Why did executives from 11 of America’s biggest technology companies obediently show up when they were summoned by the president-elect to meet at Trump Tower?
Some might suspect it has something to do with the $560 billion in profits those companies have stashed overseas — and refuse to bring back until the U.S. government gives them an enormous tax break.
Apple CEO Tim Cook has now confirmed that that was indeed part of his motivation to attend the tech summit with Donald Trump.
On Tuesday, TechCrunch obtained Cook’s response on Apple’s internal network to a question from an employee about the Trump meeting.
Cook first described how it was critical for Apple to “engage” with governments on what he called “our key areas of focus.” According to Cook, these include “privacy and security, education,” “advocating for human rights for everyone,” “the environment and really combating climate change” and “creating jobs” — i.e., nothing as mundane as money.
But in the third paragraph, Cook acknowledged, “We have other things that are more business-centric — like tax reform.”
Here’s what Cook’s vague description meant: Apple wants a huge tax cut, and Trump has promised to deliver one that would save the company about $40 billion to $50 billion.
The U.S. has a peculiar system of corporate taxation. On the one hand, it taxes U.S.-based multinationals on profits earned anywhere on earth at a statutory rate of 35 percent. On the other hand, corporations can defer paying taxes on overseas profits until they bring the money back to the U.S.
This creates two incentives for multinationals. First, it encourages them to use ludicrous accounting shenanigans, many pioneered by Apple, to pretend as much of its profits as possible were “earned” in foreign countries, like Ireland, with super-low tax rates. Second, they’ll hold the money hostage overseas until the U.S. government becomes so desperate for revenue that it offers them a sweetheart deal to bring it back.
This already happened in 2004, when the George W. Bush administration offered companies a special one-time offer: If they brought back their profits to hire more U.S. workers or engage in research and development, their tax rate would be cut from the statutory 35 percent to 5 percent. Companies happily repatriated $312 billion, and then went about firing workers and using the money for stock buybacks and huge hikes in executive pay.
Since then multinationals’ overseas profits have built up to an even greater level: a stunning $2.4 trillion, over four times the size of the current federal budget deficit. The 11 technology companies whose representatives met with Trump account for about one-fourth of that $2.4 trillion — in other words, they’re holding untaxed overseas profits equal to the federal deficit.
Apple is responsible for over $200 billion of that, more than any other company. Earlier this year Cook announced that “we’re not going to bring it back until there’s a fair rate. There’s no debate about it. … It’s not a matter of being patriotic or not patriotic. It doesn’t go that the more you pay, the more patriotic you are.”
The good news for Apple is Trump’s campaign tax plan would deliver them everything they’ve ever dreamed of, allowing them to bring back their overseas profits at a one-time rate of 10 percent. (The permanent statutory 35 percent tax rate for corporations would be slashed to 15 percent.)
As pointed out by a study by Citizens for Tax Justice, Apple has reported that if it were to repatriate its $200 billion in overseas profits, it would owe the U.S. government about $60 billion in taxes. (Multinationals are permitted to deduct taxes already paid to foreign governments from their tax due to the U.S., and so rarely face a full 35 percent assessment when bringing money home.) If Apple brought back all of its profits at Trump’s 10 percent tax rate, it likely would owe $10-20 billion — meaning Apple would save $40-50 billion.
During the 2016 campaign Cook was bipartisan. He hosted a fundraiser for Hillary Clinton and, as email from her campaign chairman John Podesta shows, when Apple contacted them with concerns that Clinton would use patents as leverage to force Apple to bring profits back to the U.S., the Clinton team jumped to reassure them they’d never do that. Cook also hosted a fundraiser for Republican Speaker of the House Paul Ryan. So it’s understandable that before the election Cook said he was “optimistic that, in 2017, there will be some sort of corporate tax reform” no matter who was elected.
Top photo: Apple CEO Tim Cook exits the stage after an Apple special event at the Yerba Buena Center for the Arts on March 9, 2015, in San Francisco, California.
COOKing the books. It is time somebody took a big bite out of APPLE that doesn’t build anything in America anyway, but counts to Americans to cover the taxes the company doesn’t pay. It’s time Cook and company were cooked and let some honest American entrepreneurs waiting in the wings to manufacture products in the United States. Pro-nuclear arms raceTrump, unfortunately, isn’t the president to help that happen.
What do you expect?
The Commies ran them out of the US.
Well, isn’t that special. Well, aren’t they? We, the American government ie. taxpayers, gift them w/$560 million – they much be pretty darn special. Though personally, I have to say, I just don’t see it.
“…refuse to bring back until the U.S. government gives them an enormous tax break.”
Tax lax has NOTHING to do with why companies leave earnings offshore… it is theUS GAAP accounting rules for ‘indefinitely reinvested’ exception that prevents the ‘book’ tax expense on this income (nor tax law).
When the accounting rules change is when corporate behavior will be impacted.
The absolutely BEST thing about polarizing policy discussions with religious political ideology… we can forget about simple arithmetic, economics, and monetary policy.
Democrats and Republicans shove globalism and “free trade” down the throats of all Americans and the rest of the developed world, destroying the 1st world manufacturing capacity and middle class… and then have the temerity to lecture everyone about what the “proper” way to assess taxes should be.
Those congress-critters that oppose repatriating overseas profits are all butt hurt because they are worried they will miss out on strong-arming their part of that big pie from American corporations.
All this being so… they gave a full court “get out of jail free” card to the bankster class who raped the nation through corruption, fraud and abuse of the entirety of America.
Making money is no crime. However, racketeering, corruption and influence peddling IS a crime.
If it was written in a screenplay… it would be considered stretching believability much too far!
Trump prides himself on being a yuge dealmaker. So my question is, what does Trump get for giving Apple a big tax break?
Apple’s revenues back into the United States where they will add to the government’s revenues.
Progressive leftists create the biggest Big Government deep state in history, that allocates crony money to Big ‘Health’ and big everything else…
…and then tries to lecture on crony capitalism.
said a trump voter
quote”Since then multinationals’ overseas profits have built up to an even greater level: a stunning $2.4 trillion, over four times the size of the current federal budget deficit. “unquote
Living proof the citizens of the Dumbest Country on the Planet love getting butt-fucked daily. Meanwhile, the Big Club are clinking glasses of $50k per bottle Champagne at the top of the Burg Kalifa, while rolling on the floor in gut splitting laughter. Meanwhile, the Big Bang of Stupidity elect the one opening the bottle.
SO?This is a NO STORY. Youse give are killing the Intercept as fares journalism goes – it is pathetic!
Say’s one still trying to figure out the words on page one of Dick and Jane. pathetic indeed.
I’d buy an Apple iPhone, but I am not a fan of NSA spyware, which is built right into everyone of them. My friends in China say so.
So, the intercept has censored me again. Let me appeal to Glenn Greenwald, with whom I’ve offered my opinion of years, though he will not remember me. Glenn, I find the sickness that pervades this nation is summarized precisely that those I criticize at your site can prevent me from commenting. I understand why they might, they are a bunch of thieves, that I call them that they don’t like, but I find it discomforting that your site would prevent me from telling that truth. Sorry, for you. That they who can’t tolerate my truths won’t change one way or another, they’ll always be thieves.
Pardon me, Intercept, I’m very sensitive to those who censor, there have been many. Happy Holidays, jimbo
oh oh, I see the intercept is censoring me again. I guess those who steal really don’t like to be called out for what they are
by withholding that which is owed to America and Americans these rich pos have done calculable damage, accruing largely to those who need the help the most. To the extent any of these pos spends time praying to his or her god, someone should remind them its Mammon, fucking slime.
If you can’t string a sentence together, try Twitter. Works for Trump
I would imagine the broader reason is to ensure Trump will continue the establishment’s crony-capitalism and keep crowding out actual competition, just as he’s doing with other areas of industry.
I might theoretically support a ZERO corporate/business income tax.
First all the deductions would have to be eliminated.
Actual gross profit would be stated on the balance sheet.
All stock holders would have to pay current income tax on net evaluation.
Because-membership has its priviliges.
This is the United States of America. If they don’t want to pay, good. The corporations need us more than we need them. How many of the multi-national corporations would change their tune if they were told to pay US Corporate Taxes or stop selling in the biggest economy in the world?
I’m having a hard enough time with The Don getting his new gig next month. This bit of Timmy Nonsense is not helping…
Apple use to make great hardware and software. They used to innovate. Now they just defile Steve-O’s corpse while they shift into being an IP/Phone/TV Appliance/Watch company.
Their desktop and laptop computer hardware is taking huge steps backward, while their OS just gets more default, can’t fully remove it crap pumped into it… With this article, my NeXT rounds of computer purchases will not include Apple… Dell makes gear with a couple of different Linux options pre-installed, and that (finally) are no harder to run & maintain than a Win box.
With 25 years in the IT business it is time for me to, once again, Think Different.
Not that I’ll hold my breath regarding the following… Yo, Timmy. When you want to get Apple back to being an insanely great, mindshare dominating company, give me a ring. Now get off my yard.
OT.
The government makes more inflammatory claims without providing evidence – this time regarding Edward Snowden:
House Report Accuses Edward Snowden of Being ‘In Contact’ With Russian Intelligence
Democrat, Republican, it doesn’t matter… They’re a bunch of fucking liars.
Edward Snowden responds to the HPSCI report on his disclosures
Thanks for posting, Maisie.
Cheers
With such High Quality work as this coming out of Congress, why should we doubt the impending investigative report on Russian Hacking of the DNC.
They’re all liars. It should be well understood by now. They and their sheeplike media are dedicated to publishing lies for the common people to swallow. Except the common people aren’t swallowing the way they used to. Therefore more and bigger lies get even bigger headlines. But they’re still lies.
Apple CEO Tim Cook Met With Trump to “Engage” on Gigantic Corporate Tax Cut
PSYCHE!
not really but yes except no but yes… Such is the tax code created by the crafty elected Dumb&Dumbers club for the thieving wallstreet thieves. Talk about cutting taxes, 95%. Talk about cutting tax rates, 5%. Talk about cutting tax loopholes, 0%.
Committing fraud upon the American public is a very profitable venture but is not legal unless you are elected to the Dumb&Dumbers club aka Congress.
Donald Trump actually wants to find a way to con the cons ducking tax obligations to the tune of trillions. What better man to make that happen?
First, it’s their greed (for executive compensation and bonus) that drives the “shenanigans”. Not the law. No matter what law is in place, every company will look to reduce costs, either fairly or unfairly.
Second, as in the case of Apple (which you conveniently left out) the “accounting shenanigans” were actually reviewed and caught by the EU. The funds are being taxed by the EU. Your real beef here is compliance. Different governments where businesses are located need a system to derive an amount, any amount, to apply a tax rate. You are actually demonizing the allocation vehicle and not the behavior. If companies AREN’T allowed to allocate profits, what is the basis for paying ANY amount of tax in ANY country?
Lastly, every tax payer has their own special tax give-away by the government. For US homeowners, it’s the mortgage interest tax deduction or child-care or other. My point here is that the tax code is filled with tax give-aways.
Taxation is a choice by government on how to fund the various programs it has in place. I have no objection to lowering taxes, if the government is lowering its spending.
If Cook wants a fairer rate, then these Silicon Valley CEOs should demanding the government spend less and tax less, for everyone.
Lastly, every tax payer has their own special tax give-away by the government. For US homeowners, it’s the mortgage interest tax deduction or child-care or other. My point here is that the tax code is filled with tax give-aways.
True, but those give-aways end up being recycled directly back into the economy and how many Americans citizens can afford the kind of tax advice that would allow them to clear massive profits AND get a government tax refund?
http://moneymorning.com/2011/09/02/these-u-s-companies-made-billions-in-profits-and-received-federal-tax-refund/
it doesnt make sense to give needy people a tax break if your job is getting paid lots of money for tax advice because you need a large wealth pool as a customer. Elected whores in congress who have violated their oath of office have no problem helping to create, enrich and protect wealth pools for themselves to feed on. Their understanding of cause and effect is limited to their boundaries of selfishness which is actually a yet unrecognised form of autism.
Please don’t misinterpret my response as an apology, but there is nothing inherently wrong with receiving a refund as it is usually from the overpayment of tax in the first place.
But I will presume your examples from the article you posted are not of this kind. But this brings up another valid question: what did lead to the refunds you cited? Right?
A refund can be portrayed as inexcusable in the light of profits and exec comp. But these are all separate issues.
I’ll poke at their financials, but I would be surprised if those examples are examples of No Tax Due situations leading to refunds.
I get your points on legal or tax advise. It’s noted. But if tax give aways for citizens are directly recycled, why would it be an different for companies?
Even if companies stick those saving into the bank, the bank would lend out those dollars to stimulate the economy, right?
Your responses are , pedantic, irrelevent, pathetically reaching and worst of all boring. Go back to the NYT’s where you’re tripe is appreciated.
And if you would like to continue to shut your eyes to facts that should be considered, by all means.
Close your eyes and take nap time.
So, I looked at the 2010 financial statements for Verizon. Yes, they received $705M. But here’s what the article you cited left out.
1. They recorded $2.4B of tax expense (Deferred). The amount was actually $3.2B tax expense less this refund, etc.
2. They also have a non-controlling interest. So, the income producing activities ascribed to the non-controlling interest were cited for the increase in 2010 tax expense. This leads me to believe (rightly or wrongly) that there may have been a decrease in income for the controlling interests of the company. Another factor to consider in evaluating their taxes.
3. Their tax rate was 19.4%. So, they are paying taxes.
4. The non-controlling effect of their tax rate was 19.5%. There’s a recon of the 35% rate to the 19.4% rate. This is required by the SEC for all public companies.
https://www.sec.gov/cgi-bin/viewer?action=view&cik=732712&accession_number=0001193125-11-049476&xbrl_type=v#
Sorry Pedinska, gonna have to retract a statement. The taxes are deferred, thus not paid. My bad and my apologies.
last item to consider. Verizon is showing US Domestic tax accrual of $11.9B and Foreign tax accrual as $0.8B.
So, they ultimately will be paying much more in US taxes than in foreign taxes, when they pay. ;)
Yes, you could boycott Apple if you disagree with this. Then again, to make that work it takes millions of people an a sustained protest. How many are Apple customers because of the “Steve Jobs Hype”? How much does Cook personally save on his tax avoidance?
The vast majority of ‘profits’ have been stolen from consumers, so they BELONG to the consumers, NOT THE FUCKING GOVERNMENT. Taxation only transfers the stolen money to the government, so that the government can biuy more nukes and murder more people. I guess that’s what Schwarz wants.
This is absurd. For decades, no centuries we have heard the same old tired line about how decreased taxes and regulation will lead to a booming economy. I really don’t understand how these folks can continue on with their nonsense year after year when it is perfectly clear, it ain’t so.
The share of corporate share of US taxes has dropped in half over the last two decades and we still have a miserable economy. Meanwhile taxes on every day joes like me doubled. When clinton pushed nafta on us we were told that there were a billion chinese customers waiting for us. What we got was companies like apple moving operations overseas deserting American workers. We lost freedom of choice as our shelves became stocked with cheap shoddy imports.
Now we are told that we need to give these tratorious companies another tax break? BS. Let them sit on that money overseas. I have had it with the economic elite lies.
And we will continue compensating for their tax cuts…lovely! They dont have to worry about paying their fair share, they cheat the entire country, tax goes towards this country, they dont pay them, its that much less we have to work with. This country is headed towards another recession if not a full blown depression. They dont care, because its always about the huge profits, not about the people, “profits over people,” this countries motto. And we know that Trump, being the psychopath he is, will then blame everyone but himself for the mess he is about to create…this country is being destroyed from the inside out, no other country is responsible for whats happening here, no other country is doing this to us…its our own representatives/government that’s guilty of whats happened to our country, they destroyed the democracy and created the oligarchy we now live in.
Consumers could END Apple tomorrow. Remember that! We live in a technocracy only by choice. I think I was actually happier in the 80’s with a land line phone, letters & stamps, and a stack of Victoria’s Secret’s.
Even a lesser deal maker than Mr. Trump should be able to work something out. For example, maybe if the corporations agree to an exclusive deal to use only Trump hotels for business travel, they could be allowed repatriate their profits tax free. Ivanka could sign the deal to avoid any appearance of a conflict of interest.
sure
country leader stays at trump property
meets with the Donald
trade agreement for development includes new trump hotel in said property
ivanka signs the deal for the hotel
project starts, ends, major profits, ivanka gets paid
ivanka buys christmas presents
gives christmas presents to father purchased from profits of businesses
percent of new business vs pre-existing conditions is calculable
this is also called money laundering
A rational system of taxation would involve paying taxes where the income was earned. The US makes people and corporations pay taxes on income earned abroad, even though taxes are also potentially due in the country in which the income was earned. This amounts to double taxation. For individuals, there is the so-called foreign tax credit, which allows one to deduct a portion of the taxes paid overseas from their tax bill – but only a portion.
I am opposed to corporations skating on their tax obligations, and feel that simply lowering or eliminating corporate taxes is the wrong way to approach the problem. Corporations cost the taxpayers untold billions in environmental damage they cause, infrastructure built at public expense for their benefit, and tax breaks not afforded to living individuals. The least they could do is pay taxes at the same rate as individuals earning that much money. (Which, coincidentally, would be a marginal rate of 35%).
It is not double taxation. As the article points out, whatever tax is paid to the foreign government, is deducted from the 35%. So the total tax burden is ALWAYS 35%, except when they get special deals, as in 2004 and likely 2017.
Thanks for pointing out my error! In that case, they already have it better than those of us whose person-hood is DNA-based.
Nothing new about this. Businesses have been and always will be lying cheats only interested in more profits. If people started treating businesses and their leaders as they are, self-centered lying addicts, then maybe something could change. People can get addicted to money and perceived power just as easily as heroin or meth. And just like addicts they’ll do anything and hurt anybody to get their next fix.
They claim they’ll bring jobs here except US workers are far too expensive for their profit margins. They cut those jobs, invest in automation and computer algorithms, and out source the rest of their jobs and then claim they’re being patriotic. It’s sad the public continues to get duped by these con artists.
Until the public wants to actually use the power they have they will always be slaves to the delusions being sold to them.
At one time, within the living memory of adults, corporate charters included the requirement that corporations be responsible members of the community. Thanks to a concerted effort by ALEC, funded by those same corporations, that provision has been removed, and now corporations in the US exist solely for the purpose of making profits. Some naive individuals express this as returns on shareholder investment, but that is false. Were it true, executive pay and benefits would not have spiraled into the stratosphere as they have in the US, because study after study shows that there is no correlation whatsoever between executive compensation and shareholder return. If anything, the correlation is negative.
Corporations such as Koch Industries actively promote voter disengagement and suppression, and most large corporations actively encourage their employees to vote along party lines that support their agendas. Nowhere is that practice more pervasive than in the war industry.
Indeed. Eisenhower warned everyone of the dangers of the military-industrial complex, and the US economy hasn’t truly shifted out of a Cold War status. I remember watching 9/11 on TV when I was in high school and I knew then things were going to change, and likely for the worse. I’m a German immigrant, moved to the US as a very young kid, and learning the history of Germany through the US education lens and my families accounts, I learned quickly about what people and governments are capable of doing.
I used to be idealistic and truly hoped the younger generation would rise against this trend. As a young man I look around and I don’t see much to hopeful about. There are a few of us who are open, thoughtful, and intelligent. But, there are so many insecure cowardly young people out there I just don’t see things improving anytime soon. Especially with how US education sets kids up to fail by just providing glories baby sitting instead of educating.
Pardon the rant. These subjects get me waxing intellectual.
*glorified baby sitting
Pardon the typo.
I struggle with these feelings as well. There are some absolutely amazing, unselfish people in the world who truly believe in, and act towards, the betterment of society as a whole, but they seem to be a minority.
It appears the majority of people live their lives afraid in every possible way. Of the government, their bosses, their neighbors, etc. So afraid to lose what little they have that they accept all levels of degradation and even declining wages. The amount of ignorance, or perhaps even dangerous innocence, is frightening, and leads one to wonder how there was every even a successful labor movement in the United States in the mid-20th century.
So I waver between trying to act in the best interests of others who don’t seem to appreciate or even acknowledge it, and saying to myself, “Fuck it, good luck, you’re on your own” and just keeping my head down, which doesn’t feel quite right.
I struggle with the same conflict. I’ve resigned myself to offering my insight to those who seem open because we need to keep that fire burning. If we keep quiet then those who are too afraid to voice their opinion will remain in the shadows.
My shop teacher had the best advice ever. He said, “You can fix ignorance. You can’t fix stupid.” So when I run into stupid people who don’t listen, I don’t validate their opinions. Silence is an answer too. You just force them to listen to their own opinion and don’t give them anything to react over. If I feel like teasing them I’ll ask them to “elaborate”. They usually shut up once I start laughing at their rationalizations. If they don’t shut up then I walk away. They usually are just seeking attention anyway.
Mine was the generation of the peace marches, the civil rights marches, and all that good stuff. As we got older, we mostly became reactionaries, looking to restore a glorious past that never existed. I say most because I’m one of the ones who hasn’t.
You are absolutely correct in placing the blame on the education system in the US. In your native land it is a scandal not to be ranked in the top five, but the US has now slipped below average in the OECD, and it has scarcely been noticed. Both branches of the Party are to blame for that, because their elites realize that it is easier to wield power over an uneducated, unmotivated electorate.
Sad but true. I essentially educated myself because the US education is just laughable. It’s too bad too because I remember the Internet in its early days when I was just a kid. Watching it mature as I have I’ve come to realize the Internet is more of a reflection of our culture. Sure, it’s a tool for information and those with critical thinking skills can use it to maximum effect, but it’s incredible how the Internet has gone from a mysterious Wild West of anonymity to the self-aggrandizing narcissistic advertising marketing firm it is today.
The lack of critical thinking skills in our population is painfully obvious now. Again, a credit to the lack of education.
I’m so happy I’m not a parent. I can’t even imagine how difficult it is to manage or even raise a child in this hyperconsumerist culture.
their elites realize that it is easier to wield power over an uneducated, unmotivated electorate.
George Carlin nailed this and it will never get old because they will never stop trying to make us compliant and keep us ignorant.
https://www.youtube.com/watch?v=-14SllPPLxY
I miss George.
I miss him too. He was a fountain of wisdom. Honestly, I find more insight and truth from comedians than I do from news media or education systems.
Education is just cultural conditioning. They want obedient children whose identities are rooted in their usefulness to the state, and to just keep buying shit. I’m always amused when the US flag waving types mock communist countries or authoritarian groups like the US is some bastion of freedom.
As Bill Hicks said, “It’s the Land of the Free, to do as you’re told.”
Thanks for that! An addition to my George Carlin collection.
I miss him too.
Was Schumer invited to this meeting also? He already went on about the same thing a couple months ago. So glad the Dems aren’t like those dastardly Republicans!
Getting screwed over by the ruling class is a bipartisan effort.
It’s the same exact thing Hillary was going to do, which is why Hillary and the disgraced DNC were the top recipients of money from Apple this year by a wide margin.
There’s little doubt that Tim Cook and his company are “bad guys” in all sorts of ways and for many reasons. However, in the context of our political-economic system, “working with” government to save his company $40-50 billion is simply his job — and his legal obligation to his shareholders. Were he to fail to participate in a meeting with a president-elect to discuss savings (increased profits) of that magnitude owners of Apple stock would be lined up in short order to file lawsuits.
“The problem” is that we have an economic system that prioritizes profit over all other goals and a legal system that requires corporate managers to observe that priority.
Further, we have a political system that is controlled, at all levels, by the Owners, the people who overwhelmingly benefit from that economic system. Quite naturally, in those circumstances, our governments serve our profiteers.
Tim Cook is just doing his job.
Yes, just as the financial industry paid billions in campaign contributions to get themselves deregulated, then offered in defense of their misconduct that they were merely obeying the law.
So now Trump and his fellow republicans will give the corporations what they want, with the democrats offering feeble opposition to maintain the illusion that they are somehow different. But watch: there will be no change to the foreign tax credit for us small guys.
Every article you write about corporate tax policy is completely dishonest. No mention of the fact that the United States is one of only 6 countries that tax worldwide corporate taxes instead of on a territory basis. This is the number one reason for corporate tax inversions – to get out from under this idiotic tax system that has no place in the modern economy.
France taxes based on territory. UK taxes this way. Canada taxes this way.
http://taxfoundation.org/blog/worldwide-taxation-very-rare
That’s a hilarious comment. When, oh when, will Jon Schwarz stop being so mean to those nice, altruistic corporations!? Why doesn’t he say how bad they have it from USGOV!11!11!1
Should we start a GoFundMe for these poor, beleaguered tech companies?
While I have you, why does the U.S. state interfere in free markets by legislating into existence the legal fiction called a corporation? Big government!
Dave,
I agree that it would be preferable to explain this in detail in any article about corporate taxation, but that would come with a downside, which is that it would greatly tax (joke) reader patience. I’m planning to write something in 2017 that will go through all the basics, so I can just refer people to it if they want to know more.
Anyway:
1. The dividing line between territorial and worldwide corporate tax systems (such the one the U.S. has) is fuzzy. Systems that are called territorial have worldwide elements, and vice versa. In reality tax systems are generally hybrids of one kind or another.
2. America’s worldwide system doesn’t tax US-based corporations at a higher rate than territorial systems do corporations that are subject to them. The effective (ie, not statutory) corporate tax rate in the US is almost exactly the same as the average OECD rate — and as you point out, most of the OECD now officially has territorial tax systems.
Corporate taxes have also been falling as a share of GDP. It used to be 4-6%, now it’s under 2%.
So the corporate push to lower tax rates in the US isn’t about making things somehow more “fair” for US-based companies, it’s about ratcheting down corporate tax rates all over the world. If the US cuts rates, US companies will be paying much less than European companies, which will then use that to agitate for lower tax rates in Europe.
3. More pure territorial systems have a huge downside, which is that they encourage Apple-style financial engineering to make it appear that companies “earned” all their profits in Bermuda.
4. In terms of fairness and eliminating opportunities to game the system, both worldwide and territorial systems are probably inferior to a formulary apportionment system. That’s why the EU is trying to move to a formulary system. Part of the US corporate anxiety to slam through tax “reform” is because they’re worried that if the EU sets that up it would create momentum for formulary apportionment in the US.
As you can see, it’s complicated, and it’s not really feasible to include this in every article.
Well done, Jon. In my experience, the sort of comment Dave offers is simply the shrieking of an extreme capitalist who cannot tolerate the remotest suggestion that corporations are anything less than the deity’s greatest blessing.
Of all the people or entities in the world meriting sympathy and/or needing more equitable treatment — well, the notion that U.S. corporations should even be on the list is simply preposterous.
I definitely agree, but even extreme capitalists can shriek questions that are legitimate even if the shrieking is done in bad faith ;-)
Here’s another question:
How much air pollution in tons per year does it take to make $560 billion in profits? It’d be nice to have a per product estimate viz iPhone | $profit | pollutants TPY | NOX TPY | SOX TPY | etc..
It’s not just about paying a US tax bill but also a US regulatory bill.
Every yr they’re coming out w/ a new phone and intentionally junking “last yr’s model” to get you to buy more. If Apple cared about the environment as much as Jobs let on they wouldn’t force you to buy a new MacBook cuz you can’ t update the OS anymore..
But it is not as though we as consumers do not have a choice. One of my phones is a GSM model I bought in 1995. I got a newer Android phone only because I live in a fringe area and needed to operate in the extended range band.
And as for computers, it is the same story. Linux is FREE. Open Office and Libre Office are FREE. Python is FREE. GIMP is FREE. You can do damned near anything you need to do, from sending e-mails or writing letters to programming microcontrollers without spending a cent on software. So why do people buy Macs? Because they think it’s cool. And it is, to conspicuous consumers.
I was a win machine user personally, then bought a mac while jobs was still alive; and it is quite possibly a miracle machine. I still have it and I still use it; haven’t bought another. The number of times it has crashed can be counted on one hand; meanwhile the win machines used at work are continuously slowing down, crashing, and all around are pieces of shit.
My mac turns on as quickly as the day I got it.
Agree, some folks buy because of the “cool” “hipster” factor; since jobs has died I’ve increasingly been dissatisfied w/ software quality of the phone. It’s a peice of shit just like the win machines.
I can’t comment on the state of mac computers today because I don’t have the latest; don’t have the latest iPhone either. If they’re anything like the iPhone they’re prob getting shitty too.
So why do people buy Macs? Because they think it’s cool.
My current MacBook is 7 years old. Why did I buy it? Because I could use it out of the box to do all the things I professionally needed to do and didn’t have time to learn in order to use all the free stuff because I was already working 60+ hours per week.
It isn’t always because it’s cool. And, just like it wouldn’t be easy for someone versed in computers to set up and run an RNA extraction and interpret the test results, it’s not always easy for the average computer user to comprehend all the alternative options – let alone install and learn how to use them – out there for us that might actually be better.
I must be in the pink with my TI-99 4a
How about the full 35% gets taxed, but 10% goes to USA (double than Bush’s 5%) for climate change programs via NREL & 25% goes to a UN climate change fund. Those nations who’ve historically contributed more to the total carbon footprint need to obviously pay more (e.g. EU-US).
Further, these profits have been made outside the States, thus it’d be fitting if that same cash funded foreign efforts to combat climate change. Plus Apple could contribute an additional $160M to the UN CC fund to show that they really, really care about global climate change. It’d be a neat trillion dollar jumpstart to 2017!! That’d be my holiday wish.
Apple is kind of a “hero” company to many people, especially educated, less blue collar workers, as it designs great products and has appeared to have forward looking policies in employment, making their computers accessible to the handicapped, etc.
But how are they less harmful than China in monetary policy if they are holding earnings over seas to avoid taxes?
They and other corporations are basically holding the rest of we taxpayers hostage and blackmailing the government to bring the income back at a low tax rate, thereby shifting the burden from their execs and stock holders to the less fortunate, and lower income taxpayers.
Of course, a chronic tax avoider like Trump will favor them. But it should be pointed out that they are damaging the country with their greed, and maybe they should go on the list of companies associated with Trump’s fellow corporate criminals.
It might be hard to influence them, because people are so addicted to their iPhones, but something needs to be done. I have two iPhones, both given to me because they have cracked screens. But they work, are older, but I can get along with older ones for several more years because I am moving more away from being involved with digital information, not more into it. For reasons that most readers of The Intercept are aware of.
So in essence, Apple will be contributing to the negative effects of a Trump presidency, and should be made to be associated with Trump if they insist on putting the tax burden on the rest of us.
Let’s ask a more general question: Why do executives from any US company obediently show up when they were summoned by Uncle Sam? ..or when Sam wants to propose this or that regulation?
There is an executive that comes to mind that does not do this. He’s a Virginian named Don Blankenship.
A bit of hyperbole here, but any deal w/ Sam is a deal w/ the devil; but you really don’t have a choice. You have to deal w/ him. He’s the devil.
quote”He’s the devil” unquote
Hmmm, given he’s in prison, I’d submit he’s just another scumsucking capitalist criminal who causes people to get killed. However, it’s too bad he was sentence to only a year. In my universe, the family’s of those miners who died because of his orders to ignore safety regulations, would be allowed to beat him to death.