EU commission orders Apple to pay €13bn as back taxes

Seen something interesting in the news or on the intertubes? Discuss it here.

Moderators: Zamfir, Hawknc, Moderators General, Prelates

User avatar
CorruptUser
Posts: 8381
Joined: Fri Nov 06, 2009 10:12 pm UTC

Re: EU commission orders Apple to pay €13bn as back taxes

Postby CorruptUser » Wed Aug 31, 2016 8:22 pm UTC

sardia wrote:Corrupt user,
I have 0$in profit in the UK because I spent my entire budget paying licensing fees to parent company in Ireland, which I happen to be the sole shareowner. You are free to tax my 0$ in profit at whatever rate you want. Not having any profit in the UK where the taxes were higher was a coincidence, scouts Honor.


No, you tax the Irish company's profits, not the subsidiary.

Tyndmyr wrote:Just changing rates doesn't mitigate that.

It means the vertical monopoly only gets taxed once, whereas specialist industries are being taxed at each layer.

Whatever the rate is, it means that some companies are getting taxed many, many times less than others.

Inducing monopolies is bad.


Companies X is a mining company, Y is a smelting company, Z is an auto plant. X sells ore for $10,000, has $8000 in labor cost. Y buys $10,000 of ore, has $8000 in labor cost, sells steel for $20,000. Z buys $20,000 of steel, has $8000 in labor cost, sells a car for $30,000. Each company has $2000 in profit, and they pay 1/3 to the government, or $2000. X Y and Z merge into XYZ. The company now has $24,000 in labor costs, and $6000 profit. The tax rate is still 1/3, and the government still collects $2000.

Am I missing something? If there's sales tax involved, then yes, XYZ has an advantage over X Y and Z because by "selling" to themselves they avoid sales tax, but it's not income tax that's the problem here.

User avatar
LaserGuy
Posts: 4299
Joined: Thu Jan 15, 2009 5:33 pm UTC

Re: EU commission orders Apple to pay €13bn as back taxes

Postby LaserGuy » Wed Aug 31, 2016 8:42 pm UTC

CorruptUser wrote:Companies X is a mining company, Y is a smelting company, Z is an auto plant. X sells ore for $10,000, has $8000 in labor cost. Y buys $10,000 of ore, has $8000 in labor cost, sells steel for $20,000. Z buys $20,000 of steel, has $8000 in labor cost, sells a car for $30,000. Each company has $2000 in profit, and they pay 1/3 to the government, or $2000. X Y and Z merge into XYZ. The company now has $24,000 in labor costs, and $6000 profit. The tax rate is still 1/3, and the government still collects $2000.

Am I missing something? If there's sales tax involved, then yes, XYZ has an advantage over X Y and Z because by "selling" to themselves they avoid sales tax, but it's not income tax that's the problem here.


Tyndmyr was responding to my suggestion of taxing revenues rather than profits.

User avatar
sardia
Posts: 5493
Joined: Sat Apr 03, 2010 3:39 am UTC

Re: EU commission orders Apple to pay €13bn as back taxes

Postby sardia » Wed Aug 31, 2016 8:55 pm UTC

CorruptUser wrote:
sardia wrote:Corrupt user,
I have 0$in profit in the UK because I spent my entire budget paying licensing fees to parent company in Ireland, which I happen to be the sole shareowner. You are free to tax my 0$ in profit at whatever rate you want. Not having any profit in the UK where the taxes were higher was a coincidence, scouts Honor.


No, you tax the Irish company's profits, not the subsidiary.
is "you " Ireland, or another country like the US?

Mutex
Posts: 854
Joined: Wed Jan 09, 2008 10:32 pm UTC

Re: EU commission orders Apple to pay €13bn as back taxes

Postby Mutex » Wed Aug 31, 2016 9:17 pm UTC

I assumed "you" meant the UK since they were talking about how the UK would tax the company claiming they made £0 in UK profit. Not sure how that would make sense in practice either though, taxing a company that doesn't even directly operate in the UK.

elasto
Posts: 3025
Joined: Mon May 10, 2010 1:53 am UTC

Re: EU commission orders Apple to pay €13bn as back taxes

Postby elasto » Wed Aug 31, 2016 9:35 pm UTC

Bogus licencing fees and intra-company loans are a big problem and I have no real clue how to tackle them.

Anyone got any bright ideas..?

User avatar
sardia
Posts: 5493
Joined: Sat Apr 03, 2010 3:39 am UTC

Re: EU commission orders Apple to pay €13bn as back taxes

Postby sardia » Wed Aug 31, 2016 11:17 pm UTC

elasto wrote:Bogus licencing fees and intra-company loans are a big problem and I have no real clue how to tackle them.

Anyone got any bright ideas..?

A Global cartel that raises taxes equally. I think they call them treaties though, sounds better.

Mambrino
Posts: 388
Joined: Tue Aug 02, 2011 9:45 pm UTC
Location: No we don't have polar bears. Except in zoos.

Re: EU commission orders Apple to pay €13bn as back taxes

Postby Mambrino » Thu Sep 01, 2016 7:52 am UTC

sardia wrote:
elasto wrote:Bogus licencing fees and intra-company loans are a big problem and I have no real clue how to tackle them.

Anyone got any bright ideas..?

A Global cartel that raises taxes equally. I think they call them treaties though, sounds better.


And cartel sounds worse. It implies it's unwelcome disruption to the markets of ... corporate tax rates? Which is a bit silly, because main problem of tax evasion is that some corporations manage to be "customers" of different countries (accessing their markets while enjoying the existing physical, social and legal infrastructure) while avoiding paying the explicitly stated fees (corporate tax of profits) required by governments as a part of the trade.

elasto
Posts: 3025
Joined: Mon May 10, 2010 1:53 am UTC

Re: EU commission orders Apple to pay €13bn as back taxes

Postby elasto » Thu Sep 01, 2016 9:13 am UTC

sardia wrote:
elasto wrote:Bogus licencing fees and intra-company loans are a big problem and I have no real clue how to tackle them.

Anyone got any bright ideas..?

A Global cartel that raises taxes equally. I think they call them treaties though, sounds better.

I was talking about realistic ideas... It only takes one country failing to join to scupper the scheme - and the more countries that sign up, the greater the financial reward for any country that doesn't.

The US can't even prevent a race to the bottom between its own States internally; What hope is there for global cooperation..?

(Heck, Ireland did join just such a cartel - and has been found by that cartel to have broken the rules anyway - hence this thread!)

Eowiel
Posts: 163
Joined: Sat Jun 12, 2010 5:57 pm UTC

Re: EU commission orders Apple to pay €13bn as back taxes

Postby Eowiel » Thu Sep 01, 2016 10:06 am UTC

You could force countries to join by refusing to sign double tax treaties with them if they don't join. If a US company has a group member in Ireland, the thing that prevents the US from also taxing the Irish income is the fact that both countries have a treaty on the avoidance of double taxation. Most international tax avoidance schemes rely heavily on the existence of such tax treaties.

User avatar
Diadem
Posts: 5609
Joined: Wed Jun 11, 2008 11:03 am UTC
Location: The Netherlands

Re: EU commission orders Apple to pay €13bn as back taxes

Postby Diadem » Thu Sep 01, 2016 10:34 am UTC

Could a big enough country / group of countries like the US or EU not simply say: "If you want to sell products on our market, you have to pay at least 20% taxes over your total worldwide profit. We don't care where you pay them, or how you pay them. You can pay a little bit here and a little bit there. But if the total taxes you pay worldwide don't sum up to 20% of your total worldwide profit, you are banned from selling on our market".

Countries could still evade taxation, but they'd lose their major markets, and for most companies that wouldn't be worth it.

Would such a thing work, or is that still exploitable?
It's one of those irregular verbs, isn't it? I have an independent mind, you are an eccentric, he is round the twist
- Bernard Woolley in Yes, Prime Minister

User avatar
Dauric
Posts: 3737
Joined: Wed Aug 05, 2009 6:58 pm UTC
Location: In midair, traversing laterally over a container of sharks. No water, just sharks, with lasers.

Re: EU commission orders Apple to pay €13bn as back taxes

Postby Dauric » Thu Sep 01, 2016 10:52 am UTC

Diadem wrote:Could a big enough country / group of countries like the US or EU not simply say: "If you want to sell products on our market, you have to pay at least 20% taxes over your total worldwide profit. We don't care where you pay them, or how you pay them. You can pay a little bit here and a little bit there. But if the total taxes you pay worldwide don't sum up to 20% of your total worldwide profit, you are banned from selling on our market".

Countries could still evade taxation, but they'd lose their major markets, and for most companies that wouldn't be worth it.

Would such a thing work, or is that still exploitable?


I think this ends up with different flavors of corruption. "Psst... Hey, if you build the infrastructure that we need to optimize our operations we'll give you 5% of that tax payment instead of the 2% we're paying you now." Or: " We know our smaller competitor is trying to get licensed to operate in your market, if that happens it will reduce our market share and we'll not be able to pay you that 3%, but only a percent and a half." Which naturally leads to : "Well, as the regulators we can authorize your business licensing as long as you agree to pay us 8% of your tax payment."
We're in the traffic-chopper over the XKCD boards where there's been a thread-derailment. A Liquified Godwin spill has evacuated threads in a fourty-post radius of the accident, Lolcats and TVTropes have broken free of their containers. It is believed that the Point has perished.

User avatar
Zamfir
I built a novelty castle, the irony was lost on some.
Posts: 7210
Joined: Wed Aug 27, 2008 2:43 pm UTC
Location: Nederland

Re: EU commission orders Apple to pay €13bn as back taxes

Postby Zamfir » Thu Sep 01, 2016 11:33 am UTC

There are obvious problems when it comes to free trade. If you install such huge a barrier on market access, you can throw away any hope of mutual agreements on trade (Unless you're suggesting gunboat diplomacy)

Setting that part aside: a constant problem with tax rates is that companies are hard to define. "Apple Europe" can be a formally independent company from "Apple Worldwide".

Well, in revised law this doesn't count because they have the same owner. But then they can set up a truly independent company with different ownership, let's say "Apple Imports Europe", whose sole purpose is buy Apple products from "Apple Bermuda" under Bermuda law, and sell them at a small mark-up in Europe.

In response the law moves down one level, and demands taxes from the OEM regardless who sells the products in Europe. Then Apple sets up a company that buys almost-finished iphones, makes a small change to them, and sells them as "Special European phones that are no way iphones", with Apple Bermuda as their main supplier.

Next step, not only the OEM has to pay the 20% rate, but suppliers down the line as well. Now every screw factory in China refuses to sell screws to companies if the product might end up in Europe.

Perhaps the rule applies only to "major subcontractors" who supply more x% of the end product. Well, in the new business model iphones are sold by "Absolutely Not Apple". Who buy assembly from Hon Hai, a screen from JDI, memory from Samsung, fab time from TSMC. And drawings from Apple Engineering, a marketing concept from Apple Design Services, chipset IP from Ax Processors, software from iOS Ltd. and no one reaches the threshold for "major subcontractor"...

At that point, all the profit is going to tax lawyers, people start complaining that tax law is way too complicated, and why don't we simplify the tax code...

elasto
Posts: 3025
Joined: Mon May 10, 2010 1:53 am UTC

Re: EU commission orders Apple to pay €13bn as back taxes

Postby elasto » Thu Sep 01, 2016 1:47 pm UTC

Which is why I tend to agree that a high sales tax is the least worst option - especially if tied to a negative income tax or citizen's wage to mitigate the regressive nature of it.

That means no matter how complicated an arrangement 'Absolutely Not Apple', 'Apple Bermuda' and so on make, when the device is sold the same tax is taken.

User avatar
Zamfir
I built a novelty castle, the irony was lost on some.
Posts: 7210
Joined: Wed Aug 27, 2008 2:43 pm UTC
Location: Nederland

Re: EU commission orders Apple to pay €13bn as back taxes

Postby Zamfir » Thu Sep 01, 2016 2:31 pm UTC

That's just giving up, which would a shame. The problem is hardly restricted to profit taxes - lots of other tax forms that tend to fall on really rich people, also tend to be vulnerable to these international tax avoidance constructions.

User avatar
sardia
Posts: 5493
Joined: Sat Apr 03, 2010 3:39 am UTC

Re: EU commission orders Apple to pay €13bn as back taxes

Postby sardia » Thu Sep 01, 2016 2:34 pm UTC

Zamfir wrote:That's just giving up, which would a shame. The problem is hardly restricted to profit taxes - lots of other tax forms that tend to fall on really rich people, also tend to be vulnerable to these international tax avoidance constructions.

A band aid fix is to give more money to the tax collectors to go after companies, and to create an agile regulator that goes after the worst offenders. Right now, there's no penalty for trying to avoid taxes. Like if you try and fail, you ought to pay a big penalty.

User avatar
ucim
Posts: 5090
Joined: Fri Sep 28, 2012 3:23 pm UTC
Location: The One True Thread

Re: EU commission orders Apple to pay €13bn as back taxes

Postby ucim » Thu Sep 01, 2016 2:50 pm UTC

sardia wrote:Like if you try and fail, you ought to pay a big penalty.
... which is regressive in an even worse way. The well off can afford to figure out beforehand whether or not they are likely to succeed, and act accordingly. The less well off can just stuff it.

Jose
Order of the Sillies, Honoris Causam - bestowed by charlie_grumbles on NP 859 * OTTscar winner: Wordsmith - bestowed by yappobiscuts and the OTT on NP 1832 * Ecclesiastical Calendar of the Order of the Holy Contradiction * Please help addams if you can. She needs all of us.

User avatar
Dauric
Posts: 3737
Joined: Wed Aug 05, 2009 6:58 pm UTC
Location: In midair, traversing laterally over a container of sharks. No water, just sharks, with lasers.

Re: EU commission orders Apple to pay €13bn as back taxes

Postby Dauric » Thu Sep 01, 2016 2:59 pm UTC

sardia wrote:
Zamfir wrote:That's just giving up, which would a shame. The problem is hardly restricted to profit taxes - lots of other tax forms that tend to fall on really rich people, also tend to be vulnerable to these international tax avoidance constructions.

A band aid fix is to give more money to the tax collectors to go after companies, and to create an agile regulator that goes after the worst offenders. Right now, there's no penalty for trying to avoid taxes. Like if you try and fail, you ought to pay a big penalty.


The problem is most of these tax dodges aren't actually illegal. They're carefully constructed to get around the tax laws, to let the money flow through the legal path of least resistance (cost). You can give regulators all the funds in the world to investigate and prosecute, but if the individuals and companies involved don't actually break the law there's nothing to prosecute. The regulators can release press statements illuminating the latest tax dodge and how shitty it is to the government and the citizens of the country the regulators represent, but they can't -actually- impose fines or toss someone in jail until the legislature makes laws to close the loophole (most often with suggestions from tax lawyers and accountants...)

Even this case with Apple, Ireland and the EU is.. problematic. To my understanding at any rate: The EU isn't fining Apple, it's telling Ireland to fine Apple, even though Apple was technically in compliance with Ireland's taxation laws at the time. The EU might have some recourse against Ireland for having tax codes (and loopholes) that are not consistent with the EU treaties, but the EU can't itself go after Apple for tax evasion.
We're in the traffic-chopper over the XKCD boards where there's been a thread-derailment. A Liquified Godwin spill has evacuated threads in a fourty-post radius of the accident, Lolcats and TVTropes have broken free of their containers. It is believed that the Point has perished.

User avatar
Zamfir
I built a novelty castle, the irony was lost on some.
Posts: 7210
Joined: Wed Aug 27, 2008 2:43 pm UTC
Location: Nederland

Re: EU commission orders Apple to pay €13bn as back taxes

Postby Zamfir » Thu Sep 01, 2016 3:52 pm UTC

That's the 'less well off rich people can stuff it' which might be the best we can do anyway.

When I am in a cynical mood, I believe in the law of conservation of tax avoidance. There will be loopholes, or illegal shelters, or legam shell company schemes, or weak regulators, or whatever. Because governments can't afford to annoy the really rich as a whole, they have to provide pressure relief. You push them too far, they unite and get rid of you. They all get behind the low-tax opposition in the mild cass, or worst comes to worst they'll pay for the junta and the death squads.

User avatar
Dauric
Posts: 3737
Joined: Wed Aug 05, 2009 6:58 pm UTC
Location: In midair, traversing laterally over a container of sharks. No water, just sharks, with lasers.

Re: EU commission orders Apple to pay €13bn as back taxes

Postby Dauric » Thu Sep 01, 2016 4:01 pm UTC

I don't get quite that cynical, but only because I figure modern democracies have that release valve built in. IE: the people you'd worry about paying for the junta and/or death squads are already paying for candidate campaigns. You might get a small minority of legislators that would effectively close tax loopholes (without opening up other ones), but the majority of the legislature is going to owe favors to people who make use of those loopholes (or indeed candidates who make use of those loopholes themselves).
We're in the traffic-chopper over the XKCD boards where there's been a thread-derailment. A Liquified Godwin spill has evacuated threads in a fourty-post radius of the accident, Lolcats and TVTropes have broken free of their containers. It is believed that the Point has perished.

User avatar
sardia
Posts: 5493
Joined: Sat Apr 03, 2010 3:39 am UTC

Re: EU commission orders Apple to pay €13bn as back taxes

Postby sardia » Thu Sep 01, 2016 5:50 pm UTC

Dauric wrote:
sardia wrote:
Zamfir wrote:That's just giving up, which would a shame. The problem is hardly restricted to profit taxes - lots of other tax forms that tend to fall on really rich people, also tend to be vulnerable to these international tax avoidance constructions.

A band aid fix is to give more money to the tax collectors to go after companies, and to create an agile regulator that goes after the worst offenders. Right now, there's no penalty for trying to avoid taxes. Like if you try and fail, you ought to pay a big penalty.


The problem is most of these tax dodges aren't actually illegal. They're carefully constructed to get around the tax laws, to let the money flow through the legal path of least resistance (cost). You can give regulators all the funds in the world to investigate and prosecute, but if the individuals and companies involved don't actually break the law there's nothing to prosecute. The regulators can release press statements illuminating the latest tax dodge and how shitty it is to the government and the citizens of the country the regulators represent, but they can't -actually- impose fines or toss someone in jail until the legislature makes laws to close the loophole (most often with suggestions from tax lawyers and accountants...)

Even this case with Apple, Ireland and the EU is.. problematic. To my understanding at any rate: The EU isn't fining Apple, it's telling Ireland to fine Apple, even though Apple was technically in compliance with Ireland's taxation laws at the time. The EU might have some recourse against Ireland for having tax codes (and loopholes) that are not consistent with the EU treaties, but the EU can't itself go after Apple for tax evasion.

You're sorta answering your own question, give regulators the power to open and close loopholes as needed to maintain revenue.

User avatar
Dauric
Posts: 3737
Joined: Wed Aug 05, 2009 6:58 pm UTC
Location: In midair, traversing laterally over a container of sharks. No water, just sharks, with lasers.

Re: EU commission orders Apple to pay €13bn as back taxes

Postby Dauric » Thu Sep 01, 2016 5:55 pm UTC

sardia wrote:You're sorta answering your own question, give regulators the power to open and close loopholes as needed to maintain revenue.


That puts legislative -and- executive powers in the same hands. That's -not- a good place to be.

"Our department needs more revenues, come up with some new regulations we can hit people with."
We're in the traffic-chopper over the XKCD boards where there's been a thread-derailment. A Liquified Godwin spill has evacuated threads in a fourty-post radius of the accident, Lolcats and TVTropes have broken free of their containers. It is believed that the Point has perished.

User avatar
sardia
Posts: 5493
Joined: Sat Apr 03, 2010 3:39 am UTC

Re: EU commission orders Apple to pay €13bn as back taxes

Postby sardia » Thu Sep 01, 2016 5:58 pm UTC

You can't not fund government, and it's not like the IRS or EU tax officials aren't already ruling on regulations with large monetary value.

User avatar
Dauric
Posts: 3737
Joined: Wed Aug 05, 2009 6:58 pm UTC
Location: In midair, traversing laterally over a container of sharks. No water, just sharks, with lasers.

Re: EU commission orders Apple to pay €13bn as back taxes

Postby Dauric » Thu Sep 01, 2016 6:27 pm UTC

The IRS enforces -existing- tax regulations, it doesn't get to make up new ones or re-write the ones on the books. and it doesn't "make rulings", it has to take its case to the courts like any other law enforcement agency.
We're in the traffic-chopper over the XKCD boards where there's been a thread-derailment. A Liquified Godwin spill has evacuated threads in a fourty-post radius of the accident, Lolcats and TVTropes have broken free of their containers. It is believed that the Point has perished.

mcd001
Posts: 127
Joined: Tue Sep 09, 2014 7:27 pm UTC

Re: EU commission orders Apple to pay €13bn as back taxes

Postby mcd001 » Thu Sep 01, 2016 6:33 pm UTC

sardia wrote:You can't not fund government, and it's not like the IRS or EU tax officials aren't already ruling on regulations with large monetary value.

Yes, and in the US, IRS bureaucrats have abused that authority in the past (see Lois Lerner controversy for a recent example). Human nature being what it is, the more power you give to government, the more it will be abused.

Complex, convoluted laws and regulations give people like Lois Lerner plenty of room to operate, and makes it nearly impossible to hold them legally accountable afterwards. I would be very cautious about giving them any additional authority. The power to tax is the power to destroy.

User avatar
LaserGuy
Posts: 4299
Joined: Thu Jan 15, 2009 5:33 pm UTC

Re: EU commission orders Apple to pay €13bn as back taxes

Postby LaserGuy » Thu Sep 01, 2016 7:04 pm UTC

Tyndmyr wrote:Just changing rates doesn't mitigate that.

It means the vertical monopoly only gets taxed once, whereas specialist industries are being taxed at each layer.

Whatever the rate is, it means that some companies are getting taxed many, many times less than others.

Inducing monopolies is bad.


Maybe the solution then, is to tax global profits, based on a proportion of local revenues. So if your company has $100b revenue, of which $25b comes from the United States, and your total profit is $20b, then the United States applies it corporate tax rate assuming your American profit is 25% of $20b = $5b, regardless of where that profit is held offshore.

morriswalters
Posts: 6503
Joined: Thu Jun 03, 2010 12:21 am UTC

Re: EU commission orders Apple to pay €13bn as back taxes

Postby morriswalters » Thu Sep 01, 2016 7:50 pm UTC

If only there were a solution.
mcd001 wrote:Yes, and in the US, IRS bureaucrats have abused that authority in the past (see Lois Lerner controversy for a recent example). Human nature being what it is, the more power you give to government, the more it will be abused.

Complex, convoluted laws and regulations give people like Lois Lerner plenty of room to operate, and makes it nearly impossible to hold them legally accountable afterwards. I would be very cautious about giving them any additional authority. The power to tax is the power to destroy.
Right, as if that were purely a problem of government. Complex and convoluted law is what Apple has used to shield their profits.

Apple got too cute and got bit. Tax their total profit in the US, even better, let them keep their profit and tax them on their total value as a company, as noted by their stock value. They can't take that overseas and they can't hide it.

User avatar
sardia
Posts: 5493
Joined: Sat Apr 03, 2010 3:39 am UTC

Re: EU commission orders Apple to pay €13bn as back taxes

Postby sardia » Thu Sep 01, 2016 8:38 pm UTC

mcd001 wrote:Yes, and in the US, IRS bureaucrats have abused that authority in the past (see Lois Lerner controversy for a recent example). Human nature being what it is, the more power you give to government, the more it will be abused.

Complex, convoluted laws and regulations give people like Lois Lerner plenty of room to operate, and makes it nearly impossible to hold them legally accountable afterwards. I would be very cautious about giving them any additional authority. The power to tax is the power to destroy.

Denying the ability of government to tax some means that government has to tax others at higher rates. You're causing the very problem that you are afraid of except instead of whatever oversight the government has, you're relying on shareholder oversight to rein in companies. Btw You're asking shareholders to tell the companies to make less money.

No one simple rule is gonna work when there are billions of dollars at stake. Someone is gonna find a loophole. What we can do is limit the damages and collect as much as possible(out of our target revenue). We do this by having a decently funded regulator and collector, and constantly updating rules to reflect market trends. This minimizes the tax burden on society overall.

mcd001
Posts: 127
Joined: Tue Sep 09, 2014 7:27 pm UTC

Re: EU commission orders Apple to pay €13bn as back taxes

Postby mcd001 » Thu Sep 01, 2016 9:02 pm UTC

morriswalters wrote:Right, as if that were purely a problem of government.

Even if it weren't, it doesn't invalidate my point.

morriswalters wrote:Complex and convoluted law is what Apple has used to shield their profits.

And who created the laws that Apple took advantage of? (Answer: government.) As near as I can tell, the Apple case appears to be an example of what I'm talking about: Government (in this case Ireland's) using its power in arbitrary and capricious ways to benefit some at the expense of others. When government has the power to dictate with impunity who wins and loses in the marketplace, who gets tax exemptions and who doesn't, or who pays or doesn't pay a tax depending on some shaky interpretation of the increasingly complex tax code, then that government is too powerful.

sardia wrote:Denying the ability of government to tax some means that government has to tax others at higher rates.

I'm not sure where I said the government did not have the right to tax everyone. I am saying that government authority should be restricted as much as possible in order to avoid the sort of abuses of power we're seeing today. If you want a large, powerful government, fine. Just don't be too surprised when you learn its power has been abused, as it inevitably will.

sardia wrote: We do this by having a decently funded regulator and collector, and constantly updating rules to reflect market trends.

But what if these 'updated rules' have become so complex that no one can understand or comply with them even if they want to? And how do you keep the regulators and collectors from acting as judge, jury and executioner when it comes to enforcing compliance?

Tyndmyr
Posts: 10119
Joined: Wed Jul 25, 2012 8:38 pm UTC

Re: EU commission orders Apple to pay €13bn as back taxes

Postby Tyndmyr » Thu Sep 01, 2016 9:27 pm UTC

sardia wrote:No one simple rule is gonna work when there are billions of dollars at stake. Someone is gonna find a loophole.


Well, yeah. All we're doing is finding less exploitable systems.

There'll always be a path of least taxes, and folks with many billions of dollars have an advantage in finding that path.

If you want a system wherein the delta between "path of least taxes" and "what everyone else" pays is minimal, you're probably looking at something like a flat tax system. And even that is going to accrue complications, particularly when dealing with multinationals.

morriswalters
Posts: 6503
Joined: Thu Jun 03, 2010 12:21 am UTC

Re: EU commission orders Apple to pay €13bn as back taxes

Postby morriswalters » Thu Sep 01, 2016 9:30 pm UTC

mcd001 wrote:And who created the laws that Apple took advantage of?
Instead of asking who created the complexity of the tax code, try asking why it got complex. Governments lag, they don't lead. The tax code is complex because the methods of avoiding taxes are complex. The law reflects that.

User avatar
ucim
Posts: 5090
Joined: Fri Sep 28, 2012 3:23 pm UTC
Location: The One True Thread

Re: EU commission orders Apple to pay €13bn as back taxes

Postby ucim » Thu Sep 01, 2016 11:53 pm UTC

morriswalters wrote:and tax them on their total value as a company, as noted by their stock value.
But "stock value" isn't the total value as a company. Stock value is just an opinion. Granted, one that is spread out among lots of potential buyers and sellers, but one that can change with the weather. If it weren't so, we wouldn't even have a stock market.

What happens when the stock price goes down - do they get a tax refund?

morriswalters wrote:The tax code is complex because the methods of avoiding taxes are complex. The law reflects that.
The tax code is complex because life is complex. This applies to international corporate life as well as to individuals.

And in any case, as far as I understand it, this isn't about Apple evading taxes. This is about Ireland setting tax rules (that Apple followed) that the EU decided were not kosher. If there is a bad guy here, it's not Apple, it's Ireland.

Jose
Order of the Sillies, Honoris Causam - bestowed by charlie_grumbles on NP 859 * OTTscar winner: Wordsmith - bestowed by yappobiscuts and the OTT on NP 1832 * Ecclesiastical Calendar of the Order of the Holy Contradiction * Please help addams if you can. She needs all of us.

morriswalters
Posts: 6503
Joined: Thu Jun 03, 2010 12:21 am UTC

Re: EU commission orders Apple to pay €13bn as back taxes

Postby morriswalters » Fri Sep 02, 2016 12:22 am UTC

ucim wrote:What happens when the stock price goes down - do they get a tax refund?
No, they just pay less taxes. It really doesn't matter. They would find a way around it.
ucim wrote:The tax code is complex because life is complex. This applies to international corporate life as well as to individuals.
I disagree, life isn't that complex. A business makes x dollars and spends y dollars to do so. Everything else is a dog and pony show designed to distract and to keep lawyers employed.

User avatar
sardia
Posts: 5493
Joined: Sat Apr 03, 2010 3:39 am UTC

Re: EU commission orders Apple to pay €13bn as back taxes

Postby sardia » Fri Sep 02, 2016 1:02 am UTC

morriswalters wrote:
ucim wrote:The tax code is complex because life is complex. This applies to international corporate life as well as to individuals.
I disagree, life isn't that complex. A business makes x dollars and spends y dollars to do so. Everything else is a dog and pony show designed to distract and to keep lawyers employed.

I agree with ucim and here are examples why morris is wrong. It also slams flat taxes.
http://www.npr.org/sections/itsallpolit ... -get-wrong
The real complication in the system is in the tax base, not in the rate structure. Figuring out how you calculate capital gains or figuring out whether you're eligible for the [earned income tax credit for lower-income Americans], given the child rules — once you've got that, then you just plug in the rates."
Think about your own taxes — it can be complicated to figure out how much you owe when you have things like investment income, wages from self-employment or lots of deductions. But once you fill in the boxes and subtract all that out, figuring out your rate is easy (and if you're using a program like TurboTax, the computer does it for you).

Cutting taxes as a whole tends to be the real goal behind rate-cutting, said Ed Kleinbard, professor of law and business at the University of Southern California. After all, no one ever tries to simplify tax brackets upward.
"The number of brackets has an almost imperceptible effect on the complexity of tax law as it is lived by the individual taxpayer," Kleinbard said."
What does simplicity look like?

So reducing the number of brackets isn't the clearest path to simplification. What is? Making the rest of your tax preparation experience easier, says one expert.
"[Simplification] does not necessarily mean that taxes are a simple mathematical function of income," said Matthew Weinzierl, a Harvard University assistant professor, who studies what optimal tax systems look like. "After all, with TurboTax it's easy to have a computer do a complex calculation for you. Instead, what economists typically have in mind is that a tax system should be easy to understand, transparent and hard to game."
A lot of these bracket-cutting ideas come alongside proposals to limit deductions. And that, in its own right, is a great step toward simplification. Bush, for example, wants to cap the amount of total deductions most people can take (not counting the charitable deduction).

"Most economists think a tax base with fewer such loopholes is less subject to evasion and less distortionary to economic activity," Weinzierl said.
The idea is that these loophole closures offset the tax revenue lost from cutting brackets. But that's not how it always works.
"The call for fewer tax brackets in every case has as its real motive lowering the tax burden on the highest-income Americans, not making life simpler for the middle class," Kleinbard argued. Consider Bush's tax proposal as an example. While it limits deductions, it also would overwhelmingly benefit the highest earners (and grow the national debt — unless there is unprecedented growth in the economy).

Cutting deductions and loopholes makes for a great sound bite, but it's far tougher than it sounds. The politically popular mortgage-interest deduction is a great example of this. It tends to benefit higher earners more, but despite constant calls to "simplify" the tax code, it's so politically popular that it has proved impossible to eliminate.
Cutting deductions isn't the only way candidates could fight for simpler taxes. They could also pledge to combat efforts of tax preparers to keep tax preparation itself complicated. Vox's Dylan Matthews and the Center on Budget and Policy Priorities' Robert Greenstein have reported that H&R Block pushed for changes that would have quadrupled the earned income tax credit form's length, making it harder for low-income families to get the credit (that is, without H&R Block's help). (The company has defended itself here.)

There are also unsexy opportunities to make the code less complicated. For example, Kleinbard argues that some long, hyperspecific definitions could be trimmed down.
"If you really care about complexity, the place to look, for example, is the definition of who's a dependent," Kleinbard said. "People fight over whether a child is a dependent of one parent or another. It turns out to be an incredibly complicated topic, and nonsensically so. If you look for simplicity, you'd actually want to look at things like a consistent and simple definition of 'dependent.' "

So there's plenty of room for simplification, and politicians often point to the so-called 70,000 page tax code as proof of that. However, railing against the page count may be a misguided line of attack.
One (nitpicky) reason is that the tax code itself is not, in fact, 70,000 pages long, as Slate pointed out last year. That distinction belongs to a compilation of court decisions surrounding the tax code, according to the Tax Foundation. The statutes themselves are about 2,700 pages long.
But far more important, Kleinbard said, some complexity is inherent to a tax code that tries to govern a complicated economy.

"The tax code is thousands of pages long for a very simple reason: It is a model, in the economic sense, of all of economic activity," he said. "Most Americans don't spend a lot of time worrying about the taxation of cutting timber or of being crew on a tuna boat. But there are rules for that, and you may find the rules irrelevant to you, but the rules are complex for a reason." And here's another compelling complication: The U.S. may have already stumbled onto a pretty good system. Earlier this year, economists at the Minneapolis Fed found that the current U.S. system, warts and all, is, in fact, "nearly optimal," beating out other "optimal" options like a flat-tax-plus-transfer system.

Trying to understand all of these tax-policy contradictions at once might (understandably) make your eyes glaze over. But the ultimate takeaway is simple: When a politician advocates simplifying the tax system, there's usually a good reason to be skeptical.

morriswalters
Posts: 6503
Joined: Thu Jun 03, 2010 12:21 am UTC

Re: EU commission orders Apple to pay €13bn as back taxes

Postby morriswalters » Fri Sep 02, 2016 2:43 am UTC

This piece is talking about personal taxes, not corporate. And a lot of that complexity arises out of using the tax code to manipulate social policy. The litigation arises from disputes about what Congress meant when it wrote the code, which all the members will have different opinions on. Because language itself is malleable. That malleability is why law is written the way it is. And why so many things end up in litigation. Read your own citation. His points are made for the personal tax law, not corporate taxes per se.
One (nitpicky) reason is that the tax code itself is not, in fact, 70,000 pages long, as Slate pointed out last year. That distinction belongs to a compilation of court decisions surrounding the tax code, according to the Tax Foundation. The statutes themselves are about 2,700 pages long.


Vox's Dylan Matthews and the Center on Budget and Policy Priorities' Robert Greenstein have reported that H&R Block pushed for changes that would have quadrupled the earned income tax credit form's length, making it harder for low-income families to get the credit (that is, without H&R Block's help). (The company has defended itself here.)
"If you really care about complexity, the place to look, for example, is the definition of who's a dependent," Kleinbard said. "People fight over whether a child is a dependent of one parent or another. It turns out to be an incredibly complicated topic, and nonsensically so. If you look for simplicity, you'd actually want to look at things like a consistent and simple definition of 'dependent.' "


It really isn't all that complex for Apple. They are incorporated here. Not Ireland. If they want to be a European Company let Tim Cook pack his bags and move to Europe. There isn't anything stopping him. They can incorporate anywhere. He could do his job in Dublin, Brussels, London or for that matter Dubai as well as he can do it here. And if Dublin has lower corporate taxes then it would seem to be a good business decision. My point on the stock was that it is the only thing that represents the company without the complex structures put together to get favorable tax treatment.

User avatar
ucim
Posts: 5090
Joined: Fri Sep 28, 2012 3:23 pm UTC
Location: The One True Thread

Re: EU commission orders Apple to pay €13bn as back taxes

Postby ucim » Fri Sep 02, 2016 3:14 am UTC

morriswalters wrote: And a lot of that complexity arises out of using the tax code to manipulate social policy.
Some is, yes. And that is not a bad thing (though I may disagree with some of the social policy being promoted, but that's a different question). A prime example is the mortgage deduction; making it easier for citizens to afford to own their own home is a Good Thing For Society.

morriswalters wrote:It really isn't all that complex for Apple. They are incorporated here. Not Ireland.
I do not work for Apple, but I strongly suspect that, as with all large multinational corporations, it really is all that complex. It's not a mom and pop.

morriswalters wrote: If they want to be a European Company let Tim Cook pack his bags...
The private home of an Apple employee (even a powerful well-paid one) is irrelevant.

morriswalters wrote: My point on the stock was that it is the only thing that represents the company without the complex structures put together to get favorable tax treatment.
... and my point is that it doesn't represent the company, with or without the complex structures. In fact, the stock price depends in part on the complex structures, whether for tax treatment, export/import regulations, management friction, supply chain, or any number of reasons.

Life is complex. Each case is different. Tax law reflects this.

Jose
Order of the Sillies, Honoris Causam - bestowed by charlie_grumbles on NP 859 * OTTscar winner: Wordsmith - bestowed by yappobiscuts and the OTT on NP 1832 * Ecclesiastical Calendar of the Order of the Holy Contradiction * Please help addams if you can. She needs all of us.

morriswalters
Posts: 6503
Joined: Thu Jun 03, 2010 12:21 am UTC

Re: EU commission orders Apple to pay €13bn as back taxes

Postby morriswalters » Fri Sep 02, 2016 4:00 am UTC

ucim wrote:The private home of an Apple employee (even a powerful well-paid one) is irrelevant.
That was a rhetorical excursion. Don't be so bloody literal minded. Cupertino, Ca, is the corporate home of Apple and it could just as well be in Dublin. Better?
ucim wrote:A prime example is the mortgage deduction; making it easier for citizens to afford to own their own home is a Good Thing For Society.
So says you. Others may differ. But I'll leave that argument for another day, or maybe century.
ucim wrote:I do not work for Apple, but I strongly suspect that, as with all large multinational corporations, it really is all that complex. It's not a mom and pop.
Oh, I'm quite sure that doing business on multiple continents is very difficult. Which is a very different thing than determining their tax liability is the US. They do know how much profit they generate, don't they? Isn't that reported to shareholders, annually? I mean they can park a little money here and a little money there, but in the end investors want to know the bottom line.
ucim wrote: and my point is that it doesn't represent the company
Pray tell me, exactly what does the stock represent?

User avatar
Dauric
Posts: 3737
Joined: Wed Aug 05, 2009 6:58 pm UTC
Location: In midair, traversing laterally over a container of sharks. No water, just sharks, with lasers.

Re: EU commission orders Apple to pay €13bn as back taxes

Postby Dauric » Fri Sep 02, 2016 1:59 pm UTC

morriswalters wrote:Pray tell me, exactly what does the stock represent?


Stock represents an estimated valuation of what a group of people (those who actively buy and sell stock) think the company is going to be worth in some period of time in the future, not on what the company actually has in assets, income or debts. Some people that duration can be hours, minutes, or (for some robo-traders) seconds. There's others who own stock and hold on to it for years thinking it will be part of their retirement portfolio.

Trades based on short-term buying and selling are as much about market hype over"Company Policy X" "Product Y" and "Current Event Z" as they are about actual company assets and debts. Long term stock ownership tends to not have a large effect on stock ownership as the single trade that purchased the stock doesn't move the value as much as the larger volume of shorter-term trades.
We're in the traffic-chopper over the XKCD boards where there's been a thread-derailment. A Liquified Godwin spill has evacuated threads in a fourty-post radius of the accident, Lolcats and TVTropes have broken free of their containers. It is believed that the Point has perished.

User avatar
Lucrece
Posts: 3558
Joined: Mon Feb 25, 2008 12:01 am UTC

Re: EU commission orders Apple to pay €13bn as back taxes

Postby Lucrece » Fri Sep 02, 2016 3:21 pm UTC

Schumer is a grimy cunt, anyways. How apt of the career Democrat to show his corporate stooge colors when it's about domestic profits at the expense of somebody else.
Belial wrote:That's charming, Nancy, but all I hear when you talk is a bunch of yippy dog sounds.

morriswalters
Posts: 6503
Joined: Thu Jun 03, 2010 12:21 am UTC

Re: EU commission orders Apple to pay €13bn as back taxes

Postby morriswalters » Fri Sep 02, 2016 3:27 pm UTC

The stock price represents what the market believes a company is worth at the moment a share is traded. Over time it's a pretty good indicator of it's value. My thought for what it was worth, was that it was a way to tax that value, versus playing hide and seek with the company over where it houses its profits. It wasn't much of a thought. In point of fact what will happen is likely a new round of legislation, which will accomplish precisely nothing after the lawyers stretch the taffy that is the tax code.


Edit

A cunt? Really?

User avatar
CorruptUser
Posts: 8381
Joined: Fri Nov 06, 2009 10:12 pm UTC

Re: EU commission orders Apple to pay €13bn as back taxes

Postby CorruptUser » Fri Sep 02, 2016 3:29 pm UTC

LaserGuy wrote:
Tyndmyr wrote:Just changing rates doesn't mitigate that.

It means the vertical monopoly only gets taxed once, whereas specialist industries are being taxed at each layer.

Whatever the rate is, it means that some companies are getting taxed many, many times less than others.

Inducing monopolies is bad.


Maybe the solution then, is to tax global profits, based on a proportion of local revenues. So if your company has $100b revenue, of which $25b comes from the United States, and your total profit is $20b, then the United States applies it corporate tax rate assuming your American profit is 25% of $20b = $5b, regardless of where that profit is held offshore.


Which is exactly what I said.


Return to “News & Articles”

Who is online

Users browsing this forum: heuristically_alone, rivulatus and 11 guests