Apple to Testify Before Senate on Tax Evasion/Avoidance

[Surrealistik]

Per the title.

Wish I were surprised at the depth and breadth of these allegations, but given the massive off-shoring they've been notorious for I can't say that any of this comes as a shock unfortunately.


Articles:

Huffington Post:

http://www.huffingtonpost.com/2013/0...tml?ref=topbar

Globe and Mail:

http://www.theglobeandmail.com/repor...ticle12030686/

New York Times:

http://www.nytimes.com/2013/05/21/bu...tics.html?_r=0


{SCRUBBED}

[dehro]

not that I'm opposed to breaching those kind of subjects, but, doesn't this stray dangerously into forum-unfriendly waters?

[The Giant]

You may discuss the story if you steer clear of all political implications, including any hopes for legislative changes that may occur as a result. But consider this a Warning for the thread; anyone who crosses into politics will get an Infraction.

[Karoht]

1-Apple was never the nice company everyone thought they were. All the public saw was the trendy devices, no one seemed to question the little things. Like where the products where being produced, environmental factors, etc. This will drag the Apple brand through the mud, and quickly, as the scrutiny increases. Rich people are fine, rich people who don't pay taxes are kind of a hot button right now.

2-While I don't hold my breath for any particular legislative changes, nor will I speculate on such (both as per the Giants warning and the forum rules), I will speculate that other lawsuits will come out of the woodwork and soon. If someone wanted to counter-sue for things like recent copyright issues (even if it was just to annoy apple and their lawyers), doing so in the middle of a major government audit would likely be the time to do so. Truthfully, I expect to see some representative of Apple talking to the press, looking like someone has a very large thorn twisting away in their side.

Between the two, I see Apple likely to undergo some massive changes at the end of all this. Chances are good that with their next big product release, we will see some serious rebranding efforts.

Truthfully, I feel bad for them. The decision to not pay those taxes is going to hurt a lot of people who had nothing to do with such. The harm will likely be large and long lasting.

[Don Julio Anejo]

Me? I just find it ironic that Apple claims they "provide over 500,000 jobs in the United States" when the number is closer to 50,000 and the vast majority are iNerds working at Apple Stores for minimum wage, with maybe a few hundred to a few thousand design engineers/marketing/admin staff. That in no way supports the American economy, it takes away from it.

That's before you even get into any of the tax evasion (seriously, how is it even possible to claim their taxes in Ireland?).

[warty goblin]

I think I'm at a point where the headline 'giant multinational corporation does bad thing' is about as surprising as 'man walking through piranha filled river dressed only in bacon reduced to skeleton.' Which is to say, it's unfortunate but about as surprising as sunrise.

[HalfTangible]

Me? I just find it ironic that Apple claims they "provide over 500,000 jobs in the United States" when the number is closer to 50,000 and the vast majority are iNerds working at Apple Stores for minimum wage, with maybe a few hundred to a few thousand design engineers/marketing/admin staff. That in no way supports the American economy, it takes away from it.

That's before you even get into any of the tax evasion (seriously, how is it even possible to claim their taxes in Ireland?).

As someone with no job, I thoroughly disagree. Minimum wage jobs may suck, but they're still jobs. You still get a paycheck, which is more than than one can say for someone without a job.

Sure, it's not a major boost to our economy to have a ton of minimum wage jobs, but it hardly takes away from the economy.

I think I'm at a point where the headline 'giant multinational corporation does bad thing' is about as surprising as 'man walking through piranha filled river dressed only in bacon reduced to skeleton.' Which is to say, it's unfortunate but about as surprising as sunrise.

This PARTICULAR "bad thing" is kind of surprising, though.

[137beth]

I think I'm at a point where the headline 'giant multinational corporation does bad thing' is about as surprising as 'man walking through piranha filled river dressed only in bacon reduced to skeleton.' Which is to say, it's unfortunate but about as surprising as sunrise.

I disagree: I'd be very surprised if a man dressed only in bacon decided to walk through a piranha filled river. I am not surprised when a giant multinational corporation does __.

[Emperor Ing]

Uhh...as far as I can tell Apple hasn't broken any laws. They simply take a lot of completely legal tax deductions and are being paraded in a show-trial to be made an example of for their "bad citizenship."

[Don Julio Anejo]

As someone with no job, I thoroughly disagree. Minimum wage jobs may suck, but they're still jobs. You still get a paycheck, which is more than than one can say for someone without a job.

Sure, it's not a major boost to our economy to have a ton of minimum wage jobs, but it hardly takes away from the economy.

Actually, it does - it puts a drain on the local economy. A store will always sell more merchandise than it will use to pay its employees (otherwise, it's unprofitable and will close down at some point). Therefore, all the money from locals buying shinies will go to two places: A) China where all the shinies were made, and B) rich people's bank accounts, seeing as Apple hasn't paid (much) corporate tax in the US (paying it in Ireland instead) despite being headquartered in California.

On a macro scale, this means Apple takes away more out of the United States than it puts in. Therefore, it can be construed as exploiting the country for corporate gain, a common problem with colonialism. The only difference is that the country being exploited is the one the company is in.

On a PR side, it means Apple cannot claim to be supporting the American economy, whether by providing jobs or by any other means.

[Worira]

Uhh...as far as I can tell Apple hasn't broken any laws. They simply take a lot of completely legal tax deductions and are being paraded in a show-trial to be made an example of for their "bad citizenship."

Making sure you do all your puppy-kicking in a country with a puppy-kicking loophole in their legal system doesn't make you any less of a puppy-kicker.

[warty goblin]

I disagree: I'd be very surprised if a man dressed only in bacon decided to walk through a piranha filled river. I am not surprised when a giant multinational corporation does __.

Personally, I never try to get into the head of somebody who dresses entirely in raw meat. Either they're Lady Gaga, or things are liable to get really scary.

[Emperor Ing]

Making sure you do all your puppy-kicking in a country with a puppy-kicking loophole in their legal system doesn't make you any less of a puppy-kicker.

That's utterly preposterous! Since when was the mortgage interest deduction and charitable contributions deduction the moral equivalent of puppy-kicking? Even insofar as you could compare the two?!

[Rawhide]

Let me pose a question to anyone upset at any of the companies doing this. If you went overseas and earned $100,000, but then realised that if you brought it back home with you, you'd only have $65,000, what would you do?

[Anarion]

Let me pose a question to anyone upset at any of the companies doing this. If you went overseas and earned $100,000, but then realised that if you brought it back home with you, you'd only have $65,000, what would you do?

I'd come home, probably. Having to live in Ireland to keep my cash seems like a big sacrifice. You'd have to add a 0 or two to your number to make it worthwhile.

That said, there's a wiki entry for the Double Irish arrangement and Apple is hardly the only company taking advantage of it.

[snoopy13a]

I'd come home, probably. Having to live in Ireland to keep my cash seems like a big sacrifice. You'd have to add a 0 or two to your number to make it worthwhile.

That said, there's a wiki entry for the Double Irish arrangement and Apple is hardly the only company taking advantage of it.

I think it helps if you add a Dutch Sandwich. I believe that pretty much all U.S. tech companies use these arrangements.

http://www.nytimes.com/interactive/2...wich.html?_r=0

Tax attorneys and accountants are paid big bucks to try and come up with exotic techniques such as the Double Irish. It's sort of akin to Min/Maxers in RPGs, only for real.

[Rawhide]

I'd come home, probably. Having to live in Ireland to keep my cash seems like a big sacrifice. You'd have to add a 0 or two to your number to make it worthwhile.

You could still come back home quite easily without bringing it back home with you.

[Anarion]

Tax attorneys and accountants are paid big bucks to try and come up with exotic techniques such as the Double Irish. It's sort of akin to Min/Maxers in RPGs, only for real.

Well, at least we know how to monetize the forum-goers, should that ever be necessary.

You could still come back home quite easily without bringing it back home with you.

Well, yeah, then I'd totally leave the cash in Ireland then. It takes a brave and very strange soul to straight up donate thousands of dollars to the government when it's not required. Especially since even the most altruistic could instead keep the cash and donate to a cause of his or her choice.

[Tebryn]

Let me pose a question to anyone upset at any of the companies doing this. If you went overseas and earned $100,000, but then realised that if you brought it back home with you, you'd only have $65,000, what would you do?

I'd bring the money back home and pay. Edit: No question.

[The Glyphstone]

A Double Irish Dutch Sandwich sounds either really tasty or incredibly perverted and disgusting, not sure which.

[Emperor Ing]

I'd bring the money back home and pay. Edit: No question.

Would you force others to make that decision if put in a similar situation, even if they didn't want to?

[Tebryn]

Would you force others to make that decision if put in a similar situation, even if they didn't want to?

If it's the law? Yes. I didn't say I'd be -HAPPY- about it mind you. The question posed has little relevance on the situation we're discussing though but other than that...I don't think I can get into it for forum reasons.

[Soras Teva Gee]

Let me pose a question to anyone upset at any of the companies doing this. If you went overseas and earned $100,000, but then realised that if you brought it back home with you, you'd only have $65,000, what would you do?

I know that if I was making six figures overseas I'd have to be making at least six figures back home... or I would have changed homes.

(Seriously folks you can live almost anywhere these days)

So the example in full context could be proportionately smaller.That said the basic point holds up well enough.

And if there ain't no rule broken....

[Don Julio Anejo]

Let me pose a question to anyone upset at any of the companies doing this. If you went overseas and earned $100,000, but then realised that if you brought it back home with you, you'd only have $65,000, what would you do?

This is more akin to you living at home but saying "oh, but I pay my taxes in Ireland" and then not paying any tax home whatsoever, yet having all the advantages of being a US citizen, such as making use of US infrastructure (without paying for it).

If Apple wanted to move to Ireland, they can. Then they'd have to come in and do business in the US as a foreign company, as well as still pay capital gains on whatever money they earned in the US.

This way, they're trying to have their cake and eat it too.

[Anarion]

This way, they're trying to have their cake and eat it too.

While this is true, it's something that's available and legal to all sorts of companies, not just Apple. It strikes me as something that needs fixing (hence the discussion and OP), but not something to condemn a company for as long as it's legal.

[Don Julio Anejo]

While this is true, it's something that's available and legal to all sorts of companies, not just Apple. It strikes me as something that needs fixing (hence the discussion and OP), but not something to condemn a company for as long as it's legal.

It utterly violates spirit of the law, even if it follows the letter.

And yes, I do want all companies to be held responsible.

[Rawhide]

Legal tax avoidance happens all the time from companies and individuals. I cannot condemn anyone for making use of legal measures to reduce their tax liability. I can be upset that it's possible, or that it has happened, but not at the companies for doing what anyone would.

Some examples include:
The purchasing of otherwise unnecessary equipment such as computers just before the end of the tax year.
Salary sacrifice arrangements where some of your income gets paid directly to another company rather than you (e.g. straight from the company you work for into your superannuation account, without being income taxed).
Donating money to a charity. (What? You thought companies did this purely out of the goodness of their hearts?)
Sponsoring a charity event. (See above. Also, this gets them advertising.)
Holding money in a business or different business until it is needed.
Holding money earned overseas in an overseas account or business until it is needed because transferring it back will cost more.

This isn't a discussion about whether the laws are wrong, should be fixed, or how - such a discussion is beyond the scope of the forums - but a discussion on what has happened. These companies have taken legal measures to reduce their tax liability, just like nearly everyone (companies and individuals) would.

Have you ever taken advice on how to reduce your income tax?

[Surrealistik]

Legal != ethical.

Of course, there are some that will try to play the 'Gotcha!' hypocrisy card (and have) by pointing out that most people actively work to minimize tax burden, but it is a false equivalency; there is an explicit and obvious difference between the poor to even upper middle class minimizing tax liabilities, people whose quality of life would be materially affected by not doing so, and a massively profitable multinational that can easily afford to pay corporate taxes with standard business deductions and remain massively profitable. Doubly so given its _huge_ cash stockpile of nearly two hundred billion.

While there is absolutely blame to be placed on the tax code, and while Apple, as a corporation, is legally bound to champion the interests of its shareholders, it has ultimately made the decision to go through extensive, egregious contortions and massive international legerdemain to shelter more than 92% of its estimated tax liability. Which households in America can do that? Which households in America making nearly as much money as Apple (with comparable assets and savings) would even _want_ to do that? This is especially outrageous when ~39% of Apple's profits by their own, probably understated admission, came from domestic US sales.

That all said, I can absolutely understand why they engaged in this massive tax avoidance regime, and I recognize that there may even be a legal imperative for them to do so per shareholder obligations, but ultimately Apple's actions were grossly unethical and a complete and obvious violation of the law's spirit.

[Don Julio Anejo]

Some examples include:
The purchasing of otherwise unnecessary equipment such as computers just before the end of the tax year.
Salary sacrifice arrangements where some of your income gets paid directly to another company rather than you (e.g. straight from the company you work for into your superannuation account, without being income taxed).
Donating money to a charity. (What? You thought companies did this purely out of the goodness of their hearts?)
Sponsoring a charity event. (See above. Also, this gets them advertising.)
Holding money in a business or different business until it is needed.
Holding money earned overseas in an overseas account or business until it is needed because transferring it back will cost more.

Many of these have positive side-effects. The main topic? Straight up dodging responsibility. Also, individuals that dodge taxes, even mostly legally, can often go to jail. Companies usually get away with a slap on the wrist, or fines significantly less than the taxes they're owing, and are able to dispute/appeal it a lot of the time.

Using lobbyists and high-end lawyer firms to get what you want is, while legal from a business standpoint, is unethical and in effect no different from spending the same money on bribes from a common sense standpoint and is just a different form of corruption (i.e. companies will usually get what they want anyway, irregardless if its bad for everyone else). In this case, they lawyered up a way to avoid tax on a significant number of their profits, which from a common sense standpoint is the same as hiding income.

[Emperor Ing]

That begs the question: What IS the spirit of the law? That individuals and companies making decisions about how to use their own money that they legally earned is less noble than governments taking and spending more of other people's money?