Apple plans new U.S. campus, to pay $38B in foreign cash taxes
reuters.com
reuters.com
For example, if a British company earns income in Germany, its pays German taxes on its German income. But if a US company earns income in Germany it pays both German taxes and US taxes.
What is little known about this tax bill is that it normalizes our tax system with the rest of the world by moving to a territorial tax system. This is not about Apple avoiding tax on profit earned in the US, they will continue to pay US taxes, they won't pay taxes on income earned outside of the US going forward. [0] That means that there won't be any more hordes of overseas profits. And means the end of those tax inversions or corporate inversions you have been hearing about. [1]
So now that foreign profits aren't going to be taxed, something needed to be done with all the profits generated under the old system. The 23% repatriation tax is a compromise between the new rate of effectively 0% and the old rate of 39%. This BTW happens to be very close to the OECD, the developed world's, average tax rate of 24%.
Edit: As was astutely pointed out below the US only pays additional taxes to the US if their US tax bill was higher than their German one. And they paid the difference between to two to the US.
This is not portrayed accurately. If you pay German taxes, you claim exception for that amount. So if you pay more taxes than the rate in US, you owe no tax for that income in US. If the rate is less in the country than in US, you pay the difference.
> But all this has now changed
I live in Australia. As a casual outside observer, can you inform me as to whether this tax bill has passed in to legislation, or is likely to?
The opposing party is not threatening shutdown. A group within the majority is. Since that group within the majority party won't play ball, the majority of the majority party is hoping to garner some support from the minority party.
As it happens, some of the changes they want to make would require 60% of votes rather than just 50%+1, but they haven't yet demonstrated they can get to 50%+1, so that's irrelevant here.
We live in a rules based system and the rules should be designed to incentivize the behaviors we want. Expecting any business to deviate from whats in their best interest is just... out of touch with reality.
- I’m not free to move anywhere I wasn’t invited nor is anyone paying my trip there.
All in all, death and taxes as they say.
Now they are paying the US gov. Unless they can keep coming up with more Irish tax avoidance schemes, going forward they will probably also have to pay in Europe.
Because those are EU countries and Apple has a tax deal with Ireland in the EU.
They did not pay much tax on their profits in Germany, but it's debatable which part of the profit of a firm designing phones in the US and building them in China should fall to Germany.
But if you are a non-citizen who is a resident for tax purposes, then yeah you are out of luck.
^ Not meant as sarcasm, just noting the possible reason the spellchecker gets confused.
My mention of misspelling was there only to prevent another person from pointing it out, but alas, I still failed it seems.
jumping through literal hooves would be hilarious.. lol
No they're not. You're confusing the already commonly-confused concept of legal personhood with citizenship.
> but they can contribute unlimited campaign contributions
Citizens United ruled that actual human beings had the right to make unlimited campaign contributions and that the right to do so could not be rescinded just because those flesh-and-blood individuals decided to pool their money into a corporation. People have the right to organize for political action and congress cannot take that away.
If I have pooled my 'right of personhoop' contributions into a corporate asset base and thus absolved myself of liability laws regarding the disposition of this asset base -- what basis do I have to have to claim 'my' personhood rights over how this asset base is distributed to political campaigns?
If what you say is _actually_ true then it should be illegal for corporations to disperse campaign funds in anything other than an amount that _exactly_ reflects the relative ownership amount of every single stockholder in that corporation -- otherwise an individual shareholder's claim on the percentage of personhood ownership of the corporation has been rescinded.
A corporation still cannot make unlimited campaign donations. They can however spend their money however they choose. As long as they are not coordinating with any compaign.
If a candidate is running and promises to raise income tax to 99%, then I can form a political action committee or corporation and spend as much money as we want trashing the candidate that is pushing that idea. We cannot, however, donate unlimited funds to his opponent or work directly with any campaign, pay their expenses, etc.
It is a perfectly reasonable freedom that just happens to have negative consequences.
No, it didn't. Campaign contributions are still limited.
Citizens United built on the established precedent that people unaffiliated with campaigns are free to spend their own money how they wish, as long as they don't coordinate with campaigns.
Citizens United ruled that this right applies to people who pool their money together.
This thread was about US citizens living abroad, which is a whole different issue.
This won't stop companies selling their IP to overseas shells and then paying royalties.
Regardless of this, stopping the flow of capital and investment into the country with a 35% tax is extremely dumb. Everyone will say effective is far less, but it's far less because of foreign profits and IP stashed in Ireland and effective may be 20% for tech, but marginal to bring back in the states is still 35%
If you have income from multiple sources, some of which may be in the U.S. and some not, even if it's as simple sideline business, then it gets more complicated as you also have to calculate profit/loss for that as if it were in the U.S., then subtract your taxes paid in your country, and demonstrate that it's all below a certain threshold. And there's also payroll tax exemptions, etc.
Or, like Apple have a double Irish with a Dutch sandwich.
http://www.independent.co.uk/news/business/news/eu-takes-ire...
This isn’t entirely accurate (heh, taxes are complicated). The company would most likely pay VAT/sales tax in Germany, but would pay corporate/income tax in the U.K. If your customer is a VAT registered business you would usually exclude the VAT, unless they are based in the same jurisdiction as you (it doesn’t matter where the item is going).
Up until 2015 this wasn’t the case for digital goods as VAT was charged at the ‘place of supply’ (where the company was based), but it is now accounted for where your customer is located. This is what caused the VAT MOSS kerfuffle, as you now need to account for 28 sets of tax rules depending on where your customer is located.
For example, if a British company earns income
in Germany, its pays German taxes on its German
income. But if a US company earns income in
Germany it pays both German taxes and US taxes.
Isn't that money new income for the British company, and therefor would be taxed accordingly? I think that's the key here.
E.g. Starbucks in Germany... they buy their coffee from Sbucks Luxembourg, the amount of coffee needed to make a 7 euro coffee will also cost close to 7 euros, payable to the seller, Sbucks Luxembourg. So the German subsidiary has very low profits (7 euros for coffee beans for 1 cup of coffee!), and pay very little taxes. The Luxembourg subsidiary pay the local taxes, which are much lower -- as arranged by their then premier, and now current head of European Commission, Jean-Claude Juncker:
> In early November 2014, just days after becoming head of the commission, Juncker was hit by media disclosures—derived from a document leak known as LuxLeaks—that Luxembourg under his premiership had turned into a major European centre of corporate tax avoidance. With the aid of the Luxembourg government, companies transferred tax liability for many billions of euros to Luxembourg, where the income was taxed at a fraction of 1%. Juncker, who in a speech in Brussels in July 2014 promised to "try to put some morality, some ethics, into the European tax landscape", was sharply criticised following the leaks.[52] A subsequent motion of censure in the European parliament was brought against Juncker over his role in the tax avoidance schemes. The motion was defeated by a large majority.[53]
> In 2017, leaked diplomatic cables show Juncker, as Luxembourg’s prime minister from 1995 until the end of 2013, blocked EU efforts to fight tax avoidance by multinational corporations. Luxembourg agreed to multinational businesses on an individualised deal basis, often at an effective rate of less than 1%.[54]
If you buy something from European Amazon, the bill will be from Amazon Luxembourg. Same with Apple and Ireland...
This is a bit of an exception to the HN guidelines' call for original sources. We generally prefer a high quality third party report on news like this to a corporate press release. The latter tend to read like press releases.
Really, all we care about is having the best article on a topic, where by 'best' I mean something like 'most substantive, while remaining accessible to a general audience'. By that standard it seemed obvious that the Reuters url was better. Anti-Apple bias doesn't enter into it, and frankly the idea feels a little absurd to me.
For any $bigco there are lots of HN users who strongly feel for or against it, and they all have competing beliefs about which $bigco is secretly favored or secretly suppressed here.
People come up with highly charged claims about HN all the time and they're never true. They're in the eye of the beholder, reflecting how you feel, not how HN actually is, and driven by cognitive bias. I don't mean to criticize you personally—tons of HN readers do it, and I've written about the phenomenon a lot. https://hn.algolia.com/?sort=byDate&dateRange=all&type=comme...
It's strange how some users get indignant about certain bigcorps in favor of other bigcorps and vice versa. I suppose the Greeks were that way about their gods.
While you may push back on some, almost daily I see content from Google taking up one of their products where if It wss on a Microsoft or Oracle site for example submission would never see the light of day.
Google just hides their press releases in blog posts.
As a country the US has obligations to its current citizens and its future citizens and those obligations cost money. If we overly celebrate these windfalls every time the tax rate is lowered, we might not realize that what we owe the citizen is being forgot and allowed to erode because the means to pay for it just aren't available.
As to "what does it matter if the government can't take a cut?" --- the government does take a cut, and the reason it matters is that the lower rate will, on the margin, encourage cash repatriation.
Remember too that firms know they will be taxed in the future at (unknown, but estimable) rates, and today's rate will be compared against firms' estimates of current rates.
So in terms of the government's cut I forget the numbers in the current plan but say the corporate tax rate goes from 30% to 20%, and Apple decides that 20% is As Good As It's Likely To Get, and decides therefore to bring $1B of cash into the US that at a 30% rate it would have left elsewhere -- the US gov now gets 200M, rather than the 0 it would have gotten if the tax rate had stayed where it was.
1) Apple will spend it on capital investments (factories, campuses, data centers, etc.) in its business. Doesn't benefit the government, but benefits the country.
2) Apple will spend it on R&D / employees. Doesn't benefit the government directly, but benefits the country.
3) Apple will dump it into an American bank. That bank has a reserve ratio that is relatively low. It will lend several times the amount that Apple deposits to people or corporations who will do 1) or 2)
4) Apple will spend it on buybacks and dividends, which ultimately ends up in the hands of Apple's owners (you and me through our 401(k)'s, and probably a bunch of rich people as well), who will do 1), 2), or 3)
So, whether or not the government gets a cut, it benefits everyone who actually lives here.
The repatriation is just a tax/accounting fiction. Yes, Apple now has more flexibility to do with that cash what it wants (mostly return capital to shareholders through dividends and buybacks), but on aggregate for the economy it doesn't make a huge difference.
[1] http://investor.apple.com/secfiling.cfm?filingid=1628280-16-...
$38,000,000,000 > $0
Corporations are treated as people only when it's convenient.
You and I don't have high-powered lawyers, lobbyists, loopholes, offshore accounts, subsidiaries, etc to hide behind.
This is an insult to every U.S. citizen...Apple wouldn't exist if it weren't for the U.S. and its tax-payers providing the environment that allowed Steve Jobs to create his company and become successful.
The rate they're being charged on this money is even lower than the new lower rate that they'll be charged on future income. Must be nice. Yay for corporate oligarchy.
I know lots of Apple workers (directly or indirectly) are in China, but I wanted to point out why it's inappropriate to compare personal and corporate taxes.
That's like saying the wheat creates work for the mill to make flour.
You can't have one without the other. Can we just get rid of the ridiculous notion that corporations provide more than the workers doing the actual work?
Why is this a ridiculous notion?
The same arguments applied to the peasantry of the feudal age. There are many more peasants than lords, but through an imbalance of power (military in the feudal age, and monetary in the modern age), the higher ups gets to claim the profits of the workers.
See also: VUCA
This is not terribly unique. We had a very similar (slightly more generous) repatriation tax holiday during the Bush Administration, in 2004.
What's incredible is that there are many more of regular people than these "people," yet regular people do not act cohesively to form a political bloc so they bicker amongst themselves.
If we want to tax the rich, let's tax the rich. Let's not tax straw men that intermediate wealth for everyone, because that's what corporations are.
As for not taxing corporations at all and instead fully taxing dividends and gains, that's a different discussion with its own merits.
Agree. They used the double Irish paying basically no income tax there. Then were trying to move to Jersey (the island). This isn't new though and other companies were doing it. Is there any realistic short term hope that we'll finally close all the loopholes and the Apples and Googles of this country will start paying their fair share of taxes? Probably not.
But I don't see why not at least be happy with them paying some taxes and investing the money domestically? Yet everyone here is upset. It is not ideal, I'd rather have universal healthcare, basic income even, I'd rather these companies not be able to do these schemes and pay their fair share of taxes, but it is what it is, why not be happy for some positive thing happening.
And yeah, I see the point about it being considered a person but that is mostly what is called "legal fiction" (it is actually a technical term, not just me being silly https://en.wikipedia.org/wiki/Legal_fiction). And that only goes so far. Mostly to benefit the corporate entity not the society. I'd like to put some companies in prison for life for destroying the environment or poisoning its workers but it just won't work. It would be nice to see how far it would go though.
If Apple pays double taxes on iPhones sold in Europe to European citizens, after Apple pays taxes to the EU, that's effectively a tax by America on citizens of the EU. The phones are made in China, shipped to Europe and sold to citizens of the EU for Euros, never having stopped on US soil, and being taxed in the EU. Why does it make sense for the US to apply a tax which effectively would amount to an increased tax on purchases by citizens of another country?
But another interesting thing here is the interplay with EU countries. EU recently started to pay closer attention to Apple. Even forced them to look for a new place (they found Jersey I think). From my armchair understanding if they pay taxes in one place, say EU they might not need to pay it in US and vice-versa. Because of double taxation. As long as Apple was hoarding the money quietly and nobody could do anything it all good. As soon as EU started going after the money, it would benefit US to try to get to it sooner.
Whether politicians considered that or not not sure. But if they did, I can see them wanting to capture those taxes before EU got to them.
I for one am happy the part of them investing more in US. Don't see the reason people are upset about it.
That is how our federal government constantly engages in double taxation. A corporation makes money + pays taxes, then pays employees who pay taxes. Those employees buy goods and services as well as have their own companies, all of which pay taxes on their incomes.
After five layers of this double-dipping, an initial million dollars only has $327,000 left, with the other two thirds having been paid in taxes (at an average of only 20%). Many people pay far more than 20% in federal taxes. The federal government takes in taxes most of every dollar this way.
That is a misconception. It's not like they are storing dollar bills in warehouses on foreign soil. The bulk of the 'overseas' money is already invested, for a large part in the US. See page 49 in Apple's yearly report [1], to see how that money is currently invested: at the end of 2016 almost $42 billion dollars were invested in US treasuries, $131 billion in corporate securities. It doesn't say how much of those corporate securities are US companies, but it's probably the bulk. It's an accounting/tax fiction that it is currently 'overseas'.
[1] http://investor.apple.com/secfiling.cfm?filingid=1628280-16-...
I know tax isn't, like, simple, but it's not that complicated.
In any case, the reason that corporations lobbied so hard for this particular tax code change was that they actually needed to repatriate money ASAP. Interest rates are going up. Their operational tactic of borrowing low-interest money against their overseas cash to repurchase shares is ending and they needed their cash. They would have repatriated anyway. Now you can kiss that tax money goodbye, just like you can kiss goodbye to the tax money on the free stepped-up basis that large estates will be passing on for the eight years.
What happened here is that the government finally set a rate that is agreeable to both parties, which is of course in its interest and long overdue.
My point is that encouraging a behavior where the country sets a rate, then many celebrate the reduction because they get a short term gain, risks leading the US farther down a path that neglects its obligations.
Fact 1: reduced tax rate and revenue
Fact 2: permanent beneffit to corporations, in the form of tax reductions
Bet 1: the economy will grow
Bet 2: the proffits will trickle down
Bet 3: increase in economy will allow to fullfill obligations
If the bets do not materialize, nobody cares. That is, nobody except tax payers and recipients of federal promises.
Corporations and wealthy individuals will pocket proffits upfront. The rest are left praying for the bets to work out.
I am interested in seeing where this goes. if we do see wage growth from it, it provides evidence to a lot of questions about how the cost of healthcare was squeezing out our wages. if it doesnt, then a lot of complaints about corporations will have a lot more evidence.
putting all that aside, this news about apple bringing over the cash is a huge win for everyone. having that money sit and do nothing was pretty much bad for everyone.
Spoiler alert: It's a remake. Trickle-down doesn't work.
Investing significant money in businesses doesn't create more work. Increasing demand creates more work. How do you do that? You put more money into the hands of consumers, which is the opposite of what this bill did.
beyond that, I have seen me and many others see immediate returns. your position is already starting from a hole, but I am a wait and see kind of person.
I hope it works out, you should too, unless you are one of those people who just want to see the world burn types.
Are you in the bracket of a typical American taxpayer or the bracket of a typical HN-er?
> I am a wait and see kind of person.
We've been slashing taxes on corporations and the wealthy since the Reagan era under the trickle down philosophy, but we're still waiting for that money to actually trickle down: https://www.epi.org/productivity-pay-gap/
If 50 years isn't a long enough experiment for you, what is?
Ending the individual mandate will likely reduce the number of people buying insurance from ACA marketplaces, but that isn't going to dramatically change the price of other insurance (to the extent it has an impact, it will probably push insurance prices up...).
The tax cuts are, at present, going to largely be paid for by borrowing money.
Nah, they capitulated and accepted a far lower rate than they should have received otherwise if Apple (and companies like them) weren't permitted to play these shifty legal games.
If the U.S. gov was really looking out for its own interests and the interests of its citizens, it would have closed these loopholes years ago and told Apple to go pound sand going forward.
Pay your taxes or get slammed with massive fines and be barred from selling product in the U.S. until your tax bill is paid.
Not many markets can afford their products, see how they like it when the country whose resources and laws allowed them to become so successful becomes off limits to them.
I'm starting from a position that assumes the government is entitled to the prevailing tax rate that was law at the time the income was earned.
A tax rate that existed during a time when Apple became the world's most valuable company. It wasn't a colony with no representation suffering under a tyrannical monarchy that was leeching it like a parasite for the enrichment of an elite class. They ARE the elite class.
In fact the opposite is true. Apple benefited from all the services paid for by other tax payers (security and military, infrastructure, legal system, etc) and avoided paying their fair share using legal tricks and loopholes.
The result wasn't "fix the loopholes" it was "give the finger to the American people and government until we get someone elected that will change the rules in our favor"
I'm not saying government is the answer to all problems. Far from it. But there's no question Apple exists and is as successful as it is in large part due to the favorable environment America provides to business...and part of that environment exists due to things paid for with taxes. Never mind the ridiculous wealth inequality that is only continuing to grow in the U.S...this road leads to oligarchy.
Of cours, in the real world, you likely work for a corporation, and the retired Teachers in California are collectively one of the biggest owners of companies in the US [1].
However, given the issue with iCloud, you can see that they've now realized they have to reduce the leverage China has over time, but $5 billion seems way too small to move an entire logistics manufacturing chain, they need a moonshot for this. Apple spends way too much on stock buybacks and dividends and not enough on reinvestment.
Elsewhere in this thread, the pro-Trumpists don't seem to get why people were opposed to the tax plan:
The fear many people have is that this repatriation will mostly go to stock buybacks, dividends, and executive compensation just like the last 3 times there was a repatriation event. The last repatriation event didn't make a dent in national income growth or GDP, it barely moved the needle. The Democrats wanted the funds to be spent on infrastructure, or education as an offset.
The GOP decided to spend any increased revenue on lowering the estate tax and marginal tax rate cuts to avoid the cutoff for reconciliation. Since Democrats, backed by tech companies, had long supported repatriation. The GOP had a chance to pass a clean corporate tax bill that left everything else alone. Everyone knows the reductions for marginal rates at the high end and the estate tax changes aren't going to affect GDP much, and the net result of that was to impose double taxation on some states due to SALT deduction changes, and increase the deficit by $1.5 trillion. Apparently, double taxation is bad if it's the estate tax, but not if you're in California, New York, etc.
A practical, clean, corporate tax reform bill would have been better, especially if it was synchronized with international partners to try and close loopholes. For this reason, although the tax plan had some good aspects to it, overall, it's a very bad bill and I doubt the positives to Apple are going to offset the negatives to the rest of the economy.
Like the article said, they prepped a certain amount and waited. Saving billions for doing the same thing but waiting a few months is a no brainer.
Apple has already been doing buybacks and dividends by using bonds.
Also, it's not double taxation. The SALT money is taxed in the states and spent in the states. Why should those states that choose to have large internal governments get a discount on their federal contribution percentages? They receive the same services and benefits...
https://www.nytimes.com/interactive/2017/12/17/upshot/tax-ca...
Secondly, let's dispense with this damned notion that the SALT deduction is somehow the high tax states benefiting at the expense of the low tax states, it is precisely the opposite. High tax states raise money and take better care of their citizens, and so their citizens consume less federal dollars per capita in need. In other words, state spending lowers the burden of the federal government having to pick up the slack. Isn't this the conservative dream? States rights? Spending decisions on social programs being done at the state level, laboratories of democracy and all that?
The low tax states, primarily RED STATES, do not spend sufficiently on their populations and as a result, are a larger burden on the federal government, requiring more subsidy. It is the low state states that are raising the cost of government for everyone else and it's quite ludicrous to claim states like CA and NY are being subsidized by this.
Most high tax blue states give more money to the federal government than they receive, and most of the low tax red states are a net federal burden.
So not only do California and New York already subsidize and pay for benefits that these low tax states aren't providing for their citizens, in addition to taking care of their own residents, their citizens now have to pay for egregious tax cuts and have a further burden thrust on them.
If you think the SALT deduction is California and New York benefiting at the expense of the red states, how about we impose a new rule that says your state cannot receive more federal dollars than it pays to the treasury,except in natural disasters and emergencies. Then let's see how long your low tax status lasts. Only a few of the low tax red states are net contributors.
The position that local governments shouldn't raise taxes to pay for their own programs is a deliberate attack on the whole concept of local control, states rights, and a smaller federal government. If states are not handling their people's needs, it just means the Federal government will be bigger and more invasive.
My question is, why do I have to pay for and subsidize the lack of government in these low tax, freeloader states? I mean, this is a rhetorical question, these are my fellow American citizens and the rich states should help the poor ones. But do you see how this faux GOP messaging about blue states could be turned around? I don't mind that my state is a net giver, but I'm really angry about claims we're takers and need to pay more. If you need more, maybe we'll pay more, but don't try an ideological wealth transfer from blue states to red states to appease your voting block and then turn around and lie about the reasons for these cuts. If you want to close my SALT deduction to pay for much needed middle class relief, infrastructure, or services, I'm all for it. But eliminate it so you can give the top 1% an enormous marginal tax break, or give a handful of ultrawealthy dynastic families an estate tax break? Hell no.
Secondly, the GOP tax plan isn't about you. They passed permanent budget busting tax cuts for corporations, for wealthy estates, didn't touch the carried interest loophole, and gave marginal tax cuts that will expire for you in a few years. They tried to eliminate deductability of tuition expenses for kids, for teachers, for medical expenses, and a host of other mostly middle class deductions, while adding loopholes for wealthy prep-school tuition. They hit the endowments of private colleges like Stanford, Harvard, etc with an endowment tax, while trying to exclude religious conservative degree mills. This think is a damn ideological sham with blatant attempts to punish democratically leaning states and institutions that aren't even veiled, and sold as what every knows is a sham, with the new budget deficits providing the justification needed to gut entitlements.
I expect I'll be voted down, but my state has high taxes because we like having a top university system, we like taking care of our people, and we like cleaning up our environment. Maybe these other states don't, that's for their voters to decide, it is the right of Californians to spend more of their own money to take of their people instead of asking the Feds to do it.
It's extremely short-sighted to look at just the near-term effects of this tax bill. But such is America where so few have adequate retirement planning. We're headed for another period similar to the one that led to the establishment of Social Security. The question is how people will react this time when they see so many retirees dying in poverty.
TL;DL: I don't think that argument would fly with informed voters.
Perhaps.
But if they took jobs with approximate pay and work conditions that the Chinese FoxConn employees in company-cities have, that wouldn't look anything like a modern American job.
It would look far more like an American coal mining job in the 1920s where workers toil under enormous pressure for meager wages and owe most of them (of not all or more) back to the company town for housing and food. This is AFAICT an accurate description of some of the worst working conditions of FoxConn.
And if there is such demand to work in such conditions, then how hasn't some enterprising American company started and supplied that dirt-cheap labor? There isn't enough supply of labor for the demand that you imagine exists.
Neither the now-referenced page from Reuters nor Apple’s press release mention that. They will invest in their domestic suppliers and manufacturers, but that’s it, manufacturing-wise.
I think that when people hear that Apple has thousands of suppliers from 50 US states, people think that they're talking about high-tech suppliers for iPhones.
When in reality, Apple is also a retail chain operating in 45 states and has suppliers like cleaners and office suppliers and security that would naturally come locally. Not that these suppliers are worth less, but I don't think the reality matches what people think Apple is saying.
>Apple expects to invest over $30 billion in capital expenditures in the US over the next five years and create over 20,000 new jobs through hiring at existing campuses and opening a new one.
All of this is discretionary spending.
You only owe the taxes that the law compels you to pay. There's no obligation whatsoever to pay a dime more.
Do you personally look to pay the maximum amount of taxes that you could possibly justify through various readings of the tax code? Because I guarantee that your tax software or your tax accountant are not "taking advantage" of opportunities for you to pay more unless you look to.
do you pay your state government the sales tax you owe it for all of your online purchases?
I made this mistake when I first starting selling online, which stung. Setting up a tax ID in Canada was very easy. Now that I am selling in the US, I am just beginning to explore the issue, and it is notably less easy.
So if you "get away" with not paying sales tax online, it is likely that the sales tax was simply baked into the price.
here's a little page from washington state on it, which matches my understanding of the situation in most other states: https://dor.wa.gov/get-form-or-publication/publications-subj...
> Have you ever made a retail purchase and the invoice didn’t include retail sales tax? This may occasionally occur, especially if you purchase items over the internet or from out-of-state vendors. ... However, the buyer has a responsibility to pay use tax to the Department of Revenue even if the seller doesn’t collect it.
> Also, an invoice should never have a single figure that “includes retail sales tax.” If you receive such an invoice, contact the vendor and ask for a new invoice with the retail sales tax separately stated. Washington law requires that customer sales slips, contracts, invoices or other sales documents separately state the amount of retail sales tax due.
If there is a poorer argument against wrongdoing than this I don't know it.
If the law allowed me to set up a company facade so that I could keep more of the money that I earn, I'd do so in a heartbeat.
For apple, the effort is worth the benefit. For you, it may not be.
Apple has done nothing illegal. If you don’t like it, you can complain about the tax laws, that’s what is bothering you.
A huge part of their $250B stash have never been taxed at all.
http://fortune.com/2013/05/20/meet-aoi-apples-mysterious-iri...
Shareholder primacy is a theory -- though it's really more of an ideology -- that executives/board members can believe in, but it is by no means required by law[1].
>A business corporation is organized and carried on primarily for the profit of the stockholders. The powers of the directors are to be employed for that end. The discretion of directors is to be exercised in the choice of means to attain that end, and does not extend to a change in the end itself, to the reduction of profits, or to the non-distribution of profits among stockholders in order to devote them to other purposes...
It's not the only interpretation however
>Dodge is often misread or mistaught as setting a legal rule of shareholder wealth maximization. This was not and is not the law. Shareholder wealth maximization is a standard of conduct for officers and directors, not a legal mandate. The business judgment rule [which was also upheld in this decision] protects many decisions that deviate from this standard. This is one reading of Dodge. If this is all the case is about, however, it isn't that interesting.
>A business corporation is organized and carried on primarily for the profit of the stockholders. The powers of the directors are to be employed for that end. The discretion of directors is to be exercised in the choice of means to attain that end, and does not extend to a change in the end itself, to the reduction of profits, or to the non-distribution of profits among stockholders in order to devote them to other purposes...
You could have researched that one pretty easily:
https://www.nytimes.com/roomfordebate/2015/04/16/what-are-co...
https://medium.com/bull-market/there-is-no-effective-fiducia...
https://www.washingtonpost.com/opinions/harold-meyerson-the-...
https://www.quora.com/Taxes-To-what-extent-are-U-S-companies...
Many shareholders care about stability, There is the whole distinction between "growth" stocks and "income" stocks. Some investors prefer low-growth companies that pay big dividends, other investors prefer just the opposite.
Some investors care about environmental issues, or social issues, or religious issues. e.g. the Norwegian sovereign wealth fund divests from companies that don't meet its ethical objectives, and is often a significant investor.
Simple. "It's in our shareholders' best interest to have a stable society with upwards mobility so more people can buy our products over time."
Or, "It's in our shareholders' best interest for us not to act so amorally as to turn public opinion against us, incurring new onerous regulations as a result."
Basically Apple just did a COUNT(*) query on their vendor table WHERE country IS 'USA'.
So far we've seen company after company giving substantial bonuses to all employees, announcing expansions, repatriating large amounts of capital from overseas back to America.
Funny the nerative always seems to stay negative even though facts say otherwise.
[1] https://www.bloomberg.com/news/articles/2018-01-11/wal-mart-...
[2] https://www.google.be/search?q=number+of+employees+walmart
And we tech people wonder why so much of the country scoffs at our echo chamber. Maybe you've never been on the lower rung of income, but an extra $40/month can be a big deal to a lot of people. Typical median household income in 2017 was $59k, so a 2% increase is meaningful.
But don't let me get in the way of your political narrative.
Let's see what actually lands in whose bank accounts before we raise the praise flags.
Having been poor, then living on $750/month in US for many years, a $1000 bonus is not life changing but also not laughable.
The companies certainly didn't have to give those and could have pocketed all of it.
> large lay offs in two cases (Walmart and Comcast).
Are those because of the tax incentives?
Decreasing taxes on retained profits increases the incentive to cut any activity that is a short term loss rather than trying to turn it around.
Because business expenses are deductible from corporate “income” taxes, they are functionally retained profits taxes.
So, yes, the tax cuts incentivized the layoffs.
So lower taxes means people are laid off, higher taxes means they are laid off. What tax structure would give them an incentive _not_ to lay people off?
They are basically closing off 60 Sam's Clubs. When is the last time you went to Sam's Club? Do you know anyone who goes there regularly? I don't. I had membership many years ago. Many will be converted to e-distribution centers. Guessing this has little to do with taxes and more to do with new year reorg to compete with Amazon. Otherwise, what would you do? What kind of incentives would you give to Walmart to save those Sam's Club workers?
But for rich and poor alike, a layoff is definitely life-changing....
Agree there, no doubt, most people would rather have a job than a $1000 bonus. But what does that mean in this context? Should Walmart keep those 60 Sam's Club stores open at a loss to avoid laying people off? Should the government subsidize them? Maybe it should break apart Amazon because a lot of those location will become e-distribution centers.
What would you have done. How would you have saved those Sam's Clubs workers? I am curious, not being sarcastic or tricky? I'd suggest breaking Amazon into regional companies like they did with AT&T. Or maybe breaking AWS away from Amazon-retail business.
That's up to a $1000 bonus. That's if you've been working there for 20 years.
They have a total of about 250k employees worldwide: https://www.att.com/Common/about_us/pdf/att_btn.pdf.
Pretty sure there 80% of their workforce are not district supervisors and store managers.
Comcast said it paid the bonus to 100k employees "that are eligible and not in executive roles".
> So I'm not happy for them because they don't exist.
Good news, I think I found them!
> Comcast said it paid the bonus to 100k employees "that are eligible and not in executive roles".
But neither did they say they were making min wage. And then ...
> Good news, I think I found them!
You aren’t making a valid inference here, it honestly feels like something Trump would claim.
AT&T has a lot of door-to-door people: technicians, sales "consultants". Also people in call centers. Those are a lot closer to minimum wage than what you are implying - that only managers and big wigs got those bonuses.
> You aren’t making a valid inference here
The claim was you couldn't be happy for them because basically only managers got those. I did some legwork and found that it's probably not true. You were looking for a reason to cheer and be happy for them, so I found one.
> it honestly feels like something Trump would claim.
I usually prefer a conversational style with exclamation points and allegories. But I think you're not in the mood for that. Sorry, I should be more formal perhaps.
Also not sure why we are talking about Trump?. But since you brought him up (invoked the Devil's name!). Do you think he is responsible for these tax cuts and the bonuses or it is mostly a charade?
For 20+ year employees.
At 10 years the bonus was, IIRC, $190. IMHO, "laughable".
Sure we are all software developers expecting 6 figure salaries, RSUs, options and $50k bonuses every year, $1000 is nothing, I get it. Though someone working at an AT&T store in Columbus, OH or Kansas would be quite happy to get $1000. it's disappointing and I'd wish they all had large salaries and thought $1000 is insulting just like we do.
In general we would rather have free healthcare, and other things we like to talk about here, but those probably are not going to happen in this country at his point in time. But why not be happy for these people at least or say that it is nice for Apple to pay some taxes and invest in US as opposed to stashing it away for another 20 years.
What companies are doing is exactly what they were expected to do: make some "feel good" moves for a bit to validate the tax plan as a "resounding success" until the midterm elections, then do whatever they want. I've seen these incredible displays of "corporate goodwill" after tax breaks like this to know they are always temporary and self-serving (I grew up in a country where these "booms" happened like clockwork every 8 or so years.)
> The companies certainly didn't have to give those and could have pocketed all of it.
Now imagine if the tax give-away would have gone completely to workers.
That would be life changing.
Source: http://money.cnn.com/2018/01/11/news/economy/tax-law-raises-...
Any source for that assertion?
Please don't; it breaks the HN guideline against name-calling in arguments. Your comment would be fine without the first, and perhaps also the last, sentence.
Crappy articles and solid articles don't map to entire sites very easily. Even highly politicized sites or low grade tabloids sometimes produce the kind of pieces we want here. We moderate HN for article quality, not website or publication quality.
If that's what this big hoopla ultimately amounts to then it will be highly disappointing. The fact that we are celebrating $1000 bonuses from corporations that have been enjoying record profits (for the most part) recently is disheartening. Something is better than nothing I guess.
There have been a few announcements of actual wage increases that corporate PR departments have tried to attribute to the tax cuts, but in every one I've looked at, it was clear the wage increase was just the result of normal market forces and dressed up to pretend it was the result of tax cuts. For example, a few banks (including Wells Fargo) announced a minimum wage increase to $15/hour, but Bank of America announced that same change at the end of 2016, before any tax cuts.
They’re certainly good for PR, and perhaps that’s the primary intention, but employees are benefitting from it.
Now, if Walmart gave everyone who worked there a $1 raise. With about 1.5 million full-time employees working around 1700 hours per year (US average 2016) that would mean about $2,550,000,000. So that bonus is almost equivalent to a temporary raise in terms of benefits.
That is just for full-time employees. A blanket $1 raise would probably come out to about $4,000,000,000 each year that Walmart may not have if the tax cuts are removed by the next administration, which they very well could be.
It's sad that it's one time. It was probably the quickest way to reward people around the holidays. For many it's a few car payments and maybe a month worth of rent. Yeah it is peanuts for anyone living in on the coasts or writing software or both.
> Only workers with 20+ years of service are getting $1,000.
Walmart wasn't the only company which did it. Sure it was a PR stunt just as much, and it would be nicer to have other things like universal healthcare, but at this point that's a nice fantasy and this is something that made people's live better.
The criticism of these companies then is that they have just received massive financial windfalls via the GOP's tax cut programs and have portrayed normal corporate activities as signs of corporate largesse due to the tax-cut they've received. Should we tie the layoffs announced by these firms to their tax-cuts as well?
Walmart, for example, has struggled for years to attract employees due to the low wages they offer, wages so low that a good percentage of their labor pool is subsidized by taxpayers. When you combine that situation with the massive lay-offs and closures of Sam's Clubs the raising of wages seems to be less a generous overture driven by the tax-cut than perhaps a recognition that they must offer higher wages or continue to stagnate and fail.
I've also read that the bonus offered by AT&T is on the low-end of the bonuses offered every holiday to their employees. That's anecdotal though.
This is a bit of a reductio ad absurdum, but the point here is, what cost are we willing to pay as a society in exchange for the $1,000 one-time bonuses? This hypothetical law would be a terrible precedent for businesses, but would it be worse for the people receiving these bonuses than the actual tax plan?
And in order to answer whether it would or wouldn't, we need to look at the merits of the actual tax plan's substance, not the fact that it has (supposedly) caused people to get $1,000 bonuses.
[0] - https://www.cnbc.com/2018/01/11/walmart-to-boost-starting-wa...
Walmart's Sam's Club business is not doing well in competition with Costco. It hasn't been doing very well for years now. You'll notice the Think Progress article avoids any discussion of the context of the Sam's Club business from which the workers were fired.
Here's the hint: Sam's Club closed 63 locations. Do you think they did that to save money on the workers? They didn't just fire workers at the locations, they closed 63 locations.
$1000 is a gigantic bonus for people.
Apple is doing these things because they believe it will eventually help their bottom line. That's how corporations work and make decisions.
Granted, tax reform may have been a contributing factor in opening the door to this type of reinvestment in the US, but it is way too early to declare these actions by Apple as a victory for tax reform.
The main objection to tax reform was that incredibly rich individuals are going to pay a lot less tax, and the middle classes will (once the temporary cuts expire) end up paying more. All of these complaints about the individual tax rates have very little to do with the impact of these corporate tax changes.
And let's face it: it's far too early to say that these tax changes have been either a success or a failure. The way the reforms were passed - another source of legitimate complaint - sidestepped all the usual assessments and calculations in order to pass something, anything as quickly as possible. So we're flying in the dark here. Yes, these short term bonuses are a positive sign. But who knows what the impact of lower tax revenue will be on other services (e.g.) Walmart employees depend on. Will they still be happy with a $200 bonus if they find out their Medicare coverage gets cut?
You're relying on a handful of anecdotes, of which at least several don't look so good upon close inspection, to infer a larger economic benefit. Sounds like it's just narrative vs. narrative.
The Tax repatriations count for 38 bil. The new capital is 30 billion. Supposed the 20000 people are all making a 200000 dollars/ years thats 20 biliion. Where does the other 250 billion come from?
"Apple will spend an estimated $55 billion with US suppliers and manufacturers in 2018"
How much room is in there for $50b in the US and all manufacturing overseas? It would seem theoretically possible to fit all of that in. Here's their supplier list:
https://images.apple.com/supplier-responsibility/pdf/Apple-S...
3M for example has six US location references. Broadcom has two US locations. Corning has one. Flextronics has one US location. Intel has three US locations. Samsung has one US location listed. Texas Instruments has several. And so on; about 40 locations in all.
Does it add up to $50 billion in real US manufacturing and supplier activity? Who knows.
It's just everything they already spend in the US, lumped together
I am not a domain expert, but the availability of cheap credit must have been a principal consideration, as well as the knowledge that a potential Republican president would offer an effective repatriation holiday.
In short, there are many conceivable situations in which it might make sense to pay such a tax - we're just not in one of those at the moment.
I won't address your last assertion, not having data, but I've read in many publications that the effective corporate tax rates in the US are far lower than rates in other countries.
No it doesn't. Apple has been lobbying aggressively for years, including during most of the Obama Administration, to change the backwards US global tax policy (the US being one of the few countries to utilize such an approach) and or to arrange a one-time repatriation holiday. They finally got what they wanted and they're repatriating the money immediately thereafter.
It depended on one thing: getting a low enough rate to make bringing the cash home modestly punishing. Apple was always clear about that, Tim Cook spelled it out in numerous interviews over several years.
Think carefully about what that means for the Obama years, and what it says about all the people who insisted those headline unemployment figures were iron-clad, indisputable proof that things were getting better and that anyone who claimed otherwise was simply lying.
Only time will tell whether the recent reduction in corporate tax rates will have a long-term net positive effect, but this move by Apple alone seems like a good sign that it will. If other US corporations follow suit with repatriation, the American economy will experience unprecedented corporate reinvestment.
Ideally the US begins stealing corporations and manufacturing from the rest of the world, whereas previously the flow had been going the other direction, with dozens of large companies abandoning the US for lower tax locations.
For example, the lower corporate tax rate, combined with very inexpensive US energy (cheap natural gas), makes manufacturing in the US even more appealing.
You don't have to beat all the other tax havens, you just have to get low enough to be competitive on the overall value proposition. The UK is at or going down to 17.5%, that 3.5% variance with the new US rate becomes mostly meaningless as an issue (17.5% vs 35% however is a drastic gap).
I'm not saying this is definitely the case, and I would love to be proven wrong. I just don't see how a tax cut would have corporations scrambling to return jobs to the U.S., instead of having both a tax cut AND cheap foreign labor.
[1] https://www.reuters.com/article/us-usa-budget-tax/obama-targ...
Incorrect. There is a repatriation tax holiday that enables them to pay lower rates than normal on repatriated cash. It is designed to encourage repatriation. They are not required to do so.
Unfortunately, you're incorrect.
https://www.pwc.com/us/en/tax-services/publications/insights...
“[The plan] uses the mechanics under subpart F to impose a one-time ‘toll charge’ on the undistributed, non-previously taxed post-1986 foreign E&P of certain US-owned foreign corporations as part of the transition to a new territorial regime. The toll charge is reduced by a deduction computed in a manner that ensures a 15.5-percent effective tax rate on ‘cash’ and an 8-percent effective tax rate to the extent the inclusion exceeds the cash position.”
There is nothing there indicating that people with guns were going to show up with guns and demand that Apple repatriate its cash. Once again, the bill was designed to encourage repatriation.
And since you seem to be unaware, the vast majority of Apple's cash has already been in the US for years, invested in US treasuries and other fixed income assets and held by American trust banks. It's Irish cash only in a legal sense. This is broadly true for all other American multinationals as well.
Apple bringing capital back to the US is solely to do with their being tax incentives to do so.
Nothing more. Nothing less.
This statement is fiction. There is nothing from Apple indicating this.
The tax is being levied on all overseas money (mandatory) and some companies are deciding to bring that money back to the USA (voluntary).
Not sure what's so hard to understand about that.
We could be in a 1930's recession and it would still be tax-advantageous to bring the money back. Especially since Apple is tipped to use it for stock buy back.
Analogy: Anyone can open a cryptocurrency masternode [1] and get a several percent per month ROI, paid in that currency. I don't want to do that unless I believe in a given coin, however, because I must invest in and hold a large amount of the given coin in order to operate the masternode and get the return. Yes, I am being incentivized to do so, but it still doesn't make sense unless I believe in the underlying investment.
Maybe the shareholders “believe in America” and will invest their gains in the country. Or maybe they’ll stash most of it in tax havens. Nobody knows — but it’s disingenuous to argue that somehow 100% of the repatriated money will be invested when America’s wealthy classes haven’t been doing that previously either.
The US government _forced_ the companies to pay this tax, that point is irrefutable.
Had the Republicans chosen not to use this opportunity to go for broke while they're in control of Congress and the White House, they'd have Democratic support.
Why is that fascinating? It's the tax holiday the tech megacorps have been asking for since the last one in 2004.
Nothing about that is "fascinating". You're trying to make a narrative out of "hey, we want this." "OK, here it is."
You'd have more of a point if you were trying to say that all the doomsayers were wrong about the downsides of a tax holiday and here's the proof, but it's a bit early for that.
[1] https://www.bloomberg.com/news/articles/2017-05-04/apple-buy...
The difference is purely in accounting, they keep that money on a different line of their balance sheet and are unable to use it for domestic expenses without paying tax on it.
Most of the money isn't going to move at all after they repatriate it (they'll actually sell Treasuries to pay... the Treasury!). No part of "bringing back" the money will result in more money being invested in the US--it's already invested here!
In general, from reading a lot of your comments, you seem to act like an authority on this issue when most of your statements sound like a freshman who just finished his macro midterm. If you actually read the lobbying documents and testimony from many corporations, this deemed repatriation wasn't at the top of their lists, and in many cases was completely unwanted. Even further, the republicans actually ended up with a much higher tax rate than what was originally agreed, 15/8 vs 10/7. Of course, this was offset by long term corporate tax decreases but many large multinationals vigorously advocated for no repatriation and just a tax change, or at the least a very soft repatriation holiday and absolutely no deemed repatriation.
Fortunately, due to things like "balanced budgets" and "deficits", the Republican caucus was quite literally forced to enact a "deemed repatriation" on offshore funds to make the corporate tax changes viable in the least. "Deemed" as in mandatory, which you so incorrectly refuted above in a different comment, because again, without it the corporate tax changes would have made the government unable to follow up on current monetary obligations. Some would, justifiably, call such a lenient deemed repatriation analogous to a soft holiday, but the overall point is that corporations actually took a small loss on this facet of the tax bill to gain a huge win in other parts.
The whole fight over repatriation was mostly a sleight of hand trick to captivate the public while making changes that actually matter to the more permanent corporate tax code. After all, Apple even stated a couple years ago they were using the money sitting in Ireland to help finance their upcoming (now finished) campus. Where the money is matters very little compared to where it's spent since dollars are fungible.
The corporate tax changes weren't his idea - they have been kicking around Capitol Hill with more or less bipartisan support for years, and it almost happened while Obama was president. The full package of changes wound up being highly politicized and controversial, but the corporate changes were always seen as very likely to pass sooner or later.
To claim this tax cut is a result of bipartisan legislation is rather odd.
[Edit] It must be really painful to downvote reality.
Jeb Bush: https://taxfoundation.org/details-and-analysis-governor-jeb-...
Marco Rubio: https://taxfoundation.org/presidential-hopeful-marco-rubio-a...
You can compare all candidate plans here: https://taxfoundation.org/comparing-2016-presidential-tax-re...
In fact it was Ben Carson who proposed cutting the tax rates the most (corporate tax rate -> 14.9%).
That doesn't really seem too surprising. The previous administration tried to force them to do it, they refused. The current administration gave them what they wanted, they did it.
> If other US corporations follow suit with repatriation, the American economy will experience unprecedented corporate reinvestment.
Yes, but "corporate reinvestment" can mean a great many things. Endless rounds of share buybacks (as many CEOs have indicated they want to do) won't really benefit the broader economy (or actual citizens) all that much.
It is true that the partisan extremism of everything leads to people irrationally hating everything someone does (or, as in this case, is loosely associated with), but that doesn’t mean the opposite.
This does not and should not wash this revolting presidency clean.
http://www.rgj.com/story/news/2017/05/10/breaking-apple-anno...
No it wasn't. Most people thought that after the health care debacle that Trump would've pivoted to infrastructure. Especially given the tax cuts were so fiscally reckless which would've alienated moderate Senators like Collins or McCain.
> and may very well have had a large influence on the Reno decision
Apple has other data centres. They were largely driven by their own needs and not to do with macro economic effects.
What matters was what investors thought. And as a follower of the financial/investing news, there was very much an expectation of a large corporate tax cut.
> alienated moderate Senators like Collins or McCain
Both voted for it.
> not to do with macro economic effects
The size of the tax cut was certainly enough to significantly affect the economics of a datacenter investment.
So without a tax cut Apple would have just let users suffer? Hardly. Users drive DC investments, not tax policy. There's no tax cut in the universe that's going to get Yahoo to build a new DC in Nevada.
Not quite. The proposal has been on the table for years. The difference has been how to use the proceeds from repatriation. Republicans wanted lower corporate taxes. Democrats wanted something else. This wasn't new, it wasn't unique, and it wasn't Trump. Believing this was a plan proposed by Trump ignores history and facts. Sure, he signed the bill into law, but the same thing would have effectively happened had Democrats been in charge instead of Republicans.
Wasn't that the case when Obama was first elected? And yet, it didn't happen. They've kind of painted themselves into a corner with the "the rich and corporations aren't taxed enough" rhetoric, not sure how they'd successfully sell a corporate tax holiday to their base.
An example of this was outlined on Frontline a few years back. Obama crafted a bill, and included a number of items the GOP said they wanted. He then presented it to the GOP, and was surprised when the GOP soundly rejected it. This is a failure of Sales 101, in that it was set up so Obama would get the credit. Of course the GOP rejected it. A craftier technique is to invite the GOP to write those sections of the bill themselves, and give the GOP the credit. Same bill, but totally different approach.
Again, the buck stops with the President.
All he needed was to peel off a couple GOP Congressman - surely he could have found a way to do that given 50 of them. Political parties are never a solid block of commitment, there are always waverers and members who can be manipulated with the right carrots.
As I mentioned in the antecedent, he made serious persuasion mistakes in dealing with the GOP that pretty much guaranteed failure.
Obama's first step would be to accept responsibility for the task, rather than blaming the GOP. Blaming the GOP only served to diminish Obama's political capital.
(Remember Clinton outmaneuvered the GOP with the "Contract with America". Obama could have consulted with Clinton.)
That wasn't a failing of Sales, that was an opposition who was willing to harm themselves, and the country, to not give any leeway.
I have legitimately spent fifteen minutes trying to find a source, but I haven't managed yet in Internet searches, lists of "ridiculous quotes" from McConnell, nor Wikiquote.
Thank you.
Of course, dubbing the bill "Obamacare" was a virtual guarantee of no Republican support. The Dems should have worked hard to name it something more inclusive (and more catchy than "Affordable Care Act"). Marketing matters!
Obama Administration did propose 28% in 2012 and get taxes for those under 200k down as well. The current plan that is in effect has a lot of similarities but it did not set a 200k high limit. The US really needs to figure out a way to handle small business taxes that get caught up in the way personal taxes are done.
Less tax burden is always a win. What the US really needs for explosive growth is a cap on spending. Many other countries to include a few European countries have rules in place to keep it below growth for a reason, because it pays off fast.
Where in the article does it state that they will invest the repatriated cash in the US? The only concrete number is the $38 billion tax payment upon repatriation, which is a direct result of the tax plan. If you read carefully they state nowhere how much of the repatriated cash will be invested instead of simply returned to shareholders. They just added up what they were already planning to invest anyway in the next 5 years. It might have increased slightly with the tax cuts, but not a whole lot. They weren't constrained by cash before, only by meaningful investment opportunities.
Keep an eye on their quarterly and yearly reports to get the real story. I expect a large chunk of the repatriated cash will be used to pay off the debt they took on to finance past dividends and share repurchases. The rest will be used for future share buybacks.
Rich person/fund X will get a larger dividend than before, and they’ll invest in the same way as before. It’s not like this money is somehow earmarked.
If giving more money to the rich were the solution to America’s problems, it would have worked by now.
Or use it for consumption. And that consumption or those investments are not necessarily in the US.
Where do you think that money is now? It's not like it is stored as dollar bills in some warehouse abroad. The 'repatriation' they are talking about is purely an accounting/tax fiction. If you look at Apple's yearly report [1], on page 49, it details how its cash and equivalents are invested. Most of it is in US treasury securities ($42 billion) and commercial securities ($131 billion). Repatriating it will not magically make it somehow more productively invested in the US. In some cases, quite the opposite: as a foreign Apple shareholder, any dividends I receive are spent outside the US.
[1] http://investor.apple.com/secfiling.cfm?filingid=1628280-16-...
Any corporate announcement you read in january has been under corporate review at least since end Q3 2017.
That $5 billion over 5 years is nothing for Apple, since they get about $100 billion in revenue each year from the US alone, with a large percentage of that in pure profit.
They don't need repatriated cash for this $1 billion/year investment.
It's a pretty small US investment, really.
That's why they spend their cash on dividends. Dividends basically means they a company has better idea on what to spend their money on than to just give it back to their shareholders.
Vs
Apple getting all the money and using to create jobs on its own.
https://www.ft.com/content/789e69f6-e1ea-11e7-a8a4-0a1e63a52...
If it's behind a paywall the interesting part is:
> Senate and House leaders unveiled the final version of their tax reform legislation on Friday, putting the Republicans on the cusp of delivering tax cuts of close to $1.5tn. As part of the package they will impose a 15.5 per cent one-off tax on offshore cash, coupled with an 8 per cent levy on less liquid assets, a Republican aide said.
So the tax plan didn't convince Apple to repatriate it's money because the tax rates were amazing. The tax plan is causing Apple to pay 15.5% taxes anyways, so since it's being forced to pay taxes on it they might as well use that opportunity to move a lot of that cash to the US where it's more usable for them.
Chances are after this Apple (and all other megacorps) will go right back to storing cash off seas waiting for their next chance for another free chance to move money to the US.
I feel like Amazon's HQ2 search is going to open the floodgates for tech companies asking for public incentives. Tech companies in the Bay Area have been creating tens of thousands of jobs for years without asking for much publicly. Expect that to change now.
It is a hedging against increasingly expensive work force.
Key word being "initially."
Austin is where many of their support workers are now, as well as engineers. Apple's main Cupertino campus is 2.8 million sq.ft., but the Austin campus is also huge at 1.1 million sq.ft. for the main set of buildings and another 216K for a smaller campus in southwest Austin.
So is this announcement for a third campus, or another expansion in Austin? I guess time--and incentives--will tell.
An Apple employee tells KOLO 8 the new facility will be a location where Apple filters computers through on their way to the new data center on USA Parkway and another center in Arizona."
It's basically datacenter machine staging. Good jobs I'm sure, hardly a second headquarters.
http://www.kolotv.com/content/news/Groundbreaking-set-for-do...
> The company plans to establish an Apple campus in a new location, which will initially house technical support for customers. The location of this new facility will be announced later in the year.
The Reno facility is separate.
Well when ya all but purchase support from all the mayors, aldermen, district supervisors, judges, etc, kinda negates your need to ask for anything.
What percentage of jobs of these are full time versus part time?
Why do large corporations and politicians love to toot their horns about 'jobs', but refuse to go into details?
Oh wait, there public.
>Employees:As of September 30, 2017 , the Company had approximately 123,000 full-time equivalent employees.(http://investor.apple.com/sec.cfm?DocType=Annual&ndq_keyword...)
123k divided by 2 million equals 6.15% of employees are full-time, whereas 93.85% are part-time.
Last repatriation, the companies did exactly what you said but now that is no longer possible.
Can nitpick it for sure. It has billions of dollars sitting around, it can choose to open a new data center, new manufacturing plant, start a cloud offering, Uber-for-dogs, whatever. Or it can continue sitting on that money. It's not automatic. That's what people mean by "job creation". Choosing to invest the money usually involves creating new positions.
Another way to look at it, is that it is location dependent. Since it is an American company, it might "hire" for a position that used to be filled in China, but the new hire is US. On the global market it "hired" someone in the US market it "created" a job.
Apple isn’t creating jobs out of thin air, but they do both directly and indirectly provide distinct opportunities, despite those opportunities generally having existed in some other form (possibly in some other country) before. It might seem more accurate to say that Apple shifts jobs, but that’s an equally imprecise way of framing it.
You are correct that people have to want them (specifically, want them enough to spend money on them) in order for jobs to be created. But the order of operation is pretty clear from the observable evidence.
For example, there weren't crowds of people lined up outside Apple Stores demanding the iPhone in May of 2004. But after Apple invested in the product development and manufacturing of the iPhone, there were crowds of people outside Apple Stores in June 2007, waiting to pay $600 per item or more. Apple created a lot of jobs to meet that demand, but Apple had also created that demand in the first place.
They're grabbing 252.3B and spending less than a fifth of it. Let's imagine a different world. 200B, divided by 50k + 1.5x overhead (75k) could create about 2.6M decent jobs for one year (or 1.3M for two years etc).
2.6M jobs is equal to 0.8% of the total US population. The total labor force size is about 160M (~1/2 the total population) and the U6 measure of unemployment is about 8%. A healthy U6 is probably closer to 6% (from around 2000). That 2% of 160M is 3.2M jobs. Thus, in one fell swoop without even affecting operations overly much, Apple could reduce the magnitude of the economic crisis by a little over 2/3.
These are astonishing numbers that would have real impacts on people's lives. Imagine what we could do with the profits of the other large conglomerates.
Instead, they're spending a tiny amount on PR and reduced taxes that they lobbied heavily for to do what? Probably stock buy backs. The adulation of the rich and powerful continues at the expense of the working class.
EDIT: added some comparison numbers
EDIT: You guys are too much! So many questions, keep on asking, but I'll have to let others answer. I have other things to do today. Keep thinking critically about the political economy of the system. :)
The working class does benefit from Apple, in the form of high-quality technology that even they can purchase.
The workers benefit somewhat from Apple, yes, in the form of a consumer gadget. I will grant Apple some utility, it did find a way to fuse existing science and technology in an interesting way to produce a very nice pocket computer.
However, this has had many effects, some good (access to information and maps), some bad (dissolution of privacy, addictive interfaces, the creation of "apps" at the expense of the open internet). Apple then uses this commodity to vacuum up dollars from consumers in excess of what it cost to produce... and do nothing with them other than allow executives and securities holders to slake their desire to accumulate. It's an addiction in itself.
I can't, because I won't have the money to purchase them, but they are "in business to make money," and I'm clearly only here for the opportunity to buy the products that I make.
OK, sarcasm isn't especially productive, but I hope my point is clear: if my employer takes all the money and pays only subsistence wages, which the huge power imbalance enables, then he's doomed because nobody can afford his products.
At the very least, mine would be if he hadn't managed to get massive tax breaks for being a "job creator" who's also persuaded the government to subsidize those jobs with public funding, and then decided that he's not topping those wages up with the money his business earned. Basically, running costs are funded by the public while he pockets all the profits and pays me with my own tax dollars.
The working class needs more than just the benefit of stuff being offered for sale. We need to be able to spend and save, the ability to shape the economy and keep it running, otherwise it all breaks down.
From my perspective, Apple isn't "grabbing" anything. They are moving their money from Bank A to Bank B and paying a 20% fee on their balance simply for doing so. You may say this is a PR piece and a continued way to screw workers, but i see it differently. Apple had no need to repatriate this money. This is part of a conscious shift in their fiscal policy moving forward. It stands to benefit US workers a great deal more than them keeping these funds overseas.
With respect to Japan and China, a multinational company, an effectively stateless entity (or possibly a state unto itself) can simply move to the most profitable country, thus forcing countries to compete for its tax dollars. Thus, the multinationals, unless resisted via solidarity, will cause a collapse in all nations treasuries.
For this reason, we should encourage corporations to form cartels to avoid getting taken advantage of by disloyal consumers.
This is the key mistake people make when they say that tax cuts will create jobs, or minimum wages will cost employment. Companies try to be efficient, and therefore don’t create jobs they don’t need, and don’t get rid of jobs they do need if wages go up. That’s why there is pretty much zero statistical correlation between tax cuts and employment, or wage price and employment.
Apple will create jobs if their operations require them - they’re not going to make up busywork out of the goodness of their hearts.
But you can’t expect companies to randomly create new jobs just for the sake of making jobs (because they have a bit of spare cash)... It just doesn’t make sense.
I'm suggesting that capitalism is going to encounter a crisis point sometime in the next decade or two at this rate. It will destroy itself leaving either barbarism or socialism in its wake.
I'm not saying this is good, but this is what they will do.
Most of the things in question have already previously been manufactured in the US at one point or another. The specialization / knowledge is already here. The base manufacturing capability, the buildings/plants, the inexpensive energy, the automation capabilities, the software, the access to cheap commodities, is already here.
The US is the world's second largest manufacturer, by a very wide margin to the others down the list. Only China compares in scale globally.
Call up Texas and Corning, make a deal backed with billions in investment, build the plants, and you'll be making as much glass in the US as you want within three or four years.
http://variety.com/2017/digital/news/apple-corning-investmen...
I'm surprised that no stateside port cities have tried to encourage that sort of thing; there are plenty of negative externalities, but I would still LEAP to move to such an initiative.
It's like...I want to create something that could make a difference for people, but all that I see in our current tech cities is faux do-goodiness, iniquity, and seething resentment. It's a bunch of people saying that they want to save the world while reaching into the pockets of people who can't afford it, and it hurts to be unfailingly lumped into that sort of behavior.
It's almost like people really focus on whatever positive input they get and cling to it no matter what.