>I'm pretty sure China would be quite happy if the US punishes Apple. That means that their protectionist policy towards Huawei will be even more effective.

If the US put onerous taxes on the purchase of Apple phones that might be true.

If the US instead just collects a larger share of Apple's profits then Apple is going to go on exactly as before and just not deliver quite as much cash to its shareholders.

Taxing the phone or the company’s margins should have the same effect, right? They’re both costs on apple’s revenue. Barring maybe some enforcement issue or something it makes no difference how you collect it, Apple will pass some of it off to their customers and eat another percentage based on whatever the new cost/demand curve looks like to them.

>Taxing the phone or the company’s margins should have the same effect, right?

Wrong

>They’re both costs on apple’s revenue.

Hardly. Make zero profit and you pay zero tax on that profit.

My argument is that since apple can move the price, if you tax the company they increase the cost of the phone as much as makes sense and eat the rest. If you tax the phone, they leave as much as the increase on the cost to the end user as makes sense and lower the price beyond that, eating it. In neither case are profits or demand going to zero.

>if you tax the company they increase the cost of the phone

Raising your prices in response to not making as much profit as you desired is not often a winning move in business.

And a tax on the phone does this, so they either lower the cost and eat it, or suffer the same fall in demand as when the price of the phone increases to protect their margins.

Perhaps, but a tax on profits does not do this.

Are you arguing that a 100% tax on Apple profits wouldn’t impact their competitiveness? How would they build new factories, develop new products or hire more workers without reinvesting profits into their company? Why wouldn’t a company that can raise more money from capital markets and that has the support of its government quickly overtake Apple’s position?

>Are you arguing that a 100% tax on Apple profits wouldn’t impact their competitiveness?

Pretty much. It would render their stock worthless, but there's nothing about a 100% tax on realized profits from preventing a business from operating exactly as before.

>How would they build new factories, develop new products or hire more workers

With relative ease. Corporation tax is paid only on realized profits. Reinvesting earnings has often been a way of avoiding paying it at all, which is actually supposed to be a feature.

> With relative ease.

Yeah, but why would they? Why would any employee or manager have an incentive to do extra work to do so? Where do they get the money from, and more importantly, why would they reinvest the money if there is absolutely no gain to doing so, instead of paying it out to executives and shareholders and just cashing out?

> Corporation tax is paid only on realized profits.

I’m not sure you know what this means. A new factory is an asset, taxes are definitely paid on it if Apple buys a new factory with retained earnings. Are you claiming that a corporation can gain new long term assets without paying any tax unless investors put more money into the business or banks loan them money?

I'm sorry if I sound shocked, but I actually file corporation taxes for a small business. Corporate profits are taxable whether they get paid out to shareholders or reinvested into the company.

>Yeah, but why would they? Why would any employee or manager have an incentive to do extra work to do so?

Coz they get paid.

>why would they reinvest the money if there is absolutely no gain to doing so, instead of paying it out to executives

It's true that with a higher profit tax you'd may see execs paying themselves higher and higher salaries and shareholders would be less inclined to prevent it.

>I’m not sure you know what this means. A new factory is an asset, taxes are definitely paid on it if Apple buys a new factory with retained earnings. Are you claiming that a corporation can gain new long term assets without paying any tax unless investors put more money into the business or banks loan them money?

>I'm sorry if I sound shocked, but I actually file corporation taxes for a small business.

So do I. Actually, the year before last I personally paid more in corporation tax than Facebook did (they paid £4,000).

I'm pretty sure they were taking neither investment nor loans.