What we mean by Apple operating in (say) Germany is these things: they make sales there, and they have employees there.
Where the letterhead says they're incorporated... isn't this just an implementation detail? It's like asking where their datacenter is located. It's in the cloud, who cares? It seems to me that making the tax laws care about this is crazy... why do we this?
Why not simply tax the things which cannot move, transactions involving real people who live in particular places?
The letter wants you to compare this rate to _your_ rate of income tax and be shocked. But this is stupid, the corporation is not a human being.
For those profits to be enjoyed by anyone, they have to be paid out again as salary, or dividend, or recovered by selling shares... and these transactions are all taxed. And, of course, all of this money which is now profit was taxed when whoever bought the computer was charged VAT.
(Who signs the check to the tax man on each of these transactions is irrelevant, but another common way to mislead people for outrage. The tax man stands between you and Apple and demands VAT... and between Apple and their employee and demands income tax... how this is collected is, again, an implementation detail.)
that's already happening. Unless you're implying increasing consumption tax (VATS, GST etc), or higher income tax for individuals (payroll tax, capital gains tax etc).
The tax that's "missing" (read: dodged) is corporate income tax - which is a tax on the profits a corporation makes. But if you don't make any profits (read: hide profits using legal schemes), then what _do_ you tax?
To prevent tax-havens, you'd need to impose sanctions against doing business with any entity that is incorporated in said tax haven. But that's a nuclear option, which can cause damage beyond just stopping tax dodge (like harming the citizen of the tax-haven country, since they now cannot import food, for example).
We tax the money going from a human being into the corporation (VAT etc). And we tax the money coming out (Payroll etc).
The idea that we must tax the company's profits too (if they made any) is what seems strange to me. Because it depends then on defining which bit of a multinational made the profit, and there's no good way to do this. All it seems to do is encourage complicated schemes which the little guys can't afford. And I don't see the advantage over just taxing both ends of the pipe.
I know there are economists who disagree with me, and I don't understand their reasons. But all I'm seeing in the letter (and this thread) is personification, saying "the pipe must pay his share!" but the pipe isn't a person.
The profits were taxed as VAT or something on the way into Apple. They will be taxed again as income tax or something on their way out again. We are free to adjust these rates as we wish.
But trying to tax intermediate steps which seem to be largely accounting fictions (like exactly which puzzle piece of the global empire actually made that profit) seems like a fool's errand.
First, they have to pay corporate income taxes in all their foreign countries. Then, they owe 9% to state of California on what’s left. Then they owe 35% to the US treasury on what’s left. Then they pay the remainder as dividends, and shareholders owe up to 10% to their stars, and then 15-20% to the federal government.
We could likely generate as much or more in tax revenues by eliminating the corporate income tax and treating individual dividend payments as regular income (taxed at 28-38% normally).
This way reinvested profits aren’t taxed, leading to more investment, which leads to more profits and more dividends. And the return on investing for individuals increases, leading to more investment. More investment means more jobs, higher productivity and higher pay.
And hundreds of thousands of corporate tax accountants can now actually be switched to work that benefits society.
What they then choose to do with the money after that, and what taxes individuals pay on their own investments, are not part of Apple's tax rate.
Also, good luck getting dividends taxed as normal income rather than capital gains!
https://www.apple.com/newsroom/2017/11/the-facts-about-apple...
And the real rate is actually higher because it doesn't count the deferred taxes they owe and will pay when they repatriate.
IOW, that 24.6% absolutely does include the money they say they expect to owe when they eventually repatriate those earnings.
In the meantime, they earn returns on the money they've set aside that they "owe" for taxes they aren't actually paying, so deferring the payments is very profitable for them. They've even taken out large loans in the U.S. to pay dividends, because it was cheaper for them to borrow money and pay it back with interest than repatriate this money.
It's fair to say I love Apple, and I've been described as too ardent a defender of their, but they're being ridiculously disingenuous here, and it's clearly working, as you took that sentence from their statement at face value.
There is no law that requires US corporations to repatriate their profits; not choosing to do so means they're deferring a tax liability. What's disingenuous about that?
It's not part of Apple's rate, it's part of the rate at which the entire investment is taxed. The US taxes profits on corporate investments in the range of 35-70%, do you really think that's realistic? A business owner has a large number of countries they can just re-incorporate in to be able to keep 3/4s of their profits instead of less than half.
You could just as well argue that anything Apple sells should be free on account of them wanting more sales, not less. And the goal of government is not to maximize corporate income. For that matter, companies don't really have a right to make more money, only to participate in a fair economy.
Just hoping that the fix isn't perceived as "going after apple". Going after existing law, tax havens, etc, is more productive.