Shouting ‘pay your taxes,’ activists occupy Apple retail stores across France
marketwatch.com
marketwatch.com
Worse yet, they frequently seem to do this by subverting our public officials. It's reached the point where our regulatory institutions and even our government appear severely compromised by the financial concerns of corporations. If our elected representatives need corporate money just to get elected, how can we rely on them to represent us on issues that might run against the interests of those corporate donors? Direct public action, such as protests, seem to be the last recourse left available to us on certain topics.
When you have a large, enormously successful company sitting on gargantuan cash reserves not paying its taxes and getting away with it, you have a problem. Apple probably isn't even the worst offender, but they're famous and have a built in hate-club (anything that inspires fans also inspires anti-fans). While this protest only had a few hundred supporters, that's pretty incredible for this kind of topic. Hopefully this sort of protest happens more often and gives tax-evading corporations pause.
Seems perfectly understandable to me why foreign firms behaving like Apple would be the target.
http://www.lemonde.fr/economie/article/2016/11/24/le-fisc-fr...
I think a more effective form of activism would be to flood representatives' offices with requests to change tax laws and to vote for candidates willing to do so. I think most governments and taxes in the world today render "fair taxation" an oxymoron. It is a mess at all levels and should be fixed, but I'm not sure localized protests at places of business are the most effective way to go about doing it.
Yes. It reduces the company's bottom line until they either inflict bad publicity on themselves, sit and cope with it silently, or submit to the demand to pay their lawful taxes.
>I think a more effective form of activism would be to flood representatives' offices with requests to change tax laws and to vote for candidates willing to do so.
You're getting downvoted because we've got a lot of Americans on HN. For us, that approach failed as of last night.
They pay their lawful taxes. They engage in tax avoidance, not tax evasion.
2) Protesting your local politicians always works provided you have enough people. You're just not doing a good enough job convincing your fellow citizens. That's how you really effect change.
If a phone is sold in France, a corporation is making money from the French market, so given that that market has fixed infrastructure costs, shouldn’t actors in that market contribute to those costs through taxation?
Also, I think the chances of Apple deciding to pay its taxes due to this kind of pressure are at least as high as politicians in X country closing loopholes.
It's exactly like Occupy Wall Street where people protested and camped outside the likes of JP Morgan. And what was the outcome of all of that ? Nothing.
The only thing most people know about occupy wall street was that a bunch of people camped out for no particular reason.
You mean those things that have changed the world in massive ways?
I'd respect activism advocating for simplified, hard to game tax codes more.
I don't think it's really sustainable for the public to get interminably worked up, protesting company after company in order to keep everyone honest.
In general, the best solution to corruption is simpler, more transparent systems. Corruption thrives in complexity and arcana. Deals happen in back rooms for a reason.
Bringing back a societal-enforced code of ethics punishable by humiliation and public shame with a defined path of atonement is what’s going to put all corporations back in line. It absolutely has dangers and can go to far, but that is inherent in nearly every good political choice.
On a more scary note, a lot of security advisors have suggested we’ll be seeing a rise in terrorism against corporations and executives (very soft targets) in the next 10 years, probably coinciding with the next economic bubble.
See “Brave New War” by John Robb for more info.
Here in America, workers are trash as far as our society is concerned. Work harder! Ask for less!
More than 60% of U.S. households would get tax cuts from the Senate Republican tax plan in 2019, while 8% would pay more, according to the nonpartisan Joint Committee on Taxation.
By 2027, after the individual tax cuts EXPIRE, most households would see little effect, as 61% would have either tax increases or tax cuts below $100. In that year, 16% of households would have tax cuts exceeding $100 while 23% would pay more.
This is completely besides the fact that I find taxes to be a good thing, seeing as the only reason I even have a future is through publicly funded programs that helped pay for my education and subsidize the small town I grew up in and even my entire state. I'm plenty glad to pay back what the USA invested in me
I'm sure I'm not an exception thinking this is a backwards approach to influence behavior.
Better to shut their stores down than let them keep operating illegally, the French tax authorities should be arresting and charging management with tax fraud for their illicit scam. Apple is stealing from you and me, increasing our taxes with these tax scams.
Its a very practical and approachable court system for the common person comparatively.
Apple makes huges efforts to violate the spirit of tax law (that a business making good profit should pay quite some taxes) while trying to avoid that authorities / courts can prove it. Actually they have been fined already, they are still appealing. So whether they comply with the law is formally undecided.
Edit: Not sure whether "fined" is the correct legal term. They have received some kind of "letter" that they have not paid what was legally required in the past and they are obliged to pay the missing sum (13 billion EUR).
Say that to Martin Shrekil. Big corporations are immune to shame, local business aren't.
The problem is: the simpler the tax code, the easier it is to game. There's a reason why tax codes are universally huge and complex, and it's not just because of politicians giving tax favors to their donors.
For example, how would you game a flat tax?
Imagine a car manufacturer, headquartered in Germany where all of the R&D happens, and most sales outside of Germany.
Germany has invested lots of money into its education system so that the car manufacturer has a very large pool of talented and qualified personnel, but with a cash flow tax the manufacturer pays the most of his taxes in the respective countries, thus depriving the German state of the resources it needs to provide the companies in Germany with qualified personnel.
In the current scenario Germany loses tax money due to evasion, in the flow tax scenario it would lose tax money because it's paid where the cars get sold.
edit: whoops, I misread you - flat tax, not flow tax. A flat tax scheme would still put an inadequate load of taxes on poor-ish people. With a 20% tax, someone with 1M $ of yearly income has to pay 200.000 $ in taxes and takes home 800.000 $ while a poor person with 20.000 $ income pays 4.000 $ in taxes and takes home 16.000 $. The rich person most likely won't notice the 200.000 $ being gone, but the poor person will immediately notice it. It's not a question of gaming the system here, but of social fairness.
Maybe there's an argument to be had for a forced charity fee, but that can be accomplished with one flat deduction across the board (say 50k). Again a simple rule that applies to everyone equally. H&R Block will hate it.
A flat tax is simple, more fair, and efficient. Plus it's pretty hard to dodge when there are no loopholes / 50 different forms to fill out and process.
I agree. I feel like many of the protests are more along the lines of 'this company makes a lot of money so they should pay more taxes, regardless of the current law'. As a society we would get a lot further along making real changes if we protested the government who a) put these complexities in place and b) who seem to lack the will to change. In the end, a single corporation making a lot of money is easier to hate, rather than understanding all the backroom deals/lobbying to get the complexity added in the first place.
Apple is paying the taxes it is legally responsible to pay. End of story. If you want them to pay more tax then you should be protesting against Macron and the rest of the French government and get the laws changed. Multinational tax avoidance can ONLY be fixed through international cooperation of governments.
Do facts like almost every American wants a more fair system change it? No, because the governing structure has itself been corrupted after decades of abuse.
Therefore, it seems the most effective means of causing change -- given that what you suggest has failed for decades -- would be to cause direct financial harm to those who are actively corrupting the system for their benefit, as that changes the calculus for them and incentivizes stopping.
This is a downright civil way to do that when society breaks down -- the poor used to just stab people over bad tax law.
Also, few journalists would report on the protest otherwise.
What's your rebuttal to this? https://news.ycombinator.com/item?id=15836006
It's not about what is legal, or what is habitually done. It's about how things should be.
"Well why aren't they protesting every company?" There are only so many hours in the day.
Think about the knock-on effects of the Weinstein case. You show up, you fight, and eventually society will start agreeing and fight with you
https://www.apple.com/environment/
Maybe because today being seen environmentally conscious makes you more money than you lose by paying for greener technologies? If people can make avoiding paying taxes seen in the same light, things will change.
I wait for the day this page exists:
> https://www.apple.com/paying_taxes/
Not quite what you mean, but there's this, just posted within the last month:
https://www.apple.com/newsroom/2017/11/the-facts-about-apple...
No, because they believe that showing that they care about the environment more than the laws require will result in increased profits, otherwise they wouldn't do it.
There is a generational issue as well. Cook (and before him Jobs) grew up in the '70s, when the political upheavals of the '60s had started to rot. The main ideals that survived that age were environmentalism and racial/sexual equality - likely because they could be coupled with aggressive capitalism relatively painlessly. What "big values" do companies like Apple push, today? Environmentalism and racial/sexual equality.
Fair taxation is an issue that started to be considered only since the late '90s, and really went mainstream only with Occupy. In the '60s and '70s high taxes were normal (the legacy of New Deal and war effort in US, and socialist movements in Europe); in the '80s and '90s cutting taxes became a mantra, a shortcut to political victory. By the early 2000s the cracks started to show. As the generations that grew up with Occupy start to get in positions of command, hopefully they will try to find ways to conciliate the search for private profit with the fairness of higher taxation.
You say that like "the generations" uniformly "grew up with Occupy". Lots grew up with other kinds of populism. Many grew up with online FPSs. I'll bet on a lot of diversity of perspective in lizardpeople^H^H^H^H^H^H^H^H Millennials over any sweeping prediction about Millenial culture and politics.
If Apple's sales go up, but they're having to pay higher taxes to attract those sales, there won't necessarily be a net gain in after-tax profits.
As a contrasting example, installing solar panels is primarily a one-off cost, will probably end up saving you money in the long run, and if it drives sales, the costs of operating those panels don't increase proportionally with your sales.
--
Or, alternatively, maybe Apple wants to be green because that is something the upper management actually care about on a personal level. I don't think it's likely that Tim Cook feels the same way about increasing the French government's tax revenue. Why should he? He's not French. Which, coincidentally, might be the real problem with multi-nationals - at the end of the day, corporations actually are run by people, but most people won't care about more than one or two nations in their lifetimes. Hell, many studies indicate that the average person can't be emotionally engaged with more than a hundred people, much less a hundred countries full of people.
I personally have lived in four different countries, but would say I only care about the success of two of them.
Moreover, it raises awareness, and it is a good thing to blame publicly those society to help governments change the rules. If no one complains, why do anything?
So, Apple exploits both China and Europe to make a buck.
2) European doctrine in accounting is not that you can do anything as long as you don’t break the rules, but that you should account in a way that reflect the truth as much as possible within the rules
3) the European doctrine of tax law is that you should tax your profit where they are made
4) your headquarter for European tax purpose is not the address in your letterhead, but where the orders tend to radiate from.
Just because you can dump industrial waste into a river doesn't mean you should. Just because you can steal doesn't mean you should. Just because you can shortchange citizens doesn't mean you should.
Yes laws should be passed, I agree, but that doesn't mean we can't also multilaterally also go after others at the same time. Do you hold the parent responsible for the kid stealing? Yes. But you also hold the kid responsible for stealing.
Most of all, I want to get of this notion that public corporations have fiduciary responsibility to maximize profit. In the Supreme Court case Burwell v. Hobby Lobby, the supreme court stated that "modern corporate law does not require for-profit corporations to pursue profit at the expense of everything else, and many do not do so. For-profit corporations, with ownership approval, support a wide variety of charitable causes."
There is a better option, we just aren't taking it. As citizens, we should be supporting multilateral action for a more ethical capitalist economy.
Secondly, you would be surprised, there enough people who don't deduct everything possible. There are also enough people who don't take the cheapest energy, but choose a green option instead. Who don't buy the cheapest meat, but go for more expensive non-factory farm meat. Who don't take a plane, but take a train. Etc.
(Before someone starts to criticise green energy, bio meat, etc., that's not the point: people are willing to spend more for a more ethnical lifestyle. Why shouldn't we expect the same from a company that always talks about its ethical virtues?)
What is the ethical amount of tax deductions to take? All, some, or none of the ones offered by the tax law?
A few years ago a guy came to me with a scheme to reduce my tax. It took him a two-page diagram to show me how it worked. The gist of it was that participants could "work" for a few hours a week on a music project. The work consisted of providing feedback on the music of P Diddy (Puffy/Daddy/etc). Now just to provide some background, I don't know anything about music. I can't play an instrument. I don't have Diddy's cultural background. I don't listen to his music. I'm a financial coder who lives on a different continent.
Apparently as long as we could document that we'd done this work, it there would be a way to deduct some sort of loss.
I didn't take part.
There will always be legal ways to do things that are wrong, because just like the corner cases in code, there are corner cases in tax code. You can exploit them to make an exception, but you know what the point of the code is.
b) even if you could draw the line and somehow say Apple was doing something "more evil" than normal tax avoidance, what's the point in petitioning the corporation to stop doing that? A corporation is sort of a money-hungry optimization machine without a soul and the outcome you get with it depends on the environment it exists in, as a matter of mechanical logic. Would you hold a counter protest to bees because they sting people? No, that would be silly, it's just in their nature to sting people. Would you picket the Borg for trying to take over your star system? No, it's pointless to try and guilt the Borg and even more so to try to force them to change by such appeals.
Simple: brand value. Apple likes to be associated with: privacy, green, etc. If their brand gets associated with greed and tax evasion, their brand devalues (at least in Europe), possibly leading to fewer sales.
For a company that that sells with high margins, like Apple, reputation is extremely important.
Governments can and should make fair tax laws. They failed to do so, and now it’s Apple’s fault?
Why would we want to move the responsibility of setting tax rates out of the hands of government and into the hands of corporations?
e.g. Apple has been ordered to pay up to €13 billion ($19 billion) in back taxes, plus interest, to Ireland [1] [2]
[1] http://www.smh.com.au/business/the-economy/apples-headache-i...
[2] http://www.smh.com.au/business/the-economy/appleeu-case-was-...
If your brand is actively associated with a controversial practice, then your sales will fall. There will be people that won't want to be seen carrying an iPhone.
Ok, say we protest the Irish government, and they close the loophole. Next, they do the same from another country. What should we do when Apple uses another loophole?
That does not automatically mean taking advantage of tax havens. Warren Buffett says Berkshire Hathway can save tax using such tax havens but he does not do it because its not the right thing to do.
Any enterprise which does not make consistent high profits eventually gets scooped up / controlled by "activist investor" scum which then demands profit extraction to shareholders at any level possible: tax evasion schemes, loading up the company with debt which then gets distributed to shareholders or other financial tricks that only benefits the shareholders, often at expense of the workers and society.
The only other exceptions to this rule I know are Amazon, Google and the various companies of Elon Musk - which are exceptions only because of their extremely charismatic and successful leaders.
Hell, I even believe citizens have a civic duty not to contribute to corporations that make the nation a worse place. You are as selfish as your most sociopathic executive. You both contribute to the same bottom line, it is only compensation that is different.
[1] http://www.slate.com/blogs/moneybox/2012/09/25/foxconn_getti...
A blurb from article. It looks like the government already went after Apple.
Yes, this is relevant; Apple is not being punished¹, they're just being told to fulfill their obligations.
¹I'm not saying they should or shouldn't be.
Hows that state aid ?
This could be seen as a negative externality, because it has a very negative impact on the economy of the countries they're operating in. They're basically sucking money out of the country without contributing back what they should
Why do you assume no one is? This has been discussed at length during the last French presidential election for example.
See also: https://www.bloomberg.com/news/articles/2017-10-24/macron-ha....
"According to one diplomat, the strongest level of opposition came from Ireland, Malta and Cyprus. Luxembourg was said to have raised a series of practical problems about the proposal, arguing it would introduce a lot of complexity into the tax system."
Go figure. Noncompetitive EU countries complaining the loudest.
I'm starting to thing that there might also be a geopolitic reason to become a tax heaven, not just an economic one, something along the line "Let's convince Amazon to book profits here, and there let's see who will dare mess with us, given that Amazon will be protected by USA"
Ireland's corporate tax rate + joining the European single market, resulted in one of the greatest booms in modern economic history. From $40 to $280 billion in GDP in just 17 years.
Given the extreme nature of the benefits, a small nation is probably crazy not to do it.
Because they're picketing Apple and not the National Assembly?
Apple is a public company with an obligation to its shareholders to make money, not pay erroneous taxes.
I'm not so sure about this as I'd question that it's possible for a single government to close loopholes on its own. Arguably yes, governments should be pressured into closing "certain loopholes", but not because this necessarily leads to a better outcome.
>Apple is a public company with an obligation to its shareholders to make money
Not everyone agrees that companies ought to maximise only shareholder value.
That's the argument against signing global warming treaties, isn't it?
If such a loophole exists, and it's blatantly obvious that you're a dick for using that loophole, yes, that loophole should be fixed. But that doesn't mean you're not a dick for using it in the first place.
To put it in another perspective: If there was a loophole that allowed me to kill someone without facing any consequences, yes, that loophole should be fixed. But that doesn't mean that I'm not a dick for using it.
So no, not done.
Apple doesn't get to decide for us what our collective moral values are. If they don't like them, they should stop doing business in Europe. Otherwise, they should just pay their dues like nearly every person and small/midsize company in Europe does. Since Europe is a hugely profitable market, this is the better option for them.
I wouldn't exactly call these values "moral".
Apple should just pull out from Europe.
If you want to do business in a country, you have to live by the laws of the country. If a country's laws specify that a certain percentage of profit should be paid as taxes, it is like it is.
Some countries prefer free-for-all capitalism. Other countries prefer to have state-mandated universal health care, a decent amount of holidays, a certain income for unemployed, etc. Those facilities have to be funded somehow.
I wouldn't exactly call these values "moral".
Sure, for someone who believes in pure capitalism, it is not moral. For someone who believes in social democracy, it is. For a typical EU citizen (making a large generalization), US-style capitalism is immoral. Unfortunately, the US tries very hard to export their model to the rest of the world (which is of course in the interest of the US).
Apple should just pull out from Europe.
Even with the normal taxation tariffs (that smaller companies cannot dodge), Apple will make a large profit in Europe. So, that would be a large loss to them.
I mostly don't care, but for the sake of argument, setting up shell corporations and then saying they made this purchase or that deal for tax reasons isn't exactly being honest.
It reminds me of the "characters" Bunbury and Ernest from Oscar Wilde's "The Importance of Being Earnest":
"""
You have invented a very useful younger brother called Ernest, in order that you may be able to come up to town as often as you like. I have invented an invaluable permanent invalid called Bunbury, in order that I may be able to go down into the country whenever I choose. Bunbury is perfectly invaluable. If it wasn't for Bunbury's extraordinary bad health, for instance, I wouldn't be able to dine with you at Willis's to-night, for I have been really engaged to Aunt Augusta for more than a week.
"""
That’s why Apple USA sells iPhones to Apple France at some price above hardware production costs. It doesn’t make sense any other way. Value isn’t created on sale, it is only realized as money at that point.
Like it or not, taxation internationally is currently based on where value is produced which is why...
> Under the current international tax system, profits are taxed based on where the value is created. The taxes Apple pays to countries around the world are based on that principle. The vast majority of the value in our products is indisputably created in the United States — where we do our design, development, engineering work and much more — so the majority of our taxes are owed to the US.
https://www.apple.com/newsroom/2017/11/the-facts-about-apple...
The value is not created at time of sale! Well, some value is created by virtue of the sale itself that go into retail profits, but the store has to pay its suppliers the price they charge regardless of the supplier’s markup. Imagine it’s a department store (Nordstrom’s or whatever) selling LV bags, LV is not charging the department stores just production cost. France in turn is taxing LV on the design value added in France, that tax money isn’t going to China or the USA where the bag is sold. France would be pissed otherwise.
If France wants to tax America’s R&D, then they can change their laws, but the USA isn’t going to be very happy about that, obviously.
Let's say I can recreate the new IPhone with only 1/1000 of the budget of Apple's R&D, would I make a profit? Yes of course I would. If Apple could create their new IPhone for only 100$ of total R&D, be sure they would do it.
On the other hand, ask yourself why there is no Apple Store in a lot of African countries. It's because Apple does not meet the local markets requirements for a store there to be profitable, so they would not get any value out of it.
R&D being a cost center is the reason most of the countries in the world have tax-breaks specifically on R&D and also why the copyright laws are that harsh to prevent ripping of all the value by selling copies of your competitor.
At anyrate, value is well defined across the world. If it was define the way you want, the countries would see all their exporters as freeloaders, not paying for the infrastructure that is realizing their profit. Heck, places like Switzerland and Singapore wouldn’t be able to survive.
Tax breaks are on R&D, not sales and Apple does not have any R&D in France so I don't follow you...
> At anyrate, value is well defined across the world.
There's no common tax laws across the world so this does not seem to be true.
Sales is not the only source of value to be had. It is weird that you are on this site and think development is value free.
I find it the opposite, I find weird that you are on this site and think value magically appears out of R&D since the countless startups which are failing every month... Just look at YCombinator data from the past 5 year and I bet most of the startups back then (which had products) failed because they did not generate enough revenue to sustain themselves.
See this Forbes' article on transfer pricing as tax avoidance:
https://www.forbes.com/2010/06/24/tax-finance-multinational-...
http://www.internationaltaxreview.com/Article/3410898/Irelan...
Every developed country has its own tax haven. Even if a country manages to ban banks from transferring money to a tax haven, businesses would move to other countries or find other loopholes.
It's a race to the bottom. I guess the only thing that would solve the situation is a global agreement against tax havens, something that would require a lot of diplomatic work between countries, so I guess the UN would be involved somehow?
I hear so many people ranting about the government increasing their taxes, so often in their anger they sympathize with companies who use tax havens, surprisingly, saying it's the fault of politicians and their whole "gang".
I am still waiting for voters to be attentive to this not sexy problem of taxation, and maybe, maybe, if large companies's image suffer from it, maybe things will move... But it would require citizens to at least be aware of the accounting of all of this...
http://www.oecd.org/tax/transparency/automaticexchangeofinfo...
I believe governments (some of them, starting in Europe...) may very well be on their way towards harmonised tax levels because there is just so much money they are missing out on and they know it. Ireland may be reaping most of the benefit as it stands right now, but it is probably clear that a slightly higher tax in Ireland and a slightly lower one in other European countries may well net Ireland more in the end anyway.
If large megacorporations will be as affected by this general trend as small business owners remains to be seen I guess - I'm not too optimistic about that.
Tax experts seem to be 10 steps ahead of legislators, not to mention lobbyists.
I really want to believe that tax havens could be solved, but if you think about it, it's a very hard problem and nobody has enough political capital to solve it. Even people who are in power have little interest in trying to improve the situation, and I doubt that voters would really give any damn, not to mention that there are many small businesses who already benefit from tax havens too.
https://www.reuters.com/article/us-norway-swf-tax/norways-we...
The problem that arises is that governments do not manage their responsibilities in these areas (or pretty much every area they have legislative control over) in any adequately honest way.
Instead of everyone being treated in the same way (including any entities created by fiat such as companies, etc) equally, we see all governments make special cases for various segments. So we see varying rates of taxes being applied across the population. Within that, what is never brought to account is how that government uses those funds.
Many years ago, if I heard it correctly, a new taxation regime was to be brought into a certain country. One of the ideas put forward internally was that a transaction tax be levied against all transactions passed through the banking systems use in that country. From what I gathered, it was something like, 1/100 currency unit per 100 currencies units.
The initial estimation (from what was conveyed) was that this would raise enough taxation to be able to remove all other taxation methods (including income taxes, sales taxes, government duties, etc). The richest companies and individuals would (by the nature of their transaction) pay the majority of this. It would also gather tax from all money laundering and criminal activities.
The burden on the least able members and small companies, etc would be less than what they were currently paying.
From what was conveyed, this specific option was given the death knell due to it being an incredibly hard sell to the country because all major companies and all major welfare groups would come out against this.
They settled for something that ended up not being capable of decreasing the basic taxation burden on the general non-business community.
The taxation law would have gone from 30,000+ pages down to probably less than 50 pages.
So how do you expect any sense to arise in this area?
It must be, otherwise why would Apple even have a retail channel in France? I think the number would be closer to 50%. Keep in mind that iphones are purchased at all sorts of retailers apart from istores.
The government isn't doing anything, but we can !