Apple Pays No Tax on Much of Its Overseas Income, Senate Panel Finds | Hacker News Reader

Apple Pays No Tax on Much of Its Overseas Income, Senate Panel Finds

online.wsj.com

15 pointsjedwhite21 comments

> "What they often leave out is the second part of the story, that Apple is one of the largest tax avoiders," said Sen. John McCain (R., Ariz.), who described Apple as the "most egregious offender" among U.S. corporations trying to avoid tax bills.

That's ludicrous. Apple followed the byzantine tax rules that Congress put in place to benefit their friends and punish their enemies. The correct interpretation of McCain's statement is that Apple is the best at obeying the law in a way most favorable to themselves.

I don't think anyone has a moral obligation to pay more taxes than the law says they owe. If the tax codes are poorly written - as ours most obviously are - then fix those instead of blaming the entities who are working within that framework.

Somewhat relevant talk by Milton Friedman that I found enlightening when thinking about these tax matters (economics of tax shelters, tax cuts being the "product" politicians "sell", etc.): http://www.youtube.com/watch?v=TruCIPy79w8 (I strongly recommend watching all of it, but around 5:50 in he talks about why the tax system will remain complicated if you have an internet attention span).

It may be hard to legally define which companies should pay U.S. taxes on products made in Taiwan and sold in Japan.

Apple dodged all the taxes they could, and saved $1.9 trillion overseas. When they got called out on it, they hit it right back and said "go right on ahead, fix the loopholes we're using, tax us more, let us help."

But then GE would have to pay those taxes too. And with the campaign contributions they make, we can't be having that.

right. let's not start pointing fingers.

Google, Microsoft, GE, etc.

"General Electric Paid No Federal Taxes in 2010"

http://abcnews.go.com/m/story?id=13224558

"GE's CEO, Jeff Immelt Heads Obama's Council On Jobs And Competitiveness"

http://www.huffingtonpost.com/mobileweb/2011/01/21/jeffrey-i...

"Former Google Exec Turns Whistleblower On Company’s Tax Avoidance Machinations In The UK"

http://techcrunch.com/2013/05/19/former-google-exec-turns-wh....

Stupid headline, well, duh, it's overseas. They pay 7 Billion here.

I think the point is that they are managing to avoid paying tax to any overseas governments on the income too

According to Apple they are paying tax on everything somewhere; they just refuse to have the same revenue taxed in multiple countries.

Check out this page: https://en.wikipedia.org/wiki/Double_Irish_arrangement

There is a lot more going on that simply avoiding double tax. I'm not saying I blame them for taking advantage of the prevailing laws to pay as little tax as possible, but for them to claim it's simply avoiding double tax is very disingenuous.

While Apple likely isn't breaking the law (at least not seriously) what you seem to be missing is that as an American, you are liable to pay income tax regardless of where in the world you earn it. 'Technicalities' are allowing Apple (and many many many other companies) to avoid a large amount of the income tax fairness suggests they ought to pay. The article states that Apple pays little to no income tax to _any_ foreign government.

But those "technicalities" are the law, as it was written. The rules say "if you meet these conditions, then use this algorithm to calculate your tax bill". The inevitable result is that every company with a halfway competent accounting department pores over the tax code to find the algorithm that results in the lowest tax bill, then figures out how to meet the necessary requirements to use it.

Please note that in no way do I think this is a good thing to do, or that I'm remotely in favor of the current situation. It sucks and I'm not. But Congress made that game, and they completely lack the moral authority to complain about others playing it.

Put this in coding terms, where each tax code requirement is a conditional branch in a `calculateTax()` function. If you write a function with 50,000 conditionals, you simply can't be surprised that someone figures out a way to call the function with arguments that give the best possible output for them. Even worse, you can't close those loopholes by adding more conditionals. By definition, you're only creating more optimization paths for them to choose from.

Would like to add that the senior management in charge of running the company are expected to perform their fiduciary duties i.e. optimize for minimizing taxes for the benefit of the company.

> Even worse, you can't close those loopholes by adding more conditionals. By definition, you're only creating more optimization paths for them to choose from.

One thing they try are schemes like alternative minimum taxes:

http://en.wikipedia.org/wiki/Alternative_minimum_tax

Computationally, they solve this problem. But, as far as tax terms, who knows.

I'm not sure what point you're trying to make.

Should Congress not try to fix structural problems in the tax code which allow plenty of corporations avoid tax obligations?

Yes, and that's only possible by removing many exemptions, deductions, special cases, etc. Congress should absolutely reform the tax code, and it must be by reducing the number of ways it can be worked around.

You're not familiar with tax law. What you just said is emphatically NOT true, even for private citizens. As an American citizen you are not liable to pay federal income taxes on income earned overseas until it exceeds a specified amount (>$100,000) - even if you aren't paying any local taxes on it.

Not sure what is 'emphatically not true' with the OP.

Americans are required to state global income over some threshold (I believe it was around $91K this tax year). Few other countries apply a tax to wages earned overseas by citizens. After passing a minimum threshold, tax treaties are applied to determine precise tax liability for the year.

Directly from irs.gov

"If you are a U.S. citizen or resident alien, the rules for filing income, estate, and gift tax returns and paying estimated tax are generally the same whether you are in the United States or abroad. Your worldwide income is subject to U.S. income tax, regardless of where you reside."

"If you are a U.S. citizen or resident alien, you must report income from all sources within and outside of the U.S. This is true whether or not you receive a Form W-2 Wage and Tax Statement, a Form 1099 (Information Return) or the foreign equivalents."

That does not negate taylodl's claim. See http://www.irs.gov/Individuals/International-Taxpayers/Forei...

When your tax rate is high enough, it pays to optimize your cash flows to avoid taxes. If tax rates were more reasonable it wouldn't make sense.

Reply on news.ycombinator.com