Good article on Apple and taxes (NYT)

Discussion in 'Apple' started by Alan Browne, May 24, 2013.

  1. Alan Browne

    Alan Browne Guest

    Alan Browne, May 24, 2013
    #1
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  2. Alan Browne

    JF Mezei Guest



    What is mising from the discussion here are the benefits to the american
    economy if money earned overseas is patriated to the USA instead of left
    in other countries.

    The issue spans more than just taxes the USA govt can collect. Consider
    the "quantitative easing" to help spur the economy if Apple were allowed
    to bring in tax free 100 billion bucks.
     
    JF Mezei, May 24, 2013
    #2
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  3. It all depends on what Apple does with the money.
     
    Michelle Steiner, May 24, 2013
    #3
  4. Alan Browne

    JF Mezei Guest

    No matter whatr Apple does with it, it is 100 billion that is added to
    the US monetary mass. If deposited in a bank, there is the multiplier
    effect that allows that bank to make loans etc.

    When Apple borrows money to pay for a dividend, it reduces the amounts
    banks will lend to other businesses.


    If Apple uses that cash to pay dividends, that money goes to
    indiciduals and investors and pension plans and is then used to
    stimulate the economy.

    For the USA, they would rather its multinationals patriate profits made
    overseas. (and should provide incentives instead of dis-incentives).

    However, from a "good global corporate citizen" point of view,
    multinationals are expected to invest in countries where they make
    profits. So if Apple-France makes oodles of profits, one would expect
    Apple-France to invest to develop some software/hardware development in
    France to stimulate the economy in France.


    Apple has a very centralised product development perspective. Google is
    more decentralised and has software development in different areas of
    the world. (Although I believe Apple has localisation done in varius
    countries for software translations etc).

    I do not know that there is a single anwers to this. But in a global
    econo,y, countries need to compete to attract capital/jobs. And if the
    USA wants to get jobs back into the USA, it needs to compete against
    countries such as China and Ireland.

    When you look at aircraft, states and cities compete like mad to get
    Boeing to select their city/state for an assembly plant. They not only
    waive taxes, but provide subsidies.

    And here, we have senators trying to scold Apple instead of asking "what
    can we do to get you to bring that money into the USA and help our
    economy ?"
     
    JF Mezei, May 24, 2013
    #4
  5. Alan Browne

    billy Guest

    Based on responses to bug reports, Apple has people in India working
    on their software. I'd be surprised if that's the only other (besides
    the USA) country, too.

    Billy Y..
     
    billy, May 24, 2013
    #5
  6. One of the stories I heard this week on NPR said that one of the "tax
    shelter islands" that many companies use is Manhattan. A foreign
    subsidiary can deposit their money in a US bank. It's not taxed by the
    US because it belongs to a foreign company and isn't being used to fund
    US operations.

    But the banks can use it to make loans, etc. The story ended by saying
    that although this bolsters the US economy, it's not enough to make up
    for the lost tax revenue.
     
    Barry Margolin, May 24, 2013
    #6
  7. Alan Browne

    Rod Speed Guest

    What matters is where they spend it, not where they keep it.
     
    Rod Speed, May 24, 2013
    #7
  8. Alan Browne

    Rod Speed Guest

    Nothing like what Bernanke 'prints'
    Apple is very unlikely to do that with it.
    Only if they do that with it.
    It doesn't do that when it has that sort of surplus cash.
    That happens regardless of where they keep the surplus
    cash that they choose not to distribute as dividends.
    Corse they would, but they arent likely to
    deliberately not tax that money so that happens.
    Not even possible without choosing to not tax them on that money.
    And in the real world they invest where they get the best tax treatment
    instead.
    You can expect anything you like. Successful multinationals
    do the development where it can be done most cheaply and
    still get done as well as where else it can be done instead.
    And that has worked out very well for them with some of the
    best products available and driving quite a bit of the market.
    And hasn't done anything like as well with hardware products particularly.

    Rather better than Apple in some other areas like mapping tho.

    But not with OSs.
    Corse there isnt. If there was someone would have found it by now.
    And some compete very aggressively indeed
    using the taxes they impose, like Ireland.
    The USA doesn't have a problem with jobs in the USA.

    The unemployment rate bottomed at 4.x% with an immense
    legal and illegal immigration rate and the participation rate,
    the percentage of the workforce that chooses to work, at an
    all time historic high, just before the clowns were allowed to
    completely implode much of the world financial system, AGAIN.
    Not even possible to do that with China with the manufacturing
    of physical goods. The labor costs are so radically out of line and
    will be for the foreseeable future too.

    Its unlikely that the US will ever offer anything like the tax
    treatment that Ireland has chosen to go for, and you can
    make a case that it would be mad for the US to do that too.
    But there was no need for the federal govt to offer the same
    tax incentives that Ireland chose to have to get Boeing to stay
    in the country.
    Because both Apple and Google choose to avoid
    the taxes that the law requires them to pay.
    Because the answer to that is obvious. There is nothing
    that the US can do that will ever get Apple to make its
    products in the US again, because labor costs are so
    much lower in places like China.

    They do still do most of the R&D in the US, because the labor
    costs aren't as important with that part of their operation.
     
    Rod Speed, May 24, 2013
    #8
  9. Alan Browne

    Michael Eyd Guest

    Am 24.05.2013 12:17, schrieb Rod Speed:
    That's (for all I know) just plainly wrong. They (and most probably all
    the other large corporations all over the world) just choose to follow
    the law by the letters, while still combining the different laws (in
    different countries) to their advantage. They save on taxes *by obeying
    to the law*, not by avoiding the law.

    It's not their fault that the taxation laws open those loopholes (some
    are certainly there on purpose, some just coincidentally), that's the
    job of the politicians.

    Actually, if they didn't do it this way, there would likely be
    investors, stock-holders, ... complaining about not enough left on the
    bottomline - and it might be hard (e.g. in court) to defend against this
    claim...
    Interestingly, Apple has announced to start (again) the production of
    one line of Macs in the US. Doesn't quite fit to your statement, does
    it? ;-)
     
    Michael Eyd, May 24, 2013
    #9
  10. Alan Browne

    Kurt Ullman Guest

    And since Apple management still has an aversion to spending money
    that is at least as great as my depression-era relatives....
     
    Kurt Ullman, May 24, 2013
    #10
  11. Alan Browne

    Guest Guest

    what bug reports and what responses?

    because apple's engineering is done in cupertino. they don't offshore
    development. it even says so on the box, 'designed by apple in
    california.'
     
    Guest, May 24, 2013
    #11
  12. Alan Browne

    Guest Guest

    they use legal ways to minimize how much tax they are required to pay,
    just as ordinary taxpayers do.
    except that apple makes a lot of stuff in the usa, including a mac
    that's about to be released along with many parts for a variety of
    products.
     
    Guest, May 24, 2013
    #12
  13. Alan Browne

    Kurt Ullman Guest

    It doesn't do that when it has that sort of surplus cash.[/QUOTE]

    Actually they just did. (And it isn't terribly unusual way to do things
    any more).


    Especially for high value added stuff, that is not necessarily the
    case. Whirlpool (and heck even Apple) and others have announced they are
    brining back some of the work. China is no more immune from supply
    demand things as any place else and wages have been driven up (albeit
    from a low base) there. Add in govermental interference, cost of
    shipping, the Chines playing games with currency, industrial espionage
    and general headaches and the Americans are looking better and better.

    Nope not in the least. They very carefully use the term tax avoidance
    because that is entirely legal. It is tax evasion when they don't pay
    what the laws requires them to pay.
    Even though some Senators are using avoidance in a way that implies
    otherwise, it well established in the US law that avoidance of taxes is
    perfectly legal.
    I commend to you the words of Judge Learned Hand:
    "Anyone may arrange his affairs so that his taxes shall be as low as
    possible; he is not bound to choose that pattern which best pays the
    treasury. There is not even a patriotic duty to increase one's taxes.
    Over and over again the Courts have said that there is nothing sinister
    in so arranging affairs as to keep taxes as low as possible. Everyone
    does it, rich and poor alike and all do right, for nobody owes any
    public duty to pay more than the law demands."

    Unless, apparently it offends the sensitivities of some
    CongressCritters.
    I guess Mr. Cook never got that memo.
    http://www.huffingtonpost.com/2012/12/06/apple-manufacturing-usa-macs_n_2
    249613.html
     
    Kurt Ullman, May 24, 2013
    #13
  14. And since Apple management still has an aversion to spending money
    that is at least as great as my depression-era relatives....[/QUOTE]

    Apple does? Then why the increase in R&D spending? Why spend five billion
    on a new campus? Etc.
     
    Michelle Steiner, May 24, 2013
    #14
  15. Actually they just did. (And it isn't terribly unusual way to do things
    any more).[/QUOTE]

    Well, technically it wasn't *exactly* that because some of the borrowed
    money is to buy back stock. But I realize that I'm being picky here. ;)
    I wonder whether that's merely a PR thing‹accepting the increase in
    production costs in return for the ensuing PR benefits. I'm not saying
    that it is; I'm wondering whether it is.
     
    Michelle Steiner, May 24, 2013
    #15
  16. Alan Browne

    Guest Guest

    I wonder whether that's merely a PR thing‹accepting the increase in
    production costs in return for the ensuing PR benefits. I'm not saying
    that it is; I'm wondering whether it is.[/QUOTE]

    apple said that a lot of components are made in the usa, which would
    then need to be shipped to china for assembly. manufacturing everything
    in the usa streamlines it.

    you can be sure they did't do it because they want to spend more money
    than they have to.
     
    Guest, May 24, 2013
    #16
  17. Alan Browne

    Kurt Ullman Guest

    There is a fairly long list of companies that are either pulling
    production back from overseas (Whirlpool in Kentucky for instance) or
    putting new lines in here instead of elsewhere. Not a flood by any
    means, but still a shift. I've got a full (albeit year old) list of some
    of these companies floating around here somehwere. If I can find I'll
    add in some others.
     
    Kurt Ullman, May 24, 2013
    #17
  18. Alan Browne

    News Guest


    More a global logistics cost optimization issue than not.
     
    News, May 24, 2013
    #18
  19. Alan Browne

    billy Guest

    If you had ever reported anything worth a response, you'd know they
    all contain this -

    | *****************************************************************
    | THE INFORMATION CONTAINED IN THIS MESSAGE IS UNDER NON-DISCLOSURE
    | *****************************************************************

    Hopefully I won't catch hell for disclosing that. Heh.
    You base your conclusion on "it even says so on the box?"

    Billy Y..
     
    billy, May 24, 2013
    #19
  20. Quite often companies spend money they don't have to spend. They do it for
    better PR, for example, and/or because the feel a sense of obligation to
    the community and/or the country.
     
    Michelle Steiner, May 24, 2013
    #20
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