General Discussion
Related: Editorials & Other Articles, Issue Forums, Alliance Forums, Region ForumsApple Bites Back at Congress During Tax Hearing
WASHINGTON, May 21 (RIA Novosti) – The head of the US-based multibillion dollar computer firm Apple told a Senate panel on Tuesday his company has paid “every single dollar” it owes in taxes, despite a new congressional report that says Apple shifted billions of dollars in profits away from the United States and into subsidiaries in Ireland where it gets a special tax rate of less than two percent.
“Apple does not move its intellectual property into offshore tax havens and use it to sell products back into the US in order to avoid US tax; it does not use revolving loans from foreign subsidiaries to fund its domestic operations; it does not hold money on a Caribbean island; and it does not have a bank account in the Cayman Islands,” said Apple CEO Tim Cook.
“Apple has substantial foreign cash because it sells the majority of its products outside the US,” he said in opening remarks to the Senate Permanent Subcommittee on Investigations, which is looking into how multinational corporations are able to move profits to offshore tax havens and avoid paying US taxes.
The committee’s report, released on Monday, finds Apple has used a complex web of offshore entities to avoid paying billions of dollars in US income taxes.
MORE...
http://en.rian.ru/world/20130522/181279550/Apple-Bites-Back-at-Congress-During-Tax-Hearing.html
= new reply since forum marked as read
Highlight:
NoneDon't highlight anything
5 newestHighlight 5 most recent replies
TampaAnimusVortex
(785 posts)They would simply raise the price of their products and shift it down to the consumer. Apple would collect the tax it would end up paying from everyone else, but it wouldn't give up a penny of its profits to pay those taxes, you can bank on that one.
LooseWilly
(4,477 posts)If Apple were to arbitrarily raise prices on it's computers, there're a dozen different companies building Windows 7 and 8 machines that a consumer could turn to, not to mention something generic and load it with linux downloaded at the library.
iPhones have Androids and now those silly Microsoft phones to compete with.
iTunes has MP3 formats... Netflix and a variety of Pirate Bays...
There are MP3 players that compete quite handily with iPods.
Fluctuations in tax rates are no more (or less) weighty a concern in setting prices than the cost of fuel to bring product to market from factories in China (which Apple will soon stop doing, apparently), or the cost of health insurance for executives.
The nice thing about monies that are "spent" on taxes, as far as the "consumer" is concerned, is that at least the money that goes for taxes is spent, generally, on the public welfare. The money spent on gas, on the other hand, is only spent on the welfare of oil corporations.
TampaAnimusVortex
(785 posts)Fluctuations in tax rates are no more (or less) weighty a concern in setting prices than the cost of fuel to bring product to market from factories in China (which Apple will soon stop doing, apparently), or the cost of health insurance for executives.
Those items are exactly the type of costs that get pushed down into the price of items as well.
Also, if we are to assume that they look to address this tax issue in some holistic way, then all corporations that are operating internationally would have similar costs added to their balance sheets and have to address them in some manner... which the easiest being to push them all downstream to the consumer. If they all do this, it doesn't affect their relative competitive stances at all, nor their profitability. All it would do is soak the consumer for more. Again, don't look for corporations to pay taxes, they generally act as the middle man and simply collect them somewhat indirectly.
0rganism
(23,937 posts)Apple pays more taxes -> Apple raises prices on consumer goods -> Apple sells less products -> Apple makes less money
What actually happens:
Apple pays more taxes -> Apple distributes this expense by reducing multiple line items (salaries, external contracts, purchasing, etc.) and keeps its price point pretty much the same to continue to be competitive. Problem solved.
TampaAnimusVortex
(785 posts)First - I notice you didn't have them reducing "profit", which was my point to start with.
Second, Apple isn't operating in a vacuum.
It's competitors will also be affected by any change in legislation as well. Given they are all impacted somewhat equally by the same legislation, they will all push the same price adjustments into their cost chains. Any cost they have to pay will simply be shifted. Lower salaries result in lower taxes paid by employees to the government. Lower external contracts results in the same. Or they could just all push the prices to the consumer, which is my bet. This leaves the entire industry pretty much unaffected relatively speaking. The consumer simply pays more and the corporations hand over all that extra money the consumer paid to the government. They are tax collectors... not payers.
0rganism
(23,937 posts)As you note, "Apple isn't operating in a vacuum". Apple especially produces products which are already retailed at the top end of what consumers will pay for the services they provide. The optimal price point for Apple is already established, through extensive market research on each of its products. They aren't going to charge noticeably more because its a loser compared to their other options.
Nor will Apple reduce their excess profits if they can avoid it. That makes executives look weak to stockholders, even if it's a much saner option compared to overpricing their goods or reducing infrastructure. Unfortunately, because EOs are natural egomaniacs, reducing economic profit is out of the question.
So initially it might seem like they're in something of a bind: top-down, they'll want to keep their profit margin high, while bottom-up they need to keep their products competitive with the other brands. What's left is stuff in the middle. That's things like mid-level staff salary increases (which can be replaced with stock options and grants if necessary), paid vacation time, replacing aging equipment way ahead of its MTBF, and so on. As always, these things are distributed across the entire company in such a way that no one sees a single big decline in salary, benefits, or quality of life. The savings get distributed upwards to feed bloated EO salaries and bonuses and pay shareholders.
As long as the EOs and the shareholders don't dodge taxes, the gov't can take at least as much from them as it would have from any pre-reduction staff salary increases. So yeah, the gov't can take in more money from Apple, the price stays the same because it has to, and the only people who feel the pinch are the staff whose salaries and benefits packages stagnate over time. After 20 years working in the tech industry, I've seen it all before: it's a well-established industry-wide procedure, and it happens consistently and predictably.
DirkGently
(12,151 posts)You hear rightwingers push that noise all the time, but it's pretty silly if you consider it for a moment.
How do you raise prices to compensate for increased taxes on profits you haven't made yet? If you charge more, you may sell less, but you don't know how much, or how that will equate with the increased rate. It's nothing at all like a worldwide increase in the price of oil or something, and even that can't be said to be 100% passed along.
Is there any evidence at all companies actually all do this, in like amount to the taxes, with the net effect of absolutely nothing besides proportionally higher prices? Isn't the world economy a little more complicated than that?
And, if it's such a perfectly balanced effect, why would corporations even fight closing tax loopholes or raising rates? Apparently it doesn't cost them anything? Hmmmm.
Likewise the idea that the entire market will adjust to anything we do with corporate taxes. Really? Every single competitor in the entire world will have to react in exactly the same way to Apple or some other company paying more taxes? Because if they don't, Apple will accept less profit, which is where taxes are supposed to come from.
Sounds to me a lot like the "tax cuts pay for themselves" flavor of economics that really boils down to Republican / libertarian rhetoric.
What corporations actually don't like about paying more taxes is that the corporations might have less money. They wouldn't be lobbying as hard as they do or utilizing the loopholes so assiduously if it was somehow really the public's burden.
0rganism
(23,937 posts)Especially in a competitive market, arbitrarily increasing the price of a product is suicide -- or at least large-scale masochism. And in high tech, where consumers consistently expect more for less, it's definitely more of a suicide thing.
Apple's already pushing the borders of what they can possibly charge for their QoS and you bet they know it.
DirkGently
(12,151 posts)Apple should pay corporate taxes. So should oil companies and everyone else. We are drowning in a lot of highly orchestrated pseudo logic about how taxes and government regulation in general are somehow the worst thing in the world, instead of fairly obvious necessities for any kind of civilization.
We all know this, I think, but for some reason a lot of people feel allegiance to the empowered voices spewing a lot of facially ridiculous nonsense that somehow grew the balls to pretend to be logical thought.
There's just such a critical mass of wantonly made-up thinking that people seem to have lost the ability to call bullshit on all of it. Tax cuts do not pay for themselves. We do not benefit more from military spending and oil subsidies than we do out of infrastructure, education, and social welfare. Scientists are not less trustworthy than religious leaders or CEOs.
We're becoming more and more willfully ignorant, and it's just sad and destructive and pointless.