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Am I reading this right that there's a big cliff between making $999,999 and $1M? With that and the somewhat fuzzy notion of "associated accounts", I predict a

Am I reading this right that there's a big cliff between making $999,999 and $1M? With that and the somewhat fuzzy notion of "associated accounts", I predict a lot of ugly rules-gaming & enforcement activity in the future.

gjsman-1000 6y ago
No, you are reading it wrong. All money up to $1 million is "taxed" at 15%, and all money after $1 million is "taxed" at 30%. It's like income tax brackets in the US. Thus, there is no advantage for trying to stay at $999,999. If you make $1.2m in sales, you get 15% taken on the $1m and 30% taken from the leftover $200k.
- tehlike 6y ago
  I think you are wrong. If you pass 1M$ in 2020, your 2021 apple tax rate would be 30%. Key parts: If a participating developer surpasses the 1 million USD threshold, the standard commission rate will apply for the remainder of the year. -> Yes. For that year, first 1M is 15% but remainder is 30%. But following year, it's 30%. If a developer’s proceeds fall below the 1 million USD threshold in a future calendar year, they can re-qualify for the 15% commission the year after. ->So anything you make affects your future tax rate.
  - gjsman-1000 6y ago
    In that case, Apple is expecting that the odds of somebody making less money in 2022 because of the increased rate compared to 2021 to be very unlikely. I.e. If you sold exactly $1M and were taxed at 15%, Apple takes $150K and you make $850K. Under an increased rate of 30%, that means you would lose money if you made less than approximately $1.25M in the year after, but the odds of someone with $1M in revenue failing to get to $1.25M by next year is very unlikely.
    - deleted 6y ago
      [deleted]
    - stickfigure 6y ago
      > the odds of someone with $1M in revenue failing to get to $1.25M by next year is very unlikely. Apps tend to be faddish, especially games. There's an upswing and a downswing. Little stays popular forever.
  - impalallama 6y ago
    Yes, the Tax Rates can be in brackets because you fill them out once a year. Any developers can fill me in but I doubt apple is either holding onto payments so they can apply their tax at the end of the year or “charging” a developer at the end of a year based on how much they make. Apple Tax is on a per transaction basis so while it might be nice if Apple changes every company 15% and then 30% after they made a certain amount that’s not what they are doing and instead you have to “prequalify”.
    - tehlike 6y ago
      It works like marginal rate for the year. If you made less than 1m in 2020, your taxing is 15% on first 1m and 30% on the rest in 2021. In 2022, your tax rate would be 30% since you no longer qualify for this.if you make less than 1m$ in 2022, you start at 15% again in 2023
- freeone3000 6y ago
  That's still worse than having it all at 15%, so it's still worth breaking it up if possible.
tehlike 6y ago
Rats of hanoi, cobra effect and all. Apple should have made this like the tax rates, first 1M at 15%, rest at 30%. With this move, apple didn't affect their revenue, while looked good to everyone. From a prior thread [1], this affects very little of apple's revenue. [1] Information from Sensor Tower indicating the App Store cut would apply to an estimated 98 percent of iOS app developers who generate roughly 5 percent of the store’s revenue.
- gjsman-1000 6y ago
  "should have"? But they did, that's exactly how it works.
  - RandallBrown 6y ago
    Not exactly. If I make $999,999 one year, then I'll be charged 15% commission the next year. Let's say I hit $1,000,000 in October of that next year. For the rest of the year I'll pay 30% commission. When the next year starts, I'll pay 30% commission for all the earnings that year. If I fail to make $1,000,000 that year, I'll go back down to 15%.
    - tehlike 6y ago
      This is correct, but clarifying the last sentence, you go back to 15% the year after.
  - tehlike 6y ago
    See my other comment in this thread.

gjsman-1000 6y ago

No, you are reading it wrong. All money up to $1 million is "taxed" at 15%, and all money after $1 million is "taxed" at 30%. It's like income tax brackets in the US. Thus, there is no advantage for trying to stay at $999,999. If you make $1.2m in sales, you get 15% taken on the $1m and 30% taken from the leftover $200k.

tehlike 6y ago
I think you are wrong. If you pass 1M$ in 2020, your 2021 apple tax rate would be 30%. Key parts: If a participating developer surpasses the 1 million USD threshold, the standard commission rate will apply for the remainder of the year. -> Yes. For that year, first 1M is 15% but remainder is 30%. But following year, it's 30%. If a developer’s proceeds fall below the 1 million USD threshold in a future calendar year, they can re-qualify for the 15% commission the year after. ->So anything you make affects your future tax rate.
- gjsman-1000 6y ago
  In that case, Apple is expecting that the odds of somebody making less money in 2022 because of the increased rate compared to 2021 to be very unlikely. I.e. If you sold exactly $1M and were taxed at 15%, Apple takes $150K and you make $850K. Under an increased rate of 30%, that means you would lose money if you made less than approximately $1.25M in the year after, but the odds of someone with $1M in revenue failing to get to $1.25M by next year is very unlikely.
  - deleted 6y ago
    [deleted]
  - stickfigure 6y ago
    > the odds of someone with $1M in revenue failing to get to $1.25M by next year is very unlikely. Apps tend to be faddish, especially games. There's an upswing and a downswing. Little stays popular forever.
- impalallama 6y ago
  Yes, the Tax Rates can be in brackets because you fill them out once a year. Any developers can fill me in but I doubt apple is either holding onto payments so they can apply their tax at the end of the year or “charging” a developer at the end of a year based on how much they make. Apple Tax is on a per transaction basis so while it might be nice if Apple changes every company 15% and then 30% after they made a certain amount that’s not what they are doing and instead you have to “prequalify”.
  - tehlike 6y ago
    It works like marginal rate for the year. If you made less than 1m in 2020, your taxing is 15% on first 1m and 30% on the rest in 2021. In 2022, your tax rate would be 30% since you no longer qualify for this.if you make less than 1m$ in 2022, you start at 15% again in 2023
freeone3000 6y ago
That's still worse than having it all at 15%, so it's still worth breaking it up if possible.

tehlike 6y ago

Rats of hanoi, cobra effect and all. Apple should have made this like the tax rates, first 1M at 15%, rest at 30%. With this move, apple didn't affect their revenue, while looked good to everyone. From a prior thread [1], this affects very little of apple's revenue. [1] Information from Sensor Tower indicating the App Store cut would apply to an estimated 98 percent of iOS app developers who generate roughly 5 percent of the store’s revenue.

gjsman-1000 6y ago
"should have"? But they did, that's exactly how it works.
- RandallBrown 6y ago
  Not exactly. If I make $999,999 one year, then I'll be charged 15% commission the next year. Let's say I hit $1,000,000 in October of that next year. For the rest of the year I'll pay 30% commission. When the next year starts, I'll pay 30% commission for all the earnings that year. If I fail to make $1,000,000 that year, I'll go back down to 15%.
  - tehlike 6y ago
    This is correct, but clarifying the last sentence, you go back to 15% the year after.
- tehlike 6y ago
  See my other comment in this thread.