This is how Apple brings overseas profits to the US while avoiding taxes

[William Gayde]

It's no secret that Apple and other multinational corporations have found countless loopholes to avoid paying taxes in the United States. Offshore accounts and subsidiaries in tax havens like Ireland and the Caribbean have become the favorite among tax savvy executives looking to help their bottom line. Government regulation in this area is also a bit of a gray line with what effectively amounts to an honor system of self-assessment. Everyone knows it happens, but there hasn't been much change.

A new Bloomberg report follows the global journey Apple's profits take. Products developed in California are sold worldwide, with most of the overseas profits, around $216 billion, being stashed in a subsidiary in Cork, Ireland. A financial haven for corporations seeking to avoid paying US taxes, 9 of the top 10 wealthiest US companies have subsidiaries based in Ireland. This topic has been well publicized, but the article goes on to further outline what Apple does with these earnings.

Braeburn Capital, is Apple's owned Reno, Nevada-based investment firm that manages the company's money and has been increasingly buying US treasuries. These treasury investments are then held and controlled by New York banks. The US Government has an obligation to pay interest on these purchases, which has done to the tune of $600 million in the past few years. Bloomberg estimates this total amounts to around $6 per US taxpayer over the last five years.

Ethics aside, Apple clearly knows what they are doing and has a very efficient machine set up to manage their finances. In short, University of Michigan law professor Reuven Avi-Yonah described it as paying someone to borrow a bike that you already own.

Image credit: Bloomberg

The strategy sounds like the plot from a financial themed movie drama, but it's not all that bad. Interest rates are low so this maneuver isn't currently a big money maker for Apple. They are effectively buying US debt which helps to finance government spending. In addition, the interest earned from buying this debt is also taxable.

In the wake of the 2016 election, the issue of what to do about offshore corporate accounts has come up again. Donald Trump has promised to help bring back some of the $2.6 trillion held overseas with a repatriation tax of 10%. It won't be easy and companies will do all they can to avoid paying any more than they have to, but this has historically been an issue both Democrats and Republicans can agree on.

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https://www.techspot.com/news/67332-american-taxpayers-help-finance-apple-stash-offshore-profits.html

 

[davislane1]

"companies will do all they can to avoid paying any more than they have to"

Just like everyone who reads this website.

Smart moves by Apple, though. The financial world is a chess game that, when played correctly, is very lucrative. They might not have very bright people making design decisions (headphone jack), but their finance guys are on point.

 

[p51d007]

Simple solution...amend the constitution to abolish the 16th amendment, implement a fair/flat tax on CONSUMPTION, and watch TONS of money come back to the shores of the USA.
Corporations don't pay taxes anyway, it's just passed along to the consumers.

 

[Evernessince]

Simple solution...amend the constitution to abolish the 16th amendment, implement a fair/flat tax on CONSUMPTION, and watch TONS of money come back to the shores of the USA.
Corporations don't pay taxes anyway, it's just passed along to the consumers.

I don't think you know what simple means. Amending the constitution is never simple.


davislane1

- "companies will do all they can to avoid paying any more than they have to

Just like everyone who reads this website.

Smart moves by Apple, though. The financial world is a chess game that, when played correctly, is very lucrative. They might not have very bright people making design decisions (headphone jack), but their finance guys are on point."


Right, people don't want to pay more than they have to. Unfortunately for regular people, they don't have tons of money to lobby the government for loopholes so their effective tax rate is nothing. But yeah, smart move by Apple, creating loopholes so that they can then have people like you come here and state how fair it is that they pay so little in taxes. Instead of investing that money back into the economy they would rather continue the concentration of power, which in turn hurts the economy as the money simply sits there.

 

[davislane1]

I don't think you know what simple means. Amending the constitution is never simple.


davislane1

- "companies will do all they can to avoid paying any more than they have to

Just like everyone who reads this website.

Smart moves by Apple, though. The financial world is a chess game that, when played correctly, is very lucrative. They might not have very bright people making design decisions (headphone jack), but their finance guys are on point."


Right, people don't want to pay more than they have to. Unfortunately for regular people, they don't have tons of money to lobby the government for loopholes so their effective tax rate is nothing. But yeah, smart move by Apple, creating loopholes so that they can then have people like you come here and state how fair it is that they pay so little in taxes. Instead of investing that money back into the economy they would rather continue the concentration of power, which in turn hurts the economy as the money simply sits there.

Cite one loophole Apple has created.

 

[Puiu]

Simple solution...amend the constitution to abolish the 16th amendment, implement a fair/flat tax on CONSUMPTION, and watch TONS of money come back to the shores of the USA.
Corporations don't pay taxes anyway, it's just passed along to the consumers.

what you said can't be done and would be very bad for the US economy.

 

[p51d007]

what you said can't be done and would be very bad for the US economy.

LOOK IT UP! They've spent millions in private money researching a fair/flat tax. I was initially against it until I read up on it.
It's sound, and FAIR. Those NOT paying taxes will pay taxes, those paying unfair taxes will be reduced. Each person gets a rebate on staples like food, utilities etc. The biggest reward is it take away the congress/senates power to punish people and businesses.
People are "afraid" of the IRS. Many overpay their taxes in hopes of fending off an audit. People have been "conditioned" into believing that if they get a "big fat refund" from the IRS, they've "stuck it to the man", when, in fact, the government stuck it to you! They got free use of the excess money for an entire year, INTEREST FREE! How many ads do you see, that show people happy, they got a big refund? I have my taxes set up that I MIGHT get back 100 bucks or so. If they got rid of the payroll deduction, and FORCED people to write that check to the government each month, THEN you'd see tax reform.
It's why the government STEALS your money before you even see it.
Ask about anyone, "how much do you make?"... most will say, I take home XXX. I'll then ask them the same question.
No, I asked you how much you make. They will usually just look at you like a dog hearing a funny sound.
I'll explain to them, when you get your check, what's it say the amount paid to you at the top is. But...that's not mine, that's what the government gets. Why? Another dog hearing the funny sound look on their face.
People have become CONDITIONED into simply giving up their hard earned money to the government.
People are afraid of the government, and it SHOULD be the other way around. By eliminating the IRS, it would be a HUGE
first step in reigning in the over reaching power of the federal government, and, placing the power back into the hands
of the people.
Oh, repeal of the 17th amendment would be a good second start also!

 

[Puiu]

LOOK IT UP! They've spent millions in private money researching a fair/flat tax. I was initially against it until I read up on it.
It's sound, and FAIR. Those NOT paying taxes will pay taxes, those paying unfair taxes will be reduced. Each person gets a rebate on staples like food, utilities etc. The biggest reward is it take away the congress/senates power to punish people and businesses.
People are "afraid" of the IRS. Many overpay their taxes in hopes of fending off an audit. People have been "conditioned" into believing that if they get a "big fat refund" from the IRS, they've "stuck it to the man", when, in fact, the government stuck it to you! They got free use of the excess money for an entire year, INTEREST FREE! How many ads do you see, that show people happy, they got a big refund? I have my taxes set up that I MIGHT get back 100 bucks or so. If they got rid of the payroll deduction, and FORCED people to write that check to the government each month, THEN you'd see tax reform.
It's why the government STEALS your money before you even see it.
Ask about anyone, "how much do you make?"... most will say, I take home XXX. I'll then ask them the same question.
No, I asked you how much you make. They will usually just look at you like a dog hearing a funny sound.
I'll explain to them, when you get your check, what's it say the amount paid to you at the top is. But...that's not mine, that's what the government gets. Why? Another dog hearing the funny sound look on their face.
People have become CONDITIONED into simply giving up their hard earned money to the government.
People are afraid of the government, and it SHOULD be the other way around. By eliminating the IRS, it would be a HUGE
first step in reigning in the over reaching power of the federal government, and, placing the power back into the hands
of the people.
Oh, repeal of the 17th amendment would be a good second start also!

What you said doesn't make sense. I'm sorry, but instead of an automated system where the government takes money from your payroll, you want one where you have to do it instead... like that will solve something. It's the opposite, it will just create unnecessary problems for both the government and the people.
"Many overpay their taxes in hopes of fending off an audit." - what the actual hell? - I can only facepalm at what you said.
If you pay your taxes then you have nothing to fear. And saying that the government steals money from you is just not true. Sure there are problems with the current system, but it's still a system that works. What you suggest just doesn't work.

 

[Evernessince]

LOOK IT UP! They've spent millions in private money researching a fair/flat tax. I was initially against it until I read up on it.
It's sound, and FAIR. Those NOT paying taxes will pay taxes, those paying unfair taxes will be reduced. Each person gets a rebate on staples like food, utilities etc. The biggest reward is it take away the congress/senates power to punish people and businesses.
People are "afraid" of the IRS. Many overpay their taxes in hopes of fending off an audit. People have been "conditioned" into believing that if they get a "big fat refund" from the IRS, they've "stuck it to the man", when, in fact, the government stuck it to you! They got free use of the excess money for an entire year, INTEREST FREE! How many ads do you see, that show people happy, they got a big refund? I have my taxes set up that I MIGHT get back 100 bucks or so. If they got rid of the payroll deduction, and FORCED people to write that check to the government each month, THEN you'd see tax reform.
It's why the government STEALS your money before you even see it.
Ask about anyone, "how much do you make?"... most will say, I take home XXX. I'll then ask them the same question.
No, I asked you how much you make. They will usually just look at you like a dog hearing a funny sound.
I'll explain to them, when you get your check, what's it say the amount paid to you at the top is. But...that's not mine, that's what the government gets. Why? Another dog hearing the funny sound look on their face.
People have become CONDITIONED into simply giving up their hard earned money to the government.
People are afraid of the government, and it SHOULD be the other way around. By eliminating the IRS, it would be a HUGE
first step in reigning in the over reaching power of the federal government, and, placing the power back into the hands
of the people.
Oh, repeal of the 17th amendment would be a good second start also!

A flat tax is only good for the rich. For example, if you apply a flat tax rate of 25%, not only is that much lower than the current tax on the ultra-wealthy but it also disproportionately affects the poor or anyone really under the upper-middle class. You say everyone should pay their fair share but you forget to take into account that the lower your income, the larger the portion of your money that goes to absolute necessities.

"Each person gets a rebate on staples like food, utilities etc."

A rebate is money you get later for something you buy today. How is that going to work when the rebate is intended for something you need right now? Answer, it won't. Not to mention deciding what gets a rebate and what does not is not going to be a simple thing. It sounds to me like this plan still needs the IRS.

If you are going to reply to this comment, either do so with direct links or not at all. It is not my Job to figure out what article or study you are referencing.

 

[Darius Moon]

Wasn't there an article a few months ago about apple not paying sufficient taxes to Ireland?

 

[GirlDownunder]

"Offshore accounts and subsidiaries in tax havens like Ireland and the Caribbean have become the favorite among tax savvy executives looking to help their bottom line. Government regulation in this area is also a bit of a gray line" Gray line, my *ss.

Unless you're a little guy. Then, you're hung on the rack, tipped upside down, & beaten until every cent falls out.

According to the "newest" rack(et) from the IRS, FATCA (Google it- it's actually not even legal how it got pushed through), NO ONE gets away if they have off-shore holdings. So, if Apple doesn't have to pay, wtf is FATCA doing except attacking it's small-potatoes, overseas citizens?

This, is thievery. Anyone who defends this as "clever" must be nuts. Talk about a backwards reaction to the big corporations screwing you over...smh

 

[GirlDownunder]

A flat tax is only good for the rich. For example, if you apply a flat tax rate of 25%, not only is that much lower than the current tax on the ultra-wealthy but it also disproportionately affects the poor or anyone really under the upper-middle class. You say everyone should pay their fair share but you forget to take into account that the lower your income, the larger the portion of your money that goes to absolute necessities.

I suppose a modified "flat" might be better. End the loopholes (no poor person ever initiated one) & limit write-offs for incomes which are above a certain level as much as is possible. You could also still implement an exemption on income which would be considered too low to tax ($0- 12,000, say). Yes, I understand that isn't a "flat tax" - no, it isn't- it is modified to not make the poorest suffer. Just a thought.

 

[Puiu]

I suppose a modified "flat" might be better. End the loopholes (no poor person ever initiated one) & limit write-offs for incomes which are above a certain level as much as is possible. You could also still implement an exemption on income which would be considered too low to tax ($0- 12,000, say). Yes, I understand that isn't a "flat tax" - no, it isn't- it is modified to not make the poorest suffer. Just a thought.

in general all income should be taxed, the exceptions being only really extreme cases. in theory what you said is not bad, in practice it doesn't really work since you create a big loophole with the "too low to tax" law.