Gyroscopic Investing

Thanks to a complex network of offshore accounts and cleverly named subsidiaries, Apple, the world's most valuable company, paid just $713 million on its $36.8 billion in foreign earnings last quarter. That amounts to a rate of just 1.9 percent, a figure that makes Mitt Romney's 14.1 percent effective tax rate look downright generous. And believe it or not, Apple actually reduced its foreign tax rate by nearly 25 percent as the company's market cap soared to new heights this year. According to the Associated Press, it was 2.5 percent at this time in 2011. Did Apple get a tax cut? Nah, it just got better at avoiding the IRS.

http://www.theatlanticwire.com/business ... xes/58681/

Given how good Apple is at creating new wealth, I wonder if it wouldn't make sense to charge them 0 taxes.

It seems like the world economy benefits in myriad ways from Apple's success, so giving them a pass on confiscating a portion of their earnings might not actually be a bad idea at all.

MediumTex wrote: Given how good Apple is at creating new wealth, I wonder if it wouldn't make sense to charge them 0 taxes.

It seems like the world economy benefits in myriad ways from Apple's success, so giving them a pass on confiscating a portion of their earnings might not actually be a bad idea at all.

My thoughts, exactly.

I love Apple as a consumer and as an investor. Still, they can afford to pay more than 2% and according to the article, the American taxpayer has to pick up the slack.

I encourage anyone to do anything in their legal power to lower their tax bill. So, I can't vilify Apple for being good at it.

With that being said, I do think our legislators have the responsibility to make a tax code that represents the interests of the people who elected them. If we had an honest vote of the people I doubt these loopholes would remain open.

In other words, "Don't hate the player, hate the game." 

melveyr wrote: I encourage anyone to do anything in their legal power to lower their tax bill. So, I can't vilify Apple for being good at it.

I'd be pretty good at it too if I had millions of dollars to spend on a small army of attorneys and tax accountants

dualstow wrote: I love Apple as a consumer and as an investor. Still, they can afford to pay more than 2% and according to the article, the American taxpayer has to pick up the slack.

If we are only talking about foreign earnings, how would the American taxpayer have to pick up any slack?

I think that foreign earnings should be taxed in the tax jurisdiction where they were earned (if they are to be taxed at all).

Consider that all Apple's employees, vendor's employees, etc. pay a lot in income taxes from the profits of Apple. The government isn't missing any tax revenue.

And frankly, I'd rather Apple keep their dollars than give them over to people like Nancy Pelosi and John McCain to spend.

MediumTex wrote: It seems like the world economy benefits in myriad ways from Apple's success, so giving them a pass on confiscating a portion of their earnings might not actually be a bad idea at all.

craigr wrote: Consider that all Apple's employees, vendor's employees, etc. pay a lot in income taxes from the profits of Apple. The government isn't missing any tax revenue.

Surprisingly enough these were the arguments put forward to defend the banks in the UK, didn't hold any water in that context.

Arguing that companies should pay less tax essentially because they are big multinationals is sucking on the devils teat the work of politicians.

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Sent from my iPhone

gizmo_rat wrote:Sent from my iPhone

Oh the irony!

There was a similar report about Starbucks in the UK recently. Basically they have barely paid any tax in the UK at all during the time they have been operating here. They are managing to do this (perfectly legally) by making payments to subsidiaries in other countries, so that the UK business appears to be losing money.

What struck me about it was that the multinational corporation has a massive advantage over the small independent tea shop/cafe, who simply don't have the resources to pursue similar strategies. I'm not sure I know what the solution is though; perhaps the simplest way would be to allow the little guys to pay no tax either!

MediumTex wrote:

dualstow wrote: I love Apple as a consumer and as an investor. Still, they can afford to pay more than 2% and according to the article, the American taxpayer has to pick up the slack.

If we are only talking about foreign earnings, how would the American taxpayer have to pick up any slack?

I think that foreign earnings should be taxed in the tax jurisdiction where they were earned (if they are to be taxed at all).

You'll have to ask the authors. ;-)

chrish wrote: [...] the multinational corporation has a massive advantage over the small independent tea shop/cafe, who simply don't have the resources to pursue similar strategies. I'm not sure I know what the solution is though; perhaps the simplest way would be to allow the little guys to pay no tax either!

Exactly. Either that or make the tax code so simple that it's virtually impossible to find loopholes in it. At least then small businesses would be on a more even playing field with the big corporations as far as taxes are concerned.