Hacker News Reader

Comment by _23sd | Hacker News Reader

"We pay our taxes" sounds a bit disingenuous from a company that is famous for aggressively offshoring its profits to avoid paying US and California taxes, the latter of which would directly contribute to local housing programs.

View on HN

Normally, I'd say that actually cheats the federal government out of tax revenue (for now), but Apple actually is incorporated in California, not Delaware, and California has various corporate taxes.

That said, it doesn't make sense for the global profits of a company like Apple to get taxed in California or Cupertino. The accounting isn't necessarily easy, but it makes more sense to tax where was money was made (which is murky and complicated) than to funnel it all to the HQ; Apple is more than just a spaceship in one city.

This isn't to say Apple isn't doing things to avoid paying taxes, either. My point is that using corporate taxes of a company with global sales to solve local issues doesn't make sense.

Apple's marketing is that the money is made in California. Designed by Apple in California has long appeared as a feel good on their products that are assembled overseas.

I would point you to all that cash sitting offshore that they can't repatriate back to the US, and can't seem to find productive use for in the countries where it sits. That is the direct result of tax planning. I haven't been keeping up with the cases, but I know Amazon won, and Coca-cola just lost, not sure where Apple's cases are in tax court. Hopefully they aren't an EY audit/tax client.

Okay. My belief is that their marketing is more indicative of their ethos than their tax planning though.

They are in fact an EY client (as is Coke). Not sure about Amazon

Apple's effective worldwide tax rate is ~25%, which is actually slightly higher than other US multinationals. That is also not counting taxes on income/capital gains paid by California employees, which are obviously pretty sizable.

"Apple’s effective U.S. federal income tax rate was just 7.3% in 2011. Apple claimed its tax rate in 2011 was 24.2%, one-third less than the official tax rate of 35%. But the Senate subcommittee found its rate was no more than 20.1%, allowing "Apple to claim credit for $3 billion of deferred taxes on overseas income that are not owed until the profits are brought back to the United States. Since Apple has said that is not likely to happen, its effective tax rate in 2011 was just 7.3% – $2.5 billion in taxes actually paid against $34.2 billion of income before taxes. [Exhibit 1a, pp. 38-39]"[0]

[0] https://americansfortaxfairness.org/issues/corporate-taxes/h...

Reply on news.ycombinator.com