The seven craziest findings in the US investigation of Apple’s tax avoidance practices

[n2doc]

1. Almost all of Apple’s foreign operations are run through an Irish company with no employees.

The company told investigators that it lost all records concerning why Apple Operations International was originally set up in 1980, and why all of Apple global sales go through it. You might have a few ideas why if you keep reading.

2. Apple pays 2%—or less—in corporate income tax in Ireland.

The already low-tax country gives Apple special treatment with a negotiated 2% income tax rate. But that’s just the top-line number: Between 2009 and 2011, one Irish subsidiary, Apple Sales International, earned $38 billion and paid $21 million in taxes, for an effective rate of .06%.

3. Apple Operations International, which provided 30% of Apple’s worldwide net profits from 2009 to 2011, doesn’t pay taxes anywhere.

This move is devilishly brilliant: The US decides if it can tax you based on where you incorporate your company. Ireland decides if it can tax you based on the location of the people managing the company. So if you incorporate a subsidiary in Ireland, and manage it from the US, you don’t (so far) have to pay taxes in either country. And that’s exactly what Apple has done, not filing a tax return for AOI anywhere in the world in the last five years.

4. Apple’s US profits keep ending up in Ireland, too.

The report alleges more than just the avoidance of US taxes on foreign sales of Apple’s products. It also argues that Apple is effectively sending US profits to its Irish subsidiaries, too. How? Transfer pricing. Apple has set up a cost-sharing agreement with its Irish subsidiaries that gives them a disproportionate share of the profit from research and development that occurs in the United States. From 2009 to 2012, Apple allocated $4 billion in R&D costs to its US unit, which had $38.7 billion in profits, while its Irish subsidiary had $4.9 billion in R&D costs—and $74 billion in profits.

5. Most of the $102 billion Apple is keeping “overseas” is in US banks.

Just as its Irish companies are managed by US employees, Apple’s Irish cash is mostly kept in US financial institutions, largely managed by Braeburn Capital, Apple’s financial engineering nexus in Nevada.

more

http://qz.com/86740/the-seven-craziest-findings-in-the-us-investigation-of-apples-tax-avoidance-practices/

[HappyMe]

1. iHoles

[zerosumgame0005]

2. buy iShit

and you not only subsidize worker abuse you also help them avoid taxes so the country can keep on sliding down...

[raouldukelives]

6. That battle has been lost. People prefer gadgets to human rights and stock returns to freedom. nt

[abelenkpe]

13. And cheap shoes, clothes, cars, etc etc etc. nt

[uponit7771]

3. +1

[simpify]

4. Interesting stuff for future business owners to think about.

[Chisox08]

5. iEvade

[frylock]

7. this is legal. blame the congress. bleep blorp.

[Egalitarian Thug]

31. I think it's YARGLE BARGLE BLARRRRGH! n/t

[n2doc]

8. Rand Paul jumps to Apple’s defense

Sen. Ran Paul, the Kentucky Republican and libertarian, Tuesday defended Apple’s tax machinations, saying he was “offended” that Apple CEO Tim Cook was being “hauled” before the Senate’s Permanent Subcommittee on Investigations to explain how the company could attribute nearly two thirds of its income to Irish entities that have no employees, no physical residence, and are not taxed by any government anywhere, but are totally controlled by Apple.

Paul accused chairman Carl Levin, D-Mich, and fellow Republican John McCain, R-Ariz., of trying to “bully America’s greatest success story.” Paul said Congress should “hold a mirror” up to itself instead of conducting a hearing on Apple, because Congress created the tax code that Apple is manipulating. Paul argued that multinationals should pay only a minimum tax of five percent on foreign earnings.

“Frankly I think the committee should apologize to Apple,” Paul said.

McCain’s blistering critique of Apple’s tax strategies and Paul’s unabashed defense makes for interesting new tax politics in the GOP. Stay tuned. McCain chastised Paul for accusing Levin of bullying the company, calling Paul’s comments, “frankly, offensive.”

more

http://blog.sfgate.com/nov05election/2013/05/21/rand-paul-jumps-to-apples-defense/

[Apophis]

11. If Rand Paul supports a company, you know it's not a good company.

[nineteen50]

9. Greed is

God.

[coldmountain]

10. Apple is America's largest taxpayer and it's competitors take advantage of the same tactics

[Rex]

18. Not really, one of the energy companies is probably the largest taxpayer.

My guess would be Exxon or Chevron. Apple CLAIMS to be America's largest taxpayer, but that doesn't really make it true.

[Heywood J]

20. I believe you dropped this.

^{[[font color="blue"]citation needed[/font]]}

[HiPointDem]

24. apple is *not* america's largest taxpayer.

[trotsky]

25. "the other guys are doing it too"

That stopped being effective reasoning for a position sometime after 2nd grade.

[coldmountain]

26. They did it first also applies

[trotsky]

27. Yup, same effectiveness.

Never worked with my mom when I tried to tell her my brother started it, either.

[adieu]

12. The simple solution is for all

countries' governments to coordinate their taxing methodology. Once all countries have agreed, there's no place for global corporations to sneak away to. Any country that chooses not to participate will see the wrath of being a social outcast among the group of nations, not to mention not receiving any help in case of disaster or other trans-national events.

The benefit of having a universal tax pact is that all countries will benefit from having higher corporate tax receipts.

[moondust]

15. EU is going there.

In a speech to the European Parliament, European Commission President Manuel Barroso said that, at a time of austerity, EU states were missing out on tax revenue equal to nearly double their collective annual budget deficits. "That is a huge amount of money to simply let through the net," he said.

EU leaders are getting serious about loopholes and seeking international agreement on new rules to counter the ease with which individuals and companies can move money around to minimize tax. They'll discuss the issue at a summit this week.

~

EU leaders meeting this week will consider a proposal for automatic information sharing among member states on all forms of income from Jan. 1, 2015.

And the U.K. will use a G-8 summit next month to promote international tax reform among the world's biggest economies.

~

http://money.cnn.com/2013/05/21/news/economy/europe-taxes/index.html

[adieu]

16. It's time

It's far easier for 180+ countries to agree to a plan that will benefit them all than to work individually with each and every corporation that decides to draft an operating agreement.

[Brigid]

19. We have our winner.

Yes, it is time. Now, how do we get countries to get together and draft such an agreement?

[Savannahmann]

14. I've mentioned before but it applies here.

Often I've said that corporations use every single tax loophole they can find, and with the lawyers, accountants, and former IRS agents on the payroll, they find every one there is. Apple is one of the most effective, but all of the rich individuals, and corporations, do the same thing to some extent. The reason they get away with it is simple. They have people who are able to argue the law, and win because those loopholes exist.

We the regular people, do not get to take advantage of those loopholes. If Apple is audited, it won't take place in the office of the auditor, it will be in a large conference room, filled with lawyers, accountants, and former IRS agents who will argue every single deduction. If we are audited, we show up with a shoe-box full of receipts praying we don't get screwed too badly.

With Liberty and Justice for all (Who can afford it). The legal system is completely screwed. First, we write laws so convoluted that nobody knows what they mean, leaving them up for interpretation by the lawyers, and the courts. What does this really mean is the question that every lawyer for the corporations will ask, and then explain to the advantage of their clients. We regular people don't stand a chance, because we can't afford an army of lawyers and tax experts to argue our returns.

This is just an example of the tax laws. Now, Apple will be audited, and the tricks they're using will be all legal, even if one or two aren't the fines will be a pittance and appealed for years. Apple will pay the least amount of tax they can, and we will rail and gnash our teeth and bemoan fucking corporations. But our votes put people in office who wrote those laws. Our votes enabled the system we currently have, which is set up to benefit the rich. We cheer when one of the betrayers we have elected says that they're going to close the loopholes. But somewhere in the thousands of pages of legal language, there are two loopholes for every one that is closed.

This is an example of the inequities of the system, one we help continue by voting for the same people who put this crap in place time and time again. If you're angry about it, look in the mirror, and ask yourself this. The folks I voted for, what did they do about this? Even if they did take the position in opposition to this, they did so halfheartedly because they want those campaign donations more than they want equality and justice.

[davidthegnome]

32. Awesome post.

Worthy of it's own thread.

I think you hit the nail on the head a number of times here.

I just heard my Father discussing tax issues with my mother - at 29, it's depressing and a little embarrassing to be living with mom and dad, but, tough economy, blah blah blah...

Anyway, individually, they each pay more in taxes every two weeks than I earn in two weeks - approximately, what they pay out in federal and state income taxes is what I would earn with a full time job at nine or ten dollars an hour. They make decent money - approximately one hundred thousand dollars a year, before taxes, but they've also worked hard for it for well over thirty years.

I believe the rate they're taxed at is somewhere between thirty and thirty-five percent. Somehow though, people like Mitt Romney are taxed at half that rate, or even less. The funny thing? My parents are democrats, who might complain about taxes frequently enough, but it is because they are unfair. People like Mitt Romney (and, I imagine, many apple corporate officials) complain about takers, about food stamps, about medicare/medicaid... if it's a federal or state program that benefits the people they have been screwing for decades, they hate it, oppose it, will destroy it if at all possible.

It IS class warfare - and the political elites are not on our side, because they are elites. That is, they are, for the most part, members of the same class as Mitt Romney.

It's so damned depressing - and I have so little hope that we can actually do anything about it. I mean, these people basically control everything, they really aren't likely to be inclined to care what the "unwashed masses" think of them. They aren't likely to be inclined to care if the system is unfair, if we're getting screwed. The only way that I expect that they will ever care, is if people become angry enough to do something about it.... and I think that time is coming.

For all their rhetoric and self righteous babble, the political elite are some of the most despicable of all individuals on earth today.

[Rex]

17. When the world is covered in iShit

My iPants(tm), the iHumans will rise up to demand phone access anywhere in known space!

[justiceischeap]

21. Instead of hating on Apple or any other company that takes advantage of tax codes

why not be pissed at Congress for allowing this type of shit to happen in the first place? It is they who created the laws that allow corporations to get away with this shit. It is they who create tax codes that favors off-shore banking and manufacturing. Mostly, it's the American people who keep electing these assholes, that keep creating these loopholes.

[HiPointDem]

23. i hate them both. and apple went *beyond* what was provided by congress.

[ProdigalJunkMail]

29. so...they broke the law? nt

[HiPointDem]

30. i guess we'll see.

[ProdigalJunkMail]

34. and when it turns out that they did not?

is the company evil... or just the laws that they followed?

sP

[HiPointDem]

35. companies can't be 'evil'. they're not human. so stupid question. neither can laws be evil, for

the same reason. both can be instruments of evil.

in my opinion at this point in time, whether apple has formally broken any laws or not, it's an instrument of evil, for many reasons.

but it's not exceptional in that regard. except for the fact that it's promoted itself as some kind of socially conscious, hip company. which it's not. so in the degree of it's corporate hypocrisy, it's exceptional.

[ProdigalJunkMail]

36. wow... talk about getting wrapped up in semantics

but how is it hypocrisy if the company's purpose is to make money for its investors? and to use the tax code to their advantage to do so? never once has apple claimed it was in business to give money to the gov't. and while they market their product to the hip, socially conscious crowd, the aim of that marketing is to make money.

i dare say not many would not invest in a company that left $35 billion on the table at tax time... that would border on malfeasance. i very much support changing the laws... but until such time unless the company is breaking the law, they are just doing what companies do... making money for their investors. if we're to get bent out of shape over companies following the law then we need to change the law.

sP

[HiPointDem]

37. once you accept the premise that a company's only or overriding purpose is to make money for

its investors, you're already far down the road to evil.

you pretend 'the laws' and 'the companies' are two separate things, the laws are bad, it's not the companies' fault -- but the laws are made *for* the companies and *by* the companies.

who is this 'we' that's going to change them? legislation and legislators are basically bought, at all levels, and the bought survive & thrive.

i've read your posts before and for me there's no point in talking to you; whether you really believe what you say or not, just no point.

[ProdigalJunkMail]

38. ahhh... no point in talking to me...

nice... i have read your post too, and while you constantly insult people and are frequently wrong on points of basic fact, i decided to try to engage your brain this morning... oh, well.

the sad part is your statement, "but the laws are made *for* the companies and *by* the companies," is something i agree with 100%... but apparently there is no point talking to me. funny that...

sP

[HiPointDem]

39. have i mistaken you for another poster who frequently uses snark and personal attack to push

libertarian talking points?

if i have, my apologies.

i only insult those who insult me first (or regularly), generally speaking. (And there is a team of them.) and if i'm shown evidence i'm wrong on a point of fact, i acknowledge it; unlike many of my detractors and attackers.

[HiPointDem]

22. kr. apple = slave labor. their shit is not 'cool' at all.

[baldguy]

28. Like we needed another reason to hate Apple.

[OhioChick]

33. iShit made by iSlaves n/t