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Apple responds to NYT: "We're among top payers of U.S. income tax"

84 points by fhoxh 14y ago

dotcoma 14y ago
They should be #1, not "among the top".
andrewljohnson 14y ago
There have been a lot of articles recently about how this or that corporation pays their taxes. They are always shallow analyses, just info-tainment. There is a broader question of how the US should structure corporate taxes, but demonizing individual corporations for how they follow the crazy rules is a silly thing. Perhaps useful to further the conversation, but not really a reflection on ethics.
- _delirium 14y ago
  I don't much like narrative-centric journalism either, but that's basically how journalism works, mostly because that's what audiences repeatedly show they want. Imo, fundamentally most of the issues worth writing about have to do with systems more than individual actors. But the only way to analyze a system in a way that people will read is to weave a narrative through it. I personally prefer more systems-centric journalism myself, which focuses on how economics/law/etc. interacts rather than tracing some particular person/company/story, but it rarely appears outside of specialist journals. Even in the Valley, journalists trace how the startup/technology ecosystem works by weaving tales of specific founders and startups that they hope illustrate broader principles, instead of describing those broader principles directly.
- joelhaasnoot 14y ago
  If a company didn't do all these tricks, they'd be paying 5x more and would never be creating all these jobs due to the enormous tax burden.
  - eropple 14y ago
    If extraordinary claims require extraordinary evidence, what do farcical claims require?
    - joelhaasnoot 14y ago
      So my comment isn't very specific, but don't you agree that at some point in time for a business, bureaucracy, tax rules and governments can really get in the way of things? Rather than being critical about companies not paying taxes, we need to either look at closing loopholes, or make paying taxes easier/less restrictive/cheaper.
      - eropple 14y ago
        I will not allow you to move the goalposts. You claimed that Apple would pay five times more were they not undergoing their accounting shenanigans (which would, for those keeping track at home, be 49% of net as tax) and would not be able to hire due to it. That is what I mean by fucking farcical--because you decided it would be totally groovy to make shit up out of whole cloth and blithely assert it to be true. Coupled with the "closing loopholes" dog-whistle--to reasonable people who have not ceded their thinking to Ayn Rand, this should not be in the same statement as anything related to "lower taxes"--and I have a great deal of trouble finding a good-faith reason to think better of you than "disingenuous."
  - bohrsatom 14y ago
    It's highly unlikely Apple tries to offset any guilt it may have over tax avoidance by hiring a few extra people. Ignoring a few inefficiencies, companies try to minimise (in cost and number) their workforce in order to maximise profits. If they can get away with their current tax structure then they're only losing money by hiring more staff.
- mattstreet 14y ago
  I would agree, except that the crazy rules that favor the large companies are pretty much written by the large companies aren't they? Its cool that they're just following the rules in a way that makes the most sense for them, but not that they corrupt the political process.
  - maratd 14y ago
    I expect all actors, including corporations, to act in their own self-interest. The problem isn't that they corrupt the political process. I expect them to try to shift the rules into their favor. The problem is that the political process is corruptible in the first place. That's what we should be working on ... and the only way to fix it is to instill an expectation of identical treatment for everybody. All citizens, all parties, play under the same set of rules. If you start playing favorites with the poor or some depressed economic sector, it simply opens the door for everybody else to play the game and game the system.
- palsbury 14y ago
  You thought that times article was entertainment? It seemed to touch the major tax issues to me. Bottom line, individuals don't get these kind of tax relief options
  - klapinat0r 14y ago
    In my opinion, individuals aren't supposed to. Businesses have lower base tax rates and deductions in order to encourage money making, and thus job creating, environments.
    - jbooth 14y ago
      You could argue that lower taxes on individuals stimulate demand and encourage job creation, too. More to the point, right now most of the fortune 500 companies are sitting on piles of cash and not hiring, so I question your "money making -> job creating" quote. At the end of the day, we've got bills to pay, and any deviation from "everyone pays a fair share" should have the burden of proving it's worth it.
      - aiscott 14y ago
        Money doesn't sit still unless it is truly hard cash and stuffed under a mattress. When companies sit on huge piles of cash, what that really means is they have invested huge piles of cash. That means they gave that money to someone else, and perhaps they are hiring, or perhaps they in turn invested it again.
        jbooth 14y ago
        Maybe it's invested in China. Maybe it's run through 10 mutual funds on the way to becoming 10 cents on the dollar in terms of salary. "The cash probably goes somewhere" isn't that convincing. I'm not saying that companies should hire with extra cash if they don't need the employees. That would be a bad business decision. I'm just saying that "cash sitting on the sidelines = probably employment somewhere" isn't a great justification for them paying less taxes than I do. I work too, you know.
- robomartin 14y ago
  There's a much deeper question on the whole concept of taxation in general. What is it for and where should the limits be? If you really look around you'll quickly learned that everything is taxed. Everything. Politicians have gotten very good at finding all sorts of areas where they can insert a probe and extract "blood". From gasoline to telephones, communications, dogs, cars, food, air travel, tobacco, etc. Here's one attempt at a list: http://theeconomiccollapseblog.com/archives/taxed-enough-already http://theeconomiccollapseblog.com/archives/taxed-enough-alr... Here in California it is not uncommon to hear of more hair-brained schemes to levy taxes on more things. A little-bit here and a little-bit there and politicians have collect billions to keep their gravy train going. Regardless of whether we are talking about personal or corporate taxes, or taxes in general, it is important to always keep in mind what the "mission statement" might be for taxes. Lately the lines on this have blurred. In general terms taxes should be used to run the government, military and reasonable social services (the last one being debatable). Lately, at least in California and other similarly-afflicted states, a huge percentage of taxes are being dedicated to supporting a ridiculous pension infrastructure and a bloated government and public employee sector. Tax increases are being proposed with the sole purpose of finding funding for union pensions. We, then, exist to ensure that the union "class" gets to live happily every-after with their wonderful lifetime pensions and healthcare. This is beyond wrong. This is criminal. I don't have a problem with the idea of questioning if large companies are paying what they are legally supposed to. At the same time, the system should also demand that government be responsible and not exist to create and maintain their own ecosystem through the abuse of taxation. Name one government entity that, over the last few years, has put forth cuts and savings measures on par with families and businesses across this nation. Exactly. Watch closely what is happening with the post office. Here's a clear case of a government entity that should start to see massive cuts and reorganization. What do you want to bet that we carry these people on our taxes for the rest of our lives? So, rather than being able to devote our money to the furthering of our own kids and culture we are obligated, through taxation, to support useless hordes of government employees. This isn't going to end well.
  - jbooth 14y ago
    I don't want to get in the way of some nice comfortable randian ideology, but you could at least read a wikipedia article: http://en.wikipedia.org/wiki/2008%E2%80%9311_California_budget_crisis http://en.wikipedia.org/wiki/2008%E2%80%9311_California_budg... The Cali budget crisis was caused by a decrease in revenue. Let me repeat that. Decrease. Similarly, federal spending on domestic discretionary (what you're complaining about) has been flat or almost-flat for a decade, while spending on defense/security has been skyrocketing. Lastly, if you want to reduce government spending on employee benefits, the first, second and third things you should think about are healthcare reform, not pensions. Healthcare costs are and have been inflating a lot faster than any other cost-of-living cost. Compound 15% over 10 years and see where that gets you.
corin_ 14y ago
The amount they do pay is fairly irrelevant, it's the equivilent to a single person saying "I know I owe taxes, but hey I've already paid a lot, so..." The more relevant part of their statement is "Apple has conducted all of its business with the highest of ethical standards, complying with applicable laws and accounting rules." That's their actual response, the rest is just decoration. I also like the irony (though to be fair you can see why they said it) of saying "We have contributed to many charitable causes but have never sought publicity for doing so"... in a press release.
- orangecat 14y ago
  The amount they do pay is fairly irrelevant, it's the equivilent to a single person saying "I know I owe taxes, but hey I've already paid a lot, so..." "So I'm not going to pay more than I'm legally required to". I have no problem with that.
  - eagsalazar 14y ago
    I'll add: "...because we're super rich and can hire ultra clever accountants to abuse loopholes in your tax laws that were put in place by politicians paid by other super rich corporations specifically to get away with paying less taxes thereby grossly violating the trust of the American public and the spirit of taxation in general." Are you still ok with that?
    - jimmyvanhalen 14y ago
      if you're the CEO/CFO and you're not looking for every legal way to maximize shareholder value, then you're not doing your job.
      - eagsalazar 14y ago
        What a bizarre and unfortunate opinion. Too bad so many people actually believe that is the way it should be.
btian 14y ago
3+billion is a huge amount of money the last time I checked. The fact is Apple derives most of its revenue abroad, and it's unfair to subject their overseas earnings to US taxes.
- yequalsx 14y ago
  It's my understanding that overseas profits are only taxed when the money is brought into the U.S. Do most countries do this? Is this abnormal?
  - officialchicken 14y ago
    Yes, most countries try to do this according to local tax/finance laws. The problem with repatriating the funds back into the US is that the capital can be allocated in other countries for better long term effect. Why would any manufacturer pay taxes on income, then taxes on repatriation (into a low-growth economy), just to then export that money the next quarter or year in order to build a new factory somewhere. Just leave the money overseas until you need it.
frankydp 14y ago
The idea of taxing corporations on the very arbitrary definition of profit is a big issue imo. It would be more accurate to tax when money changes hands going in or out, not as a sales tax but a resource tax. This approach may decrease the need for the 50k page definition of profit vs investment. I have not given t his much thought but taxing the end state seems wishful thinking, because anyone would decrease there end state as much as possible before getting there?
- cperciva 14y ago
  Applying taxes every time money changes hands creates huge market distortions and gives big business a tax advantage over small businesses: Compare the tax burdens paid by a vertically integrated conglomerate which cuts down trees, converts them to lumber, builds furniture, and sells the furniture at BigCoRetail with the total taxes paid if those four steps were performed by separate logging, sawmilling, furniture-building, and retail-selling companies. Moreover, applying taxes to gross sales rather than profits eliminates some profitable business models. Suppose I can hire someone for $50 to take $49 of lumber and build $100 of furniture. I make $1 of profits and even if I pay 50% tax on my profits, everybody is still happy. But if you tax revenues, unless your tax rate is less than 1% I'll be going out of business -- at which point there is less government revenue, less value created, and Joe Carpenter has lost his job.
  - whatusername 14y ago
    Doesn't a sane Sales Tax approach deal with the first issue? If I buy Lumber with a Sales Tax of $X and Sell Furniture with a higher sales tax of $Y, then I send the $Y-X in Sales Tax to the Government. (At least -- that's essentially how the GST works in Australia). BigCoRetail has better accountants and can deal with the processing more -- but the ultimate tax collected is the same.
    - cperciva 14y ago
      Yes, that's the difference between a Sales Tax and a Value Added Tax. The Australian GST (and the Canadian GST, but unlike most Canadian provincial sales taxes) is a VAT. It doesn't solve the "not profitable to hire someone to produce stuff" problem unless you count employee wages as inputs though.
frankydp 14y ago
The idea of taxing corporations on the very arbitrary definition of profit is a big issue imo. It would be more accurate to tax when money changes hands going in or out, not as a sales tax but a resource tax. This approach may decrease the need for the 50k page definition of profit vs investment. I have not given t his much thought but taxing the end state seems wishful thinking, because anyone would decrease there end state as much as possible before getting there?
brown9-2 14y ago
In the first half of fiscal year 2012 our U.S. operations have generated almost $5 billion in federal and state income taxes, including income taxes withheld on employee stock gains, making us among the top payers of U.S. income tax. "among the top payers" in absolute terms, right? I don't think that's the part that is being debated - the amount paid by Apple relative to total earnings is what is being discussed.
Havoc 14y ago
>The vast majority of our global work force remains in the U.S. lol. Clever phrasing of outsourcing work to foreign countries.
- dasil003 14y ago
  What's clever about it? It's pretty straightforward. Despite the fact that they are a global retailer and they manufacture electronics which are pretty much impossible to manufacture outside of Asia, the majority of their employees remain in the US.
lolcraft 14y ago
TLDR seems to be: we may pay a much lower tax on profits than most individuals do on income, but at least we have so much profit that we still pay a lot. Also, it's technically legal, so it must be ethical. And we donate to charity and stuff, so whatever. Funny that they recognize in the response that they are primarily an US-based company, with US labour educated in the country, but instead want to pay Irish taxes. Or maybe they do get 30% of their worldwide profits from Ireland, who knows...
- taligent 14y ago
  Well clearly you don't know what on earth is going on. Ireland is the EMEIA headquarters for Apple and yes they do get more then 30% of their worldwide profits from Europe.
- hej 14y ago
  Apple's EMEA headquarters are in Cork, Ireland. 2,800 people (and growing) are working there. In the last quarter, 23 percent of Apple’s profits were made in EMEA (compared to 33 percent in the Americas, 28 percent in Asia-Pacific, 16 percent in Japan and seven percent in retail). The article on The New York Times quotes numbers from 2004, then EMEA made 28 percent of Apple’s profits. I don’t think it’s a problem when Apple decides not to move money made overseas back to the US. That's their decision and there is nothing shady about it either way. I can't think of any moral objections. Purposefully moving money somewhere in order to avoid taxes, however, could be if not a legal at least a moral problem.
  - georgemcbay 14y ago
    "I don’t think it’s a problem when Apple decides not to move money made overseas back to the US. That's their decision and there is nothing shady about it either way. I can't think of any moral objections." I don't think this is a problem either, unless they lobby themselves a holiday under which they can move it back on the cheap. Which is something they have been trying to do for a while now (to be fair, Google, Cisco and others have been pushing for this with them, so it isn't just Apple). http://www.bloomberg.com/news/2011-09-29/google-joins-apple-mobilizing-lobbyists-to-push-for-tax-holiday-on-profits.html http://www.bloomberg.com/news/2011-09-29/google-joins-apple-...
k-mcgrady 14y ago
The NYT 'attacks' on Apple recently have annoyed me. Firstly the Foxconn story. All the attention was focussed on Apple and the other companies using these factories didn't get any bad publicity. If the NYT actually cared about what was going on there they would have exposed all the companies with issues in China. Same applies here. Paying less tax in this way is something every multi-national company does and yet the NYT has once again decided to focus on Apple. Let me be clear, I'm not an Apple 'fanboy'. I think if the NYT actually cared about these 'issues' they would expose all the bad actors. They're just trying to get page views. And honestly, this is not even a story. Apple are acting within the law, trying to maximise their profits. They sell their products worldwide and can take advantage of that to pay less tax.
- kristiandupont 14y ago
  Well, maybe they are going after Apple because they are the worlds most valuable company. I think that is reasonable. Also, the "within the law" argument has a bit less weight when you operate at this level. They have a lot of power to affect the law and its interpretation. I think it's probably impossible or at least not feasible to make laws that force a company like Apple to pay "normal" taxes for some definition of normal, simply because it's an international issue. But that makes an article like this even more relevant because it allows consumers to take this into account when they choose which product to buy.
  - k-mcgrady 14y ago
    "But that makes an article like this even more relevant because it allows consumers to take this into account when they choose which product to buy." That's the problem though. Consumers will take this into account. But because the article only focussed on one company they will just end up buying from another company doing the exact same thing.
    - lflowers 14y ago
      I think the goal is to get Apple to respond to the criticism.
savrajsingh 14y ago
Of course they'll say they comply with the letter of the law. That is the 'highest ethical standard' any large public corporation will claim. If we as Americans believe Apple, however noble, is evading the spirit of the law, we need to make the letter of the law more specific.
foenix 14y ago
Wow, the comments in this otherwise rational forum are astounding. Does no one really understand the purposes of taxation? Or are you all too self-inflated to realize that you are part of a public collective? Don't you find it strange that things like roads to transport your products, education to give knowledge to your employees (and consumers!), and emergency services to ensure the safety and well-being of the public are all things we rely on to keep living our individual lives? To replace these services with private entities would take their control out of the hands of democracy and into selected special interests. I would say that HN readers and contributors are among the smartest people on the web; they are the intellectuals. So please pardon my "rantiness" when I say that it is the responsibility of intellectuals to facilitate growth in their communities. And in this cyber-cosmopolitan age it becomes important to understand where the most efficient contributions to growth are going to take place. After all, life is infinitely finite. When you're 6 feet under the only things that survive are your genetic progeny and your intellectual progeny. Favouring conservative taxation in favour of purported "individualism" is not only selfish, but highly inefficient. Charities and government subsidies do not fill the voids required by collective resource allocation. To be more concrete: you can't build a socioeconomic infrastructure on top of capitalism. You have to do it the other way around. Philanthropy isn't as widespread in Europe as it is in North America. That's because European taxation models are such that there is a "safety net" (one which is akin to our emergency response system, but more robust and covering more edge-cases). Pardon my frustrated response, but I just don't think HN is on the same page when it comes to the benefits of democratic "socialism".
- adventureful 14y ago
  Roads, education, emergency services. Ah yes, the classic tiny list meant to justify taking $6 trillion per year out of the economy in the form of taxation. Roads? Laughable. Let's run that budget up against SS / Medicare / Military, and see where our taxes are really spent. Education? Oh my, yes, the government is doing such a stellar job inflating the cost of education to infinity, while results get worse and worse. Emergency services? The ones that people are increasingly having to pay extra fees just to use? Special interests already control the items you listed. In case you missed that whole Federal unions thing; or the protected road workers unions that typically dominate at the state level. Or the teachers unions that protect their own to the harm of students, which is why we spend so much more than anybody else and get such radically worse results. Government services in the US are about as far away from being in your hands of control as they could get. Which is why the TSA gets away with such extreme abuse, or why our infrastructure is collapsing despite the government having doubled in size in the last 13 years.
nQuo 14y ago
Favourite part of the article: how NYT describes each apple that the tax subsidiaries are named after. "Braeburn is a variety of apple that is simultaneously sweet and tart." "Baldwin apples are known for their hardiness while traveling."
georgieporgie 14y ago
Summary: * We make a lot of low-paying jobs for young people, hocking our foreign-made goods to Americans in every state. * We may or may not create jobs as a bi-product of our app store, where developers can try to scrape in an environment where people will turn to piracy because $0.99 is too expensive for an app. * We pay more in taxes than any of you plebs. (The last one is the Adam Carolla attitude: "I pay a large absolute value in taxes, so you should thank me, regardless of any considerations of relative value or overall rates")
wsc981 14y ago
I'm not sure why so many people seem to think this is such a big deal. It happens everywhere around the world. Companies like Shell and bands like U2 do the same. It's called tax avoidance and it's not illegal and personally I wouldn't even call it immoral or unethical. Business has little to do with morals or ethics as far as I'm concerned. It's the task of the lawmakers to decide the borders of morality / ethics and make clear laws and business just has to abide by the laws. Personally I strive to pay as little tax as possible as well. I can't blame businesses for trying the same.
abalone 14y ago
This is crazy, but I actually have a comment about Apple's response, not a political rant on the general idea of taxation. Apple includes "income taxes withheld on employee stock gains" in "Apple's" tax payments. But aren't these employees' income tax, not Apple's? Is this another instance of creative accounting? Sure, Apple can claim that they helped create that income, just like they helped create the job. But I'm talking specifically about their claim that they are a "top payer of U.S. income tax" because of their employees' tax obligations.

84 points by fhoxh 14y ago

They should be #1, not "among the top".

There have been a lot of articles recently about how this or that corporation pays their taxes. They are always shallow analyses, just info-tainment. There is a broader question of how the US should structure corporate taxes, but demonizing individual corporations for how they follow the crazy rules is a silly thing. Perhaps useful to further the conversation, but not really a reflection on ethics.

_delirium 14y ago
I don't much like narrative-centric journalism either, but that's basically how journalism works, mostly because that's what audiences repeatedly show they want. Imo, fundamentally most of the issues worth writing about have to do with systems more than individual actors. But the only way to analyze a system in a way that people will read is to weave a narrative through it. I personally prefer more systems-centric journalism myself, which focuses on how economics/law/etc. interacts rather than tracing some particular person/company/story, but it rarely appears outside of specialist journals. Even in the Valley, journalists trace how the startup/technology ecosystem works by weaving tales of specific founders and startups that they hope illustrate broader principles, instead of describing those broader principles directly.
joelhaasnoot 14y ago
If a company didn't do all these tricks, they'd be paying 5x more and would never be creating all these jobs due to the enormous tax burden.
- eropple 14y ago
  If extraordinary claims require extraordinary evidence, what do farcical claims require?
  - joelhaasnoot 14y ago
    So my comment isn't very specific, but don't you agree that at some point in time for a business, bureaucracy, tax rules and governments can really get in the way of things? Rather than being critical about companies not paying taxes, we need to either look at closing loopholes, or make paying taxes easier/less restrictive/cheaper.
    - eropple 14y ago
      I will not allow you to move the goalposts. You claimed that Apple would pay five times more were they not undergoing their accounting shenanigans (which would, for those keeping track at home, be 49% of net as tax) and would not be able to hire due to it. That is what I mean by fucking farcical--because you decided it would be totally groovy to make shit up out of whole cloth and blithely assert it to be true. Coupled with the "closing loopholes" dog-whistle--to reasonable people who have not ceded their thinking to Ayn Rand, this should not be in the same statement as anything related to "lower taxes"--and I have a great deal of trouble finding a good-faith reason to think better of you than "disingenuous."
- bohrsatom 14y ago
  It's highly unlikely Apple tries to offset any guilt it may have over tax avoidance by hiring a few extra people. Ignoring a few inefficiencies, companies try to minimise (in cost and number) their workforce in order to maximise profits. If they can get away with their current tax structure then they're only losing money by hiring more staff.
mattstreet 14y ago
I would agree, except that the crazy rules that favor the large companies are pretty much written by the large companies aren't they? Its cool that they're just following the rules in a way that makes the most sense for them, but not that they corrupt the political process.
- maratd 14y ago
  I expect all actors, including corporations, to act in their own self-interest. The problem isn't that they corrupt the political process. I expect them to try to shift the rules into their favor. The problem is that the political process is corruptible in the first place. That's what we should be working on ... and the only way to fix it is to instill an expectation of identical treatment for everybody. All citizens, all parties, play under the same set of rules. If you start playing favorites with the poor or some depressed economic sector, it simply opens the door for everybody else to play the game and game the system.
palsbury 14y ago
You thought that times article was entertainment? It seemed to touch the major tax issues to me. Bottom line, individuals don't get these kind of tax relief options
- klapinat0r 14y ago
  In my opinion, individuals aren't supposed to. Businesses have lower base tax rates and deductions in order to encourage money making, and thus job creating, environments.
  - jbooth 14y ago
    You could argue that lower taxes on individuals stimulate demand and encourage job creation, too. More to the point, right now most of the fortune 500 companies are sitting on piles of cash and not hiring, so I question your "money making -> job creating" quote. At the end of the day, we've got bills to pay, and any deviation from "everyone pays a fair share" should have the burden of proving it's worth it.
    - aiscott 14y ago
      Money doesn't sit still unless it is truly hard cash and stuffed under a mattress. When companies sit on huge piles of cash, what that really means is they have invested huge piles of cash. That means they gave that money to someone else, and perhaps they are hiring, or perhaps they in turn invested it again.
      - jbooth 14y ago
        Maybe it's invested in China. Maybe it's run through 10 mutual funds on the way to becoming 10 cents on the dollar in terms of salary. "The cash probably goes somewhere" isn't that convincing. I'm not saying that companies should hire with extra cash if they don't need the employees. That would be a bad business decision. I'm just saying that "cash sitting on the sidelines = probably employment somewhere" isn't a great justification for them paying less taxes than I do. I work too, you know.
robomartin 14y ago
There's a much deeper question on the whole concept of taxation in general. What is it for and where should the limits be? If you really look around you'll quickly learned that everything is taxed. Everything. Politicians have gotten very good at finding all sorts of areas where they can insert a probe and extract "blood". From gasoline to telephones, communications, dogs, cars, food, air travel, tobacco, etc. Here's one attempt at a list: http://theeconomiccollapseblog.com/archives/taxed-enough-already http://theeconomiccollapseblog.com/archives/taxed-enough-alr... Here in California it is not uncommon to hear of more hair-brained schemes to levy taxes on more things. A little-bit here and a little-bit there and politicians have collect billions to keep their gravy train going. Regardless of whether we are talking about personal or corporate taxes, or taxes in general, it is important to always keep in mind what the "mission statement" might be for taxes. Lately the lines on this have blurred. In general terms taxes should be used to run the government, military and reasonable social services (the last one being debatable). Lately, at least in California and other similarly-afflicted states, a huge percentage of taxes are being dedicated to supporting a ridiculous pension infrastructure and a bloated government and public employee sector. Tax increases are being proposed with the sole purpose of finding funding for union pensions. We, then, exist to ensure that the union "class" gets to live happily every-after with their wonderful lifetime pensions and healthcare. This is beyond wrong. This is criminal. I don't have a problem with the idea of questioning if large companies are paying what they are legally supposed to. At the same time, the system should also demand that government be responsible and not exist to create and maintain their own ecosystem through the abuse of taxation. Name one government entity that, over the last few years, has put forth cuts and savings measures on par with families and businesses across this nation. Exactly. Watch closely what is happening with the post office. Here's a clear case of a government entity that should start to see massive cuts and reorganization. What do you want to bet that we carry these people on our taxes for the rest of our lives? So, rather than being able to devote our money to the furthering of our own kids and culture we are obligated, through taxation, to support useless hordes of government employees. This isn't going to end well.
- jbooth 14y ago
  I don't want to get in the way of some nice comfortable randian ideology, but you could at least read a wikipedia article: http://en.wikipedia.org/wiki/2008%E2%80%9311_California_budget_crisis http://en.wikipedia.org/wiki/2008%E2%80%9311_California_budg... The Cali budget crisis was caused by a decrease in revenue. Let me repeat that. Decrease. Similarly, federal spending on domestic discretionary (what you're complaining about) has been flat or almost-flat for a decade, while spending on defense/security has been skyrocketing. Lastly, if you want to reduce government spending on employee benefits, the first, second and third things you should think about are healthcare reform, not pensions. Healthcare costs are and have been inflating a lot faster than any other cost-of-living cost. Compound 15% over 10 years and see where that gets you.

corin_ 14y ago

The amount they do pay is fairly irrelevant, it's the equivilent to a single person saying "I know I owe taxes, but hey I've already paid a lot, so..." The more relevant part of their statement is "Apple has conducted all of its business with the highest of ethical standards, complying with applicable laws and accounting rules." That's their actual response, the rest is just decoration. I also like the irony (though to be fair you can see why they said it) of saying "We have contributed to many charitable causes but have never sought publicity for doing so"... in a press release.

orangecat 14y ago
The amount they do pay is fairly irrelevant, it's the equivilent to a single person saying "I know I owe taxes, but hey I've already paid a lot, so..." "So I'm not going to pay more than I'm legally required to". I have no problem with that.
- eagsalazar 14y ago
  I'll add: "...because we're super rich and can hire ultra clever accountants to abuse loopholes in your tax laws that were put in place by politicians paid by other super rich corporations specifically to get away with paying less taxes thereby grossly violating the trust of the American public and the spirit of taxation in general." Are you still ok with that?
  - jimmyvanhalen 14y ago
    if you're the CEO/CFO and you're not looking for every legal way to maximize shareholder value, then you're not doing your job.
    - eagsalazar 14y ago
      What a bizarre and unfortunate opinion. Too bad so many people actually believe that is the way it should be.

btian 14y ago

3+billion is a huge amount of money the last time I checked. The fact is Apple derives most of its revenue abroad, and it's unfair to subject their overseas earnings to US taxes.

yequalsx 14y ago
It's my understanding that overseas profits are only taxed when the money is brought into the U.S. Do most countries do this? Is this abnormal?
- officialchicken 14y ago
  Yes, most countries try to do this according to local tax/finance laws. The problem with repatriating the funds back into the US is that the capital can be allocated in other countries for better long term effect. Why would any manufacturer pay taxes on income, then taxes on repatriation (into a low-growth economy), just to then export that money the next quarter or year in order to build a new factory somewhere. Just leave the money overseas until you need it.

frankydp 14y ago

The idea of taxing corporations on the very arbitrary definition of profit is a big issue imo. It would be more accurate to tax when money changes hands going in or out, not as a sales tax but a resource tax. This approach may decrease the need for the 50k page definition of profit vs investment. I have not given t his much thought but taxing the end state seems wishful thinking, because anyone would decrease there end state as much as possible before getting there?

cperciva 14y ago
Applying taxes every time money changes hands creates huge market distortions and gives big business a tax advantage over small businesses: Compare the tax burdens paid by a vertically integrated conglomerate which cuts down trees, converts them to lumber, builds furniture, and sells the furniture at BigCoRetail with the total taxes paid if those four steps were performed by separate logging, sawmilling, furniture-building, and retail-selling companies. Moreover, applying taxes to gross sales rather than profits eliminates some profitable business models. Suppose I can hire someone for $50 to take $49 of lumber and build $100 of furniture. I make $1 of profits and even if I pay 50% tax on my profits, everybody is still happy. But if you tax revenues, unless your tax rate is less than 1% I'll be going out of business -- at which point there is less government revenue, less value created, and Joe Carpenter has lost his job.
- whatusername 14y ago
  Doesn't a sane Sales Tax approach deal with the first issue? If I buy Lumber with a Sales Tax of $X and Sell Furniture with a higher sales tax of $Y, then I send the $Y-X in Sales Tax to the Government. (At least -- that's essentially how the GST works in Australia). BigCoRetail has better accountants and can deal with the processing more -- but the ultimate tax collected is the same.
  - cperciva 14y ago
    Yes, that's the difference between a Sales Tax and a Value Added Tax. The Australian GST (and the Canadian GST, but unlike most Canadian provincial sales taxes) is a VAT. It doesn't solve the "not profitable to hire someone to produce stuff" problem unless you count employee wages as inputs though.

frankydp 14y ago

brown9-2 14y ago

In the first half of fiscal year 2012 our U.S. operations have generated almost $5 billion in federal and state income taxes, including income taxes withheld on employee stock gains, making us among the top payers of U.S. income tax. "among the top payers" in absolute terms, right? I don't think that's the part that is being debated - the amount paid by Apple relative to total earnings is what is being discussed.

Havoc 14y ago

>The vast majority of our global work force remains in the U.S. lol. Clever phrasing of outsourcing work to foreign countries.

dasil003 14y ago
What's clever about it? It's pretty straightforward. Despite the fact that they are a global retailer and they manufacture electronics which are pretty much impossible to manufacture outside of Asia, the majority of their employees remain in the US.

lolcraft 14y ago

TLDR seems to be: we may pay a much lower tax on profits than most individuals do on income, but at least we have so much profit that we still pay a lot. Also, it's technically legal, so it must be ethical. And we donate to charity and stuff, so whatever. Funny that they recognize in the response that they are primarily an US-based company, with US labour educated in the country, but instead want to pay Irish taxes. Or maybe they do get 30% of their worldwide profits from Ireland, who knows...

taligent 14y ago
Well clearly you don't know what on earth is going on. Ireland is the EMEIA headquarters for Apple and yes they do get more then 30% of their worldwide profits from Europe.
hej 14y ago
Apple's EMEA headquarters are in Cork, Ireland. 2,800 people (and growing) are working there. In the last quarter, 23 percent of Apple’s profits were made in EMEA (compared to 33 percent in the Americas, 28 percent in Asia-Pacific, 16 percent in Japan and seven percent in retail). The article on The New York Times quotes numbers from 2004, then EMEA made 28 percent of Apple’s profits. I don’t think it’s a problem when Apple decides not to move money made overseas back to the US. That's their decision and there is nothing shady about it either way. I can't think of any moral objections. Purposefully moving money somewhere in order to avoid taxes, however, could be if not a legal at least a moral problem.
- georgemcbay 14y ago
  "I don’t think it’s a problem when Apple decides not to move money made overseas back to the US. That's their decision and there is nothing shady about it either way. I can't think of any moral objections." I don't think this is a problem either, unless they lobby themselves a holiday under which they can move it back on the cheap. Which is something they have been trying to do for a while now (to be fair, Google, Cisco and others have been pushing for this with them, so it isn't just Apple). http://www.bloomberg.com/news/2011-09-29/google-joins-apple-mobilizing-lobbyists-to-push-for-tax-holiday-on-profits.html http://www.bloomberg.com/news/2011-09-29/google-joins-apple-...

k-mcgrady 14y ago

The NYT 'attacks' on Apple recently have annoyed me. Firstly the Foxconn story. All the attention was focussed on Apple and the other companies using these factories didn't get any bad publicity. If the NYT actually cared about what was going on there they would have exposed all the companies with issues in China. Same applies here. Paying less tax in this way is something every multi-national company does and yet the NYT has once again decided to focus on Apple. Let me be clear, I'm not an Apple 'fanboy'. I think if the NYT actually cared about these 'issues' they would expose all the bad actors. They're just trying to get page views. And honestly, this is not even a story. Apple are acting within the law, trying to maximise their profits. They sell their products worldwide and can take advantage of that to pay less tax.

kristiandupont 14y ago
Well, maybe they are going after Apple because they are the worlds most valuable company. I think that is reasonable. Also, the "within the law" argument has a bit less weight when you operate at this level. They have a lot of power to affect the law and its interpretation. I think it's probably impossible or at least not feasible to make laws that force a company like Apple to pay "normal" taxes for some definition of normal, simply because it's an international issue. But that makes an article like this even more relevant because it allows consumers to take this into account when they choose which product to buy.
- k-mcgrady 14y ago
  "But that makes an article like this even more relevant because it allows consumers to take this into account when they choose which product to buy." That's the problem though. Consumers will take this into account. But because the article only focussed on one company they will just end up buying from another company doing the exact same thing.
  - lflowers 14y ago
    I think the goal is to get Apple to respond to the criticism.

savrajsingh 14y ago

Of course they'll say they comply with the letter of the law. That is the 'highest ethical standard' any large public corporation will claim. If we as Americans believe Apple, however noble, is evading the spirit of the law, we need to make the letter of the law more specific.

foenix 14y ago

Wow, the comments in this otherwise rational forum are astounding. Does no one really understand the purposes of taxation? Or are you all too self-inflated to realize that you are part of a public collective? Don't you find it strange that things like roads to transport your products, education to give knowledge to your employees (and consumers!), and emergency services to ensure the safety and well-being of the public are all things we rely on to keep living our individual lives? To replace these services with private entities would take their control out of the hands of democracy and into selected special interests. I would say that HN readers and contributors are among the smartest people on the web; they are the intellectuals. So please pardon my "rantiness" when I say that it is the responsibility of intellectuals to facilitate growth in their communities. And in this cyber-cosmopolitan age it becomes important to understand where the most efficient contributions to growth are going to take place. After all, life is infinitely finite. When you're 6 feet under the only things that survive are your genetic progeny and your intellectual progeny. Favouring conservative taxation in favour of purported "individualism" is not only selfish, but highly inefficient. Charities and government subsidies do not fill the voids required by collective resource allocation. To be more concrete: you can't build a socioeconomic infrastructure on top of capitalism. You have to do it the other way around. Philanthropy isn't as widespread in Europe as it is in North America. That's because European taxation models are such that there is a "safety net" (one which is akin to our emergency response system, but more robust and covering more edge-cases). Pardon my frustrated response, but I just don't think HN is on the same page when it comes to the benefits of democratic "socialism".

adventureful 14y ago
Roads, education, emergency services. Ah yes, the classic tiny list meant to justify taking $6 trillion per year out of the economy in the form of taxation. Roads? Laughable. Let's run that budget up against SS / Medicare / Military, and see where our taxes are really spent. Education? Oh my, yes, the government is doing such a stellar job inflating the cost of education to infinity, while results get worse and worse. Emergency services? The ones that people are increasingly having to pay extra fees just to use? Special interests already control the items you listed. In case you missed that whole Federal unions thing; or the protected road workers unions that typically dominate at the state level. Or the teachers unions that protect their own to the harm of students, which is why we spend so much more than anybody else and get such radically worse results. Government services in the US are about as far away from being in your hands of control as they could get. Which is why the TSA gets away with such extreme abuse, or why our infrastructure is collapsing despite the government having doubled in size in the last 13 years.

nQuo 14y ago

Favourite part of the article: how NYT describes each apple that the tax subsidiaries are named after. "Braeburn is a variety of apple that is simultaneously sweet and tart." "Baldwin apples are known for their hardiness while traveling."

georgieporgie 14y ago

Summary: * We make a lot of low-paying jobs for young people, hocking our foreign-made goods to Americans in every state. * We may or may not create jobs as a bi-product of our app store, where developers can try to scrape in an environment where people will turn to piracy because $0.99 is too expensive for an app. * We pay more in taxes than any of you plebs. (The last one is the Adam Carolla attitude: "I pay a large absolute value in taxes, so you should thank me, regardless of any considerations of relative value or overall rates")

wsc981 14y ago

I'm not sure why so many people seem to think this is such a big deal. It happens everywhere around the world. Companies like Shell and bands like U2 do the same. It's called tax avoidance and it's not illegal and personally I wouldn't even call it immoral or unethical. Business has little to do with morals or ethics as far as I'm concerned. It's the task of the lawmakers to decide the borders of morality / ethics and make clear laws and business just has to abide by the laws. Personally I strive to pay as little tax as possible as well. I can't blame businesses for trying the same.

abalone 14y ago

This is crazy, but I actually have a comment about Apple's response, not a political rant on the general idea of taxation. Apple includes "income taxes withheld on employee stock gains" in "Apple's" tax payments. But aren't these employees' income tax, not Apple's? Is this another instance of creative accounting? Sure, Apple can claim that they helped create that income, just like they helped create the job. But I'm talking specifically about their claim that they are a "top payer of U.S. income tax" because of their employees' tax obligations.