are countless examples of this. Take sales tax. By the US constitution, the Federal government has the right to tax interstate commerce. The states don't. This led to a problem in the Internet era where people were shopping online and Internet retailers were under no obligation to collect state sales taxes. Technically consumers were liable for them anyway (so-called "use taxes") but many never reported them. Companies with a presence in the state however were obligated to collect those sales taxes as their presence made them subject to state laws. This is why if you shop from B&H or Adorama you only pay taxes if you live in the state of New York (NJ too for Adorama IIRC). But some years ago the state of New York went after the likes of Amazon with a so-called "Amazon tax". Such a move by the states was inevitable and I believe now Amazon collects sales taxes everywhere. This puts them on the same footing as the likes of Walmart. So there are still retailers around that are small enough they don't merit the Amazon treatment but who cares? The point was to get to a "good enough" solution rather than a perfect solution.

deleted 9y ago

[deleted]

Isamu 9y ago

FTA: > But the U.S. code provides ample room for sheltering and avoiding taxes on foreign income, a major reason it needs an overhaul. The rules essentially divide foreign profits into three categories. One bucket of profits is more or less taxed at the full rate of 35%. On a second bucket, the multinational can defer paying the U.S. tax due. And a third category is excluded from all U.S. taxation, amounting to corporate America’s biggest loophole. > Apple generates more foreign income that any other U.S. company. In FY’16, it booked $41.1 billion pre-tax profits outside the U.S., or 67% of the $61.4 billion total. > It’s the third category that amounts to a big tax break, and explains why Apple’s effective rate is well below the statutory 35%. > Once again, if Apple had faced the full 35% rate, it would have paid $21.46 billion in federal taxes (as well as another $990 million to the states). Instead, it paid $10.444 billion in cash, and accrued $5.241 billion in U.S. tax owed on foreign profits, but deferred to be paid later. That’s the total of $15.685 billion that it booked in tax expense on its income statement. The difference between that number and the approximately $21.5 billion it would have paid at the 35% rate is the almost $5.6 billion attributed “indefinitely invested foreign earnings under the GAAP rules.”

jaredhansen 9y ago

The best way to think of the tax code is as an enormous legacy codebase whose authors were largely unaware of one another, often working at cross purposes, and subject to an ever changing set of requirements -- which requirements, importantly, are at least as much about social engineering as they are about raising money. There is a constant tension between: - backward compatibility ("we built our business around [tax provision]! you can't remove it now!"), - expansion of the codebase to accommodate new requirements ("we must get more $activity; let's add a tax credit to incentivize it!") - refactoring to better serve existing organizational goals ("we are leaking billions of dollars because of [loophole]! we have to close it now!") This is why things like the "flat tax" or other simplification schemes are perennially floated, and also why they continue to get shot down: desires to simplify and refactor run into desires to support existing worfklows as well as current and anticipated future social goals, and they just can't get off the ground. This is also why I end up posting basically the same thing in every tax thread, from the late great Martin Ginsburg, from whom I was lucky enough to take corporate tax: "Everything in the tax code is simultaneously a trap for the unwary, and an opportunity for the well-advised." So your own interactions with the tax code should be considered similar to, say, an SAP deployment or something. Theoretically it's all documented and you can figure it out on your own, but in real life an expensive consultant will pay for herself over and over.

corey_moncure 9y ago
Another thing that has always bothered me about tax code (and criminal code but that's another story) is the explicit use of constant dollar amounts. For instance, how the child tax credit should be $1,000, the minimum wage should be $9.15, and the penalty for illegally parking your car should be $52.13. All of these numbers are completely arbitrary, and if they had any justification when they were decided, they lose their relationship to reality quickly over time as the money supply and other economic factors shift over time. We have computers now. Why can't we write a code where the incentives and disincentives stay where we intend them to relative to the state of the economy?
- ptx 9y ago
  In Swedish law these numbers are often specified as some multiple of the "price base amount" (prisbasbelopp), so there is a single constant that can be updated from time to time, which indirectly adjust all these other amounts in various laws.

matt4077 9y ago

The only actual argument this article makes is: Multinationals could often put foreign cash to more profitable use in the U.S. by making acquisitions, building plants, paying special dividends or repurchasing stock. But that quickly falls apart: First, Apple is in no way constrained by cash in its investments. And even financially weaker companies could still use foreign cash reserves as collateral to get credit at almost insignificantly low interest rates. More importantly: investments can be expensed. If you hire employees, their wages reduce your profit, and therefore your tax burden. The corporate tax only applies to profit, not revenue. Apple could repatriate those $200 billion, hire ten million employees, and wouldn't pay a dime in taxes. Other than that, it almost seems like an effort to use these corporations' tax-avoidance schemes as an argument to reward them. The logic in that is the same as striking murder from the criminal code to reduce crime

valuearb 9y ago
Investments can’t be expensed for tax purposes. If they repatriate $200B, they owe the state of CA roughly $20B and the US $63B in income taxes, no matter what they invest it in. They could invest in hiring tons of employees and their salaries would be expenses (mostly future expenses) l. But that’s no free ride, those employees need to increase sales to cover their costs or the money is wasted. If my business makes $1M this year and i pay a contractor $1M so I don’t owe taxes this year, that contractor better build something worth more than a million or it was s huge waste. Losing $1M to save $350K is really bad business. Imagine if the contractors project sold for $900k next year. Great, you deferred taxes a year, but still owe $315K on the contractor sale next year, and you lost $100k. Net loss $65,000. Dumb, dumb dumb. What Apple would actually do if it repatriated the $200B is a) pay the $80B in state/federal taxes, b) pay $117B in dividends, so its shareholders would have to pay at least $20B in state/federal dividend taxes, for a total tax of around $100B. But it’s worse than that. Remember, the $200B is only what’s left after paying about $25B in income taxes to foreign governments. Your company earns $225B, and can only pay about 45% to you, and 55% ends up going to various taxes (note we ignored VAT/Excise/Payroll taxes too). Now do you understand why Apple doesn’t repatriate?

flippyhead 9y ago

I recently read an excellent book on this subject: https://www.amazon.com/Fine-Mess-Global-Simpler-Efficient/dp/1594205515 https://www.amazon.com/Fine-Mess-Global-Simpler-Efficient/dp... I was kind of amazed that a book about the tax system could be page turner -- it was very interesting!

bob_theslob646 9y ago
What was so good about the book? What didn't you know before that you do know now?
- flippyhead 9y ago
  How ingenious the VAT is.

mftf 9y ago

Not choosing a side, what is the justification for taxing foreign profits?

onlyrealcuzzo 9y ago
Agreed. I'm being serious, I can't understand why corporations are taxed at all. The money going to US citizens already gets taxed as income (although at capital gains rates). Even if the money funnels through a few corporations before it gets to the individual. Money that would go to foreign shareholders (or foreign corporations) should be taxed at the same rate. If we didn't tax businesses, they'd be more incentivized to stay in the US or even move here. What would we lose from not taxing corporations (and adjusting capital gains tax to make up for that)?
- jandrese 9y ago
  You could also argue that income tax makes no sense, because the people are going to pay sales tax or property tax with it anyway. The more you concentrate the tax in one area of the economy, the more you incentiveize people to try to find a way around that specific tax. Spreading it out reduces the risk of making people behave otherwise irrationally just to avoid paying tax.

lend000 9y ago

Many of the same people who get angry about the complex tax acrobatics used by big corporations also deride people like Rand Paul who have suggested a one page tax code. But what about my deduction for this? What about the deduction for that? Hundreds of thousands of pages later, that's how you end up with loopholes that only the savvy/wealthy are able to find. That's the kind of thinking that led to this mess. Like good developers, we should abstract the tax code to simply define the acceptable conditions for something to be deducted. Then, the Treasury can provide a list of 'standard' deductions somewhere that won't attract any extra scrutiny, and which will suffice for most purposes. Things like a minimum rent amount, minimum food expenses, etc.

maxxxxx 9y ago
I would be with Rand Paul but his proposals would mainly reduce taxes for the wealth without making much of a difference for the average guy.
- lend000 9y ago
  I see nothing wrong with only agreeing with a subset of a person's politics. I support some of his tax reform ideas (especially the common theme of simplifying the current system) not because they are perfect, but because they would be a large non-incremental improvement on the current system.
  - maxxxxx 9y ago
    I don't think his plans would be an improvement because they would just make inequality even larger. I don't think we need that.
rrhd 9y ago
> Many of the same people who get angry about the complex tax acrobatics used by big corporations also deride people like Rand Paul who have suggested a one page tax code. because that's equally absurd and harmful.

fastaguy88 9y ago

What a bunch of propaganda. The central theme of the article is that if Apple could repatriate its $200 Billion, it would have more money to invest and create more jobs. But this assumes that Apple is not investing as much as it would like. There is no reason to believe that Apple feels it needs to invest more. And, if it did, it could borrow the money from its foreign subsidiaries and spend it without paying any taxes (and charge itself whatever it wanted in interest since it's borrowing from itself). As the past 9 years since the Great Recession have shown, companies do not make investments just because they have more money. They invest for business reasons. It is true that Apple investors will be worth more if the money is repatriated, but more jobs?? not so much.

valuearb 9y ago
So if repatriated, the money disappears? It’s not reinvested in Apple or other companies, put in the bank to be loaned out to other businesses, nor spent on goods and services? Cause all three of those things create jobs.
- mholmes680 9y ago
  I think OP's point is that its not "guaranteed" to do any of the things you listed. If the FED raises rates, the companies may want to hold it, as an example. Or if the best business application is to do a buyback or dividend, you're bypassing the jobs part. We're also talking two buckets of money. The money coming back in to the US, and the taxes the govt collects. I think this one-time tax money in this case is already spent with these tax cuts?
  - valuearb 9y ago
    both buybacks and dividends create jobs. in fact without buybacks and dividends no one would ever start a business and no jobs whatever be created, Other than sole proprietors.
    - namlem 9y ago