Apple: Corporate Tax Rates

LongTimeListener · Apr 30, 2012

Ragu, as shown in the Apple piece, the equilibrium rate for taxation is 0 percent in Nevada. What you're saying is the equilibrium rate worldwide is based on the current structure; if the U.S. brings its tax rate* down to that of Ireland or Switzerland, then Ireland or Switzerland is going to be extremely motivated to find a new equilibrium rate, and on and on it goes.

*The cited tax rate itself is misleading, as shown by Apple and GE and who knows who else avoiding billions in taxes. We'd have to see what the real tax rate is.

Azrael · Apr 30, 2012

Maybe we should forbid any company with the majority of its assets parked overseas from bidding on defense contracts.

www.motherjones.com/politics/2011/04/military-ge-f136-jsf-engine

Azrael · Apr 30, 2012

Also apt:

www.thedailybeast.com/articles/2012/04/30/stephen-king-tax-me-for-f-s-sake.html

The Big Ragu · Apr 30, 2012

Azrael said:

Maybe we should forbid any company with the majority of its assets parked overseas from bidding on defense contracts.

www.motherjones.com/politics/2011/04/military-ge-f136-jsf-engine
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We should just set our tax rates competitively with the rest of the world, and make the bidding process for government contracts competitive, as well, to procure things as cost efficiently as possible.

The simplest way happens to be the most efficient and the least subject to corruption.

doctorquant · Apr 30, 2012

I'd prefer we just did away with corporate taxes altogether, but something tells me most members of the board wouldn't be in support of my position.

The Big Ragu · Apr 30, 2012

LongTimeListener said:

Ragu, as shown in the Apple piece, the equilibrium rate for taxation is 0 percent in Nevada. What you're saying is the equilibrium rate worldwide is based on the current structure; if the U.S. brings its tax rate* down to that of Ireland or Switzerland, then Ireland or Switzerland is going to be extremely motivated to find a new equilibrium rate, and on and on it goes.

*The cited tax rate itself is misleading, as shown by Apple and GE and who knows who else avoiding billions in taxes. We'd have to see what the real tax rate is.
Click to expand...

You are being a bit U.S. centric. This is a market that already exists, whether the U.S. is competitive or not.

Ireland and Switzerland are ALREADY competing. We're the ones who are not.

It's a safe bet that about where rates are already in the lowest tax havens in the world is the place where diminishing returns would bring about a disceconomy of scale if they lowered rates any more.

It's not like this is a game that isn't being already played out in a global marketplace.

You seem to think that if the U.S. tries to compete, THEN it becomes a marketplace. The marketplace already exists.

LongTimeListener · Apr 30, 2012

Ireland's tax rate is, what, 12 percent? Say the U.S. lowers it to 10 percent. All U.S.-based companies with operations in Ireland go there and say, "Well, it was fun, but we can get that same rate at home, so there's really no reason for us to be in Ireland anymore." Staring at the prospect of thousands and thousands of newly unemployed people, what is Ireland going to do?

doctorquant · Apr 30, 2012

LongTimeListener said:

Ireland's tax rate is, what, 12 percent? Say the U.S. lowers it to 10 percent. All U.S.-based companies with operations in Ireland go there and say, "Well, it was fun, but we can get that same rate at home, so there's really no reason for us to be in Ireland anymore." Staring at the prospect of thousands and thousands of newly unemployed people, what is Ireland going to do?
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Probably wouldn't happen that quickly -- lots of assets over there aren't so easily displaced -- but your scenario's not without merit. Ireland would still have some comparative advantage (I'd think), so U.S. investment would find its new floor over time. The good news is it would be closer and closer to a true economic optimum -- capital invested where it generates the most value. If both countries lower their corporate rate to 0%, then, truly, capital would over time find its perfect place.

BitterYoungMatador2 · Apr 30, 2012

YankeeFan said:

Briefly mentioned on the Mitt Romney thread, and their talking about it on MSNBC now with Grover Norquist:

http://www.nytimes.com/2012/04/29/business/apples-tax-strategy-aims-at-low-tax-states-and-nations.html?_r=1&pagewanted=all

Apple, for instance, was among the first tech companies to designate overseas salespeople in high-tax countries in a manner that allowed them to sell on behalf of low-tax subsidiaries on other continents, sidestepping income taxes, according to former executives. Apple was a pioneer of an accounting technique known as the Double Irish With a Dutch Sandwich, which reduces taxes by routing profits through Irish subsidiaries and the Netherlands and then to the Caribbean. Today, that tactic is used by hundreds of other corporations some of which directly imitated Apples methods, say accountants at those companies.

Without such tactics, Apples federal tax bill in the United States most likely would have been $2.4 billion higher last year, according to a recent study by a former Treasury Department economist, Martin A. Sullivan. As it stands, the company paid cash taxes of $3.3 billion around the world on its reported profits of $34.2 billion last year, a tax rate of 9.8 percent.
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For high tech companies, selling products and services over the internet, this kind of corporate tax avoidance just becomes easier and easier. (Though, still a hassle.)

GE files a 57,000 page tax return, and pays no taxes:

General Electric, one of the largest corporations in America, filed a whopping 57,000-page federal tax return earlier this year but didn't pay taxes on $14 billion in profits. The return, which was filed electronically, would have been 19 feet high if printed out and stacked.

http://www.weeklystandard.com/blogs/ge-filed-57000-page-tax-return-paid-no-taxes-14-billion-profits_609137.html
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Is it time to recognize the realities, and lower our corporate tax rates?
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NoOneLikesUs · Apr 30, 2012

Double Down said:

Ok, ok, ok ... we can't make you pay less than zero. But what if we were to, say ... giiiiiiiiive you money? Would that be appealing to you?
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This is what the sociopaths desire.

deskslave · Apr 30, 2012

LongTimeListener said:

Ireland's tax rate is, what, 12 percent? Say the U.S. lowers it to 10 percent. All U.S.-based companies with operations in Ireland go there and say, "Well, it was fun, but we can get that same rate at home, so there's really no reason for us to be in Ireland anymore." Staring at the prospect of thousands and thousands of newly unemployed people, what is Ireland going to do?
Click to expand...

You think these companies employ people in Ireland?

doctorquant · Apr 30, 2012

deskslave said:

LongTimeListener said:

Ireland's tax rate is, what, 12 percent? Say the U.S. lowers it to 10 percent. All U.S.-based companies with operations in Ireland go there and say, "Well, it was fun, but we can get that same rate at home, so there's really no reason for us to be in Ireland anymore." Staring at the prospect of thousands and thousands of newly unemployed people, what is Ireland going to do?
Click to expand...

You think these companies employ people in Ireland?
Click to expand...

Just working off the scenario put in front of me.

Ooops ... just realized I wasn't being queried.

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Apple: Corporate Tax Rates

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Apple: Corporate Tax Rates

LongTimeListener Well-Known Member

Azrael Well-Known Member

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The Big Ragu Moderator Staff Member

doctorquant Well-Known Member

The Big Ragu Moderator Staff Member

LongTimeListener Well-Known Member

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