This discussion is missing context. The whole reason that Apple has to pay taxes on foreign income is because unlike almost every other developed nation the US has a worldwide tax system. Almost every other nation has a territorial tax system. The rest of the world with their territorial system taxes income earned within that country, the US rather taxes income worldwide, regardless of where it is earned.
For example, if a British company earns income in Germany, its pays German taxes on its German income. But if a US company earns income in Germany it pays both German taxes and US taxes.
What is little known about this tax bill is that it normalizes our tax system with the rest of the world by moving to a territorial tax system. This is not about Apple avoiding tax on profit earned in the US, they will continue to pay US taxes, they won't pay taxes on income earned outside of the US going forward. [0] That means that there won't be any more hordes of overseas profits. And means the end of those tax inversions or corporate inversions you have been hearing about. [1]
So now that foreign profits aren't going to be taxed, something needed to be done with all the profits generated under the old system. The 23% repatriation tax is a compromise between the new rate of effectively 0% and the old rate of 39%. This BTW happens to be very close to the OECD, the developed world's, average tax rate of 24%.
Edit:
As was astutely pointed out below the US only pays additional taxes to the US if their US tax bill was higher than their German one. And they paid the difference between to two to the US.
=> But if a US company earns income in Germany it pays both German taxes and US taxes.
This is not portrayed accurately. If you pay German taxes, you claim exception for that amount. So if you pay more taxes than the rate in US, you owe no tax for that income in US. If the rate is less in the country than in US, you pay the difference.
Yes, that is correct but since the US had until recently the highest corporate tax in the OECD, the US corporation will would almost always pay more taxes on German income than a German corporation would on German it’s German income. Giving the US corporation a systematic disadvantage unless they kept the money out of the US. But all this has now changed.
It passed, but there are parts of the bill that only last ten years (those applying to personal/small business taxes), and then those tax rules revert to the previous version after ten years unless they are passed again under non-Byrd rules in the Senate.
https://www.bloomberg.com/news/articles/2017-11-14/how-the-b...
A 'personal tax increase' does not have to be across the board. You could e.g. increase the marginal rate for incomes above $1 million, while keeping other rates the same. That would not be politically difficult. Divide et impera.
Which assumes rational government. Our government is controlled by one party and yet we are heading to a government shutdown over immigration. Rational seems far away.
That single party has the majority of both houses of Congress and also the White House, and yet cannot manage to get a majority vote in the Senate because of disagreement within their own party.
The opposing party is not threatening shutdown. A group within the majority is. Since that group within the majority party won't play ball, the majority of the majority party is hoping to garner some support from the minority party.
As it happens, some of the changes they want to make would require 60% of votes rather than just 50%+1, but they haven't yet demonstrated they can get to 50%+1, so that's irrelevant here.
I think it's fine to view taxes that way, but we should also realize that to a business taxes are a cost to be minimized. No for-profit business willingly conducts their affairs to maximize taxes.
We live in a rules based system and the rules should be designed to incentivize the behaviors we want. Expecting any business to deviate from whats in their best interest is just... out of touch with reality.
Many public corporations want to (indirectly) maximize taxes. That's because taxes are levied on profits, and maximizing profits to increase share value is often a good thing.
But of course Apple isn't paying no German taxes. They didn't pay taxes on any of this overseas money, and they had the gall to ask for an "repatriation holiday" so they could pay overall zero taxes on that huge heap of money.
Now they are paying the US gov. Unless they can keep coming up with more Irish tax avoidance schemes, going forward they will probably also have to pay in Europe.
Apple paid millions in VAT, income tax for German employees, environmental (packaging) taxes, etc.
They did not pay much tax on their profits in Germany, but it's debatable which part of the profit of a firm designing phones in the US and building them in China should fall to Germany.
Yes, they paid taxes in Germany, France, etc. it’s reported in their financial statements. They’ve already paid 8 or 9% foreign income taxes on their foreign earnings.
Their corporate headquarter is in Ireland. They pay payroll taxes, VAT etc. in each EU member state just like every business has to. They do not, however, have to pay taxes on their corporate earnings in EU countries other than Ireland. That is a central part of "Freedom of Commerce" in the EU. (One of the EU's 4 foundational freedoms.) What Apple has been rightfully accused of is not paying their taxes on corporate earnings in Ireland.
They will still be taxed on foreign profits. It's the global minimum tax of 11%. So if they are based in Ireland they'd pay 2% in Ireland and 9% to America. If in China, they'll pay 15% in China and 0% in America.
Regardless of this, stopping the flow of capital and investment into the country with a 35% tax is extremely dumb. Everyone will say effective is far less, but it's far less because of foreign profits and IP stashed in Ireland and effective may be 20% for tech, but marginal to bring back in the states is still 35%
Yeah the latter sucks because as a resident I can’t even start a business here. I have to jump through hooves like Estonia’s e-residency program to just publish an app.
Right, but if you notice, the e and the s are adjoining keys on most common keyboards. Apologies if my wording was confusing, but I didn’t call out the es as the OP misspelling the pluralization, but rather specifically as a typo.
My mention of misspelling was there only to prevent another person from pointing it out, but alas, I still failed it seems.
Taxes are paid by "tax residence", not by "citizenship". If you live in the US, I bet you enjoy all the greatness of public schools, transportation, legal system, well preserved natural reserves... you should pay for that.
This thread was about US citizens living abroad, which is a whole different issue.
No they're not. You're confusing the already commonly-confused concept of legal personhood with citizenship.
> but they can contribute unlimited campaign contributions
Citizens United ruled that actual human beings had the right to make unlimited campaign contributions and that the right to do so could not be rescinded just because those flesh-and-blood individuals decided to pool their money into a corporation. People have the right to organize for political action and congress cannot take that away.
> Citizens United ruled that actual human beings had the right to make unlimited campaign contributions
No, it didn't. Campaign contributions are still limited.
Citizens United built on the established precedent that people unaffiliated with campaigns are free to spend their own money how they wish, as long as they don't coordinate with campaigns.
Citizens United ruled that this right applies to people who pool their money together.
Actually campaign contributions weren’t the issue. Citizens United decided that’s Congress could not take away the right of flesh and blood people to air a political advertisement just because they were organized as a corporation.
This is so beyond the pale as to be far beyond the realm of logical discussion.
If I have pooled my 'right of personhoop' contributions into a corporate asset base and thus absolved myself of liability laws regarding the disposition of this asset base -- what basis do I have to have to claim 'my' personhood rights over how this asset base is distributed to political campaigns?
If what you say is _actually_ true then it should be illegal for corporations to disperse campaign funds in anything other than an amount that _exactly_ reflects the relative ownership amount of every single stockholder in that corporation -- otherwise an individual shareholder's claim on the percentage of personhood ownership of the corporation has been rescinded.
I have no problem limiting campaign contributions and certain political activities. The constitution does, though. The law generally likes to treat corporations as separate from their owners, but no such notion exists in the constitution. And if it comes to a question of constitutionality, then it doesn't matter that our laws limit the financial liability of a stockholder to his or her contribution because that's not a constitutional question.
The constitution as interpreted by five out of nine sitting judges at the time the question was last ruled on. It's reasonable to think the constitution says otherwise, although you are correct as to the law of the land at the moment.
And I also think it's fair for you to use the shorthand, "The constitution says ..." as a stand-in for this. But there seem to be some people in the thread who are not too familiar with the American legal system, and I don't want those folks to be confused into thinking the document actually says anything directly about corporate person-hood and free speech. Not trying to put you on the defense or anything.
It's only beyond the pale because you appear to misunderstand the ruling and the existing law.
A corporation still cannot make unlimited campaign donations. They can however spend their money however they choose. As long as they are not coordinating with any compaign.
If a candidate is running and promises to raise income tax to 99%, then I can form a political action committee or corporation and spend as much money as we want trashing the candidate that is pushing that idea. We cannot, however, donate unlimited funds to his opponent or work directly with any campaign, pay their expenses, etc.
It is a perfectly reasonable freedom that just happens to have negative consequences.
The corporation cannot make campaign donations. They can't even talk with or coordinate with any specific campaign. They can, however take a public stand about who they want to win and run commercial to that effect.
Nope. Feel free to pose the question to any of the House/Senate representatives who hurriedly signed the bill because it was certainly considered in the legislation according to worldwide news outlets. I hope you don't get a canned response answer.
> That means that there won't be any more hordes of overseas profits. And means the end of those tax inversions or corporate inversions you have been hearing about. [1]
This won't stop companies selling their IP to overseas shells and then paying royalties.
The IRS really does not like that. I believe it's in litigation. Still if a citizen is subject to a tax on the difference between foreign taxes paid and US taxes owed, a corporation should be as well.
For example, if a British company earns income
in Germany, its pays German taxes on its German
income. But if a US company earns income in
Germany it pays both German taxes and US taxes.
If a British company sets up a company in Germany and that 'subsidiary' earns income in Germany and pays tax in Germany, and then wants to send its money back to the British company, does the British company need to pay tax on that?
Isn't that money new income for the British company, and therefor would be taxed accordingly? I think that's the key here.
Not answering your question, but the companies do tricks so they don't have incomes in some countries.
E.g. Starbucks in Germany... they buy their coffee from Sbucks Luxembourg, the amount of coffee needed to make a 7 euro coffee will also cost close to 7 euros, payable to the seller, Sbucks Luxembourg. So the German subsidiary has very low profits (7 euros for coffee beans for 1 cup of coffee!), and pay very little taxes. The Luxembourg subsidiary pay the local taxes, which are much lower -- as arranged by their then premier, and now current head of European Commission, Jean-Claude Juncker:
> In early November 2014, just days after becoming head of the commission, Juncker was hit by media disclosures—derived from a document leak known as LuxLeaks—that Luxembourg under his premiership had turned into a major European centre of corporate tax avoidance. With the aid of the Luxembourg government, companies transferred tax liability for many billions of euros to Luxembourg, where the income was taxed at a fraction of 1%. Juncker, who in a speech in Brussels in July 2014 promised to "try to put some morality, some ethics, into the European tax landscape", was sharply criticised following the leaks.[52] A subsequent motion of censure in the European parliament was brought against Juncker over his role in the tax avoidance schemes. The motion was defeated by a large majority.[53]
> In 2017, leaked diplomatic cables show Juncker, as Luxembourg’s prime minister from 1995 until the end of 2013, blocked EU efforts to fight tax avoidance by multinational corporations. Luxembourg agreed to multinational businesses on an individualised deal basis, often at an effective rate of less than 1%.[54]
If you buy something from European Amazon, the bill will be from Amazon Luxembourg. Same with Apple and Ireland...
Does that transition to a territorial system apply only to corporations or do individuals count too? American expats are among the few in the world who have to pay taxes to the mothership no matter how long they live abroad.
But you still have to file, which is not only a pain, rather expensive. My tax prep bill last year was around 1200 EUR in the Netherlands on top of my Dutch tax prep.
That is extremely overpriced. It is more labor intensive for working abroad, but not by that much. But if you were paying someone in the Netherlands to do your US tax return, that might explain it. Next year, get a US tax preparer and I can't imagine it being more than $200-$300.
Yes and no. You have to do a 1040 no matter what and you have to include a number of special forms that you must get absolutely right or you deal with alot of BS from having to talk to the IRS. And that's just for a simple tax situation.
If you have income from multiple sources, some of which may be in the U.S. and some not, even if it's as simple sideline business, then it gets more complicated as you also have to calculate profit/loss for that as if it were in the U.S., then subtract your taxes paid in your country, and demonstrate that it's all below a certain threshold. And there's also payroll tax exemptions, etc.
Wait a minute. Does this tax bill end the situation where e.g. Google earns $100 million/year in my European home country, but pay only $150,000 in taxes to my home country, using an Irish holding company to ensure their net tax rate (including to the US) on this amount is only a few percent? That would seem like a very good thing to me. The current situation is quite unjust.
I think more that Google will hoard less money in Europe to avoid US taxes and will be able to move more back to the US for investments there. It's the US' new isolationist policies in action.
You mean the new tax law that's more in line with the rest of the world when concerning corporations? Those damn US isolationists acting like the rest of the world! Next thing you know the globalists will start insisting on strong borders and immigration controls.
> For example, if a British company earns income in Germany, its pays German taxes on its German income.
This isn’t entirely accurate (heh, taxes are complicated). The company would most likely pay VAT/sales tax in Germany, but would pay corporate/income tax in the U.K. If your customer is a VAT registered business you would usually exclude the VAT, unless they are based in the same jurisdiction as you (it doesn’t matter where the item is going).
Up until 2015 this wasn’t the case for digital goods as VAT was charged at the ‘place of supply’ (where the company was based), but it is now accounted for where your customer is located. This is what caused the VAT MOSS kerfuffle, as you now need to account for 28 sets of tax rules depending on where your customer is located.
Not if the sale is made out of a branch or subsidiary based in Germany. Then its profit is calculated in the same way as any local company and taxed locally. And I think this what we are talking about in Apple's case. Not sales made directly by Apple Inc in the US but sales made by foreign subsidiaries of Apple.
VAT is paid by consumers, not companies. In principle, companies just collect the tax from their customers and send to the state the part that they are not transferring to their providers (but of course, taxes are complicated).
I live in UK, and I earn some money in Spain. In UK I am required to pay the difference between UK and Spanish taxes if I bring the money here. That's pretty standard everywhere.
This is a bit of an exception to the HN guidelines' call for original sources. We generally prefer a high quality third party report on news like this to a corporate press release. The latter tend to read like press releases.
Are there many, or even any, examples of that? If so I'd like to see one.
Really, all we care about is having the best article on a topic, where by 'best' I mean something like 'most substantive, while remaining accessible to a general audience'. By that standard it seemed obvious that the Reuters url was better. Anti-Apple bias doesn't enter into it, and frankly the idea feels a little absurd to me.
dang, every time there's a story about Google, admins here link to official Google blogs. Every time it hits the front page. And if thee's a negative story about Google, it's quickly buried/flagged/disappeared.
I'm sorry, but that's an absurd thing to claim. All I can really take from what you've said there is that you dislike Google.
For any $bigco there are lots of HN users who strongly feel for or against it, and they all have competing beliefs about which $bigco is secretly favored or secretly suppressed here.
People come up with highly charged claims about HN all the time and they're never true. They're in the eye of the beholder, reflecting how you feel, not how HN actually is, and driven by cognitive bias. I don't mean to criticize you personally—tons of HN readers do it, and I've written about the phenomenon a lot. https://hn.algolia.com/?sort=byDate&dateRange=all&type=comme...
Overgeneralizations about HN are my weak spot! Actually Scott and I bumped three Google submissions off the HN front page this afternoon for that very reason. The goals here are substance and variety. To be fair, some of those blog posts are substantive articles, while others just read like corporate press releases, and the same is true on apple.com.
It's strange how some users get indignant about certain bigcorps in favor of other bigcorps and vice versa. I suppose the Greeks were that way about their gods.
I don't have favorite corporations. I don't think HN should have any content from companies about their own products (exceptions for things like mea culpa articles).
While you may push back on some, almost daily I see content from Google taking up one of their products where if It wss on a Microsoft or Oracle site for example submission would never see the light of day.
Google just hides their press releases in blog posts.
If you see it happening again you're welcome to email us a link at hn@ycombinator.com. We're open to being persuaded that an article is not as substantive as it should be to make the HN front page.
Of course lowering taxes would encourage companies to repatriate large overseas cash hoards, but if that's the only goal, why have a tax at all?
As a country the US has obligations to its current citizens and its future citizens and those obligations cost money. If we overly celebrate these windfalls every time the tax rate is lowered, we might not realize that what we owe the citizen is being forgot and allowed to erode because the means to pay for it just aren't available.
You yourself point out the reason to have a tax at all: because someone has to pay for the cost of the US government. Also, at least in the versions I heard about this was a very carrot-and-stick tax bill. It didn't just allow companies like Apple to repatriate their foreign cash hoards at a lower tax rate, it taxed that foreign cash at the same one-off rate whether they repatriated it or not. The whole point was to remove all incentives to not repatriate money, to make it futile to try and wait for some hypothetical opportunity to do so at an even more reduced tax rate.
We currently get $0 in tax revenue from the cash Apple is hoarding overseas. This tax “holiday” (a term I dislike because it incorrectly implies that no tax is being paid on the repatriation, when it is simply a reduced rate) is resulting in $38 billion that we would not have otherwise received.
If you or I decided we just didn't like the tax rate that applied to us and didn't pay our taxes for decades at a time on income we made overseas, what do you think would happen?
Corporations are treated as people only when it's convenient.
You and I don't have high-powered lawyers, lobbyists, loopholes, offshore accounts, subsidiaries, etc to hide behind.
This is an insult to every U.S. citizen...Apple wouldn't exist if it weren't for the U.S. and its tax-payers providing the environment that allowed Steve Jobs to create his company and become successful.
The rate they're being charged on this money is even lower than the new lower rate that they'll be charged on future income. Must be nice. Yay for corporate oligarchy.
True it seems we are getting the crumbs here falling between the cracks. But what is another realistic scenario? Tax them even more? Wouldn't they move to another tax haven. Why didn't that work so far, these tax tricks are not new.
The whole point is that earned income should not have to be repatriated to be taxed. If I as a citizen have a bank account in Switzerland that accepts my foreign income then I pay tax on that money in the year it was earned. The exact same rules should apply. Just because the bank account is outside of the US should not make a difference.
No other country taxes it's citizens this way. Do you think if a US citizen lives and works in Germany, they should still have to file and pay US income taxes even though they were living in Germany and earning a salary working in another country? That makes no sense to me.
If Apple pays double taxes on iPhones sold in Europe to European citizens, after Apple pays taxes to the EU, that's effectively a tax by America on citizens of the EU. The phones are made in China, shipped to Europe and sold to citizens of the EU for Euros, never having stopped on US soil, and being taxed in the EU. Why does it make sense for the US to apply a tax which effectively would amount to an increased tax on purchases by citizens of another country?
> The whole point is that earned income should not have to be repatriated to be taxed.
Agree. They used the double Irish paying basically no income tax there. Then were trying to move to Jersey (the island). This isn't new though and other companies were doing it. Is there any realistic short term hope that we'll finally close all the loopholes and the Apples and Googles of this country will start paying their fair share of taxes? Probably not.
But I don't see why not at least be happy with them paying some taxes and investing the money domestically? Yet everyone here is upset. It is not ideal, I'd rather have universal healthcare, basic income even, I'd rather these companies not be able to do these schemes and pay their fair share of taxes, but it is what it is, why not be happy for some positive thing happening.
My guess is that the path outside of the legislature doing anything is through the courts. Since corporations are citizens there must be some kind of constitutional law since human citizens don’t get the same benefit.
I haven't thought of the courts. It might be interesting to see what would happen. Fighting with a hundred billion dollar company in court is tough though. The have infinite legal resources basically.
And yeah, I see the point about it being considered a person but that is mostly what is called "legal fiction" (it is actually a technical term, not just me being silly https://en.wikipedia.org/wiki/Legal_fiction). And that only goes so far. Mostly to benefit the corporate entity not the society. I'd like to put some companies in prison for life for destroying the environment or poisoning its workers but it just won't work. It would be nice to see how far it would go though.
Probably not that but they could keep that even when their "profitable on paper" subsidiaries were spread around tax havens just like before.
But another interesting thing here is the interplay with EU countries. EU recently started to pay closer attention to Apple. Even forced them to look for a new place (they found Jersey I think). From my armchair understanding if they pay taxes in one place, say EU they might not need to pay it in US and vice-versa. Because of double taxation. As long as Apple was hoarding the money quietly and nobody could do anything it all good. As soon as EU started going after the money, it would benefit US to try to get to it sooner.
Whether politicians considered that or not not sure. But if they did, I can see them wanting to capture those taxes before EU got to them.
I for one am happy the part of them investing more in US. Don't see the reason people are upset about it.
If they bring the money back then inevitably they'd spend it back into the US economy either through direct job creation or buying things. If they do create jobs, the US gets most of its money from income tax, which would increase from the more jobs/higher wages. It feels like double dipping if we expect them to pay taxes on repatriating the money and then also taxing the wages that the repatriated money allows them to pay.
> If they bring the money back then inevitably they'd spend it back into the US economy either through direct job creation or buying things.
That is a misconception. It's not like they are storing dollar bills in warehouses on foreign soil. The bulk of the 'overseas' money is already invested, for a large part in the US. See page 49 in Apple's yearly report [1], to see how that money is currently invested: at the end of 2016 almost $42 billion dollars were invested in US treasuries, $131 billion in corporate securities. It doesn't say how much of those corporate securities are US companies, but it's probably the bulk. It's an accounting/tax fiction that it is currently 'overseas'.
Boy are you in for a shock when you find out the money that you spend, which you've paid income tax on it, goes to someone who pays income tax on it again!
> It feels like double dipping if we expect them to pay taxes on repatriating the money and then also taxing the wages that the repatriated money allows them to pay.
That is how our federal government constantly engages in double taxation. A corporation makes money + pays taxes, then pays employees who pay taxes. Those employees buy goods and services as well as have their own companies, all of which pay taxes on their incomes.
After five layers of this double-dipping, an initial million dollars only has $327,000 left, with the other two thirds having been paid in taxes (at an average of only 20%). Many people pay far more than 20% in federal taxes. The federal government takes in taxes most of every dollar this way.
Most likely they will buy back stock or issue dividends. They have to do what the majority of shareholders want with the money. If they don't they will be sued.
I get your point. Only caveat is corporations also create jobs and pay their workers, but you and I as individuals do not.
I know lots of Apple workers (directly or indirectly) are in China, but I wanted to point out why it's inappropriate to compare personal and corporate taxes.
> I get your point. Only caveat is corporations also create jobs and pay their workers, but you and I as individuals do not.
That's like saying the wheat creates work for the mill to make flour.
You can't have one without the other. Can we just get rid of the ridiculous notion that corporations provide more than the workers doing the actual work?
I don't think it is. If the > workers DOING THE ACTUAL WORK are able to provide more value than the corporation, then why are they working for the corporation instead of providing more value than the corporation by themselves; and paying themselves more than the corporation pays them? I think OP's argument could be an example of reductio ad absurdum.
The balance of power remains at the management level of a corporation, despite the fact that management hardly "does the work" that workers hired would be doing.
The same arguments applied to the peasantry of the feudal age. There are many more peasants than lords, but through an imbalance of power (military in the feudal age, and monetary in the modern age), the higher ups gets to claim the profits of the workers.
"Corporations are people, too!" as in, the people who hold their wealth in the form of corporations and generate their income from capital. Realize that it's not just an inane phrase, they are talking about themselves. They want to escape being taxed and they always succeed. Everybody else can pay, please.
What's incredible is that there are many more of regular people than these "people," yet regular people do not act cohesively to form a political bloc so they bicker amongst themselves.
Regular people own wealth in the form of corporations, too. Half of all Americans own stocks. Public and private sector pension funds own large amounts of stock. University endowments include stock investments and private equity. Sovereign wealth funds, such as the Alaska Permanent Fund, own large amounts of stock.
If we want to tax the rich, let's tax the rich. Let's not tax straw men that intermediate wealth for everyone, because that's what corporations are.
Half (46% in 2013) of all Americans owned some financial wealth, that's already counting indirect investments -- I believe this number came from a study by Ed Wolff. In the same year (2013), the bottom 80% together owned about 5% of the financial wealth in the US, under the same definition counting indirect investments (80%-99% owned about 50%, 99%-100% owned about 45%). So no, "everyone" does not benefit in the same way from corporate wealth and "regular people" (the bottom 80% seems like a pretty good proxy) have basically nothing to do with it, even in aggregate -- forget about per capita.
As for not taxing corporations at all and instead fully taxing dividends and gains, that's a different discussion with its own merits.
That’s kind of like saying that because I have a house on a tiny plot of land and my rich neighbor owns half the land in town, that property taxes don’t affect me. It doesn’t really follow.
It certainly woudn't affect you as much as your rich neighbour. And if the additional tax on land brought in more community services, you would be all for it, whilst your neighbour would be against (since he'd be paying a majority of that cost to fund said community service).
My point is that if you want to punish the other half of all Americans (including poor grandmothers living on pensions) as a means of taxing “the rich”—which is exactly what high corporate taxes do—that an injustice has been done. Advocating for the interests of a diverse half of the population is many things, but “elitist” is not one of them.
Apple wasn't breaking the law. Lawmakers were split and the majority simply didn't want apple to pay taxes. You can also hide your income from taxes if you are a business owning capitalist and not a commie laborer.
While I agree with you to some degree, we have the system we have. It has somehow survived through both tax-and-spend Democratic and fiscally conservative Republican administrations. It had to be fixed. So what say what you will about the current administration, they managed to get something done that even some of the most tax-hungry politicians in the nation previously failed to do.
> So what say what you will about the current administration, they managed to get something done that even some of the most tax-hungry politicians in the nation previously failed to do.
This is not terribly unique. We had a very similar (slightly more generous) repatriation tax holiday during the Bush Administration, in 2004.
The Democrats are tax and spend and the Republicans are borrow and spend. If you borrow and spend then you need inflation to eat away at the interest you are paying on the money. But you can only borrow so much and quantitatively ease (inflate) so much.
Also unique because a simple repatriation holiday is a far cry from restructuring our corporate tax code to make us competitive with the rest of the world from a tax perspective.
Really? Have you investigated how many countries on the planet tax their citizens and corporations making money in other countries?
The US marginal corporate tax rate is 38.92% compared to the worldwide average 22.5%. Until this recent tax bill passed, the US has had the 3rd highest marginal corporate tax rate in the world, surpassed only by the UAE and Puerto Rico.
The US federal government is greedy for cash not business friendly.
A higher theoretical corporate rate is largely offset by lower income tax [1]. In the end, income taxes are basically a business cost for any company with employees. On top of that, actual tax rates after accounting for deductions are much lower [2], and then you have lower sales tax: in Europe VAT averages around 20%, whereas in the US sales tax averages well below 10% - which is why European tourists are notorious shoppers when going to North America.
You can argue whether your dollars are well spent or whether there are internal disparities, but overall the US is hardly a tax hell.
You make it sound like there was no alternative. You can also tax income when it's earned, instead of when it's repatriated. That's how individuals are taxed on their foreign income. There were also other variants proposed.
In any case, the reason that corporations lobbied so hard for this particular tax code change was that they actually needed to repatriate money ASAP. Interest rates are going up. Their operational tactic of borrowing low-interest money against their overseas cash to repurchase shares is ending and they needed their cash. They would have repatriated anyway. Now you can kiss that tax money goodbye, just like you can kiss goodbye to the tax money on the free stepped-up basis that large estates will be passing on for the eight years.
No. Apple has been waiting for the tax holiday because they've seen it before in precedent. The problem is that politicians like the tax holidays because it looks good on them (big capital inflows have an effect on the economy). But if the holiday was eliminated entirely and never expected, Apple would have to slowly repatriate these earnings as their chest grew too large.
That’s in effect what’s happened here - not only is there a one-time repatriation event, but the tax code has been changed so all future foreign cash holdings will be taxed whether or not hey are repatriated.
Not sure where you're getting your information, but that is simply incorrect. The repatriated cash is simply being taxed at a lower rate. Hence the $38 billion.
That makes no sense. Then the government would get nothing, plus give up future leverage, so obviously it will not do that. Comparing what happened to having no tax is a straw man.
What happened here is that the government finally set a rate that is agreeable to both parties, which is of course in its interest and long overdue.
How is it a straw man? Maybe it's the right way to go. I honestly don't know.
My point is that encouraging a behavior where the country sets a rate, then many celebrate the reduction because they get a short term gain, risks leading the US farther down a path that neglects its obligations.
Because the US is not going “down a path that neglects its obligations”. In fact quite the opposite since it just got a massive tax revenue increase. So comparing it to a situation where the US decided to just stop levying tax doesn’t make sense.
> In fact quite the opposite since it just got a massive tax revenue increase.
Nah, they capitulated and accepted a far lower rate than they should have received otherwise if Apple (and companies like them) weren't permitted to play these shifty legal games.
If the U.S. gov was really looking out for its own interests and the interests of its citizens, it would have closed these loopholes years ago and told Apple to go pound sand going forward.
Pay your taxes or get slammed with massive fines and be barred from selling product in the U.S. until your tax bill is paid.
Not many markets can afford their products, see how they like it when the country whose resources and laws allowed them to become so successful becomes off limits to them.
I find it odd that you start from a position that assumes that the federal government has a right to Apple's money. It was basically an attitude like that on the part of the British that led to the American revolution in the first place. If you want a health economy with strong labor demand and robust wage growth, we need to start from the opposite position - the federal government must avoid taxation for all but the most essential services and cut out everything else. If individual states wish to have more services, let them tax and spend for their local populations. At least that way if businesses and people don't like it, they can leave without leaving the country.
> a position that assumes that the federal government has a right to Apple's money
I'm starting from a position that assumes the government is entitled to the prevailing tax rate that was law at the time the income was earned.
A tax rate that existed during a time when Apple became the world's most valuable company. It wasn't a colony with no representation suffering under a tyrannical monarchy that was leeching it like a parasite for the enrichment of an elite class. They ARE the elite class.
In fact the opposite is true. Apple benefited from all the services paid for by other tax payers (security and military, infrastructure, legal system, etc) and avoided paying their fair share using legal tricks and loopholes.
The result wasn't "fix the loopholes" it was "give the finger to the American people and government until we get someone elected that will change the rules in our favor"
I'm not saying government is the answer to all problems. Far from it. But there's no question Apple exists and is as successful as it is in large part due to the favorable environment America provides to business...and part of that environment exists due to things paid for with taxes. Never mind the ridiculous wealth inequality that is only continuing to grow in the U.S...this road leads to oligarchy.
Whether or not Apple/whatever was being shifty or not is a matter of opinion. The fact is, though, that nearly every other country already had a territorial tax system.
And Apple used bullshit rationale to hide their money in a territory where they did not earn their money. They tell Europe that all the innovation is from California, then tell USA that all the IP is owned by an Irish company.
i already received 1,000$, to which I spent on a new energy efficient door, to which I paid a handyman to install it. there is a lot more winners than your dogma suggests.
I am interested in seeing where this goes. if we do see wage growth from it, it provides evidence to a lot of questions about how the cost of healthcare was squeezing out our wages. if it doesnt, then a lot of complaints about corporations will have a lot more evidence.
putting all that aside, this news about apple bringing over the cash is a huge win for everyone. having that money sit and do nothing was pretty much bad for everyone.
There are no cuts in healthcare spending offsetting these tax cuts.
Ending the individual mandate will likely reduce the number of people buying insurance from ACA marketplaces, but that isn't going to dramatically change the price of other insurance (to the extent it has an impact, it will probably push insurance prices up...).
The tax cuts are, at present, going to largely be paid for by borrowing money.
> I am interested in seeing where this goes. if we do see wage growth from it, it provides evidence to a lot of questions about how the cost of healthcare was squeezing out our wages. if it doesnt, then a lot of complaints about corporations will have a lot more evidence.
Spoiler alert: It's a remake. Trickle-down doesn't work.
Investing significant money in businesses doesn't create more work. Increasing demand creates more work. How do you do that? You put more money into the hands of consumers, which is the opposite of what this bill did.
from what I am told, my taxes were lowered - thus you would be factually wrong. but I'll wait and see if that is true when I fill out my taxes.
beyond that, I have seen me and many others see immediate returns. your position is already starting from a hole, but I am a wait and see kind of person.
I hope it works out, you should too, unless you are one of those people who just want to see the world burn types.
Are you in the bracket of a typical American taxpayer or the bracket of a typical HN-er?
> I am a wait and see kind of person.
We've been slashing taxes on corporations and the wealthy since the Reagan era under the trickle down philosophy, but we're still waiting for that money to actually trickle down: https://www.epi.org/productivity-pay-gap/
If 50 years isn't a long enough experiment for you, what is?
Some people make the (good? I don't know) argument that corporate taxes are distortionary anyways, and shuffling that tax burden over to income has the same effect with fewer side effects.
I think people like corporate taxes because people only have a vague idea of where the incidence actually falls. Clearly, at the end of the day, corporate taxes take money out of the pockets of business owners/shareholders, employees, and customers in some proportion, but no one's really sure what it is. Taxes that you're obviously paying are unpopular, whereas taxes it feels like "someone else" is paying are less unpopular.
You're of course right that owners/customers/employees/vendors/etc pay the corporate tax. But when you say "tax the corporations" it sounds an awful lot like "tax the rich people", and people imagine the Monopoly man with a monocle shelling out money from his tuxedo pockets.
Of cours, in the real world, you likely work for a corporation, and the retired Teachers in California are collectively one of the biggest owners of companies in the US [1].
My father, who is quite wise and right about many things, is very fond of stating that corporation's don't pay taxes - they just pass them on to other people. He owned a local redi-mix company until he retired, and they routinely adjusted wages and prices in response to local, state, and federal tax changes. It's a fact of life that the money corporations pay comes from somewhere, whether it's on the 'in' side or the 'out' side of the balance sheet.
One of those "out" sides of the balance sheet is the owners of the corporation. That's generally who people think of when they think of who "pays" corporate tax. Especially for taxes on profits, which go 100% to the owners.
I agree that that’s what people seem to think. But if the corporate taxes get too high, wouldn’t you think that at some point, business owners start saying “screw it, I want to be a W-2 worker,” which obviously would put downward pressure on employee wages? Conversely, now that the tax reform bill created all these tax advantages for passthrough income, isn’t it obvious more people are going to be starting businesses and trying to structure their income as business income?
Because there’d be more competition for W-2 jobs? Any situation where the average business owner can make more money by becoming a W-2 worker at someone else‘s business is not a stable equilibrium.
This is exactly the thing that renders me speechless every time this comes up in casual conversation. People generally agree that apple and other tech companies hoarding money in Ireland to avoid tax is Bad™. Then, in the next breath, they say that removing the tax burden to get them to move that money back into a US bank is somehow Good™. But what does it matter if the government can't take a cut? Why do people who don't profit off of apple care which bank it's in?
Nobody cares "which bank it's in" - but if a company has $1B in out-of-US cash not currently subject to US tax, and bringing it into the US will cost them 30% of it, they may (sensibly, in many cases) just elect to leave it sitting wherever it is.
As to "what does it matter if the government can't take a cut?" --- the government does take a cut, and the reason it matters is that the lower rate will, on the margin, encourage cash repatriation.
Remember too that firms know they will be taxed in the future at (unknown, but estimable) rates, and today's rate will be compared against firms' estimates of current rates.
So in terms of the government's cut I forget the numbers in the current plan but say the corporate tax rate goes from 30% to 20%, and Apple decides that 20% is As Good As It's Likely To Get, and decides therefore to bring $1B of cash into the US that at a 30% rate it would have left elsewhere -- the US gov now gets 200M, rather than the 0 it would have gotten if the tax rate had stayed where it was.
Also you seem to be under the incorrect assumption that capital will just sit in a warehouse as bricks of $100 bills collecting dust. Nothing could be further from the truth. In reality, one of a few things will happen:
1) Apple will spend it on capital investments (factories, campuses, data centers, etc.) in its business. Doesn't benefit the government, but benefits the country.
2) Apple will spend it on R&D / employees. Doesn't benefit the government directly, but benefits the country.
3) Apple will dump it into an American bank. That bank has a reserve ratio that is relatively low. It will lend several times the amount that Apple deposits to people or corporations who will do 1) or 2)
4) Apple will spend it on buybacks and dividends, which ultimately ends up in the hands of Apple's owners (you and me through our 401(k)'s, and probably a bunch of rich people as well), who will do 1), 2), or 3)
So, whether or not the government gets a cut, it benefits everyone who actually lives here.
You seem to be under the incorrect assumption that it is currently sitting in a foreign warehouse as bricks of $100 bills collecting dust. Nothing could be further from the truth. According to page 49 of Apple's yearly report [1] at the end of 2016 its cash and equivalents were invested as follows (amounts in millions):
* U.S. Treasury securities 41,697
* U.S. agency securities 7,543
* Non-U.S. government securities 7,609
* Certificates of deposit and time deposits 6,598
* Commercial paper 7,433
* Corporate securities 131,166
* Municipal securities 956
* Mortgage- and asset-backed securities 19,134
The repatriation is just a tax/accounting fiction. Yes, Apple now has more flexibility to do with that cash what it wants (mostly return capital to shareholders through dividends and buybacks), but on aggregate for the economy it doesn't make a huge difference.
I know this post is a few days old, but having that cash invested in treasuries, bonds, CDs, etc. is as close to a warehouse as it can possibly get. I strongly suspect that a good chunk of it will be spent on capital investments once it's repatriated.
How realistic is it that a $5 billion fund can move a non-trivial amount of iPhone manufacturing to the US? Most of the BOM supply chain is in Asia, and assembly at FoxConn I heard amounts to 3% of the cost. It seems like Apple would have to build mostly automated assembly in the US or suffer severe margin reduction, and they'd suffer turnaround issues with the crucial components being still sourced in China.
However, given the issue with iCloud, you can see that they've now realized they have to reduce the leverage China has over time, but $5 billion seems way too small to move an entire logistics manufacturing chain, they need a moonshot for this. Apple spends way too much on stock buybacks and dividends and not enough on reinvestment.
Elsewhere in this thread, the pro-Trumpists don't seem to get why people were opposed to the tax plan:
The fear many people have is that this repatriation will mostly go to stock buybacks, dividends, and executive compensation just like the last 3 times there was a repatriation event. The last repatriation event didn't make a dent in national income growth or GDP, it barely moved the needle. The Democrats wanted the funds to be spent on infrastructure, or education as an offset.
The GOP decided to spend any increased revenue on lowering the estate tax and marginal tax rate cuts to avoid the cutoff for reconciliation. Since Democrats, backed by tech companies, had long supported repatriation. The GOP had a chance to pass a clean corporate tax bill that left everything else alone. Everyone knows the reductions for marginal rates at the high end and the estate tax changes aren't going to affect GDP much, and the net result of that was to impose double taxation on some states due to SALT deduction changes, and increase the deficit by $1.5 trillion. Apparently, double taxation is bad if it's the estate tax, but not if you're in California, New York, etc.
A practical, clean, corporate tax reform bill would have been better, especially if it was synchronized with international partners to try and close loopholes. For this reason, although the tax plan had some good aspects to it, overall, it's a very bad bill and I doubt the positives to Apple are going to offset the negatives to the rest of the economy.
Speak for yourself. I'm not at the high end of the income curve - not in the 1%, not even in the 10%, and I'm getting almost a $4k tax cut next year. I ran the numbers for my friends who are probably in the bottom half of the income curve (they make just over 40k between the two of them), and they're getting about a $1200 reduction. They were pretty shocked, since they'd been told over and over that it's not really a cut for lower income people. I think the truth is that the cut is smaller in high tax states, and much larger across the board in lower tax states.
Also, it's not double taxation. The SALT money is taxed in the states and spent in the states. Why should those states that choose to have large internal governments get a discount on their federal contribution percentages? They receive the same services and benefits...
Those cuts are not permanent though. They taper off and end within 10 years and will need to be renewed through future legislation leading to even further deficit impact beyond the $1.5 trillion. Meanwhile, the corporate tax cut and I believe estate tax cut are permanent and will not require renewal.
The part you're not taking into consideration is that all of this will be paid for with cuts to Social Security and Medicare for people not already receiving benefits. So if you're still in your wage-earning years, that $4k tax cut (which others have rightly pointed out only lasts 10 years) will cost you tens (if not hundreds) of thousands of dollars a year in retirement.
It's extremely short-sighted to look at just the near-term effects of this tax bill. But such is America where so few have adequate retirement planning. We're headed for another period similar to the one that led to the establishment of Social Security. The question is how people will react this time when they see so many retirees dying in poverty.
I already plan not to receive Social Security or Medicare. If I do, I will have far more money in my retirement years than in my working years - we save at a pretty crippling rate of ~20% into Roths right now. But since I'm 35 and my wife is 30, it's likely that we'll get nothing (or very little).
I'm curious why I've never heard a politician go with the argument that a tax cut today will ruin your social security benefits tomorrow. Why do they not make the argument that a tax increase would be more beneficial for your future?
I don't trust the government to do much of anything, and that includes invest money. Their stewardship of the social security trust fund has proven that I'm right (it's essentially full of IOU's). Anybody who believes that giving the government a few thousand dollars is better for their retirement than putting the same cash in a 401k hasn't taken a hard look at the government's performance to date.
TL;DL: I don't think that argument would fly with informed voters.
Maybe because people are terrible at evaluating long-term vs. short-term benefits. Politicians need concrete things to point at to keep getting elected. Saying that "I voted for your life to improve in X years" won't help them that much.
It is double taxation, and that was the whole original justification for the deduction, which started in 1862, predates that even further, and even the founding fathers discussed it.
Secondly, let's dispense with this damned notion that the SALT deduction is somehow the high tax states benefiting at the expense of the low tax states, it is precisely the opposite. High tax states raise money and take better care of their citizens, and so their citizens consume less federal dollars per capita in need. In other words, state spending lowers the burden of the federal government having to pick up the slack. Isn't this the conservative dream? States rights? Spending decisions on social programs being done at the state level, laboratories of democracy and all that?
The low tax states, primarily RED STATES, do not spend sufficiently on their populations and as a result, are a larger burden on the federal government, requiring more subsidy. It is the low state states that are raising the cost of government for everyone else and it's quite ludicrous to claim states like CA and NY are being subsidized by this.
Most high tax blue states give more money to the federal government than they receive, and most of the low tax red states are a net federal burden.
So not only do California and New York already subsidize and pay for benefits that these low tax states aren't providing for their citizens, in addition to taking care of their own residents, their citizens now have to pay for egregious tax cuts and have a further burden thrust on them.
If you think the SALT deduction is California and New York benefiting at the expense of the red states, how about we impose a new rule that says your state cannot receive more federal dollars than it pays to the treasury,except in natural disasters and emergencies. Then let's see how long your low tax status lasts. Only a few of the low tax red states are net contributors.
The position that local governments shouldn't raise taxes to pay for their own programs is a deliberate attack on the whole concept of local control, states rights, and a smaller federal government. If states are not handling their people's needs, it just means the Federal government will be bigger and more invasive.
My question is, why do I have to pay for and subsidize the lack of government in these low tax, freeloader states? I mean, this is a rhetorical question, these are my fellow American citizens and the rich states should help the poor ones. But do you see how this faux GOP messaging about blue states could be turned around? I don't mind that my state is a net giver, but I'm really angry about claims we're takers and need to pay more. If you need more, maybe we'll pay more, but don't try an ideological wealth transfer from blue states to red states to appease your voting block and then turn around and lie about the reasons for these cuts. If you want to close my SALT deduction to pay for much needed middle class relief, infrastructure, or services, I'm all for it. But eliminate it so you can give the top 1% an enormous marginal tax break, or give a handful of ultrawealthy dynastic families an estate tax break? Hell no.
Secondly, the GOP tax plan isn't about you. They passed permanent budget busting tax cuts for corporations, for wealthy estates, didn't touch the carried interest loophole, and gave marginal tax cuts that will expire for you in a few years. They tried to eliminate deductability of tuition expenses for kids, for teachers, for medical expenses, and a host of other mostly middle class deductions, while adding loopholes for wealthy prep-school tuition. They hit the endowments of private colleges like Stanford, Harvard, etc with an endowment tax, while trying to exclude religious conservative degree mills. This think is a damn ideological sham with blatant attempts to punish democratically leaning states and institutions that aren't even veiled, and sold as what every knows is a sham, with the new budget deficits providing the justification needed to gut entitlements.
I expect I'll be voted down, but my state has high taxes because we like having a top university system, we like taking care of our people, and we like cleaning up our environment. Maybe these other states don't, that's for their voters to decide, it is the right of Californians to spend more of their own money to take of their people instead of asking the Feds to do it.
They don't need to repatriate that. They have tens of billions domestically, and can use debt instruments against their overseas money. Who wouldn't lend Apple money at very low interest rates, given >$150 billion in collateral in the bank.
Apple has already been doing buybacks and dividends by using bonds.
Except that they can just pay it with their overseas money in whatever form makes sense. On top of that, debt repayment comes out before the profit/loss that determines income so they could even use that to selectively lower their tax burden in future years.
Are you sure you can take a loan in the US and then pay it back overseas? That would be effectively transferring money from abroad. The whole point is to avoid that.
They timing seems awfully strange for that explanation to work. Remember, corporations do what makes the best sense financially. Even though they could do this before, they didn't, because it didn't make sense.
”How realistic is it that a $5 billion fund can move a non-trivial amount of iPhone manufacturing to the US?”
Neither the now-referenced page from Reuters nor Apple’s press release mention that. They will invest in their domestic suppliers and manufacturers, but that’s it, manufacturing-wise.
Also probably worth understanding who these 'suppliers' are.
I think that when people hear that Apple has thousands of suppliers from 50 US states, people think that they're talking about high-tech suppliers for iPhones.
When in reality, Apple is also a retail chain operating in 45 states and has suppliers like cleaners and office suppliers and security that would naturally come locally. Not that these suppliers are worth less, but I don't think the reality matches what people think Apple is saying.
Americans do plenty of so-called "crappy jobs" for the paycheck, if the received amount justifies the crap they have to do. There's work to be done and we can't have 300+ million engineers in one country. Maybe should take a look around at the world you live in.
> You don't speak for all Americans. Many would be happy to do it.
Perhaps.
But if they took jobs with approximate pay and work conditions that the Chinese FoxConn employees in company-cities have, that wouldn't look anything like a modern American job.
It would look far more like an American coal mining job in the 1920s where workers toil under enormous pressure for meager wages and owe most of them (of not all or more) back to the company town for housing and food. This is AFAICT an accurate description of some of the worst working conditions of FoxConn.
And if there is such demand to work in such conditions, then how hasn't some enterprising American company started and supplied that dirt-cheap labor? There isn't enough supply of labor for the demand that you imagine exists.
I love it. Apple gets to avoid paying taxes for years through accounting slight of hand, and then when they finally pay for part of what they owe they want a pat on the back for doing so. Corporations, man.
You only owe the taxes that the law compels you to pay. There's no obligation whatsoever to pay a dime more.
Do you personally look to pay the maximum amount of taxes that you could possibly justify through various readings of the tax code? Because I guarantee that your tax software or your tax accountant are not "taking advantage" of opportunities for you to pay more unless you look to.
No but I also don't set up a pretend subsidiary in Ireland that owns my intellectual property and pays me dividends for my freelance work. To pretend that they didn't go above and beyond to avoid paying taxes is lunacy.
At least here in Canada, sellers are legally obligated to remit sales taxes, even if they do not explicitly collect them. The buyer does not need to do anything.
I made this mistake when I first starting selling online, which stung. Setting up a tax ID in Canada was very easy. Now that I am selling in the US, I am just beginning to explore the issue, and it is notably less easy.
So if you "get away" with not paying sales tax online, it is likely that the sales tax was simply baked into the price.
> Have you ever made a retail purchase and the invoice didn’t include retail sales tax? This may occasionally occur, especially if you purchase items over the internet or from out-of-state vendors. ... However, the buyer has a responsibility to pay use tax to the Department of Revenue even if the seller doesn’t collect it.
> Also, an invoice should never have a single figure that “includes retail sales tax.” If you receive such an invoice, contact the vendor and ask for a new invoice with the retail sales tax separately stated. Washington law requires that customer sales slips, contracts, invoices or other sales documents separately state the amount of retail sales tax due.
This is probably because your business is too small. I’d youbwere making 10s or 100s of millions of dollars in annual profits you would have a pretend subsidiary by now.
Apple has done nothing illegal. If you don’t like it, you can complain about the tax laws, that’s what is bothering you.
I would argue that legal obligations are different than moral obligations. You may not agree that wealthy corporations have no moral obligation to pay higher taxes, but I would say that not having a legal obligation to take some action is not the same as having no obligations period.
I'm rather sure your criticism is ill-founded: the money they're talking about moving to (US) Apple Inc is actually profit of other companies also named Apple homed in other countries, of course related to (US) Apple Inc and set up by the original, but with profits already taxed (your point: at questionable rates) in those home countries. They could just reinvest those profits in THOSE countries rather than the US. I imagine folks in those other countries might be sore that Apple <Other Country> isn't locally investing.
They should probably stick away some of it under the cushions of their Irish sofa, what with that $13B EU tax bill still pending. But you are correct of course, that money are the proceeds from their tax evasion schemes overseas.
>Apple expects to invest over $30 billion in capital expenditures in the US over the next five years and create over 20,000 new jobs through hiring at existing campuses and opening a new one.
Corporations have a legal obligation to their shareholders to maximize their profits. If they did something as negligent as paying taxes they didn't have to pay, and that none of their competitors pay, they'd be opening themselves up to a lawsuit from shareholders. Laws are weird.
Factually, corporations do not have a legal obligation to their shareholders to maximize their profits. That's a myth and a very absurd one at that. If it were true, Salesforce couldn't operate its various corporate charity programs as one example.
I don't really see the difference between having a legal obligation to act in your shareholders best interests and an obligation to maximize profits. Given that profit is most shareholders only interest in owning the stock. Now that does mean that companies should maximize long term profit, perhaps at the cost of short term profit. But I fail to see how paying taxes you don't have to is ever in the best interests of their shareholders.
Fairly simply, many investors see corporate longevity, while paying smaller, more reliable dividends as their best interest. Doing so could easily be orthogonal to "maximizing profits".
Shareholders care about more than profits. Just ask one!
Many shareholders care about stability, There is the whole distinction between "growth" stocks and "income" stocks. Some investors prefer low-growth companies that pay big dividends, other investors prefer just the opposite.
Some investors care about environmental issues, or social issues, or religious issues. e.g. the Norwegian sovereign wealth fund divests from companies that don't meet its ethical objectives, and is often a significant investor.
> I don't really see the difference between having a legal obligation to act in your shareholders best interests and an obligation to maximize profits.
Simple. "It's in our shareholders' best interest to have a stable society with upwards mobility so more people can buy our products over time."
Or, "It's in our shareholders' best interest for us not to act so amorally as to turn public opinion against us, incurring new onerous regulations as a result."
There is no source because there is no legal imperative for corporations to maximize shareholder value anywhere in the United States. It's a myth.
Shareholder primacy is a theory -- though it's really more of an ideology -- that executives/board members can believe in, but it is by no means required by law[1].
It's not a myth, it's a very common interpretation of Dodge v Ford [1]
>A business corporation is organized and carried on primarily for the profit of the stockholders. The powers of the directors are to be employed for that end. The discretion of directors is to be exercised in the choice of means to attain that end, and does not extend to a change in the end itself, to the reduction of profits, or to the non-distribution of profits among stockholders in order to devote them to other purposes...
It's not the only interpretation however
>Dodge is often misread or mistaught as setting a legal rule of shareholder wealth maximization. This was not and is not the law. Shareholder wealth maximization is a standard of conduct for officers and directors, not a legal mandate. The business judgment rule [which was also upheld in this decision] protects many decisions that deviate from this standard. This is one reading of Dodge. If this is all the case is about, however, it isn't that interesting.
>A business corporation is organized and carried on primarily for the profit of the stockholders. The powers of the directors are to be employed for that end. The discretion of directors is to be exercised in the choice of means to attain that end, and does not extend to a change in the end itself, to the reduction of profits, or to the non-distribution of profits among stockholders in order to devote them to other purposes...
I'd like to know who those 9,000 American suppliers and manufacturers are. Other than Corning who supplies the Gorilla Glasses for almost all smartphone makers, I can't really name any significant domestic suppliers who would make up $55B of their "spending."
They don't mention if they are counting software vendors in this list as well. If so, it's pretty easy to hit that number. An employee wants a license for a drawing app? That company is now a "supplier".
Sometimes, it might be robotics companies whose products Apple uses to test their devices. You can't really name them because maybe you're not the target market for those products.
Apple wants to create competition for the components they need to drive down prices throughout the supply chain. Most of their investments relate to this from camera tech to oled screens.
I'm guessing they are also counting suppliers for their infrastructure. So they are counting it when they buy 2x4s for a corporate office from a US wood supplier.
All the comments seem to be sketpical or negative. I think it's funny if you go back right before tax reform passed and look at all the comments on articles here on HN almost all were blasting tax
reform. Saying it won't work, it does not help the economy, does not create jobs, and repatriation only leads to stock buybacks and executive bonuses.
So far we've seen company after company giving substantial bonuses to all employees, announcing expansions, repatriating large amounts of capital from overseas back to America.
Funny the nerative always seems to stay negative even though facts say otherwise.
For me the laughable part is that it's a small part of the benefits corporates will reap and some of the companies are also doing layoffs, as has been commented on by others.
> But for rich and poor alike, a layoff is definitely life-changing....
Agree there, no doubt, most people would rather have a job than a $1000 bonus. But what does that mean in this context? Should Walmart keep those 60 Sam's Club stores open at a loss to avoid laying people off? Should the government subsidize them? Maybe it should break apart Amazon because a lot of those location will become e-distribution centers.
What would you have done. How would you have saved those Sam's Clubs workers? I am curious, not being sarcastic or tricky? I'd suggest breaking Amazon into regional companies like they did with AT&T. Or maybe breaking AWS away from Amazon-retail business.
Would it work to argue that increasing taxes also is an incentive for layoffs? Higher taxes, means lower profit margins, means some product lines become unsustainable so departments are closed and people are laid off.
So lower taxes means people are laid off, higher taxes means they are laid off. What tax structure would give them an incentive _not_ to lay people off?
They are basically closing off 60 Sam's Clubs. When is the last time you went to Sam's Club? Do you know anyone who goes there regularly? I don't. I had membership many years ago. Many will be converted to e-distribution centers. Guessing this has little to do with taxes and more to do with new year reorg to compete with Amazon. Otherwise, what would you do? What kind of incentives would you give to Walmart to save those Sam's Club workers?
Walmart is not the only company which did this. Other companies raised their minimum wages and also gave $1000 or $2500 bonuses (Apple did that too I think). Why not be happy for them they got something for the holidays.
Sure we are all software developers expecting 6 figure salaries, RSUs, options and $50k bonuses every year, $1000 is nothing, I get it. Though someone working at an AT&T store in Columbus, OH or Kansas would be quite happy to get $1000. it's disappointing and I'd wish they all had large salaries and thought $1000 is insulting just like we do.
In general we would rather have free healthcare, and other things we like to talk about here, but those probably are not going to happen in this country at his point in time. But why not be happy for these people at least or say that it is nice for Apple to pay some taxes and invest in US as opposed to stashing it away for another 20 years.
You only get the full $1000 if you worked for Walmart full time for 20 years. It’s not like you would still get much if you were a typical Walmart employee.
Walmart is not the only company which gave bonuses. AT&T did the same. Apple gave employees $2500. Overall that is a quite a bit of people who got something they probably would not have gotten otherwise. Yeah, it would be nice to have free healthcare, basic income other things. But to someone making minimum age $1000 is a nice holiday gift. Why not be happy for them?
I'm pretty sure no one who was making minimum wage got a $1000 bonus (including at Walmart, who would be making min wage after being there for 20 years? Sounds like a store manager or district sup to me). So I'm not happy for them because they don't exist.
> I’m pretty sure AT&T and Comcast don’t employ many min wage workers, especially not like Walmart does, if any at all.
AT&T has a lot of door-to-door people: technicians, sales "consultants". Also people in call centers. Those are a lot closer to minimum wage than what you are implying - that only managers and big wigs got those bonuses.
> You aren’t making a valid inference here
The claim was you couldn't be happy for them because basically only managers got those. I did some legwork and found that it's probably not true. You were looking for a reason to cheer and be happy for them, so I found one.
> it honestly feels like something Trump would claim.
I usually prefer a conversational style with exclamation points and allegories. But I think you're not in the mood for that. Sorry, I should be more formal perhaps.
Also not sure why we are talking about Trump?. But since you brought him up (invoked the Devil's name!). Do you think he is responsible for these tax cuts and the bonuses or it is mostly a charade?
A $1000 bonus, after taxes, is not a $1000 bonus. While an extra ~$700 might be a nice windfall for someone making minimum wage, it's hardly a life-changing event that will have an durable impact in their life.
What companies are doing is exactly what they were expected to do: make some "feel good" moves for a bit to validate the tax plan as a "resounding success" until the midterm elections, then do whatever they want. I've seen these incredible displays of "corporate goodwill" after tax breaks like this to know they are always temporary and self-serving (I grew up in a country where these "booms" happened like clockwork every 8 or so years.)
Bank of America, AT&T, Comcast, Walmart, Jetblue, Southwest are just a few who announced $1,000 bonuses. Not laughable to middle class Americans. Aren't middle class who liberals fight for?
It's very telling that most of the announcements of benefits to workers purportedly attributable to the tax cuts are in the form of one-time bonuses. The corporate tax cuts are ongoing; the bonuses to workers are one-time. These are nothing more than PR moves. Moreover, the headlines are misleading in some cases; for example, Walmart's touted "$1,000 bonus" was actually $200-$1,000 depending on years of service. Only workers with 20+ years of service are getting $1,000.
There have been a few announcements of actual wage increases that corporate PR departments have tried to attribute to the tax cuts, but in every one I've looked at, it was clear the wage increase was just the result of normal market forces and dressed up to pretend it was the result of tax cuts. For example, a few banks (including Wells Fargo) announced a minimum wage increase to $15/hour, but Bank of America announced that same change at the end of 2016, before any tax cuts.
Sure, but throwing large amounts of tax breaks at corporations in the hopes that a few scraps will trickle down to workers as PR efforts is inefficient. There are much more efficient ways of achieving even better outcomes for workers.
Raises are likely to be more useful to employees than bonuses, particularly over the long term. These bonuses don’t preclude the possibility of more bonuses down the road, however. It’s unclear at this point exactly how things are going to shake out along those lines.
Walmart employs about 2.3 million people. At $1000 per employee that's $2,300,000,000 going back into the economy.
Now, if Walmart gave everyone who worked there a $1 raise. With about 1.5 million full-time employees working around 1700 hours per year (US average 2016) that would mean about $2,550,000,000. So that bonus is almost equivalent to a temporary raise in terms of benefits.
That is just for full-time employees. A blanket $1 raise would probably come out to about $4,000,000,000 each year that Walmart may not have if the tax cuts are removed by the next administration, which they very well could be.
Walmart has said that the bonuses will cost $400M, so that's not $2.3B going into the economy. Only some employees are eligible for a $1,000 bonus: some will receive between $200 and $1,000, and employees who earned less than $11/hour prior to the raises are not eligible for a bonus.
> It's very telling that most of the announcements of benefits to workers purportedly attributable to the tax cuts are in the form of one-time bonuses.
It's sad that it's one time. It was probably the quickest way to reward people around the holidays. For many it's a few car payments and maybe a month worth of rent. Yeah it is peanuts for anyone living in on the coasts or writing software or both.
> Only workers with 20+ years of service are getting $1,000.
Walmart wasn't the only company which did it. Sure it was a PR stunt just as much, and it would be nicer to have other things like universal healthcare, but at this point that's a nice fantasy and this is something that made people's live better.
Relative to the tax savings those companies will enjoy and the fact it's a one time payment instead of salary increase? IIRC Comcast will end up paying about $150 million in bonuses which will only be a fraction of the first year tax savings for them.
If that's what this big hoopla ultimately amounts to then it will be highly disappointing. The fact that we are celebrating $1000 bonuses from corporations that have been enjoying record profits (for the most part) recently is disheartening. Something is better than nothing I guess.
If we are defending $1,000 one-time bonuses, why not just pass a law requiring these companies to pay $1,000 to their workers?
This is a bit of a reductio ad absurdum, but the point here is, what cost are we willing to pay as a society in exchange for the $1,000 one-time bonuses? This hypothetical law would be a terrible precedent for businesses, but would it be worse for the people receiving these bonuses than the actual tax plan?
And in order to answer whether it would or wouldn't, we need to look at the merits of the actual tax plan's substance, not the fact that it has (supposedly) caused people to get $1,000 bonuses.
You seem to have glossed over the poster's main point, which is that many the companies announcing those bonuses, in fact many of the ones you've listed are also laying off thousands of worker at the same time.
The criticism of these companies then is that they have just received massive financial windfalls via the GOP's tax cut programs and have portrayed normal corporate activities as signs of corporate largesse due to the tax-cut they've received. Should we tie the layoffs announced by these firms to their tax-cuts as well?
Walmart, for example, has struggled for years to attract employees due to the low wages they offer, wages so low that a good percentage of their labor pool is subsidized by taxpayers. When you combine that situation with the massive lay-offs and closures of Sam's Clubs the raising of wages seems to be less a generous overture driven by the tax-cut than perhaps a recognition that they must offer higher wages or continue to stagnate and fail.
I've also read that the bonus offered by AT&T is on the low-end of the bonuses offered every holiday to their employees. That's anecdotal though.
This is #fakenews. Walmart did not fire employees, Sam's club a separately owned subsidiary did, mainly because the Sam's club business is not doing well and had to make hard decisions. It is widely accepted that Walmart had no idea Sam's club was going to do the round of layoffs when they announced their wage increase and bonuses. Also, thinkprogress really should not be cited as a source of quality unbiased news.
Sam’s club is owned and operated by Walmart, at least according to wiki. That Walmart’s retail operation carries the same name as the corporation isn’t unusual. So this is fake news like the rest of what Trump calls fake news is (meaning, it’s actually true).
Please don't; it breaks the HN guideline against name-calling in arguments. Your comment would be fine without the first, and perhaps also the last, sentence.
If anybody posted an article from Fox News here on HN, how quickly would that be flagged and commented on? Dang as a moderator you really should be be unbiased right?
Pretty sure there has been the occasional solid submission from Fox urls here over the years. I'm on my phone so can't easily check.
Crappy articles and solid articles don't map to entire sites very easily. Even highly politicized sites or low grade tabloids sometimes produce the kind of pieces we want here. We moderate HN for article quality, not website or publication quality.
Which coincides with state and local minimum wage increases; see http://money.cnn.com/2017/12/29/news/economy/2018-minimum-wa.... More increases are coming; several states are phasing in increases over multiple years. They're just getting ahead of the minimum wage increases and trying to get good PR out of it ("no, we didn't do this because we were forced to, we did it because we love our workers. cut our taxes more!").
Imagine if personal income taxes were drastically lowered instead? then, walmart could keep the same pay, but ALL its customers (not just its employees) now have more take home pay to spend at walmart.
That's intentionally context dropping by Think Progress.
Walmart's Sam's Club business is not doing well in competition with Costco. It hasn't been doing very well for years now. You'll notice the Think Progress article avoids any discussion of the context of the Sam's Club business from which the workers were fired.
Here's the hint: Sam's Club closed 63 locations. Do you think they did that to save money on the workers? They didn't just fire workers at the locations, they closed 63 locations.
If you're talking about Walmart, they announced a one-time bonus of up to $1,000. Walmart estimates that it will cost about $400 million [1], and they employ 2.3 million people [2], so the average bonus is under $200. Meanwhile Walmart will save about $1.8 billion a year in taxes, every year, thanks to the tax cut.
Also is that $1,000 if you're a 20 year employee? So for 20 years of service you get a $50 gift card worth of bonus once a year? No thanks, I'll take a permanent living wage increase instead.
Walmart said it's raising it's minimum wage in addition to bonuses. And there are 163 other companies giving bonuses. But sure, it would be nice for the employees if Walmart gave more of that savings to them.
$1000 bonus is $500 after taxes. Which means, it is $40/month or $20/paycheck. It is laughable. Most employees will get $200 bonuses, which roughly will equate to $4/paycheck.
And we tech people wonder why so much of the country scoffs at our echo chamber. Maybe you've never been on the lower rung of income, but an extra $40/month can be a big deal to a lot of people. Typical median household income in 2017 was $59k, so a 2% increase is meaningful.
But don't let me get in the way of your political narrative.
3 car payments on 2 rent payments in a lot of the country. Its like the folks poo-pooing the Youtube folks earning a couple hundred off their channels. That little bit helps quite a lot.
The main objection to tax reform was that incredibly rich individuals are going to pay a lot less tax, and the middle classes will (once the temporary cuts expire) end up paying more. All of these complaints about the individual tax rates have very little to do with the impact of these corporate tax changes.
And let's face it: it's far too early to say that these tax changes have been either a success or a failure. The way the reforms were passed - another source of legitimate complaint - sidestepped all the usual assessments and calculations in order to pass something, anything as quickly as possible. So we're flying in the dark here. Yes, these short term bonuses are a positive sign. But who knows what the impact of lower tax revenue will be on other services (e.g.) Walmart employees depend on. Will they still be happy with a $200 bonus if they find out their Medicare coverage gets cut?
> Funny the nerative always seems to stay negative even though facts say otherwise.
You're relying on a handful of anecdotes, of which at least several don't look so good upon close inspection, to infer a larger economic benefit. Sounds like it's just narrative vs. narrative.
Tax reform isn't the force driving Apple to do this.
Apple is doing these things because they believe it will eventually help their bottom line. That's how corporations work and make decisions.
Granted, tax reform may have been a contributing factor in opening the door to this type of reinvestment in the US, but it is way too early to declare these actions by Apple as a victory for tax reform.
The thing is that those values would have needed to be repatriated at some point anyways (with the added benefits for everyone). So if the repatriation tax would never have been lowered, at some point cooperations would have had to deal with it and pay. But as everyone knew that at some point in history the GOP would come in power and lower the tax, there was no incentive the repatriate with the higher burden as it was monetarily advantageous to wait. So in the end, those benefits would have happened at some point in any case, just only like this with lowered public benefit.
If you read through the articles numbers don't seem to add up to 350B:
The Tax repatriations count for 38 bil. The new capital is 30 billion. Supposed the 20000 people are all making a 200000 dollars/ years thats 20 biliion. Where does the other 250 billion come from?
>"Combining new investments and Apple’s current pace of spending with domestic suppliers and manufacturers — an estimated $55 billion for 2018 — Apple’s direct contribution to the US economy will be more than $350 billion over the next five years, not including Apple’s ongoing tax payments, the tax revenues generated from employees’ wages and the sale of Apple products."
It's just everything they already spend in the US, lumped together
The marketing blurb mostly mentions new stuff like new expenditures and new employees. But the $350B is their total contribution to the US economy and I'd guess it includes current employees, programs, and infrastructure.
How much of that is made here? If you look at their ICs even if its an American company most of their chips are made in Taiwan. For example apple might design CPU here, but its made in Hsinchu.
Very likely an impossible number to unravel (without Apple providing the detail). Their cost of revenue for 2017 was $144b out of $229b in sales.
How much room is in there for $50b in the US and all manufacturing overseas? It would seem theoretically possible to fit all of that in. Here's their supplier list:
3M for example has six US location references. Broadcom has two US locations. Corning has one. Flextronics has one US location. Intel has three US locations. Samsung has one US location listed. Texas Instruments has several. And so on; about 40 locations in all.
Does it add up to $50 billion in real US manufacturing and supplier activity? Who knows.
That money was never coming back otherwise. So no, you couldn't reasonably write that. You'd have to enter an alternate reality where US corporations like Apple voluntarily paid the backwards, high US global profit tax.
This doesn't quite make sense - the decision/cost to bring the money 'into the US' depends on a variety of factors.
I am not a domain expert, but the availability of cheap credit must have been a principal consideration, as well as the knowledge that a potential Republican president would offer an effective repatriation holiday.
In short, there are many conceivable situations in which it might make sense to pay such a tax - we're just not in one of those at the moment.
I won't address your last assertion, not having data, but I've read in many publications that the effective corporate tax rates in the US are far lower than rates in other countries.
> the decision/cost to bring the money 'into the US' depends on a variety of factors
No it doesn't. Apple has been lobbying aggressively for years, including during most of the Obama Administration, to change the backwards US global tax policy (the US being one of the few countries to utilize such an approach) and or to arrange a one-time repatriation holiday. They finally got what they wanted and they're repatriating the money immediately thereafter.
It depended on one thing: getting a low enough rate to make bringing the cash home modestly punishing. Apple was always clear about that, Tim Cook spelled it out in numerous interviews over several years.
Sure, and the issue wasn't whether it would happen, it was what the money would be used for. Republicans and Democrats wanted different things. The tax policy was going to change. It was just a matter of what we did with it. In this case, it was used to pay for lower taxes for corporations.
By the same token you could also rewrite a lot of comments in this thread, possibly including yours, as "Trump's Tax Bill Is Having Positive Effects Despite The Narrative And I Don't Like That".
Remember those articles after the election about how researchers found that pretty much all of the net jobs created since 2005 were temporary, contract work, gig economy or other such insecure short-term non-traditional employment? For instance, https://qz.com/851066/almost-all-the-10-million-jobs-created...
Think carefully about what that means for the Obama years, and what it says about all the people who insisted those headline unemployment figures were iron-clad, indisputable proof that things were getting better and that anyone who claimed otherwise was simply lying.
I find it fascinating that a tax plan proposed by a President reviled throughout the Valley is the one thing that finally convinced Apple to repatriate much of its overseas cash and invest it here in the US. They of course give no credit to him in this press release, but the proof is in the pudding. Of the many heavy handed ideas and efforts made by the previous administration to convince Apple to do this, exactly 0 of them worked.
Only time will tell whether the recent reduction in corporate tax rates will have a long-term net positive effect, but this move by Apple alone seems like a good sign that it will. If other US corporations follow suit with repatriation, the American economy will experience unprecedented corporate reinvestment.
Nobody had to convince Apple or any other company to do anything. The repatriation is deemed, i.e no company has a choice in it. And while you may believe it was "proposed" by Trump, it has actually been in the works for years by both parties in Congress and by Obama [1]. They could just never pass a bill (because what else did you expect with Obama in the WH and Republicans in control of Congress) because Democrats wanted to spend it on infrastructure, and Republicans wanted to cut taxes for corporations, which is what they ended up doing. The repatriation of Apple's overseas cash would have happened regardless of who became President.
Prior to the bill passing, pretty much every single Democrat-leaning publication tried to spin it as an evil Trump/Republican plot to give Apple billions of taxpayer money, with the figure calculated based on the difference between what they'd pay if they repatriated all those funds at the full tax rate (which wasn't ever going to happen) and the amount they'd pay under the bill. If people associate this bill with Trump and the Republicans, it's because their opponents fought hard to make that association.
They fought this bill hard because the tax proceeds are being given away to corporations with a massive reduction in the corporate rate (along with other giveaways that benefit the wealthy such as lowering personal income taxes and raising the threshold for the estate tax), in direct contravention to their policy goals.
Had the Republicans chosen not to use this opportunity to go for broke while they're in control of Congress and the White House, they'd have Democratic support.
>The repatriation is deemed, i.e no company has a choice in it.
Incorrect. There is a repatriation tax holiday that enables them to pay lower rates than normal on repatriated cash. It is designed to encourage repatriation. They are not required to do so.
Disregard the link with the confusing title and think critically for a moment. Do you really think the US government is forcing all companies to bring any and all profits earned and stored overseas back to the United States? That’s what you’re implying.
The US government is forcing all companies to pay a mandatory tax of 15.5% on all overseas profit that was designated as "indefinitely reinvested" under the previous tax regime. This is a mandatory one-time tax as part of a shift to a territorial system. Multinationals can do whatever they want with the cash, but considering that they've been lobbying government on a repatriation bill for over a decade specifically to be able to do domestic M&A, pay dividends, or do share buybacks, it's pretty obvious that all of that cash is coming back to the US. A business that wants to reinvest all their cash internationally is free to do so (and in fact the previous tax regime incentivized it), but they're going to be paying US tax on what they've accumulated so far.
All taxes are compulsory - "_forced_" - as you put it. Who would pay them if they weren't? However, they are free to invest it wherever they choose, and they have chosen the US. That is not "mandatory repatriation".
Unfortunately, that article is clear as mud and seems to use the word “mandatory” in its headline as editorialized clickbait. In its explanation:
“[The plan] uses the mechanics under subpart F to impose a one-time ‘toll charge’ on the undistributed, non-previously taxed post-1986 foreign E&P of certain US-owned foreign corporations as part of the transition to a new territorial regime. The toll charge is reduced by a deduction computed in a manner that ensures a 15.5-percent effective tax rate on ‘cash’ and an 8-percent effective tax rate to the extent the inclusion exceeds the cash position.”
There is nothing there indicating that people with guns were going to show up with guns and demand that Apple repatriate its cash. Once again, the bill was designed to encourage repatriation.
I'm not sure why you think a big 4 accounting firm would need to do clickbait, but that's beside the point. Whether Apple left the cash in Ireland or brought it back to the US, they would have paid $38B in taxes. That's the mandatory part. That's what the quoted text literally says.
And since you seem to be unaware, the vast majority of Apple's cash has already been in the US for years, invested in US treasuries and other fixed income assets and held by American trust banks. It's Irish cash only in a legal sense. This is broadly true for all other American multinationals as well.
The point is that the tax is mandatory, not the repatriation. If they didn’t believe that the US was the best place to put that money, they could have paid the tax and left it there or moved it elsewhere. The fact that they are deploying that capital here indicates some level of belief that the American economy will thrive under this tax plan.
I'm not sure this is a very convincing argument to make. The underlying economic conditions have not changed drastically in the last few months or even years. The tax plan's effect on the economy is presently a projection. Apple's decision to repatriate this sum is a no-brainer: America's economic landscape hasn't changed, but the deal that was offered has changed.
As you said, they are being incentivized to do so. It isn’t mandatory, which is what this whole argument is about. I don’t know how it’s “pure fiction” to point that out, when your own comment literally says what I have been saying.
They are indicating it by doing it. That cash doesn't have to remain here; they simply have to pay taxes on it. The only reason that a rational corporation would keep it here is because they believe it's a good investment.
Thanks, I don't get it myself. I guess simply stating what a bill actually does is going to have a hard time here on HN, if that bill has even a tangential connection to the current administration. It has become a holy war.
The main reason for bringing the cash back to the US is to pay it out to shareholders. They couldn’t do that while it was overseas. Now that it’s taxed anyway, shareholders will demand their cut.
Maybe the shareholders “believe in America” and will invest their gains in the country. Or maybe they’ll stash most of it in tax havens. Nobody knows — but it’s disingenuous to argue that somehow 100% of the repatriated money will be invested when America’s wealthy classes haven’t been doing that previously either.
We could be in a 1930's recession and it would still be tax-advantageous to bring the money back. Especially since Apple is tipped to use it for stock buy back.
Again, they don't have to bring it back - it was going to be taxed regardless. They could pay the tax and invest it somewhere else. They chose to invest it here.
Analogy: Anyone can open a cryptocurrency masternode [1] and get a several percent per month ROI, paid in that currency. I don't want to do that unless I believe in a given coin, however, because I must invest in and hold a large amount of the given coin in order to operate the masternode and get the return. Yes, I am being incentivized to do so, but it still doesn't make sense unless I believe in the underlying investment.
The repatriation tax holiday actually encourages corporations to hoard profits overseas until the next "one time" tax break. There was a repatriation tax holiday in 2004 also.
The stock market rally started on election day. Clearly it was not based on what Trump had done, but anticipated what Trump with a GOP Congress would do. The expectation of a large corporate tax cut was certainly there throughout 2017, and may very well have had a large influence on the Reno decision.
> The expectation of a large corporate tax cut was certainly there throughout 2017
No it wasn't. Most people thought that after the health care debacle that Trump would've pivoted to infrastructure. Especially given the tax cuts were so fiscally reckless which would've alienated moderate Senators like Collins or McCain.
> and may very well have had a large influence on the Reno decision
Apple has other data centres. They were largely driven by their own needs and not to do with macro economic effects.
What matters was what investors thought. And as a follower of the financial/investing news, there was very much an expectation of a large corporate tax cut.
> alienated moderate Senators like Collins or McCain
Both voted for it.
> not to do with macro economic effects
The size of the tax cut was certainly enough to significantly affect the economics of a datacenter investment.
"The size of the tax cut was certainly enough to significantly affect the economics of a datacenter investment."
So without a tax cut Apple would have just let users suffer? Hardly. Users drive DC investments, not tax policy. There's no tax cut in the universe that's going to get Yahoo to build a new DC in Nevada.
Any rational skeptic was couching their criticism that this was net loss for taxpayers, not a total loss. While Apple and others can publicly crow about new investment and jobs and give the president and GOP a PR coup in terms of their bill, you have to consider how much they were paid to do this. The dynamic score said that of the $1.5T in lost revenue, we will likely recoup about a third in new revenue. This will be a sizable amount of stimulus especially for companies like Apple that have enormous profits. If Apple are investing $30B in new capital, it's probably because they are being handed twice that much in tax breaks.
This might be the most brilliant tax plan in the universe. The president wouldn’t be any less revolting because of that. I’m not sure why you are connecting these two ideas.
It is true that the partisan extremism of everything leads to people irrationally hating everything someone does (or, as in this case, is loosely associated with), but that doesn’t mean the opposite.
This does not and should not wash this revolting presidency clean.
> I find it fascinating that a tax plan proposed by a President reviled throughout the Valley is the one thing that finally convinced Apple to repatriate much of its overseas cash and invest it here in the US.
Why is that fascinating? It's the tax holiday the tech megacorps have been asking for since the last one in 2004.
And yet nobody gave it to them until now, which resulted in trillions of dollars that should have been benefitting the US economy sitting unused in places like Ireland.
Except those trillions of dollars were already benefiting the US economy by acting as collateral for huge loans and investments taken out by Apple stateside. Even with the deemed repatriation the money will most likely still sit in Irish bank accounts, and in certain cases escrow and PE funds, as it makes no sense to spend the time and effort to wire the money over to a US bank since taxes were already paid on it and renegotiating the banking deals alone would probably be more money than it's worth.
In general, from reading a lot of your comments, you seem to act like an authority on this issue when most of your statements sound like a freshman who just finished his macro midterm. If you actually read the lobbying documents and testimony from many corporations, this deemed repatriation wasn't at the top of their lists, and in many cases was completely unwanted. Even further, the republicans actually ended up with a much higher tax rate than what was originally agreed, 15/8 vs 10/7. Of course, this was offset by long term corporate tax decreases but many large multinationals vigorously advocated for no repatriation and just a tax change, or at the least a very soft repatriation holiday and absolutely no deemed repatriation.
Fortunately, due to things like "balanced budgets" and "deficits", the Republican caucus was quite literally forced to enact a "deemed repatriation" on offshore funds to make the corporate tax changes viable in the least. "Deemed" as in mandatory, which you so incorrectly refuted above in a different comment, because again, without it the corporate tax changes would have made the government unable to follow up on current monetary obligations. Some would, justifiably, call such a lenient deemed repatriation analogous to a soft holiday, but the overall point is that corporations actually took a small loss on this facet of the tax bill to gain a huge win in other parts.
The whole fight over repatriation was mostly a sleight of hand trick to captivate the public while making changes that actually matter to the more permanent corporate tax code. After all, Apple even stated a couple years ago they were using the money sitting in Ireland to help finance their upcoming (now finished) campus. Where the money is matters very little compared to where it's spent since dollars are fungible.
Yeah, I wasn't aware that personal attacks were allowed on HN. And it's not just me, a quick review of his comments shows that virtually every one of them involves calling people stupid, naive, liars, etc. This guy should be banned from HN.
You do know that the money isn't literally sitting overseas right? It is invested (Apple would be the largest bond fund in the world [1] if they accepted outside money). So they'll sell the investments, pay a little tax and then probably do a massive buy back of their shares and a special dividend. A little switching around on paper, but certainly not a stimulus of any sort.
That's not the difference at all, it is invested in corporate debt (much of it from US companies) and giant amounts of US Treasuries. Even the people that manage it do so from the US.
The difference is purely in accounting, they keep that money on a different line of their balance sheet and are unable to use it for domestic expenses without paying tax on it.
Most of the money isn't going to move at all after they repatriate it (they'll actually sell Treasuries to pay... the Treasury!). No part of "bringing back" the money will result in more money being invested in the US--it's already invested here!
Let's say I thought I was paying too much in taxes, and now I'll pay less in taxes next year due to this tax cut. No one gave me that tax cut until now!
Nothing about that is "fascinating". You're trying to make a narrative out of "hey, we want this." "OK, here it is."
You'd have more of a point if you were trying to say that all the doomsayers were wrong about the downsides of a tax holiday and here's the proof, but it's a bit early for that.
One of the better parts of this bill was the switch to a territorial taxation system so we can stop playing chicken with tax holidays. This is not merely a holiday, but is a permanent policy change.
> to repatriate much of its overseas cash and invest it here in the US.
Where in the article does it state that they will invest the repatriated cash in the US? The only concrete number is the $38 billion tax payment upon repatriation, which is a direct result of the tax plan. If you read carefully they state nowhere how much of the repatriated cash will be invested instead of simply returned to shareholders. They just added up what they were already planning to invest anyway in the next 5 years. It might have increased slightly with the tax cuts, but not a whole lot. They weren't constrained by cash before, only by meaningful investment opportunities.
Keep an eye on their quarterly and yearly reports to get the real story. I expect a large chunk of the repatriated cash will be used to pay off the debt they took on to finance past dividends and share repurchases. The rest will be used for future share buybacks.
Well, if it's simply returned to the shareholders, then the shareholders will invest it. Economy wide it makes no difference, the money will be invested
Or use it for consumption. And that consumption or those investments are not necessarily in the US.
Where do you think that money is now? It's not like it is stored as dollar bills in some warehouse abroad. The 'repatriation' they are talking about is purely an accounting/tax fiction. If you look at Apple's yearly report [1], on page 49, it details how its cash and equivalents are invested. Most of it is in US treasury securities ($42 billion) and commercial securities ($131 billion). Repatriating it will not magically make it somehow more productively invested in the US. In some cases, quite the opposite: as a foreign Apple shareholder, any dividends I receive are spent outside the US.
well, that money does belong to shareholders. if they choose to spend it rather than invest it, that means they saw no good investment opportunities. Spending in that case is the optimal thing to do anyway rather than for apple to hoard it.
Rich person/fund X will get a larger dividend than before, and they’ll invest in the same way as before. It’s not like this money is somehow earmarked.
If giving more money to the rich were the solution to America’s problems, it would have worked by now.
it shouldn't matter where they invest it. investing it in the US when the optimal thing to do is to invest it elsewhere is bad overall, regardless of which entity is doing the investing. World economy is not a zero sum game.
Its not fascinating. The contents of the tax plan were only known to corporate CFOs during the week of the vote, there hasn’t been time for due diligence since then to change direction of a top 10000 US company.
Any corporate announcement you read in january has been under corporate review at least since end Q3 2017.
> the one thing that finally convinced Apple to repatriate much of its overseas cash and invest it here in the US
That doesn't really seem too surprising. The previous administration tried to force them to do it, they refused. The current administration gave them what they wanted, they did it.
> If other US corporations follow suit with repatriation, the American economy will experience unprecedented corporate reinvestment.
Yes, but "corporate reinvestment" can mean a great many things. Endless rounds of share buybacks (as many CEOs have indicated they want to do) won't really benefit the broader economy (or actual citizens) all that much.
The corporate tax changes weren't his idea - they have been kicking around Capitol Hill with more or less bipartisan support for years, and it almost happened while Obama was president. The full package of changes wound up being highly politicized and controversial, but the corporate changes were always seen as very likely to pass sooner or later.
They may have been kicked around the Capitol Hill for years but while (D)s had control of the presidency it did not happen. There was a time when (D)s had control of Congress, Senate and Presidency with Obama as a President and it did not happen.
To claim this tax cut is a result of bipartisan legislation is rather odd.
[Edit] It must be really painful to downvote reality.
They only claim bipartisan responsibility when the tax plan seems to do good for the country (billions of dollars in new investments, tax revenue, repatriation etc.)
Long term should benefit as well as the short term. The US had one of the highest tax rates on corporations in the world and all it did was cause the money to stay out of the country. Just like very rich individuals, when you are not bound to one country you can just keep elsewhere. The US even experiences it on a smaller scale with people moving from state to state.
Obama Administration did propose 28% in 2012 and get taxes for those under 200k down as well. The current plan that is in effect has a lot of similarities but it did not set a 200k high limit. The US really needs to figure out a way to handle small business taxes that get caught up in the way personal taxes are done.
Less tax burden is always a win. What the US really needs for explosive growth is a cap on spending. Many other countries to include a few European countries have rules in place to keep it below growth for a reason, because it pays off fast.
This has nothing to do with the tax plan. It's a $5 billion additional investment in US operations over 5 years, most likely due to competitive pressures and regular business growth. If you want to thank anyone, thank Google/Amazon/Microsoft for forcing Apple to do this.
That $5 billion over 5 years is nothing for Apple, since they get about $100 billion in revenue each year from the US alone, with a large percentage of that in pure profit.
They don't need repatriated cash for this $1 billion/year investment.
It's a pretty small US investment, really.
That's why they spend their cash on dividends. Dividends basically means they a company has better idea on what to spend their money on than to just give it back to their shareholders.
> Senate and House leaders unveiled the final version of their tax reform legislation on Friday, putting the Republicans on the cusp of delivering tax cuts of close to $1.5tn. As part of the package they will impose a 15.5 per cent one-off tax on offshore cash, coupled with an 8 per cent levy on less liquid assets, a Republican aide said.
So the tax plan didn't convince Apple to repatriate it's money because the tax rates were amazing. The tax plan is causing Apple to pay 15.5% taxes anyways, so since it's being forced to pay taxes on it they might as well use that opportunity to move a lot of that cash to the US where it's more usable for them.
Chances are after this Apple (and all other megacorps) will go right back to storing cash off seas waiting for their next chance for another free chance to move money to the US.
I have a question : What is the difference between Apple paying taxes to Trump's Govt, which will make sure that the funds will be used to create jobs.
Vs
Apple getting all the money and using to create jobs on its own.
Once corporations have exhausted their large hoard of overseas cash, the amount they repatriate will go down significantly. So isn't this really just a short-term boost?
A short term domestic investment for a long-term tax benefit. The headlines made immediately after the new legislation is passed are what will stick with people the most.
I'm not saying this is definitely the case, and I would love to be proven wrong. I just don't see how a tax cut would have corporations scrambling to return jobs to the U.S., instead of having both a tax cut AND cheap foreign labor.
The USA has moved to a territorial tax system for corporations, so any income earned abroad will no longer be subject to US tax (only taxed by the country where the income was generated), and so can be freely moved back to the USA if the companies wish. There is no longer a distinction to be made concerning where money can be spent without being US taxed.
No. These types of investments don’t simply wash away - they go to building long term value for the corporations that make them, which creates good jobs, demand for housing, etc. Further, as long as this tax plan remains in place, corporations will continue to allow international profits to flow back into the US. Even if Trump is unseated in the next election, given the positive reaction among corporations to his tax plan, it may be politically impossible for the next Administration to return to punitive tax rates despite their predilection for them.
The idea I think was to lower the corporate tax in general which will also give companies an incentive to stay and pay taxes here. Don't know how that will work long term. Maybe it will, until there would be another tax haven country advertising a better tax deal.
Ideally the US begins stealing corporations and manufacturing from the rest of the world, whereas previously the flow had been going the other direction, with dozens of large companies abandoning the US for lower tax locations.
For example, the lower corporate tax rate, combined with very inexpensive US energy (cheap natural gas), makes manufacturing in the US even more appealing.
You don't have to beat all the other tax havens, you just have to get low enough to be competitive on the overall value proposition. The UK is at or going down to 17.5%, that 3.5% variance with the new US rate becomes mostly meaningless as an issue (17.5% vs 35% however is a drastic gap).
> I find it fascinating that a tax plan proposed by a President reviled throughout the Valley
Not quite. The proposal has been on the table for years. The difference has been how to use the proceeds from repatriation. Republicans wanted lower corporate taxes. Democrats wanted something else. This wasn't new, it wasn't unique, and it wasn't Trump. Believing this was a plan proposed by Trump ignores history and facts. Sure, he signed the bill into law, but the same thing would have effectively happened had Democrats been in charge instead of Republicans.
> but the same thing would have effectively happened had Democrats been in charge instead of Republicans.
Wasn't that the case when Obama was first elected? And yet, it didn't happen. They've kind of painted themselves into a corner with the "the rich and corporations aren't taxed enough" rhetoric, not sure how they'd successfully sell a corporate tax holiday to their base.
The buck stops with the President. If the GOP Congress won't work with the President, it's the President's job to find a way to get enough of them on board. LBJ was a master at getting "impossible" legislation through Congress, so I don't believe it was impossible for Obama. I suspect this is where his inexperience in politics showed.
An example of this was outlined on Frontline a few years back. Obama crafted a bill, and included a number of items the GOP said they wanted. He then presented it to the GOP, and was surprised when the GOP soundly rejected it. This is a failure of Sales 101, in that it was set up so Obama would get the credit. Of course the GOP rejected it. A craftier technique is to invite the GOP to write those sections of the bill themselves, and give the GOP the credit. Same bill, but totally different approach.
He should have read one of the many biographies of LBJ where they go into considerable detail on his career of getting impossible things through Congress.
All he needed was to peel off a couple GOP Congressman - surely he could have found a way to do that given 50 of them. Political parties are never a solid block of commitment, there are always waverers and members who can be manipulated with the right carrots.
As I mentioned in the antecedent, he made serious persuasion mistakes in dealing with the GOP that pretty much guaranteed failure.
Obama's first step would be to accept responsibility for the task, rather than blaming the GOP. Blaming the GOP only served to diminish Obama's political capital.
(Remember Clinton outmaneuvered the GOP with the "Contract with America". Obama could have consulted with Clinton.)
And what about Mitch "We'll oppose any bill put before us, even if it's good for the country (yes, he actually said that), in order not to let Obama have any victories" McConnell?
That wasn't a failing of Sales, that was an opposition who was willing to harm themselves, and the country, to not give any leeway.
I have legitimately spent fifteen minutes trying to find a source, but I haven't managed yet in Internet searches, lists of "ridiculous quotes" from McConnell, nor Wikiquote.
BTW, just as the Dems made a mistake in not getting any Reps on board with Obamacare, the Reps made a mistake in not getting any Dems on board with the tax cut.
Of course, dubbing the bill "Obamacare" was a virtual guarantee of no Republican support. The Dems should have worked hard to name it something more inclusive (and more catchy than "Affordable Care Act"). Marketing matters!
I feel like this potentially buried the lede. Apple is planning on opening up a new campus in the USA.
I feel like Amazon's HQ2 search is going to open the floodgates for tech companies asking for public incentives. Tech companies in the Bay Area have been creating tens of thousands of jobs for years without asking for much publicly. Expect that to change now.
It's not that much of a campus: "The new facility is at 520 Evans Avenue. It's a lot that has been vacant for many years until Apple purchased it to build the new 27,000-square-foot facility.
An Apple employee tells KOLO 8 the new facility will be a location where Apple filters computers through on their way to the new data center on USA Parkway and another center in Arizona."
It's basically datacenter machine staging. Good jobs I'm sure, hardly a second headquarters.
> The company plans to establish an Apple campus in a new location, which will initially house technical support for customers. The location of this new facility will be announced later in the year.
It would do many tech companies some good to have a larger percentage of their workforce in states with cultural values different from that of the bay area. That would be valuable diversity that would help them better understand their customers.
According to the article the new campus would be for support. Most of that in the U.S. is currently part of the Apple Texas campus. So this would not really alter much in Silicon Valley.
Austin is where many of their support workers are now, as well as engineers. Apple's main Cupertino campus is 2.8 million sq.ft., but the Austin campus is also huge at 1.1 million sq.ft. for the main set of buildings and another 216K for a smaller campus in southwest Austin.
So is this announcement for a third campus, or another expansion in Austin? I guess time--and incentives--will tell.
>Apple is already responsible for creating and supporting over 2 million jobs across the United States and expects to generate even more jobs as a result of the initiatives being announced today
What percentage of jobs of these are full time versus part time?
Why do large corporations and politicians love to toot their horns about 'jobs', but refuse to go into details?
Both your numerator and your divisor are incorrect. The 2 million number is "creating and supporting", i.e. not direct Apple employees. The 123k number is "full-time equivalent", i.e. "total number of hours worked by employees / 40", where 2 employees @ 20 hours/week = 40 hours = 1 full-time equivalent. So actual full-time employees might be a small portion of the 123k, due to the workforce ofApple retail stores, etc.
Lesson to self: build empire even if it means not paying taxes and hoarding money offshore. Wait until favorable political winds change that allow easy and cheap transfer from offshore. Come up as a winner to masses, because now I can hire more people. Rinse and repeat.
Global minimum tax. No more rinse and repeat thanks to the tax bill. 11% tax on all foreign profits so this eradicates tax havens in Ireland and the islands because if you are paying 2% then you pony up the other 9% to Uncle Sam.
Last repatriation, the companies did exactly what you said but now that is no longer possible.
An important distinction re: territorial taxes is that if there is no settlement of the difference between a foreign tax rate and a home country tax rate then companies are incentivized to artificially earn as much of their income as possible in low tax jurisdictions.
Did I miss something? I thought from the title of the article mentioning WHERE the campus would be built would be a fairly important detail to include.
Apple continues to act in predictable self-interest, American economy will no longer miss out on billions as tax policy was updated to reflect the realities of a globalized world
There's no enabling here in the usual sense of the word, they just made it cheaper. It'd be like a headline "copious butter enables little Tommy to eat vegetables". Apple could have repatriated that money at any time, and likely would have if they didn't know that they could hold out for a feckless Republican administration to give them a big tax holiday. Pretending otherwise is a fiction that supports repeated corporate tax rate reductions and encourages companies like Apple to make use of elaborate tax avoidance schemes.
Alternate headline: Trump policies take American companies closer to the globalized ideal they always envisioned, by making the American market just another market they are not tied in any significant way to. $29 billion is spit in the bucket of the deficit created by this bill, and Apple is the biggest market cap company in the world, with the biggest overseas reserves.
Mainly because it's hard to suppress laughter if you think about it at all beyond a surface level. See discussion in another thread. I don't want to repeat myself.
What are they dodging? They're paying a reasonable tax rate of 23%, as opposed to never repatriating the profits and paying 0%. The US govt gave them a chance to clean the slate at a reasonable rate and they took it.
Job creation and hiring mean different things. I can hire someone for a job that already existed and was previously filled by someone else. If I bring a new job into existence, that hasn't been filled by anyone before then saying I created that job doesn't seem particularly untoward.
I anybody creates jobs it's the people who buy stuff and create demand. Then someone will meet that demand and potentially hire someone. I don't think Apple "creates" jobs. It hires people for certain needs that have been created by the market. If they don't fill the need somebody else will do in a market economy.
If you follow this rabbit hole deep enough, you invariably wind up right back at the beginning. The people who buy stuff and create demand for said stuff typically work for someone else, and that someone enables that person to buy said stuff by paying them a salary, in which you could argue that it’s again the employers/producers who create jobs rather than the consumers. This is not necessarily my argument, but just demonstrating that it can be argued in a way that makes it appear cyclical.
Apple isn’t creating jobs out of thin air, but they do both directly and indirectly provide distinct opportunities, despite those opportunities generally having existed in some other form (possibly in some other country) before. It might seem more accurate to say that Apple shifts jobs, but that’s an equally imprecise way of framing it.
Ignoring Apple retail employees, that might be true if you assume that the new products are running a version of either iOS or macOS and that those people working on that are considered part of creating that product.
Can nitpick it for sure. It has billions of dollars sitting around, it can choose to open a new data center, new manufacturing plant, start a cloud offering, Uber-for-dogs, whatever. Or it can continue sitting on that money. It's not automatic. That's what people mean by "job creation". Choosing to invest the money usually involves creating new positions.
Another way to look at it, is that it is location dependent. Since it is an American company, it might "hire" for a position that used to be filled in China, but the new hire is US. On the global market it "hired" someone in the US market it "created" a job.
Companies create demand by creating new products or services that people want.
You are correct that people have to want them (specifically, want them enough to spend money on them) in order for jobs to be created. But the order of operation is pretty clear from the observable evidence.
For example, there weren't crowds of people lined up outside Apple Stores demanding the iPhone in May of 2004. But after Apple invested in the product development and manufacturing of the iPhone, there were crowds of people outside Apple Stores in June 2007, waiting to pay $600 per item or more. Apple created a lot of jobs to meet that demand, but Apple had also created that demand in the first place.
They're grabbing 252.3B and spending less than a fifth of it. Let's imagine a different world. 200B, divided by 50k + 1.5x overhead (75k) could create about 2.6M decent jobs for one year (or 1.3M for two years etc).
2.6M jobs is equal to 0.8% of the total US population. The total labor force size is about 160M (~1/2 the total population) and the U6 measure of unemployment is about 8%. A healthy U6 is probably closer to 6% (from around 2000). That 2% of 160M is 3.2M jobs. Thus, in one fell swoop without even affecting operations overly much, Apple could reduce the magnitude of the economic crisis by a little over 2/3.
These are astonishing numbers that would have real impacts on people's lives. Imagine what we could do with the profits of the other large conglomerates.
Instead, they're spending a tiny amount on PR and reduced taxes that they lobbied heavily for to do what? Probably stock buy backs. The adulation of the rich and powerful continues at the expense of the working class.
EDIT: added some comparison numbers
EDIT: You guys are too much! So many questions, keep on asking, but I'll have to let others answer. I have other things to do today. Keep thinking critically about the political economy of the system. :)
There is no diversion about it. Remember that people, voting individuals in the US, have decidedly different stances on what "appropriate" amount of taxes should be. Business, particularly public ones, have a responsibility to their share holders to handle money as fiscally responsibly as they can.
From my perspective, Apple isn't "grabbing" anything. They are moving their money from Bank A to Bank B and paying a 20% fee on their balance simply for doing so. You may say this is a PR piece and a continued way to screw workers, but i see it differently. Apple had no need to repatriate this money. This is part of a conscious shift in their fiscal policy moving forward. It stands to benefit US workers a great deal more than them keeping these funds overseas.
Would you mind clarifying what you mean? The implications i read in this comment are that Apple isn't paying taxes and do not invest in technology. Both are of course false, even before this announcement. I haven't fished through documents but i suspect Apple spends Billions on both every year.
Apple lobbied for and received an incredible tax break for repatriating its money. It should be paying the full 35% corporate tax rate. Apple invests in some science and technology, that is true. However, for some reason, despite its fervent dedication to the arts and sciences, it hasn't figured out how to spend 200+ billion dollars. Weird.
They do pay taxes elsewhere. They are subject to each country's tax laws that they make income in. You are probably referring to the Irish/EU arrangement, but that has little bearing in Japan or China or wherever else China makes money.
Your reference to the double Irish arrangement completely undercuts your point. You admit that they aren't paying substantial taxes in a huge market they participate in.
With respect to Japan and China, a multinational company, an effectively stateless entity (or possibly a state unto itself) can simply move to the most profitable country, thus forcing countries to compete for its tax dollars. Thus, the multinationals, unless resisted via solidarity, will cause a collapse in all nations treasuries.
Apple must pay taxes where they make money. Apple's retail operations in China/Japan can't be moved to a less-tax country, it is physically impossible to be in China/Japan and not be in China/Japan at the same time! You simply cannot operate in a country without paying taxes, the EU rules being weird and an exception because of their one market principle.
Ok, last one. :) You've really just made a mockery of the ideology of competition haven't you? In fact, that is what corporations do. There's an awful lot of highly concentrated market power lying around for exactly that reason.
Would you please not use HN for ideological battle? At the point this stuff gets generic, it gets predictable, and therefore boring in HN's sense of the word.
That doesn’t make any sense though. Why would Apple just create millions of jobs that they don’t require?
This is the key mistake people make when they say that tax cuts will create jobs, or minimum wages will cost employment. Companies try to be efficient, and therefore don’t create jobs they don’t need, and don’t get rid of jobs they do need if wages go up. That’s why there is pretty much zero statistical correlation between tax cuts and employment, or wage price and employment.
Apple will create jobs if their operations require them - they’re not going to make up busywork out of the goodness of their hearts.
Let’s not forget that US-based competitors are getting the very same tax cut, while foreign-based competitors likely had more favorable tax environment to boot. Creating the jobs one doesn’t need by one player increases that player’s costs and affects margins long-term, meanwhile competitors who did nothing can simply lower their prices.
Exactly right. Why would a for-profit company work to improve the lives of the population that birthed them? I'm merely making the point that we can do better than this.
I think companies should pay their fair share of tax, comply with stringent labour, environmental and other regulations (high minimum wage, decent holidays, humane limits on work hours per week etc.), even donating part of their profits to charity would be cool.
But you can’t expect companies to randomly create new jobs just for the sake of making jobs (because they have a bit of spare cash)... It just doesn’t make sense.
Are you under the impression that a sizable portion of those currently unemployed have the skills that Apple looks for in their employees? Or are you suggesting they start up a pastry shop, carwash and clothing conglomerate?
If they don't really need that money, why not give it to the people that could really use it?
I'm suggesting that capitalism is going to encounter a crisis point sometime in the next decade or two at this rate. It will destroy itself leaving either barbarism or socialism in its wake.
There are a variety of alternative arrangements that have been proposed. Economic democracy is one of them (that is, the workers control the company via elections, which will influence their pay).
The workers benefit somewhat from Apple, yes, in the form of a consumer gadget. I will grant Apple some utility, it did find a way to fuse existing science and technology in an interesting way to produce a very nice pocket computer.
However, this has had many effects, some good (access to information and maps), some bad (dissolution of privacy, addictive interfaces, the creation of "apps" at the expense of the open internet). Apple then uses this commodity to vacuum up dollars from consumers in excess of what it cost to produce... and do nothing with them other than allow executives and securities holders to slake their desire to accumulate. It's an addiction in itself.
I'm sold! I'll go in and refuse my pay check because my employer offers me high quality products that even I can purchase.
I can't, because I won't have the money to purchase them, but they are "in business to make money," and I'm clearly only here for the opportunity to buy the products that I make.
OK, sarcasm isn't especially productive, but I hope my point is clear: if my employer takes all the money and pays only subsistence wages, which the huge power imbalance enables, then he's doomed because nobody can afford his products.
At the very least, mine would be if he hadn't managed to get massive tax breaks for being a "job creator" who's also persuaded the government to subsidize those jobs with public funding, and then decided that he's not topping those wages up with the money his business earned. Basically, running costs are funded by the public while he pockets all the profits and pays me with my own tax dollars.
The working class needs more than just the benefit of stuff being offered for sale. We need to be able to spend and save, the ability to shape the economy and keep it running, otherwise it all breaks down.
You have the right idea. That's probably what they will do, but not as a dividend (those are taxed as ordinary income). Instead they will buy back stock, reducing the supply of stock and increasing the price. Long term sales of stock incur a 15% tax rate.
I'm not saying this is good, but this is what they will do.
ahh so the bankers make $$ for an arcane opaque "buyback" I would rather have the $ now and as my apple holdings are in Investment trusts in my ISA I don't pay tax on dividends.
U6 is still high. Most of the jobs created after 2008 were more transient than old jobs. Hence, the term "gig economy". The precariousness of the working class has increased dramatically and will continue to do so for the foreseeable future.
Would like to see more investment in manufacturing here in the United States. Apple has to recognize that unstable relations between the United States, the EU, and China (along with South Korea and others)could leave them in a precarious position with their physical manufacturing capabilities. If China says, give us U.S. user data, or give us the capability to build your new 3D camera or we shut your facilities down, what will Apple do? Not to mention South Korea's antics with raiding Apple's South Korean offices and whatnot. The same goes for other US firms - EU you better watch out too.
It would need a lot of investment. You need glass makers, metal shops, semiconductor shops all close together to emulate what is there in China right now. I don't know if its really possible in the US.
You'd need a sort of 'motor city' for electronics. Something like what Detroit was for cars, or like what Shenzhen is now.
I'm surprised that no stateside port cities have tried to encourage that sort of thing; there are plenty of negative externalities, but I would still LEAP to move to such an initiative.
It's like...I want to create something that could make a difference for people, but all that I see in our current tech cities is faux do-goodiness, iniquity, and seething resentment. It's a bunch of people saying that they want to save the world while reaching into the pockets of people who can't afford it, and it hurts to be unfailingly lumped into that sort of behavior.
It's possible. It's expensive to build out and would take a decade to do comprehensively. Apple can easily afford to do it (How badly do their shareholders want that? Not that badly I suspect).
Most of the things in question have already previously been manufactured in the US at one point or another. The specialization / knowledge is already here. The base manufacturing capability, the buildings/plants, the inexpensive energy, the automation capabilities, the software, the access to cheap commodities, is already here.
The US is the world's second largest manufacturer, by a very wide margin to the others down the list. Only China compares in scale globally.
Call up Texas and Corning, make a deal backed with billions in investment, build the plants, and you'll be making as much glass in the US as you want within three or four years.
So is this actually a bad thing, or are all of the skeptical/negative comments just due to the fact that it's yet another example of the new tax bill having immediate, positive, real effects on the US economy?
Except that it took 1 bill to create the 1.5 trillion in debt and decades to create the 29bn in profits. This kind of "big windfall" is only happening this tax cycle, and won't happen ever again.
It's almost like people really focus on whatever positive input they get and cling to it no matter what.
I wonder how many of these type of headlines of companies investing in America, giving bonuses to workers, stock market and economy roaring, until it breaks the cognitive dissonance out of liberals.
For example, if a British company earns income in Germany, its pays German taxes on its German income. But if a US company earns income in Germany it pays both German taxes and US taxes.
What is little known about this tax bill is that it normalizes our tax system with the rest of the world by moving to a territorial tax system. This is not about Apple avoiding tax on profit earned in the US, they will continue to pay US taxes, they won't pay taxes on income earned outside of the US going forward. [0] That means that there won't be any more hordes of overseas profits. And means the end of those tax inversions or corporate inversions you have been hearing about. [1]
So now that foreign profits aren't going to be taxed, something needed to be done with all the profits generated under the old system. The 23% repatriation tax is a compromise between the new rate of effectively 0% and the old rate of 39%. This BTW happens to be very close to the OECD, the developed world's, average tax rate of 24%.
Edit: As was astutely pointed out below the US only pays additional taxes to the US if their US tax bill was higher than their German one. And they paid the difference between to two to the US.
[0] - https://news.ycombinator.com/item?id=11430290
[1] - https://news.ycombinator.com/item?id=11429859