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Apple (AAPL) is proving to be as good at avoiding taxes (here and internationally) as it is at...

Apple (AAPL) is proving to be as good at avoiding taxes (here and internationally) as it is at designing smartphones, taking advantage of tax laws designed for the industrial, not the digital economy.  The company had an overall tax rate of less than 10% in 2011, vs. about a 24% average for non-tech companies, reports the NYT, seemingly laying out a blueprint for politicians to shift attacks from big oil to big tech. Ugh.
Comments (114)
  • Tombaum eister
    , contributor
    Comments (180) | Send Message
     
    It's disgraceful that tax evasion is possible by hiring these vulture tax lawyers. I hope people will think twice and prefer a Nokia Lumia to an evasive Iphone!
    29 Apr 2012, 07:52 AM Reply Like
  • milehr
    , contributor
    Comments (475) | Send Message
     
    OK. We shall try to invest in companies that can pay less in taxes, but pay more.
    29 Apr 2012, 08:11 AM Reply Like
  • gensearch2
    , contributor
    Comments (1390) | Send Message
     
    In Q1 ending 31 Mar 2012

     

    Apple paid $3.91B in taxes on income of $15.5B before taxes

     

    http://bit.ly/IKuCOj

     

    Nokia paid $136M in taxes on net income of ($1.1B) before taxes. ... ( ) denote negative income.

     

    http://bit.ly/JjkwPW

     

    The share price of Nokia over that last 5 years has gone from a high of about 16 to 3.67.

     

    Perhaps the best reason you can give for buying the Lumina is as a charitable donation to a company going under. It might make more sense just to send a donation to Nokia and buy an iPhone.

     

    Really. Negative income suggests that the more they produce/sell the more in debt they go.

     

    Woz likes the Lumina better than Android.

     

    P.S. They might want to get better tax lawyers. A negative net income before taxes and they're still paying taxes?
    29 Apr 2012, 08:22 AM Reply Like
  • 215304
    , contributor
    Comments (605) | Send Message
     
    Get a life. In 2011 GE paid 0 income taxes on $14 billion in income. That's right, zero income taxes. Where was the uproar then. Every company does what it can LEGALLY, WITHIN THE LAW, to reduce it's tax burden. People do it too, did you reduce your taxes by deducting your mortgage interest? There is nothing wrong with following the tax law and using legal deductions and exemptions. And by the way, Nokia pays a lower percentage of it's income in taxes than Apple.
    29 Apr 2012, 10:27 AM Reply Like
  • DynastyMgr
    , contributor
    Comments (16) | Send Message
     
    Amen to that!!!!
    29 Apr 2012, 11:30 AM Reply Like
  • Stone Fox Capital
    , contributor
    Comments (5788) | Send Message
     
    So you would rather have somebody pay taxes to Finland? Real smart!

     

    Its not Apple's fault, its the fault of your elected officials that give preferential treatment to certain industries and locations instead of a flat tax. Income is income.
    29 Apr 2012, 11:47 AM Reply Like
  • Stone Fox Capital
    , contributor
    Comments (5788) | Send Message
     
    Great point. This goes to show the flawed logic of Tombaun (is that a Finnish name?).

     

    Buy an Apple phone and it pays income taxes, buy a Nokia phone and the company doesn't even make money to pay income taxes. Not to mention using this logic a person would want to know the income tax paid on each dollar of revenue not income. Even if Nokia paid a 30% income tax rate it might end up paying substantially less per dollar of revenue because the company is alot less efficient than Apple.

     

    So now by buying a Nokia phone you've just subsidized the executive management team in Finland and the Finish government.

     

    The solution is to buy an iPhone and tell your Senator to change the tax code.
    29 Apr 2012, 12:05 PM Reply Like
  • Stone Fox Capital
    , contributor
    Comments (5788) | Send Message
     
    Wasn't there some uproar over that? What killed me is the media typically failed to point out the losses over the prior couple of years.
    29 Apr 2012, 12:07 PM Reply Like
  • D_Virginia
    , contributor
    Comments (2280) | Send Message
     
    There was indeed plenty of uproar over GE paying no taxes (didn't they get a refund, actually?) a few years ago. As noted, this was often cited out of context by our horrible media ("GE never pays any taxes ever!"), because GE did in fact pay taxes most years prior, and has in the years since.
    29 Apr 2012, 12:16 PM Reply Like
  • Advill
    , contributor
    Comments (2179) | Send Message
     
    What do you think is Nokia doing?...something different? and Google? what do you think IBM, Exxon, Crevron, Copano, P&G etc........why only Apple is attacked?.

     

    The biggest danger for Apple is not the market competitors ....is American politics.
    29 Apr 2012, 12:45 PM Reply Like
  • charliezap
    , contributor
    Comments (1174) | Send Message
     
    Re: """In Q1 ending 31 Mar 2012"""

     

    If you actually think that Apple actually paid $3.91 billion in Q1 of 2012, then you just don't know much about accrual accounting.

     

    The tax item on the income statement consists of 2 items: A) the actual cash income taxes paid, plus, B) the deferred tax component. The NY Times article reports that for 2011, the actual taxes paid were about 10% of income. Deferred taxes are theoretical taxes that, in a growing company, never actually get paid.
    29 Apr 2012, 01:35 PM Reply Like
  • MWinMD
    , contributor
    Comments (1861) | Send Message
     
    Amazing. 61 comments on this page so far, and no one except me has mentioned the real issue here. They were evading STATE taxes (of California, by having an office in Nevada). This whole shenanigan points up the fundamental problem with having 50 different medieval fiefdoms, all with their own parochial tax laws. It's the 15th century still, is it? Well, no, except in the United States it is. (What do you want, we're still trying to discover the metric system that the rest of the world uses, go figure.)

     

    As long as you have this ridiculous granularity to laws depending on which side of an imaginary, contrived line you are standing on, you will have this kind of nonsense. Wake up people. "States rights" worked nicely when it took 4 days by horse and wagon to get to the next medieval province. It was a nice dodge for the people who wanted to own other human beings who had the "wrong" color of skin. It has NO place in a modern industrialized country.
    29 Apr 2012, 02:09 PM Reply Like
  • D_Virginia
    , contributor
    Comments (2280) | Send Message
     
    > the fundamental problem with having 50 different medieval
    > fiefdoms, all with their own parochial tax laws.

     

    I largely agree -- but would you say the same about nations?

     

    When discussing corporations vs. governments, this is a logical extension, and indeed a very real incongruity in our modern world, where corporations exploit national arbitrages every day, and governments are unable to address the problems this causes them.

     

    Also, what is your suggestion to those who value the differences in state laws? With a nation as large and diverse as the U.S., surely some degree of variance is beneficial, don't you think?
    29 Apr 2012, 02:30 PM Reply Like
  • schatzl
    , contributor
    Comments (391) | Send Message
     
    Great comment. But how would you change the existing system which is such a fundamental and defining part of the USA? It would require constitutional change, wouldn't it?
    29 Apr 2012, 02:51 PM Reply Like
  • 19IgfBUi69
    , contributor
    Comments (73) | Send Message
     
    There is a difference between tax evasion - a possibly criminal act -and tax avoidance - perfectly legal. It is also in shareholders' interests to minimize tax, not a "disgrace".
    29 Apr 2012, 03:57 PM Reply Like
  • David Urban
    , contributor
    Comments (1036) | Send Message
     
    A clearer delineation between state and federal government would be a nice start.

     

    Less state reliance on the federal government would help,

     

    Let the states have the freedom to soar or fall depending on the way they want to run themselves.

     

    What works for people in one area of the country does not work work for people in other areas. Different areas have different needs and they should run their states accordingly.
    29 Apr 2012, 04:14 PM Reply Like
  • MWinMD
    , contributor
    Comments (1861) | Send Message
     
    19 - absolutely right, I should have said "avoiding", and my comment certainly wasn't meant as a criticism of Apple, which was just acting in its own, legal interests. My larger point was that this is just another example of the ridiculousness of having variance in state laws, here in the 21st century.
    29 Apr 2012, 05:20 PM Reply Like
  • MWinMD
    , contributor
    Comments (1861) | Send Message
     
    schatzi - very good point, which was in the back of my mind as I wrote that. It's another step beyond for humanity to get around the absurdity of these arbitrary lines called borders. It's a measure of our smallmindedness that we can even conceive of the concept still. But... baby steps. First the states. :)
    29 Apr 2012, 05:22 PM Reply Like
  • MWinMD
    , contributor
    Comments (1861) | Send Message
     
    I would argue for the opposite, David. We need to, and ultimately will, weaken "states rights" to the point where they pertain to very few things (which actually relate to real fundamental differences in the geographical regions). There are few arguments that I hear that are more absurd than "what works for people in one area of the country does not work for people in other areas". Exactly how does the logic in that statement work? Are Kentuckians a different species than Nevadans? Do they eat silicon-based nanofibers for sustenance?

     

    I'm enjoying the palpable squirming of Mitt Romney these days as he puts forth the idea, completely straight-faced, that the individual health insurance mandate (a Republican invention that the Heritage Foundation once fell all over itself praising) somehow "works" for homo sapiens who dwell in Massachusetts, but would be a HORRIBLE idea for the humans who lay their head each night in the other 49 states. This is exactly the kind of idiocy that leads to Apple setting up an office in Nevada to avoid California tax.

     

    I'm very curious to meet one of these bizarre, presumably-antennaed Bay Staters. Do they have three livers and only one lung? How does a setup for delivering health care to the most people "work well for them" but not for other members of the same species? Fascinating.
    29 Apr 2012, 05:30 PM Reply Like
  • MWinMD
    , contributor
    Comments (1861) | Send Message
     
    D_Virginia, one of my responses to schatzi below was meant for you (hopefully obvious). As to how to placate the people clinging desperately to their tricornered hats and nostalgia for the 18th century and Pony Express days, I really don't know how to drag their minds into being able to embrace a larger identity for themselves. I wish I did.

     

    I'm all for diversity and variance - in dress, language, tastes, skin color, music, landscapes, art, whathaveyou. But when that extends to laws, it really creates unnecessary confusion, complication and inefficiency, IMO. I watch these petty fights going on between MD and VA for instance in trying to cannibalize each other's "business friendliness" and it seems like so much wasted energy. If we dispensed with this parochial race-to-the-bottom environment, "states" could instead focus on producing efficiencies and infrastructure of real intrinsic value, rather than just short-term, transient relative value.

     

    This is a huge subject and obviously not very suitable for resolving on a comment board.
    29 Apr 2012, 05:39 PM Reply Like
  • tahalb
    , contributor
    Comments (260) | Send Message
     
    Paying taxes is a duty for all citizens and corporations. The question is how much taxes should one pay. Therefore, I would turn the microphone to Mit romny to answer this question. God bless this great country and God bless Steve jobs soul.
    29 Apr 2012, 10:10 PM Reply Like
  • J 457
    , contributor
    Comments (947) | Send Message
     
    At least tell your Senator, but AAPL's products do nothing good for USA.
    30 Apr 2012, 12:39 AM Reply Like
  • J 457
    , contributor
    Comments (947) | Send Message
     
    As the ship slowly sinks you cite tax code. They really have you distracted from the real issues- that is; the USA cannot sustain its current rate of spending (on boomer entitlements) without more taxes from corporations and citizens alike. Give up the medicare and SS and govt pensions and then you can have the lower tax rate. You can't have it both ways. With last weeks GDP $16.2 trillion debt limit must be raised. Spending 1.5 trillion more each year than what is received via taxes. AAPL, GE, doesn't matter who, they need to pay more or services must be cut.
    30 Apr 2012, 12:45 AM Reply Like
  • J 457
    , contributor
    Comments (947) | Send Message
     
    I sure hope you've called your elected official? Don't blame AAPL, they knew it was morally wrong and bad for the country that buys all their junk, but since it was within the "legal loopholes" it was deemed OK? Too bad corporate Americas moral compass was lost decades ago.
    30 Apr 2012, 12:48 AM Reply Like
  • sky_ozone
    , contributor
    Comments (11) | Send Message
     
    not being sarcastic,how much tax apple was paying when making loss 15 years back,with same share price?
    30 Apr 2012, 04:32 AM Reply Like
  • BradONeill
    , contributor
    Comments (21) | Send Message
     
    I totally disagree, the people in California can have their little communist island where mcdonalds is forbidden from giving toys with happy meals and I can live in Nevada or New York or whichever level of government I am comfortable with.
    30 Apr 2012, 04:48 AM Reply Like
  • fitcoachx
    , contributor
    Comments (3) | Send Message
     
    Thank you for stating the obvious, at least to some. If you don't like the way corporations do or don't pay taxes, you might want to see your local politician...........
    30 Apr 2012, 04:55 AM Reply Like
  • D_Virginia
    , contributor
    Comments (2280) | Send Message
     
    > the people in California can have their little communist island

     

    Funny, some of the biggest corporations in the world, including Apple, seem to be very happy to make their homes in that little communist island.

     

    Maybe California has at least a couple of things figured out? :)
    30 Apr 2012, 07:51 AM Reply Like
  • Poor Texan
    , contributor
    Comments (3529) | Send Message
     
    Sure. Give up Medicare and SS but keep charging the tax for both (and increase it on the employers). Sure way to wreck the country.
    30 Apr 2012, 09:27 AM Reply Like
  • gensearch2
    , contributor
    Comments (1390) | Send Message
     
    As a related issue to your point. Over 1/2 of Fortune 500 companies are incorporated in the state of Delaware. That isn't by random chance.
    1 May 2012, 08:24 AM Reply Like
  • D_Virginia
    , contributor
    Comments (2280) | Send Message
     
    > Over 1/2 of Fortune 500 companies are incorporated in the state
    > of Delaware.

     

    Incorporated there, yes, but not actually doing anything there.

     

    Companies like to incorporate in Delaware for a variety of reasons:
    1) It's cheap to incorporate
    2) You don't need to be a Delaware resident (!?)
    3) Non-Delaware businesses don't pay Delaware's corp tax (!?)
    4) One person can hold all positions for the company (!!??)
    5) Separate corporate courts with no juries (!!!!????!?!?!?)

     

    It's a dream come true for tax and legal arbitrage.

     

    And yet:

     

    How much revenue does this create for Delaware?
    How much money do those companies spend in Delaware?
    How many of those companies have sizable facilities in Delaware?
    How many jobs have they created in Delaware?
    How many of their wealthy executives live in Delaware?

     

    What have Delaware's business-friendly laws done for Delaware? :)
    1 May 2012, 11:50 AM Reply Like
  • gensearch2
    , contributor
    Comments (1390) | Send Message
     
    The point is that Delaware has adopted laws that companies see an advantage by incorporating there; Delaware has made those laws presumably because they see a benefit to it. It's a win win. Who wins more and in what ways isn't important to anyone other than to Delaware and the companies incorporating there.

     

    Ireland has set up it's tax rates and laws to attract global businesses. Quite a few companies exploit what Ireland has done in conjunction with what US tax code has been approved by Congress.

     

    If Congress were to complain [I'm not saying they are] that corporations are setting up subsidiaries to legal dodge US taxes Congress could write tax code up to defeat that. If they wanted to. They choose not to.
    2 May 2012, 03:50 PM Reply Like
  • D_Virginia
    , contributor
    Comments (2280) | Send Message
     
    > Delaware has made those laws presumably because they see a
    > benefit to it. It's a win win.

     

    Well, let's at least try to be honest with ourselves. It's a win for corporate lobbyists and a few politicians -- it's a loss for Delaware as a whole, or at least a waste. :)

     

    > Quite a few companies exploit what Ireland has done

     

    The key word being exploit. Ireland isn't doing itself any favors either. Not that anything is illegal, but that the laws aren't beneficial to the entities that made them.

     

    The con is that A) business-friendly laws will attract businesses and B) those businesses will create benefits for the state/country with those laws -- but what usually happens is you get A without B.

     

    It's a classic bait and switch that the ignorant politicians fall for every time.
    4 May 2012, 06:32 AM Reply Like
  • gensearch2
    , contributor
    Comments (1390) | Send Message
     
    Nothing stops Delaware or Ireland from changing their laws.

     

    If it's to their disadvantage they would change them. Ireland specifically set those laws up to get tax revenue and they get it. Last year they threatened to raise the corporate tax rates and the corporations shot back they would move their subsidiaries to another country and Ireland backed off.

     

    Not all business friendly laws are intended to create jobs. Sometimes states or countries are just going after the cash. Ireland doesn't expect Google to create jobs in Ireland. Ireland expects Google to set up a subsidiary and when money passes through Ireland they'll take some off the top.
    4 May 2012, 08:37 AM Reply Like
  • Neil459
    , contributor
    Comments (2644) | Send Message
     
    "..but that the laws aren't beneficial to the entities that made them."

     

    By what logic do you arrive at that conclusion?

     

    There are many benefits particularly if you are a lawyer (as are most politician's). Even a minor example, each company has to have a local registered office (again in some attorneys office) but still they have mail and other legal stuff to be handled. But the value really kicks in when lawsuits are filed. Etc. To say 'no benefit' is just wishful thinking. I have never known a politician that did things for no reason and particularly did things that did not benefits them in some way.

     

    If I have to believe a politician did something out of ignorance versus self interest I would never believe ignorance was the reason. They do everything for self interest.
    4 May 2012, 10:04 AM Reply Like
  • Simchad
    , contributor
    Comments (86) | Send Message
     
    If its legal then what's wrong?
    29 Apr 2012, 08:11 AM Reply Like
  • schatzl
    , contributor
    Comments (391) | Send Message
     
    Is it legal to casually walk past a begging child lying starving in the gutter? Yes. Is it moral and acceptable? No.

     

    Just because there are loopholes being abused, doesn't make it right. I am shocked you don't see the injustice of it and don't recognise how morally reprehensible Apple's behaviour is. Every cent they do not pay, is a cent YOU will have to pay. It is money they are stealing from YOU.
    29 Apr 2012, 08:22 AM Reply Like
  • the_value_vulture
    , contributor
    Comments (157) | Send Message
     
    That comment can cost you literally a book on that subject along. Clearly anyone with a brain and that has lived long enough can see that there are sometimes GREAT differences in legality and ethical behavior.

     

    Is Apple doing something wrong here? I don't think so. Companies are designed to exploit and profit as much as possible regardless of who gets throw under the bus.

     

    What I DO question is why I pay more taxes as a percentage of my income than Apple and why so many others do as well regardless of earning much less?

     

    Similar questions along the same lines are why does big business continue to get favorable treatment? Who is really benefiting from QE? Who is really benefiting from the low interest rate environment? Why is Fannie Mae / Freddy considering bulk selling mortgages to private equity at such big discounts when the previous homeowners were likely never given that opportunity?

     

    They said that the bailout of the banks and our financial system was the lesser of two evils. The people in power said that it was for the best of the nation and going to save America. So did it save America or did we just transfer power and wealth at the expense of the people?
    29 Apr 2012, 08:46 AM Reply Like
  • Neil459
    , contributor
    Comments (2644) | Send Message
     
    schatzl, there is nothing moral about taxes. If there were, then the high profile hollywood nuts would volunteer to give more. They don't. Its all a con resulting from indoctrination. The purpose is to get people like you to be outraged when people don't fall in line and pay homage to the government and its corrupt and crooked ways.

     

    Taxes are simply theft from those that have worked hard for success to give to low-lifes and voters of a particular persuasion.

     

    In reality Apple, should not be taxes at all. Every penny that Apple makes is paid out to someone, either investors, employees, or suppliers. The suppliers then pay it out again to investors, employees, or suppliers. Eventually there are no more suppliers and the money just goes to employees and investors. At each step employees and investors are taxed. So taxing Apple is double taxation and its killing our economy.

     

    So, schatzl, be outraged, or be informed. But remember to be informed is to go against many years of government indoctrination by union teachers that only want you to be a Democrat follower, in bed with racism and class warfare, and pay homage to the Democrat political elite who don't care one bit for you.
    29 Apr 2012, 08:57 AM Reply Like
  • milehr
    , contributor
    Comments (475) | Send Message
     
    It is no sense of justice you are exhibiting, schatzi. It is envy.
    29 Apr 2012, 09:01 AM Reply Like
  • schatzl
    , contributor
    Comments (391) | Send Message
     
    What has happened with our society, that anyone expecting behaviour more in line with an equitable and socially responsible society is accused of envy? We have truly become morally bankrupt.
    29 Apr 2012, 09:39 AM Reply Like
  • D_Virginia
    , contributor
    Comments (2280) | Send Message
     
    Perhaps you should move to the country of Neil459istan? :)

     

    Or at least to one of the following countries with no (income) taxes: Andorra, Bahamas, Brunei, Kuwait, Maldives, Monaco, Nauru, Oman, Qatar, United Arab Emirates, Vanuatu. And there are probably others.

     

    Why do companies like Apple not make their homes in these shining pillars of tax-free-ness? Sure, they might have an office or a P.O. box in them, as Apple does in Nevada, but that's the extent to which they are willing to subject themselves to those nations.

     

    Why is this? Sheer masochistic tendencies on the parts of these corporations? Why would they not want to embrace these enlightened Utopian societies that have rejected the evils of taxes?

     

    Why do these poor innocent corporations and people (but then, they are the same these days) continue to torture themselves by living in the dregs of the globe like the U.S.?

     

    Could it be because these tax-free countries have tiny markets, pitiful infrastructures, poorly educated average citizens, and significantly lower average standards of living than the U.S.?

     

    Thinking. Everyone should try it, at least some of the time. :)
    29 Apr 2012, 10:05 AM Reply Like
  • Camden
    , contributor
    Comments (1318) | Send Message
     
    That's really dumb. Under no rational scenario is it immoral to pay all the taxes one owes but no more.

     

    The problem is not with Apple or other companies, the problem is with the tax code loopholes and corrupt politicians that wrote the legislation allowing the loopholes.

     

    That said, I DO have a big problem with corporations like Apple "greasing the palm" (spending millions of dollars lobbying and making donations to politicians) in order to get legislation they want. It all comes cown to money in politics.
    29 Apr 2012, 11:22 AM Reply Like
  • DynastyMgr
    , contributor
    Comments (16) | Send Message
     
    Then let's put in place a flat tax with NO deductions. That means we ALL pay a set percentage regardless of income. Until a fair tax structure is created there will be people and companies finding ways to legally pay less. The government has proven to be a wasteful operation with the taxes they do collect so I see no problem with Apple and other companies, and individuals giving less money to an organization who is going to mismanage it. That's just smart business!
    29 Apr 2012, 11:35 AM Reply Like
  • D_Virginia
    , contributor
    Comments (2280) | Send Message
     
    > Under no rational scenario is it immoral to pay all the taxes one
    > owes but no more.

     

    This is not true. Conservative pundits often call Warren Buffett immoral for speaking on tax policies while only paying what's required of him.

     

    Hypocrisy can make anything supposedly immoral. :)
    29 Apr 2012, 11:36 AM Reply Like
  • Camden
    , contributor
    Comments (1318) | Send Message
     
    Re: "Taxes are simply theft from those that have worked hard for success to give to low-lifes and voters of a particular persuasion."

     

    That's got to be one of the most ignorant things I've ever read on Seeking Alpha. How do you think our military, all the roads, bridges, airports, and public schools we're paid for? TAXES. Without taxes this country would not exist.
    29 Apr 2012, 11:37 AM Reply Like
  • D_Virginia
    , contributor
    Comments (2280) | Send Message
     
    > How do you think our military, all the roads, bridges, airports, and
    > public schools we're paid for?

     

    He thinks they were paid for by the Capitalism Bunny and the Freedom Fairy, of course!
    29 Apr 2012, 11:39 AM Reply Like
  • nitedawg
    , contributor
    Comments (2) | Send Message
     
    Neil, VERY well said. You are right on!!
    29 Apr 2012, 12:35 PM Reply Like
  • untrusting investor
    , contributor
    Comments (9923) | Send Message
     
    DV,
    Well stated. US corporate tax laws and tax avoidance schemes are legal only because corporations continually use lobbying and in effect donation bribery of politicians to try and make them legal.

     

    Any taxation system that gives corporations loopholes and tax preferences that a country's individual citizens can not get is an abuse of the system.

     

    Perhaps the solution is to treat every individual US citizen as a corporate entity for tax purposes as well. Thus enabling the huge corporate lobby and army of corporate lawyers and corporate tax planners to actually begin working for the american citizen as well.

     

    Imagine that DV, there is a new mega growth industry for you and your partners. Just set up a corporation in Nevada to handle all the taxes for every individual US citizen who is now a corporation of One. You will become a zillionaire and the hottest new IPO on wall street. Not to mention that you will become a major employer as well, except of course for the parts of the operation that you offshore to Ireland, Grand Caymen, etc. to avoid taxes on the corporate shell in Nevada and protect your new zillionaire status.
    29 Apr 2012, 01:03 PM Reply Like
  • LtJC
    , contributor
    Comments (7) | Send Message
     
    Ok, we should all just shun all corporations who try to pay less taxes. Wait....that's all of them. Welcome to the real world buddy.
    29 Apr 2012, 03:35 PM Reply Like
  • MWinMD
    , contributor
    Comments (1861) | Send Message
     
    Yes Neil459, taxes are unnecessary. Highways build themselves, kids could absorb an education by osmosis if you put them near a library (which doesn't need funding), and police would work for free if we just stopped insulting them by handing them a paycheck every two weeks. And that big bloated military that we spend more than the next 20 countries combined on could be created out of fairy dust, if we would just listen to the tea partiers. Why didn't I think of these things.
    29 Apr 2012, 05:47 PM Reply Like
  • MWinMD
    , contributor
    Comments (1861) | Send Message
     
    > He thinks they were paid for by the Capitalism Bunny and the Freedom Fairy, of course!

     

    I always knew that Ike was a raving Che Guevara Marxist. He presided over a 91% top marginal tax rate, and used it to build the interstates that the tea partiers routinely use to get to their rallies. Such a dirty communist!
    29 Apr 2012, 05:51 PM Reply Like
  • tahalb
    , contributor
    Comments (260) | Send Message
     
    Did Madoff pay any taxes? Or was he exempt??
    29 Apr 2012, 10:12 PM Reply Like
  • tahalb
    , contributor
    Comments (260) | Send Message
     
    not all of it .
    States who are part of the powerball will have roads, esp. ones that lead to a gas station with exxon/mobile outside.

     

    Lottery should replace the tax system in this country, we should tax the winners 75% of thier winning and sharing them with our allies oversees.
    29 Apr 2012, 10:17 PM Reply Like
  • J 457
    , contributor
    Comments (947) | Send Message
     
    Neil, does the govt grease you every month? How many on this thread have the typical "pay no taxes" mantra while receiving their govt hand-outs at every turn? You want no taxes, you get no services. Can't have it both ways.
    30 Apr 2012, 12:54 AM Reply Like
  • J 457
    , contributor
    Comments (947) | Send Message
     
    Most here want the fantasy world govt. No personal or corp taxes with free medi-care, social security, military, education, and infrastructure. Its the entitlement boomer mentality (all for me, and all for free) that has slowly sunk the USA into the deep abyss the last 30 years.
    30 Apr 2012, 12:58 AM Reply Like
  • fitcoachx
    , contributor
    Comments (3) | Send Message
     
    See your local and national politicians. They set the laws and every corporation has a moral and legal obligation to their shareholders to comply with the laws, but to not spend any more shareholder dollars than necessary, including on taxes.
    30 Apr 2012, 04:56 AM Reply Like
  • fitcoachx
    , contributor
    Comments (3) | Send Message
     
    U.S. corporate tax laws and tax avoidance schemes are legal because the laws say they are. The politicians write the laws. You say the lobbist bribe politicians to make the laws? Isn't bribery illegal? Don't the lobbist operate under other laws written by Congress. It all falls back on Washington.
    30 Apr 2012, 04:56 AM Reply Like
  • Neil459
    , contributor
    Comments (2644) | Send Message
     
    "Yes Neil459, taxes are unnecessary." I've never said taxes were unnecessary. (although these comments were removed by SA editors). So for the record. None of us would mind paying taxes for roads, schools, military, etc. But that's not what we do any more. We have hard earned money taken from us to reward voters that vote for more government power and to give themselves more money (its corruption and theft). By the time these voters realize that soaking the rich does not work, the government will so be powerful that everyone will be in deep dodo.

     

    The founders realized this and did the best they could to protect America from it, but it looks like our founders have been sold out by the Media and the education system. Anyone here that thinks that what we have now is good, just and moral, should go back an read what the founding fathers thought would happen in a few hundred years (about now).
    30 Apr 2012, 09:55 AM Reply Like
  • tigersam
    , contributor
    Comments (1711) | Send Message
     
    It is wrong to walk past a begging child. You should search for their parents and chop-off their organs and I am not talking about their hands.
    2 May 2012, 04:54 PM Reply Like
  • schatzl
    , contributor
    Comments (391) | Send Message
     
    I thought Apple was an iconic American product. Oops, I'll have to think again. Neither do they employ and produce, nor do they pay taxes in the US on an acceptable level. Personally find it to be the most despicable brand currently in the US. It represents everything that is wrong with the US industry. The social conscience and national pride of a peanut.

     

    Apple doesn't disclose exact US employment numbers, but are estimated around 40-50k, aggressively outsourcing to places like China, where labour regulations are lax and environmental laws non-existent. By contrast, Walmart employs 1.4 mill in the US alone.

     

    Whatever happened to "Made in the USA"?
    29 Apr 2012, 08:12 AM Reply Like
  • Lakeaffect
    , contributor
    Comments (972) | Send Message
     
    Hey shatzl - Please tell us on which line of your tax return you entered your gratuity payment to the Federal Government?

     

    Or perhaps you did not file for your Earned Income Credit this year?
    29 Apr 2012, 08:45 AM Reply Like
  • schatzl
    , contributor
    Comments (391) | Send Message
     
    I pay taxes in Austria and I pay close to 50%. Am I happy paying this much? No, but knowing it contributes to a functioning and more equitable society and a close to balanced budget, is comforting. Call me naive or idealistic, but at least I'm not morally corrupted.
    29 Apr 2012, 09:44 AM Reply Like
  • davidbdc
    , contributor
    Comments (3141) | Send Message
     
    Guess What, I also pay close to 50%. In the US we have Federal, State, Local income taxes..... plus the idiot politicians have also thrown in a bunch of fees, tolls, etc in an effort to disguise what we really pay!!!

     

    There isn't a magic number of taxes. Its whether or not the system is on the level.... And unfortunately in the USA, our overall system of government has become more and more corrupt. We've gone from a society where people were busy creating wealth to one where people simply gather around the trough of government to divide up whatever wealth already exists.

     

    Personally I'd like to see a simple 15% tax rate for corporations with zero deductions. And I'm just as tired of hearing about how our government needs more. It needs far less and it needs to physically be far less.

     

    Its called freedom and without that everything else will eventually disappear.
    29 Apr 2012, 10:05 AM Reply Like
  • Joe Dirnfeld
    , contributor
    Comments (1128) | Send Message
     
    Your country has a history of being morally corrupt, so don't lecture us about morality . Who do you think you are fooling.
    29 Apr 2012, 10:33 AM Reply Like
  • anonymous#12
    , contributor
    Comments (552) | Send Message
     
    Austria....hmmm.....

     

    Austria is full of corruption, with it's society rotten to the heart.....

     

    "People in glass houses shouldn't throw stones".....
    29 Apr 2012, 11:21 AM Reply Like
  • RDSwindells
    , contributor
    Comments (18) | Send Message
     
    That is probably why Al Gore is on their Board of Directors.
    29 Apr 2012, 12:12 PM Reply Like
  • Lakeaffect
    , contributor
    Comments (972) | Send Message
     
    Perhaps the Austrian politicians are less disgusting than the ones in the U.S. It would be helpful if you could give us your thoughts on that.

     

    I doubt folks here are as morally corrupt as you seem to believe. Not speaking for others, I am totally disgusted with the waste, graft, lobbyists, and silliness of our politicians. I am not opposed to helping out those in need, but in the current environment, giving more money to our politicians does not accomplish that. Higher revenues will not close the budget gap one iota. Spending will simply go up, and most likely by a greater increase than the revenue increase.

     

    Higher government revenue here just go down the rathole of vote buying, political cronyism and the adventurism of the Military/Industrial complex. Rather than rail about what Apple legally pays in taxes, the concern is how to get our politicians to get their heads out of their arses and behave like adults. When that happens, the tax issues will take care of themselves post haste.
    29 Apr 2012, 12:18 PM Reply Like
  • David Urban
    , contributor
    Comments (1036) | Send Message
     
    It became impossible for Apple and other companies to manufacture their products in the US.

     

    http://nyti.ms/wPr7nv
    29 Apr 2012, 12:54 PM Reply Like
  • LtJC
    , contributor
    Comments (7) | Send Message
     
    Hey Schatzl, if paying 50% contributes to a functioning and equitable society, won't paying 80% make it even better? Heck, why don't we all just pool everything we earn and then split it up that way. Equality for everyone!
    29 Apr 2012, 03:37 PM Reply Like
  • tahalb
    , contributor
    Comments (260) | Send Message
     
    Made is the USA exists, whats wrong with you man! Do you not have a Mcdonals near you??
    29 Apr 2012, 10:19 PM Reply Like
  • tahalb
    , contributor
    Comments (260) | Send Message
     
    You people are all mis informed. You all need to purchase calculators that are MADE IN THE USA. We pay 75% of every dollar we earn towards taxes. Taxes are not just on income, Gas,food,sales tax ,death tax,entertainment tax ,airline taxes fuel surgare, tire disposal, oil dispoal, sh...t disposal, clean air tax, and the list goes on and on...dont make a bug deal out of it..life is too short to be worried about where Apple is located, who cares how much they pay in taxes, for me having them not pay any taxes is good for thier bottom line profits, Lets see how much this bit of info . will affect Monday's openning price. Good night!
    29 Apr 2012, 10:25 PM Reply Like
  • gensearch2
    , contributor
    Comments (1390) | Send Message
     
    Going after "oil companies" doesn't have much to do with their tax rates or even calculating taxes. It's about subsidizing a profitable business segment.

     

    What if someone proposed giving Apple a tax subsidy? ... Great idea. If the taxpayer gives Apple billions of $$$ that will lower the cost of an iPhone.

     

    It would be BS for Apple and it's BS for the oil companies.
    29 Apr 2012, 08:29 AM Reply Like
  • Herr Hansa
    , contributor
    Comments (3079) | Send Message
     
    A tax deduction is the same as a subsidy.
    29 Apr 2012, 01:21 PM Reply Like
  • D_Virginia
    , contributor
    Comments (2280) | Send Message
     
    > It would be BS for Apple and it's BS for the oil companies.

     

    Sort of. Taxes have long been used as a social tool: tax the things you want less of in your society, and subsidize the things you want more of.

     

    Oil is a necessary driving force behind much of the economy -- other businesses can't do well without cheap(ish) oil.

     

    iPhones? Not so much.
    29 Apr 2012, 01:59 PM Reply Like
  • apberusdisvet
    , contributor
    Comments (2860) | Send Message
     
    The same accounting that is used to pump earnings per share should be used for tax purposes; it's amazing how accounting, just like economics, can be so purposely perverted.
    29 Apr 2012, 08:46 AM Reply Like
  • tunaman4u2
    , contributor
    Comments (2743) | Send Message
     
    Slave jobs, no taxes = win for apple, lose for society

     

    Whatever
    29 Apr 2012, 09:02 AM Reply Like
  • roland4790
    , contributor
    Comments (2) | Send Message
     
    It would be interesting to also know how much the New York Times and it's subsidiaries as well as controlling stockholders pay in taxes. Or else this is just another futile exercise in crowing a "holier than thou" boast.
    29 Apr 2012, 09:24 AM Reply Like
  • Joe Dirnfeld
    , contributor
    Comments (1128) | Send Message
     
    Apple is the greatest company in the USA and world. Frankly it's a blessing that they reside in the USA. They could easily transfer their headquarters elsewhere, and pay even less in taxes.
    It is their duty to pay the least taxes as long as they are following the law. Every USA corporation behaves similarly.
    The NYT is repeatedly going after them, and even inventing stories to undermine them, as was evident in the Foxconn reporting.
    29 Apr 2012, 09:46 AM Reply Like
  • Simchad
    , contributor
    Comments (86) | Send Message
     
    Am I missing something here. A company does everything legal, pays what the govt. asks from them, and some people are upset. So some liberal newspaper wants them to pay more, big deal. Because of aapl stock, I am paying more in taxes then most people make a whole year. It shows you what America has become. A nation that wants other people to work for them.
    29 Apr 2012, 10:03 AM Reply Like
  • the_value_vulture
    , contributor
    Comments (157) | Send Message
     
    "Because of aapl stock, I am paying more in taxes then most people make a whole year."

     

    That's good and great for you, but than you must realize how "in the hole" most of the middle class is and how lopsided the pay scales are for those individuals. It is those people you should thank for buying Apple products that in turn made you so much money.

     

    "It shows you what America has become. A nation that wants other people to work for them."

     

    I think the nation wants a government that works FOR the people and not AGAINST them to benefit the few who take full advantage of tax loopholes and special little policies put in place mainly for THEIR benefit.
    29 Apr 2012, 04:58 PM Reply Like
  • SoCal.Sooner
    , contributor
    Comments (91) | Send Message
     
    With my low income and my high deductions, some years I pay zero taxes. Your a fool not to take your legal deductions.
    29 Apr 2012, 10:16 AM Reply Like
  • D_Virginia
    , contributor
    Comments (2280) | Send Message
     
    Don't hate the player, hate the game. Apple is doing what it's legally obligated/allowed to do. No harm, no foul.

     

    Does that mean the laws are bad? Kind of.

     

    This is one of the many ways in which the system is heavily flawed.

     

    Corporations, which often have as much or more influence than national governments (and certainly state governments), can and do exploit global arbitrage -- where governments are inherently bound by geography, corporations are not.

     

    Yet governments still foolishly think that tax incentives offered to corporations and the wealthy will bring them benefits.

     

    What benefits has their 0% corporate tax rate brought Nevada? Their unemployment rate is at 12% (http://bit.ly/Jux0sv), the highest in the nation unless you count Puerto Rico's 15%. They get a pittance in fees from businesses that register a mailbox in their state, but that's about it. And in fact, Nevada is generally not considered business friendly (they are #47 on this list: http://bit.ly/IBOzCM).

     

    Although median household income is about 4% higher than the national average, so maybe it's not all bad. But aside from vice industries, they basically have nothing to show for their "business friendly" laws except a lot of paperwork.

     

    Contrast this, for example, with my home state of Virginia, where the corporate tax rate is 6% (about average for states), unemployment is 5.6%, and median household income is about 20% higher than the national average. Virginia is generally considered a very business-friendly state (#2 on this list: http://bit.ly/Jux0sy), but it generally tries to bring businesses *physically* into the state -- not just on paper.

     

    Governments and corporations can successfully coexist symbiotically, but only if governments aren't stupid. :)
    29 Apr 2012, 10:43 AM Reply Like
  • phdinsuntanning
    , contributor
    Comments (1200) | Send Message
     
    I undretand that this fruit cash is mainly overseas too,
    with the exception of some USTBs...
    I guess a repatriation of the money would mean a
    nice slice for Uncle Sam, and that is why so much cash
    remains accumulated. The "advantage" is they can buy
    foreign companies now without paying any US tax!
    29 Apr 2012, 11:42 AM Reply Like
  • jp.briam@gmail.com
    , contributor
    Comment (1) | Send Message
     
    why are you not looking into Google and all the transnationals ?
    29 Apr 2012, 12:10 PM Reply Like
  • D_Virginia
    , contributor
    Comments (2280) | Send Message
     
    Apple is officially the biggest company in the world now -- get used to them being singled out for just about everything.
    29 Apr 2012, 12:17 PM Reply Like
  • VJC
    , contributor
    Comment (1) | Send Message
     
    Retired...35 years in financial services...
    29 Apr 2012, 12:12 PM Reply Like
  • Poypoy
    , contributor
    Comments (58) | Send Message
     
    Purple monkeys
    29 Apr 2012, 12:45 PM Reply Like
  • Workinprogress
    , contributor
    Comments (26) | Send Message
     
    Yet another thing AAPL is doing to try to stick out from its competitors.
    29 Apr 2012, 12:14 PM Reply Like
  • bailinnumberguy
    , contributor
    Comments (1090) | Send Message
     
    I'm all for paying less taxes. Apart from a strong national defense, there's very little that the government provides that benefits the majority of us. Sure, let's all pay maximum taxes to finance corrupt politicians and government employees whose biggest decision on a daily basis is where to go to lunch.
    29 Apr 2012, 12:14 PM Reply Like
  • Poor Texan
    , contributor
    Comments (3529) | Send Message
     
    Thanks to the NYT, whose editors use outside accountants or Turbotax (like Timmy Geithner) to prepare their own returns, to point out how our tax system(s) should work. I'm still waiting for them to appoint Jon Corzine to their board. Anybody remember the term 'yellow journalism'?
    29 Apr 2012, 12:32 PM Reply Like
  • D_Virginia
    , contributor
    Comments (2280) | Send Message
     
    Yellow journalism: "a type of journalism that presents little or no legitimate well-researched news and instead uses eye-catching headlines to sell more newspapers."

     

    The article seems quite well-researched, hardly eye-catching (articles like this are seen near Tax Day every year), and no one will ever accuse the NYT of selling very many papers. :)

     

    Take your bitterness elsewhere?
    29 Apr 2012, 12:37 PM Reply Like
  • Poor Texan
    , contributor
    Comments (3529) | Send Message
     
    D

     

    My comment was to point out that complex subjects (the Internal Revenue code is 19 volumes thick and are supplemented by the codes of fifty states as well as the codes of foreign countries in which companies do business) are difficult (that's a euphemism) for the casual reporter to adequately address. The article may sound well researched to a layman but when you deal with tax auditors on a constant basis, you'll find it doesn't even get the tip of the iceberg.
    29 Apr 2012, 10:32 PM Reply Like
  • bdhumbert
    , contributor
    Comments (21) | Send Message
     
    First - companies DO NOT pay taxes - they will recover any tax they paid in payments from customers - they have not other, magical source of revenue.

     

    Second - Apple has to do everything it can to pay as small a tax bill as possible - it is what is called "fiduciary responsibility" to it's shareholders.

     

    Finally - our problems are not going to be solved by raising taxes on Apple or me - or anyone. They will only be solved when we learn to live within our means - spending the enormous revenue that government ALREADY gets in the best way possible.,
    29 Apr 2012, 12:35 PM Reply Like
  • Hubert Biagi
    , contributor
    Comments (689) | Send Message
     
    The politically correct companies, mainly in technology, get a pass by the WH and the media. But if you are big energy, big healthcare, or big financial, look out below...
    29 Apr 2012, 12:40 PM Reply Like
  • D_Virginia
    , contributor
    Comments (2280) | Send Message
     
    Exxon used to be the biggest dog in the yard, and so they got nipped at a lot. Now it's Apple, and so the same nipping is commencing. Plain and simple.

     

    How on earth is a 5-page article on how Apple and other companies evade taxes is getting "a pass" by the media? And I seem to recall the WH giving a hefty pass to GE, who is heavily involved in energy, healthcare, and financial, so I call BS.

     

    Please at least attempt to make logical conclusions.
    29 Apr 2012, 12:46 PM Reply Like
  • David Urban
    , contributor
    Comments (1036) | Send Message
     
    That is because the CEO of GE is one of Obama's economic advisers.
    29 Apr 2012, 12:50 PM Reply Like
  • Neil459
    , contributor
    Comments (2644) | Send Message
     
    "That is because the CEO of GE is one of Obama's economic advisers" and Obama is a Chicago thug the likes of which Washington DC has not seen for decades. He makes ALL decisions based on two questions, "How much did you contribute to my political campaign." and "How much positive press have you provided to my campaign."

     

    Its just the Chicago way.
    30 Apr 2012, 01:27 PM Reply Like
  • jen443
    , contributor
    Comment (1) | Send Message
     
    Paying taxes is not my favorite thing to do, but somebody needs to pay for government, as dysfunctional as it is and also pay for our country's infrastructure. What I really do not like is when the rich and powerful, define them as you will, pay a lower tax rate than I do. The tax system needs to be overhauled, but since the rich and powerful own our government I do not see this happening anytime soon!
    29 Apr 2012, 12:43 PM Reply Like
  • geojet7
    , contributor
    Comments (6) | Send Message
     
    How much sales tax income does the IRS collect from the sale of Apple products to U.S. citizens? Bet its way more than the taxes that
    Apple LEGALLY avoids paying. There is always another side to every story. Geojet
    29 Apr 2012, 12:43 PM Reply Like
  • charliezap
    , contributor
    Comments (1174) | Send Message
     
    """How much sales tax income does the IRS collect from the sale of Apple products to U.S. citizens?"""

     

    Actually, none. Sales taxes are not collected by the IRS, but by localities -- state, county, and city.
    29 Apr 2012, 03:00 PM Reply Like
  • geojet7
    , contributor
    Comments (6) | Send Message
     
    no thanks
    29 Apr 2012, 12:43 PM Reply Like
  • words
    , contributor
    Comments (76) | Send Message
     
    The problem is not Apple, it's the system formulated by its participants. Local, state and most assuredly national politicians and the special interests that support them are the problem. Ironically everyone who partakes and supports the system without getting involved to change it constructively reflects the solution to the problem.

     

    A little self-examination is in order. Across the country the silent majority is just that, not becoming familiar with or contacting their government representatives to voice approval or disapproval, and an all too-high number of citizens do not exercise their vote. The laws on the books get there because someone has the gumption to make the effort. Those who cry foul and bad-mouth Apple for not paying taxes are invited to channel their energies by getting involved.

     

    This is a rich and wonderful country but we need individual involvement to make certain that our government and corporate institutions are functioning efficiently and honestly. Until that occurs government bureaucracy and wasteful spending, boardroom nonchalance, outrageous perks, salaries and bonuses, special interests, tax loopholes and the compensating need for further taxes, hikes and fees will continue to grow.
    29 Apr 2012, 01:41 PM Reply Like
  • MWinMD
    , contributor
    Comments (1861) | Send Message
     
    This is all because we bizarrely still have these ridiculous, antiquated and contrived things called "states". One day, when Americans grow up enough to be able to grasp that it's not 1810 anymore, we will do away with states entirely. You'll no longer have the HUGE DRAG on our economy of the spaghetti labyrinth of different laws and tax codes depending on which side of an imaginary line you're doing business on. Until then, we'll have nonsense like this. Simple as that.

     

    It really is 2012, people. Really. The calendar isn't joking.
    29 Apr 2012, 01:59 PM Reply Like
  • BlueOkie
    , contributor
    Comments (4510) | Send Message
     
    Apple is not here to pay taxes but to make a profit for its stockholders. It has and now it's giving dividends (taxable if you will). Guess NYT is mad because they are going bankrupt and no one except the extreme liberals are reading the paper. Want a skewed view of the world, read NYT.
    29 Apr 2012, 02:27 PM Reply Like
  • tigersam
    , contributor
    Comments (1711) | Send Message
     
    Why NYT is blaming Apple for. Blame tax code. I
    29 Apr 2012, 03:49 PM Reply Like
  • bailinnumberguy
    , contributor
    Comments (1090) | Send Message
     
    As an AAPL investor I'm delighted that they pay as little in taxes as the law allows. Is this some kind of a revelation that companies hire tax specialists to minimize their taxes? They're operating within the laws as written. What are they supposed to do, pay as much in taxes as they possibly can? The company has a DUTY to its investors to maximum their after tax profits so long as they're operating within the boundaries of legality.
    29 Apr 2012, 04:00 PM Reply Like
  • yumy87
    , contributor
    Comments (209) | Send Message
     
    It is not just AAPL, close these loopholes. Nobody cares which phones you like or dislike just close these loopholes for the good of the USA Economy.

     

    If Apple loves exporting jobs let's stop pretending it is helping the greater good.
    29 Apr 2012, 04:06 PM Reply Like
  • remurraymd
    , contributor
    Comments (2287) | Send Message
     
    Another NYT "hack job" on Apple just like the libelous defamatory Foxconn story that turned out to be a pack of lies.Google Microsoft GE IBM all do the same thing all pay what they legally owe in tax due to loopholes set up by politicos.It actually would be a breach of fiduciary duty to shareholders to overpay offshore tax that is not legally due.The real problem is the US corporate tax one of the highest in the world adding California state tax of 8% you are looking at 40-50%. The solution is to reduce corporate tax to Ireland's rate and close loopholes to re-shore tax revenue fairly and honestly solving many of the current US financial problems. Ask yourself why the NYT times repeatedly attacks Apple for following federal and state tax code instead of being fair and balanced when the real fault is the US tax code usurous onorous and draconian.APD
    29 Apr 2012, 04:40 PM Reply Like
  • ATG1977
    , contributor
    Comments (159) | Send Message
     
    who cares I just care about price appreciation and making money - they're not breaking the laws by doing what they're doing -
    29 Apr 2012, 08:06 PM Reply Like
  • Workinprogress
    , contributor
    Comments (26) | Send Message
     
    It's a clever workaround, but how is it affecting other stocks, if at all?
    27 May 2012, 10:51 PM Reply Like
  • Workinprogress
    , contributor
    Comments (26) | Send Message
     
    If AAPL can get around a law, why won't they do it?
    29 Apr 2012, 08:09 PM Reply Like
  • Kenny G2
    , contributor
    Comments (3) | Send Message
     
    Has this article from the NY Times got you foaming at the mouth mad! Has it driven your blood pressure sky high!

     

    Save your anger and spare your blood pressure!

     

    In an analytically bent website such as this those of you that are financially literate should easily grasp the following explanation on why the article is incorrect.

     

    The authors of the NY Times article (and perhaps you also) failed to move the discussion to its next analytical level by asking the following questions:

     

    1.) What is the impact on the corporation from the 'corporate income tax'?

     

    2.) Did the corporation mitigate the impact?

     

    3.) If the corporation mitigated the impact, HOW did it mitigate the impact?

     

    4.) Finally, WHY did the corporation mitigate the impact?

     

    Let's start with the WHY first. IT ALL COMES DOWN TO THE IMPACT ON RETURN ON INVESTMENT (ROI).

     

    THE 'CORPORATE INCOME TAX' INTERFERES WITH THE ROI.

     

    For example, for a 100% equity financed corporation needing a 10% ROI interacting with a 40% corporate tax rate will result in a 6% AFTER-TAX ROI.

     

    The historical average on ten-year treasury bills is 5.2%. Are you willing to invest your money in a much riskier endeavor for a mere .8% over the risk-free rate of 5.2% (historical)?

     

    In this example, In order to achieve a 10% AFTER-TAX ROI it take a 16.7% BEFORE-TAX ROI.

     

    Where is that additional 6.7% of NET PROFIT BEFORE-TAX going to come from?

     

    The answer is simple and this action is done in every corporation every day:

     

    SALES PRICES ARE INCREASED TO COVER THE TAX!

     

    But you're wedded to the term 'corporate income tax' because it says CORPORATE and it just has to be paid by the corporation.

     

    Your frame of reference is false because you are letting the label ('corporate income tax') drive your thinking.

     

    When you were a little kid you let labels be determinative of your thinking because you lacked the understanding to examine whether the substance was different from the label. Remember the 'tooth-fairy', 'santa claus', the 'easter bunny', etc. As you got older the substance finally revealed itself.

     

    Do not as an adult let a label rule your thinking until you have examined the substance. If the substance matches the label, well, that is good. If the substance does not match the label, you are being fooled.

     

    If you believe in the 'corporate income tax' you are being fooled. I've given you the substance in the example and explanation above. Reread it until it slaps you in the face! (You may also be confused by the term 'paid by the corporation'. The substance is that it is 'remitted by the corporation'. IT IS PAID BY YOU AS A CONSUMER!

     

    If you want to direct your anger somewhere, I suggest that you direct it to the huge, huge, huge administrative cost of the 'corporate income tax' at all levels (governmental and corporate). In addition to paying the tax you are also paying for all of the administrative cost. There are much more efficient and tremendously less costly ways of raising the tax revenue necessary to run our governments. (HINT: More efficient and less costly translates into lower tax bills and lower prices on the goods and services that you purchase).

     

    Kenny G2 CPA (and former IRS agent)
    30 Apr 2012, 04:38 AM Reply Like
  • John1138
    , contributor
    Comments (161) | Send Message
     
    Managing their corporate finances to the company's financial advantage within the applicable law?

     

    Good for them.
    30 Apr 2012, 12:38 PM Reply Like
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