5 ms·

Why is apple's tax rate lower than mine?

• Someone1234 12y ago
  They off-shore most of their money (e.g. Ireland) to evade tax. It is legal but scummy.
  • api 12y ago
    Nearly every large corporation does this.
  • forrestthewoods 12y ago
    You mean tax avoidance. Tax evasion is illegal. What Apple does is, as you said, legal.
    • prawn 12y ago
      It's the vibe of the thing, your Honour (to borrow The Castle's way of assessing this sort of thing).
  • thinkling 12y ago
    They don't "off-shore" their money in the sense of an active move out of the U.S. They earn money abroad and leave it abroad rather than pay tax to repatriate it to the US.
  • sbuk 12y ago
    I'm still yet to hear why a US company should pay tax on revenues earned outside the US. This goes for Google and Microsoft too. What has the Federal Government done to earn the tax?
    • Moto7451 12y ago
      A couple reasons come to mind (not all mine, nor do I necessarily agree with them): For one, US citizens are expected to pay taxes on money they earn outside the US, even if they reside outside the country. This, in and of itself, rubs people the wrong way. In some cases, Canada comes to mind, your US taxes are reduced by what you paid to Canada. This isn't the case everywhere. The more people-like corporations become, depending on your politics, the more likely you are to feel like the tax law should treat individuals and corporations similarly. Yes, this ignores a lot of the actual economic realities of corporations, but feelings and politics be damned :). Two, the fact that the corporations in question are housed in the US means that somewhere along the line, there is likely some sort of tax break, credit, loan, law, or incentive program that they've been given to advantage them. After all, what large corporation doesn't have lobbyists and large building projects that can get funding from state and local governments. Some industries get subsidies directly from the government (The oil industry's subsidy being a popular one for political bile). Additionally, like people, corporations benefit from functioning civil services, roads and highways, and the protection of the military. These are all things that cost money (and no, lobbying dollars aren't going to cover that :). Lastly, if you're more socialist leaning you likely wouldn't mind seeing a social safety net of some kind like a universal government stipend. Large corporate profits seem like an ends to a means in terms of executing that. I don't think a majority of US citizens feel like that's a great plan, but I've heard it suggested by some very left leaning thinkers.
• tzs 12y ago
  Are you sure you are not mixing up tax RATE and tax BRACKET?
  • steveax 12y ago
    Or more accurately, top marginal tax rate. A lot of folks don't seem to realize that if they enter a new "tax bracket", only the taxable income above that threshold is taxed at the top rate.
• jlebar 12y ago
  There is a broad consensus among liberal and conservative economists that a corporate tax rate above zero is a dumb idea. It is irksome that some large corporations pay basically zero and others don't, but the ideal solution isn't to make 'em all pay. See e.g. http://www.npr.org/blogs/money/2012/07/19/157047211/six-policies-economists-love-and-politicians-hate http://www.npr.org/blogs/money/2012/07/19/157047211/six-poli...
  • tptacek 12y ago
    Careful. Liberal economists support reducing or eliminating the corporate income tax if you offset it with drastically higher personal income tax on wealthy people along with an elimination of the capital gains tax rate, and you prevent corporations from becoming vehicles for making pre-tax political contributions. In other words: liberal economists don't support eliminating the corporate income tax in the real world.
    • jlebar 12y ago
      > Liberal economists support reducing or eliminating the corporate income tax if you offset it with drastically higher personal income tax on wealthy people along with an elimination of the capital gains tax rate, and you prevent corporations from becoming vehicles for making pre-tax political contributions. Yes, absolutely. But as liberals, let's be indignant about the impossibility of what you describe, rather than the impossibility of getting Apple to pay the same tax rate as an individual.
  • gone35 12y ago
    There is a broad consensus among liberal and conservative economists that a corporate tax rate above zero is a dumb idea. Not quite. To add to tptacek's earlier comment: Planet Money's feature was strongly criticized afterwards for mischaracterizing the panelists's opinions, and overselling them as full-fledged policy positions [1,2]. Besides, the members were not representative enough to reliably infer a "broad consensus" from their agreements alone. [1] http://www.cepr.net/index.php/blogs/cepr-blog/the-disagreement-behind-planet-moneys-economic-platform http://www.cepr.net/index.php/blogs/cepr-blog/the-disagreeme... [2] http://www.samefacts.com/2012/08/drug-policy/planet-money-and-planet-earth/ http://www.samefacts.com/2012/08/drug-policy/planet-money-an...
• sorbits 12y ago
  It’s worth mentioning that a company owner who saves up money in their company (and thus pays only the corporate tax rate) will have to pay capital gains tax if they later withdraw money from the company. IMHO a company should generally not save up large amounts of money unless there is a purpose, for example building up a reserve for worse times, acquisitions, or for a small business, saving up for pension. In Apple’s case, the shareholders are the owners, and they are paying capital gains tax on the dividends. I don’t necessarily think the tax laws are good or fair, but comparing your income tax rate with Apple’s effective corporate tax rate is comparing oranges and bananas.