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This article, and others like it, imply that what Apple is doing is unethical. However, the opposite is true: it would be negligent for Apple not to do this.

This article, and others like it, imply that what Apple is doing is unethical. However, the opposite is true: it would be negligent for Apple not to do this. Apple's responsibility is to its shareholders, and that responsibity is to maximize profits. Because it stands to lose billions of dollars in taxes if its income is reported naievely, it makes perfect sense for Apple to spend millions, tens of millions, or even hundreds of millions to optimize its tax flow. As long as nothing illegal is happening, this is just an exams of a company fulfilling its fiduciary duty to its owners. If people think this behavior is egregious and needs to change, the solution is to pass new laws to that extent. No one is going to voluntarily overpay on their taxes.

bornhuetter 13y ago
> As long as nothing illegal is happening The problem is that it is not always clear cut what is legal and what is illegal when it comes to taxation on an international scale. Tax laws are often written in language that lays out principles - such as profit should be booked in the country that the sale takes place in - but it is very easy to manipulate "profits" to make them appear in other countries. If a company goes too far to manipulate profits out of a country with relatively high taxes it can become illegal - but it would take a full investigation to determine this. More certainly can and should be done to close loopholes and improve coordination between countries, but it is not a simple matter of a country writing "a new law" to fix the problem.
philipcamilleri 13y ago
But that's exactly it: at what point does tax "avoidance" become unethical or "civically irresponsible". After all, Apple is operating in the USA: doesn't it have a responsibility to the country (and state), along with it's shareholders and customers?
- trapezoid 13y ago
  No. Its singular obligation is to the shareholders - not even to the customers, except insofar as that builds longterm shareholder value. Of course, in practice there's a lot of leeway in deciding how much attention one should pay to customers; loyal customers are key to a company's success. Whether or not to pay extra taxes, however, is cut and dry. There's virtually no benefit to Apple in voluntarily paying a higher tax, so it doesn't do so. Any obligation it has to the state must be explicitly stated in law. There's no concept of civic irresponsibility for companies; that's exactly what laws are for. there's only legal and illegal.
- snowwrestler 13y ago
  The point is that Apple is not just operating in the USA; it is operating around the world and makes profits around the world. No one disputes that Apple pays U.S. taxes on their U.S. operations, and no one has accused them of moving U.S. profits overseas to avoid taxes. The big to-do is entirely about their earnings overseas. The question of the ethics of international taxation is complicated by the fact that most countries in the world do not expect their companies to pay both local taxes and domestic taxes; the U.S. does. So it is not like Apple is violating some broad standard of behavior. If anything the U.S. tax system is the aberration.
jvzr 13y ago
There is this running joke here in France with our local Superman, Super Dupont. The guy's so patriotic and so proud of his country that he regularly pays his taxes late to pay the tax penalties and support his country. On topic, it's funny that the Congress seems so eager to treat Apple as a one of a kind bad boy whereas most of this industry is doing the same, and would be stupid not to. They bring more to their country than if they were blindingly paying the taxes the Congress think they should pay: more money means more products and more jobs. Simplistic view of the whole thing, I admit, but if France has shown one thing, is that we don't gain competitivity by suffocating companies with taxes.
k-mcgrady 13y ago
I couldn't agree more. I think most of the public would agree that corporations aren't paying their fair share of tax but it's wrong to accuse them of doing something unethical. They are doing their job and maximising profits. It's up to the government to fix the many loopholes in tax regulations. The current tactic of trying to embarrass companies in to paying more tax is just a waste of everybody's time. If the government can't do it's job right and close the loopholes they have no right to complain to companies that they aren't paying enough tax.
- jellicle 13y ago
  You're confused about the meaning of "unethical". What Apple is doing is lawful, apparently. But it is certainly unethical at the same time; everyone has a moral duty to contribute to society and make it function, and Apple is shirking that duty.
  - k-mcgrady 13y ago
    It can't be unethical. They have a legal obligation to their shareholders to maximise profits so they don't have a choice. They can't pay more in taxes.
    - mikestew 13y ago
      They have a legal obligation to their shareholders to maximise profits Please stop saying that. It's urban legend repeated by those that wish to excuse any corporate behavior. (I'm more than willing to change my stance as soon as someone provides a link backing up the "legal obligation" argument.)
  - tzs 13y ago
    Apple pays around $6 billion per year in US income tax, which is more than any other company pays.
coldtea 13y ago
>This article, and others like it, imply that what Apple is doing is unethical. However, the opposite is true: it would be negligent for Apple not to do this. Apple's responsibility is to its shareholders, and that responsibity is to maximize profits. Ethical, to have a meaning in the common sense, has to refer to "the society as a whole" -- not to whom you have a "responsibility to". A gang member also has a responsibility to his gang members (e.g to maximize profit and get rid of people causing trouble there too). That doesn't make his crimes "ethical". So, no, it can be legal and not ethical. Finding corner cases to side-step the spirit of the law is not regarded "ethical" in any place I know of.
- snowwrestler 13y ago
  Your gang metaphor makes no sense because Apple is not committing any crimes. A better metaphor would be a U.S. citizen who takes the IRS standard deduction even though they know that their itemized deductions would be less. Is that unethical? What about people who use TurboTax software, which helps them find deductions that they would not have otherwise known about? Is that unethical? In addition, consider the society of nations as a whole. The U.S. alone among developed nations expects its companies to pay U.S. taxes on profits earned globally. If Apple were a French, Dutch, English, German, etc. company then this conversation would not even be happening. They would just pay the local tax rate and then repatriate the remaining earnings.

bornhuetter 13y ago

> As long as nothing illegal is happening The problem is that it is not always clear cut what is legal and what is illegal when it comes to taxation on an international scale. Tax laws are often written in language that lays out principles - such as profit should be booked in the country that the sale takes place in - but it is very easy to manipulate "profits" to make them appear in other countries. If a company goes too far to manipulate profits out of a country with relatively high taxes it can become illegal - but it would take a full investigation to determine this. More certainly can and should be done to close loopholes and improve coordination between countries, but it is not a simple matter of a country writing "a new law" to fix the problem.

philipcamilleri 13y ago

But that's exactly it: at what point does tax "avoidance" become unethical or "civically irresponsible". After all, Apple is operating in the USA: doesn't it have a responsibility to the country (and state), along with it's shareholders and customers?

trapezoid 13y ago
No. Its singular obligation is to the shareholders - not even to the customers, except insofar as that builds longterm shareholder value. Of course, in practice there's a lot of leeway in deciding how much attention one should pay to customers; loyal customers are key to a company's success. Whether or not to pay extra taxes, however, is cut and dry. There's virtually no benefit to Apple in voluntarily paying a higher tax, so it doesn't do so. Any obligation it has to the state must be explicitly stated in law. There's no concept of civic irresponsibility for companies; that's exactly what laws are for. there's only legal and illegal.
snowwrestler 13y ago
The point is that Apple is not just operating in the USA; it is operating around the world and makes profits around the world. No one disputes that Apple pays U.S. taxes on their U.S. operations, and no one has accused them of moving U.S. profits overseas to avoid taxes. The big to-do is entirely about their earnings overseas. The question of the ethics of international taxation is complicated by the fact that most countries in the world do not expect their companies to pay both local taxes and domestic taxes; the U.S. does. So it is not like Apple is violating some broad standard of behavior. If anything the U.S. tax system is the aberration.

jvzr 13y ago

There is this running joke here in France with our local Superman, Super Dupont. The guy's so patriotic and so proud of his country that he regularly pays his taxes late to pay the tax penalties and support his country. On topic, it's funny that the Congress seems so eager to treat Apple as a one of a kind bad boy whereas most of this industry is doing the same, and would be stupid not to. They bring more to their country than if they were blindingly paying the taxes the Congress think they should pay: more money means more products and more jobs. Simplistic view of the whole thing, I admit, but if France has shown one thing, is that we don't gain competitivity by suffocating companies with taxes.

k-mcgrady 13y ago

I couldn't agree more. I think most of the public would agree that corporations aren't paying their fair share of tax but it's wrong to accuse them of doing something unethical. They are doing their job and maximising profits. It's up to the government to fix the many loopholes in tax regulations. The current tactic of trying to embarrass companies in to paying more tax is just a waste of everybody's time. If the government can't do it's job right and close the loopholes they have no right to complain to companies that they aren't paying enough tax.

jellicle 13y ago
You're confused about the meaning of "unethical". What Apple is doing is lawful, apparently. But it is certainly unethical at the same time; everyone has a moral duty to contribute to society and make it function, and Apple is shirking that duty.
- k-mcgrady 13y ago
  It can't be unethical. They have a legal obligation to their shareholders to maximise profits so they don't have a choice. They can't pay more in taxes.
  - mikestew 13y ago
    They have a legal obligation to their shareholders to maximise profits Please stop saying that. It's urban legend repeated by those that wish to excuse any corporate behavior. (I'm more than willing to change my stance as soon as someone provides a link backing up the "legal obligation" argument.)
- tzs 13y ago
  Apple pays around $6 billion per year in US income tax, which is more than any other company pays.

coldtea 13y ago

>This article, and others like it, imply that what Apple is doing is unethical. However, the opposite is true: it would be negligent for Apple not to do this. Apple's responsibility is to its shareholders, and that responsibity is to maximize profits. Ethical, to have a meaning in the common sense, has to refer to "the society as a whole" -- not to whom you have a "responsibility to". A gang member also has a responsibility to his gang members (e.g to maximize profit and get rid of people causing trouble there too). That doesn't make his crimes "ethical". So, no, it can be legal and not ethical. Finding corner cases to side-step the spirit of the law is not regarded "ethical" in any place I know of.

snowwrestler 13y ago
Your gang metaphor makes no sense because Apple is not committing any crimes. A better metaphor would be a U.S. citizen who takes the IRS standard deduction even though they know that their itemized deductions would be less. Is that unethical? What about people who use TurboTax software, which helps them find deductions that they would not have otherwise known about? Is that unethical? In addition, consider the society of nations as a whole. The U.S. alone among developed nations expects its companies to pay U.S. taxes on profits earned globally. If Apple were a French, Dutch, English, German, etc. company then this conversation would not even be happening. They would just pay the local tax rate and then repatriate the remaining earnings.