Apple Tax Avoidance

Practical and Practice issues for Professionals who practice in the area of taxation. Moral, social and economic issues relating to taxes, including international issues, the U.S. Internal Revenue Code, state tax issues, etc. Not for "tax protestor" issues, which should be posted in the "tax protestor" forum above. The advice or opinion given herein should not be relied on for any purpose whatsoever. Also examines cookie-cutter deals that have no economic substance but exist only to generate losses, as marketed by everybody from solo practitioner tax lawyers to the major accounting firms.
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Apple Tax Avoidance

Postby Number Six » Mon Apr 30, 2012 1:20 pm

Article on Apple's means of avoiding taxes in today's NY Times: http://www.nytimes.com/2012/04/29/busin ... =business#
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Re: Apple Tax Avoidance

Postby JamesVincent » Mon Apr 30, 2012 1:41 pm

Nothing new there. Apple is one of the biggest companies for doing anything possible to avoid paying anything. Thats why it used to piss me off seeing OWS morons walking around with iPhones and iPads while protesting corporate greed. If that wasnt a lesson in hypocrisy I dont know what is.
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Re: Apple Tax Avoidance

Postby The Observer » Mon Apr 30, 2012 3:38 pm

JamesVincent wrote:Nothing new there. Apple is one of the biggest companies for doing anything possible to avoid paying anything.


I wonder how many people would complain if corporations stopped avoiding taxes. Would these same people happily pay the higher prices that the corporations would pass on to their products or services? Or would they simply transfer allegiance to a competitor who was avoiding tax?
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Re: Apple Tax Avoidance

Postby Number Six » Mon Apr 30, 2012 4:16 pm

Personal ethics can be carried to an extreme, certainly there is a hierarchy of right and wrong from not doing things that are wrong to actively doing what is right. The NY Times makes a compelling argument in the article and generally every day why certain actions like this are wrong. As an elderly neighbor used to say, if people didn't have to pay taxes, if it were really "voluntary" then no one would pay.
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Re: Apple Tax Avoidance

Postby Burzmali » Mon Apr 30, 2012 8:13 pm

The Observer wrote:
JamesVincent wrote:Nothing new there. Apple is one of the biggest companies for doing anything possible to avoid paying anything.


I wonder how many people would complain if corporations stopped avoiding taxes. Would these same people happily pay the higher prices that the corporations would pass on to their products or services? Or would they simply transfer allegiance to a competitor who was avoiding tax?

It's Apple, to its adherents, price is not a factor as there are no true competitors only pale imitators. Apple lines up the price to adjust the number of people that can afford their products allowing them to maximize profit. Nobody is quite sure what will happen now that Jobs and his reality distortion field are gone.

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Re: Apple Tax Avoidance

Postby Unidyne » Tue May 01, 2012 12:20 am

JamesVincent wrote:Nothing new there. Apple is one of the biggest companies for doing anything possible to avoid paying anything. Thats why it used to piss me off seeing OWS morons walking around with iPhones and iPads while protesting corporate greed. If that wasnt a lesson in hypocrisy I dont know what is.


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Re: Apple Tax Avoidance

Postby LaVidaRoja » Tue May 01, 2012 1:25 am

The problem is not with Apple using the tax laws. The problem is with the tax laws as written
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Re: Apple Tax Avoidance

Postby JamesVincent » Tue May 01, 2012 1:32 am

The Observer wrote:
JamesVincent wrote:Nothing new there. Apple is one of the biggest companies for doing anything possible to avoid paying anything.


I wonder how many people would complain if corporations stopped avoiding taxes. Would these same people happily pay the higher prices that the corporations would pass on to their products or services? Or would they simply transfer allegiance to a competitor who was avoiding tax?


IDK, I refuse to use Apple products of any kinds. My cell phone is made by Motorola and will probably always be since they make phones that can take the punishment I put on mine. I custom build my computers with the bulk of the pieces coming from Japanese or Chinese manufacturers, not American companies building them in China. I do use windows for the simple fact that Linux and I have a love-hate relationship. As far as higher prices, I pay what a product is worth and, to me, iPhones and Apple computers are already overpriced.
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Re: Apple Tax Avoidance

Postby Burnaby49 » Tue May 01, 2012 4:00 am

I can't say I'm sympathetic to California's tax woes. Their state government is so dysfunctional and profligate they look like Greece on the Pacific. The more they try to wring out of potential tax sources to pay for it the more inventive tax lawyers and accountants get.

As some posters have stated what Apple is doing, while agressive, is entirely legal under your tax code. We have the same issues in Canada with domestic companies trying to avoid taxes by allocating income elswhere. A favorite is legitimate expenses (such as royalties) pumped up way past any reasonable market rates and paid to offshore subsides to reduce Canadian profits. I spent my working life as an equivalent to your IRS auditors working largely with large corporation tax issues and I can't say Apple is doing anything that Canadian companies wouldn't do in the same position.
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Re: Apple Tax Avoidance

Postby Number Six » Tue May 01, 2012 2:30 pm

"Would these same people happily pay the higher prices that the corporations would pass on to their products or services?"

This is one of the more pernicious arguments we hear too often. It's the type of argument Ms. Ehrenreich and David Cay Johnston have effectively answered in their books. What would you have to pay for your clothing or shoes if they were still made in your home country? I have Limmer boots now, they last forever, not the Asian-made ones. Another point on outsourcing; when I deal with Indian or Philippines customer service there is a cultural barrier as much as they try to learn the English language. I'm sure it would be much worse were we to have to learn their languages with all the different dialects or Mandarin Chinese as more Westerners are learning to stay ahead of the curve. The money goes to the top anyway in executive bonuses to further fatten the fat cats, tax lawyers and lobbyists and to shareholders. So to say that if these corporations did not receive the whopping tax subsidies and discounts that they would have to pass on the extra costs to the consumer is perversely misleading.
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Re: Apple Tax Avoidance

Postby The Observer » Tue May 01, 2012 4:02 pm

Number Six wrote:This is one of the more pernicious arguments we hear too often


And I have yet to hear such an argument totally and completely refuted.

What would you have to pay for your clothing or shoes if they were still made in your home country?


That is supposing that my home country does not allow imports of competing goods or that it applies tariffs to such competing goods to force the importers to raise their prices to the levels in my home coutnry. But since that is not what is happening in my home country your question is totally irrelevant. It also seems to indicate that you do not have an understanding of how the world economy is working or are unaware of the free trade agreements that are in effect.

So to say that if these corporations did not receive the whopping tax subsidies and discounts that they would have to pass on the extra costs to the consumer is perversely misleading.


So you think that the CEOs are going to take salary, dividends, benefits and incentives out of their packages to keep their companies' prices competitive? Given how badly you have condemned big business for the decisions they have made in the recent past, what makes you think that they are suddenly are going to become altruistic in the face of a tax consequence?
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Re: Apple Tax Avoidance

Postby Number Six » Tue May 01, 2012 4:26 pm

If they jacked up the price on consumer goods as their tax breaks were disallowed then maybe the companies with goods produced in countries with fair trading policies and reasonable pay to workers would be able to compete better. People still read labels and have loyalty to local economies, not just the bottom line. Cheap and disposable goods make for cheap and disposable people. It is a reality that those who have looked at the Chinese industrial boom and the devastating effects on people and their environment have woken up to. We may have fairly corrupt systems in the West, but Asia takes the cake with scandals we have heard about and many we have yet to hear about.
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Re: Apple Tax Avoidance

Postby The Observer » Tue May 01, 2012 8:54 pm

Number Six wrote:People still read labels and have loyalty to local economies, not just the bottom line.


Really? Not according to what you wrote here: http://www.quatloos.com/Q-Forum/viewtopic.php?t=8371

I don't boycott a business just because of a few legal violations or concerns, especially when it's hard to find those same items at a "better" company for comparable pricing.


Obviously your criteria for shopping includes getting the item for the best price. Apparently a local economy is not your top priority. The fact that you would not boycott Wal-Mart over a ethical issue puts even more support into my contention that the strategies followed by Apple (and Wal-Mart) are because American consumers have dictated that they want items at the lowest price possible. And if Apple and Wal-Mart legally avoid taxes, that means they can deliver prices at a lower price than if they had to pay corporate income tax.

So blaming Apple for tax avoidance is hyprocritical when one's purchase patterns only encourage the behavior to continue. This is not surprising given the emotional basis for Apple detratctor's position about profits; somehow a company having billions of dollars of income is evil. I am not sure why so hopefully you can explain why that is so. Otherwise, there is no factual basis for assuming that Apple is doing wrong.
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Re: Apple Tax Avoidance

Postby Number Six » Tue May 01, 2012 11:03 pm

Observer: "So blaming Apple for tax avoidance is hyprocritical when one's purchase patterns only encourage the behavior to continue."

It is a matter of degrees and alternatives. As Emerson once said, "a foolish consistency is the hobgoblin of little minds".

I don't see any ethical issues with cell phones bought at Wal-Mart vs. those bought at a Verizon store. I paid more than twice as much at Verizon. When the hardware is made in Asian sweatshops and the network is provided on a shared basis, where are the ethical choices? People choose to boycott government and become "war tax protestors" or "sovereigns". They choose to boycott Bank of America because they believe it is predatory and so they join credit unions. More ethical? I suppose so. But the idea that somehow the marketplace is the ultimate voting machine is just not a coherant argument. Scott Nearing once burned a fortune in inherited stock certificates because he didn't want to be tainted by the corrupting influence of corporate money. Ultimately he lost out and someone else benefitted through his over-refined and overwrought form of ethics.
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'Choose loss rather than shameful gains.' (Chilon Fr. 10. Diels)

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Re: Apple Tax Avoidance

Postby JamesVincent » Wed May 02, 2012 2:42 am

The Observer wrote: And if Apple and Wal-Mart legally avoid taxes, that means they can deliver prices at a lower price than if they had to pay corporate income tax.

Yet Apple products cost as much if not way more then any other system or phone out there for not greater a product, and, in many ways, much less of a product. As was already mentioned people who buy Apple products buy Apple products regardless.

So blaming Apple for tax avoidance is hyprocritical when one's purchase patterns only encourage the behavior to continue. This is not surprising given the emotional basis for Apple detratctor's position about profits; somehow a company having billions of dollars of income is evil. I am not sure why so hopefully you can explain why that is so. Otherwise, there is no factual basis for assuming that Apple is doing wrong.

Its the fact that Apple makes no pretense whatsoever to be an American company yet wants to claim to be an American company. Their products say "Designed in California" but nothing about being made by 5,000 under paid Chinese in miserable working conditions. Apple has always lied about what they put into their products and have never been truthful about what your actually buying. I still get into arguments with Apple-heads over the fact that Intel makes their processors. They tell me Im lying, that Apple makes all their parts. Yet Intel, and several other manufacturers, have made them for Apple for a long time now, since the G6 IIRC. They are evil because their profit is made on 100% lies and over-pricing. The only thing that made Steve Jobs a "genius" was his ability to bullshit people into believing that the product he was pushing was superior to anything else out there.
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Re: Apple Tax Avoidance

Postby The Observer » Wed May 02, 2012 3:47 am

Number Six wrote:It is a matter of degrees and alternatives.


No, it is an issue of being consistent within your ethical framework. You are not likely to convince people of your argument if you are perceived as holding yourself apart from it. Either you are part of the problem or part of the solution. Telling us that major corporations must be more ethical than you is not the way to convince me that somehow Apple must change.

Number Six wrote:Scott Nearing once burned a fortune in inherited stock certificates because he didn't want to be tainted by the corrupting influence of corporate money. Ultimately he lost out and someone else benefitted through his over-refined and overwrought form of ethics.


If Nearing was ultimately happy with his decision to burn his stock and had no regrets, I respect his decision. For us to judge him as "losing" is based on our criteria (and perhaps materialism) and not relevant to his personal decision.

JamesVincent wrote:Yet Apple products cost as much if not way more then any other system or phone out there for not greater a product, and, in many ways, much less of a product. As was already mentioned people who buy Apple products buy Apple products regardless.


Those are all value judgments. I can find other people who will tell you that Apple products are much more than what the PC market offers overall and with less problems.

Their products say "Designed in California" but nothing about being made by 5,000 under paid Chinese in miserable working conditions.


Do you realize how many computer and other electronic components come from the Asian Pacific Rim? Is it possible that those products are produced in a similar working environment? Otherwise, how can a PC computer and the component parts sell for less than what Apple charges?

JamesVincent wrote:Yet Intel, and several other manufacturers, have made them for Apple for a long time now, since the G6 IIRC.


On one hand, you have argued that Apple makes an inferior product, and then you claim that Apple is using parts that come from companies you recognize as being superior.

They are evil because their profit is made on 100% lies and over-pricing


If that statement is true, please explain why Apple products continue to sell, and get stellar reviews from across the globe. Please explain why people would continue to buy a product that is as inferior as you claim it to be and not be upset at paying a higher price.

The only thing that made Steve Jobs a "genius" was his ability to bullshit people into believing that the product he was pushing was superior to anything else out there.


Ah, I see your explanation. Steve Jobs just had the ability to con half the world into buying his crappy, overpriced products. He was adept at tricking tons of reviewers, media critics, journalists, and others into providing rave reviews, supporting testimonials and recommendations for Apple products. And what is even more amazing, he was able to keep up this shoddy pretense for 17 years without anyone being the wiser.

Let me tell you what I think. I think Steve Jobs was a bastard to work for and to work with. He was one of those one-dimensional characters who couldn't really get fuzzy and warm with people, including his own family. But what he was good at was recognizing what people were looking for in a product and directing his company at producing that product. As Ralph Waldo Emerson is often misquoted, whoever can build the better mousetrap is going to have people beating a path to their front door. Steve Jobs did that. But people can't stand someone being successful, so they will do anything they can to taint, impugn and destroy that success - regardless of the facts staring them in the face.

I have PC products and Apple products in my home. I have had plenty of problems with my PC computers over the last 20 or so years. I have had a Mac for the last 3 years and have not had one problem in terms of the computer starting, running and shutting down. Updates have happened without any problems and software runs without a hitch. I don't have the framerate problems with my Mac that I have with a similarly equipped PC when watching movies or playing a game. In short, the Mac works.

I call that success. You call it evil.
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Re: Apple Tax Avoidance

Postby JamesVincent » Wed May 02, 2012 4:29 am

The Observer wrote:
JamesVincent wrote:Yet Apple products cost as much if not way more then any other system or phone out there for not greater a product, and, in many ways, much less of a product. As was already mentioned people who buy Apple products buy Apple products regardless.


Those are all value judgments. I can find other people who will tell you that Apple products are much more than what the PC market offers overall and with less problems.

Not getting into that argument. People who like Apples will like them no matter what. People who buy a Windows machine will bitch and complain about it but will go out and buy another Windows machine.

Their products say "Designed in California" but nothing about being made by 5,000 under paid Chinese in miserable working conditions.


Do you realize how many computer and other electronic components come from the Asian Pacific Rim? Is it possible that those products are produced in a similar working environment? Otherwise, how can a PC computer and the component parts sell for less than what Apple charges?

Well, yeah, I do. If you had read what I had written before you would have seen that I said I buy my parts from overseas manufacturers. And, while possible, the ones I normally deal with are built in normal factories and not in sweatshops. Believe it or not there are places that keep track of such things. And I buy from companies that say where their made and dont try to lie about it. And you do realize that in China you can buy an iPhone for like $20?

JamesVincent wrote:Yet Intel, and several other manufacturers, have made them for Apple for a long time now, since the G6 IIRC.


On one hand, you have argued that Apple makes an inferior product, and then you claim that Apple is using parts that come from companies you recognize as being superior.

I never once said Intel was superior. I dont use Intel chipsets either. I did say they lie about what your buying. And Intel was not the only manufacturer making chips for Apple. Back in the day Cyrix was one of them and several other companies made, or are making, chipsets for Apple. Yet Apple never really disclosed that little fact.

They are evil because their profit is made on 100% lies and over-pricing


If that statement is true, please explain why Apple products continue to sell, and get stellar reviews from across the globe. Please explain why people would continue to buy a product that is as inferior as you claim it to be and not be upset at paying a higher price.

Very easy. People who know nothing about what their buying buy whats popular and, thanks to Jobs, Apple seems like the perfect computer and company. Is the iPhone really that superior to any other phone out there to make it worth the extra money you spend and the fact that your data plan is limited? Not to me it isnt and Ive run across a few reviews that said they thought the same way. One review I read tested the i4-s against a Droid phone and stated they couldnt say the iPhone was better and that was against a Droid 2.2. Their up to 2.3 or higher now. Oh, sorry, they said the iPhone camera was better. Pretty much everything else lost out to the Droid. And, like I said earlier, Motorola is the only one Ive found that builds their mil-specced phones strong enough to survive what I put phones through.

The only thing that made Steve Jobs a "genius" was his ability to bullshit people into believing that the product he was pushing was superior to anything else out there.


Ah, I see your explanation. Steve Jobs just had the ability to con half the world into buying his crappy, overpriced products. He was adept at tricking tons of reviewers, media critics, journalists, and others into providing rave reviews, supporting testimonials and recommendations for Apple products. And what is even more amazing, he was able to keep up this shoddy pretense for 17 years without anyone being the wiser.

Sarcasm. There is plenty of reviews that said Apple wasnt all it was cracked up to be but when you spend millions in advertising to get people in the door then reviews dont mean a damn. People still buy Dells dont they? Yet Dell has one of the worst reputations as a PC manufacturer.

Let me tell you what I think. I think Steve Jobs was a bastard to work for and to work with.He was a downright ass to work for. Ask someone who worked for Apple when they fired him for being an ass. He was one of those one-dimensional characters who couldn't really get fuzzy and warm with people, including his own family. TrueBut what he was good at was recognizing what people were looking for in a product and directing his company at producing that product.Also true As Ralph Waldo Emerson is often misquoted, whoever can build the better mousetrap is going to have people beating a path to their front door. Steve Jobs did that. But people can't stand someone being successful, so they will do anything they can to taint, impugn and destroy that success - regardless of the facts staring them in the face.

When the world went crazy over the iPod and everyone had to have one, how many people realized that Apple didnt invent it? The exact same product was being made by other companies but had not been marketed to the extent of what Apple did. Thus everyone concludes that Apple invented that concept when they didnt. They marketed it better. The early Apple ones were nowhere near the quality of what other companies were putting out and were more expensive yet they still bought Apple. Ever hear of name recognition?

I have PC products and Apple products in my home. I have had plenty of problems with my PC computers over the last 20 or so years. I have had a Mac for the last 3 years and have not had one problem in terms of the computer starting, running and shutting down. Updates have happened without any problems and software runs without a hitch. I don't have the framerate problems with my Mac that I have with a similarly equipped PC when watching movies or playing a game. In short, the Mac works.

Sorry to hear that. The computer Im using right now to send this is about 3 or so years old. It might have been turned off 10 times in those 3 years and still runs great. The only issue I have had with this machine was the virus it picked up when my ex's e-mail got hacked and someone sent a virus from her e-mail address. I can stream all day long and not drop anything, watch full HD movies in full screen and not get clippy and play just about any game out there, except for some of the newer ones that require a better video card. Does that mean your Mac is superior to my PC or did I just do a better job of building my machine then your PCs? I have used windows based machines for almost 30 years and have never had the issues that people say about Windows. I used to work on computers and worked on plenty of Apples. They were most expressly not better then a well built PC.

I call that success. You call it evil.


You can call it Wanton soup for all I care, doesnt make it the truth.
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Re: Apple Tax Avoidance

Postby The Observer » Wed May 02, 2012 4:50 pm

CaptainKickback wrote:Arguing that one is somehow superior than the other and that those others and their users should be shunned is just stupid.


It isn't an argument that I am making. What I am trying to point out that declaring Apple is "evil" and that their products do not deserve the light of day is nonsensical. There isn't anything logical about the argument. It is an argument born out of emotion, hatred, jealousy or whatever. James can't really come out and claim that the Apple product line is pure crap, because deep down he knows it really isn't. So the argument devolves into side issues as to whether Apple was lying about producing its own chips, whether Apple is exploiting people to get its product made, or if Apple was the originator of the product or just copied someone else's product.

At this point, the argument has now focused on trying to undermine Apple's success by implying that it wasn't earned. But you really can't argue against a stock share that has risen from $2 to over $600, you can't argue that having cash reserves of approximately $100 billion and being the number one company on the planet means nothing. So it becomes a point to dengirate the company, imply that its products are less than satisfactory, that its policies are suspect, that in essence that they cheated in order to get to the top.

We see James admit that it is "possible" that his own sources of computer parts could be subject to exploitation of workers but he trusts those vendors to be reputable. He doesn't address the fact that computers running on Windows might have similar issues in terms of Microsoft using unfair tactics to force competitive products from being installed or to force users from being able to remove unwanted Microsoft products or not to be able to install competing non-Microsoft products; Microsoft has had to face several anti-trust actions based on their corporate policies. None of this seems to be a problem to James in his support of Windows, Microsoft is simply not "evil" enough?

I see the same mentality expressed in competitions between people, whether on-line gaming or on the field. If someone has exceptional talent or skill, the immediate suspiscion is that it is due to the person using "l33t hacks" or performance-enhancing drugs. It can never simply be a matter of a person being successful due to having more talent, ability, knowledge or hard work to achieve what they achieved.
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Re: Apple Tax Avoidance

Postby Burzmali » Thu May 03, 2012 4:46 pm

As to Apple's tax avoidance, of course it is wrong. Not illegal or anything, but any system that lets you buy a dollar tax break for less than a dollar is defective.


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