Apple: Corporate Tax Rates

Think of it this way. When you comparison shop for an appliance, there is a point where you can't play dealers against each other because they can't go any lower. It's not worth it anymore for them -- the owner can't support his family if he barely makes any profit.

This is exactly what has happened in the world of corporate tax rates. There SEEMS to have been an equilibrium rate set organically -- it is somewhere in the 10 to 13 percent range (effective tax rate).

The U.S. probably can't compete at that rate, to be honest -- what it makes up in revenue from global companies it sees little from now, it might lose in revenue from less global companies that are U.S. based. That is the blessing AND the curse of having such a productive economy.

But that is what we are facing. If seeing Cisco and GE, etc. pay more in U.S. taxes is that important to people, we are going to have to get down to that 10 to 13 percent range.

I am not sure if the overall net revenue would be greater than where we are now, if we did.

It might be it or might not be, but we probably will never known until we see how much more revenue we can first derive from simplifying our tax code and rooting out all of the corruption -- the complicated deductions thrown in over time as special favors to various interests.

 

Did they go to Zug?

Zug, Switzerland is basically a shell of a town with a gazillion corporate subsidiaries of a person or two sitting in small offices.

 

Markets set prices through competition.

1) That isn't a "philosophy." It's a reality, not a belief system.

2) As the world keeps globalizing, we are actually seeing the disparity in standard of living between countries start to equalize. What the U.S. has lost in jobs being exported, for example, China and India and Brazil have gained -- and the overall standard of living in those places has been rising at a fast clip. We don't have to "set" a wage. As globalization continues to bring about a higher standard of living worldwide, most of the gains former third world countries see are going to come at the expense of westernized countries that didn't have to compete as much on a global scale before. That isn't a "philosophy," either, or anything that needs to be "set." It's the reality of how competition works.