Post by: eric j on April 29, 2012, 10:13:32 AM
My slowly diminishing emotional attraction to Apple places me possibly among a minority. Some 15 years ago I was attracted to the Mac not only for its ease-of-use superiority but also because of an identification with the battling-to-survive underdog. The latter aspect is clearly no longer appropriate.
Now I'm starting to rank Apple among those corporate giants who play (currenty legitimate) games that, by reducing their their own tax liabilities, inevitably add to the tax burden on the common man.
This report from the New York Times illustrates my concern:-
http://www.nytimes.com/2012/04/29/business...tml?_r=1&hp
Of course, Apple is just one among many and my attitude may be a consequence of my being a pensioner suffering from the gradual erosion of my purchasing power. I am still fortunate in being able to afford a reasonable standard of living but today's report in a British newspaper that the richest in the UK last year were able to increase their wealth by some 5% adds to my sympathy for the Wall Street protesters.
Sorry for the rant.
eric j
Post by: Paddy on April 29, 2012, 11:13:08 AM
1. Apple is a corporation, a corporation whose sole fiduciary duty is to its shareholders. Not you or me (unless we're shareholders) or any other entity. Apple is only doing, and doing spectacularly well, what every corporation with good financial management tries to do. Maximize profits. Minimize expenses. Taxes are an expense.
2. We have romantic notions about this corporation because we seem to form emotional bonds with their products - probably a bit ridiculous when examined closely. For years, we long-time Mac users were a small(er), exclusive club; we enjoyed that camaraderie - the feeling of superiority that WE had the keys to the kingdom (computers that just worked!) while the rest of the world cursed their lowly PCs. The fact that the company whose products we championed struggled only added to the romance. Obviously, one glance around a North American university classroom or airport waiting area today will disabuse anyone of the notion that Mac owners are all that unique now.
3. Nobody can be bothered kicking (or writing stories about) a company that is just one of many, doing ok. Those, like Apple, flying high and the former high flyers are good story fodder for those wanting to sell newspapers. Moral outrage - even if ridiculously misplaced, sells. Envy of success...gloating over another's supposedly deserved misery. Not pretty, but very human, apparently. Angels one day, demons the next.
Generally, I'd suggest that the jurisdictions in which Apple is doing business only have themselves to blame IF they're not happy with the corporate tax structure and what companies such as Apple end up paying in taxes. Many states and countries twist themselves into pretzels trying to attract more corporate investment in the blind belief that no matter how they manage to do it, it will benefit the state or country. Complaining about it after the fact is nothing more than whining.
The tax structure in many countries protects those LEAST in need of the protection, which is hardly surprising when you consider where the power rests. Changing it requires a tremendous act of political will, fuelled by a cultural change I simply don't see happening any time soon in the US or most western democracies. Wall Street protesters have a problem - lots of complaints, but not a lot of solutions - or certainly not solutions that those in power will ever endorse, which combined with a general lack of interest/deep understanding of anything political or economic in the general populace dooms them to being a fringe element. I could say more - much more, but I'd be in a TS no-go zone, so I'll stop there.
Now repeat after me: Apple is a company. Apple exists to make money for its shareholders. Apple is not a philanthropic organization dedicated to the betterment of the human condition. Neither is Microsoft, Walmart, Google, General Motors or Intel. Some companies are better "citizens" than others (and some just better at publicizing it) - but NONE of them, unless badly managed, pay any more taxes than they have to.
Post by: Xairbusdriver on April 29, 2012, 11:30:55 AM
If you are serious about your concern for unjust tax rules, you'll not find much support from those who benefit from them. I suggest you focus your energies on those who created those rules, no matter what Capital they may call home. There is an oft quoted statement that says the destruction of a culture is not long after it discovers they can vote themselves benefits. (I'll look up the name later... )
Post by: jchuzi on April 29, 2012, 04:33:27 PM
Post by: Xairbusdriver on April 29, 2012, 05:45:59 PM
If you want to see obscene profits and low taxes, take a look at the three or four oil companies that are left in the country! Oh, wait, I doubt those NYT reports do much driving...
I'm sure they're not upset about Apple pushing the interwebs and causing newspapers problems with the out-of-date business model.
Nah...
Post by: kimmer on April 29, 2012, 06:06:54 PM
QUOTE(jchuzi @ Apr 29 2012, 01:33 PM) <{POST_SNAPBACK}>
Too bad there isn't a LIKE button for this response. I'd click it about a 100 times! Well done, Apple, well done.
I find it odd that when a company is innovative, creative, successful and still based here in the US, that folks want to slam them for being greedy capitalists. I know, I know ... I'm on the edge if not over it ... but this kind of stuff just frosts my cookies.
Post by: jchuzi on April 29, 2012, 07:07:56 PM
Post by: Paddy on April 29, 2012, 07:44:31 PM
Post by: jwboyd on April 30, 2012, 11:04:00 AM
Post by: jcarter on April 30, 2012, 07:06:49 PM
Pretty cool, they were young, and had never seen certificates like these. Fun it was.
And they are worth more than we thought,,,,,,,
I agree with you all, Apple is a legit company and they are making money just fine, as their products are wonderful, right?
Apple has made my retirement days when the weather is winter and awful, just the most fun, with Photoshop, DreamWeaver, and everything else that is fun with the internet. Like education, Ive never had more wonderful educational opportunities without driving all over the state, ever.
Post by: tacit on May 01, 2012, 12:55:13 AM
Apple's tax liability looks very low right now because of the way corporate income taxes work. In December, Apple's corporate tax rate will suddenly take an astronomical jump.
Why? Because Apple's sales are soaring; Apple has reported twice as much income so far this year as it did last year.
Corporate tax doesn't work like income tax on individuals does. With normal individual income tax, you earn money, a percentage of it is taken out of your paycheck, and then at the end of the year you do the paperwork to determine what your actual tax should have been (accounting for deductions and so on), how much you paid, and what the difference is.
With corporate tax, you pay *estimated* tax that's based on your previous fiscal years' income. Then at the end of the year when you know what your *actual* income was, you pay the difference or get a refund.
So Apple is paying estimated tax for 2012 based on its 2011 sales. But so far in 2012 it has generated double the revenue that it did in 2011...which means that it is only paying half as much tax as it should be. At the end of 2012, when the year's books are closed, Apple will have to pay the difference. Then their 2013 estimated tax payments will be based on 2012's revenues.
So yes, its tax looks really low right now...because it's paying tax based on estimates that are only half of what it brings in. At the end of the fiscal year, it will have to pay tax to make up the difference.
The nominal tax for a corporation of Apple's size is 33%. With its tax rebates, deductions, and various other accounting shenanigans, its effective tax rate will likely be somewhere around 22-25%. The 9-10% the article is talking about is only estimated tax, based on last year's income, which was nowhere near this year's income.
Post by: jcarter on May 01, 2012, 07:37:02 AM
Thats the smart way to do it, then come the next year, they/you/I wont get hit with a big payment.
Post by: Paddy on May 01, 2012, 08:14:33 AM
QUOTE(tacit @ May 1 2012, 01:55 AM) <{POST_SNAPBACK}>
There's a serious, and rather elementary, problem, with the NYT article. Apparently, the reporter has never taken an accounting class.
Apple's tax liability looks very low right now because of the way corporate income taxes work. In December, Apple's corporate tax rate will suddenly take an astronomical jump.
Why? Because Apple's sales are soaring; Apple has reported twice as much income so far this year as it did last year.
Corporate tax doesn't work like income tax on individuals does. With normal individual income tax, you earn money, a percentage of it is taken out of your paycheck, and then at the end of the year you do the paperwork to determine what your actual tax should have been (accounting for deductions and so on), how much you paid, and what the difference is.
With corporate tax, you pay *estimated* tax that's based on your previous fiscal years' income. Then at the end of the year when you know what your *actual* income was, you pay the difference or get a refund.
So Apple is paying estimated tax for 2012 based on its 2011 sales. But so far in 2012 it has generated double the revenue that it did in 2011...which means that it is only paying half as much tax as it should be. At the end of 2012, when the year's books are closed, Apple will have to pay the difference. Then their 2013 estimated tax payments will be based on 2012's revenues.
So yes, its tax looks really low right now...because it's paying tax based on estimates that are only half of what it brings in. At the end of the fiscal year, it will have to pay tax to make up the difference.
The nominal tax for a corporation of Apple's size is 33%. With its tax rebates, deductions, and various other accounting shenanigans, its effective tax rate will likely be somewhere around 22-25%. The 9-10% the article is talking about is only estimated tax, based on last year's income, which was nowhere near this year's income.
Apple's tax liability looks very low right now because of the way corporate income taxes work. In December, Apple's corporate tax rate will suddenly take an astronomical jump.
Why? Because Apple's sales are soaring; Apple has reported twice as much income so far this year as it did last year.
Corporate tax doesn't work like income tax on individuals does. With normal individual income tax, you earn money, a percentage of it is taken out of your paycheck, and then at the end of the year you do the paperwork to determine what your actual tax should have been (accounting for deductions and so on), how much you paid, and what the difference is.
With corporate tax, you pay *estimated* tax that's based on your previous fiscal years' income. Then at the end of the year when you know what your *actual* income was, you pay the difference or get a refund.
So Apple is paying estimated tax for 2012 based on its 2011 sales. But so far in 2012 it has generated double the revenue that it did in 2011...which means that it is only paying half as much tax as it should be. At the end of 2012, when the year's books are closed, Apple will have to pay the difference. Then their 2013 estimated tax payments will be based on 2012's revenues.
So yes, its tax looks really low right now...because it's paying tax based on estimates that are only half of what it brings in. At the end of the fiscal year, it will have to pay tax to make up the difference.
The nominal tax for a corporation of Apple's size is 33%. With its tax rebates, deductions, and various other accounting shenanigans, its effective tax rate will likely be somewhere around 22-25%. The 9-10% the article is talking about is only estimated tax, based on last year's income, which was nowhere near this year's income.
That's a pretty big mistake to make - and I'm quite surprised that Apple themselves didn't pick up on it and demand that the Times publish a correction/explanation (and not just in one of those little "oops, we made a mistake" boxes.) Forbes did catch this - and you've got to love their headline: Apple's 9.8% Tax Rate: New York Times Ignorance Again and Tim Worstal minces no words in his utter contempt for the NYT's reporting:
QUOTE
So, what the NYT/Greenlining calculation has done is compared the profits in 2011 not with the taxes paid on profits from 2011. It has compared profits in 2011 with the taxes calculated on the basis of 2010′s profits.
Which is obviously clear and present nonsense, entire argle bargle of which at least the newspaper should be ashamed.
Which is obviously clear and present nonsense, entire argle bargle of which at least the newspaper should be ashamed.
The fact that the NYT relied entirely on the "report" from pressure group the Greenlining Institute, without checking the facts, is disturbing, though certainly not unprecedented.
Post by: Paddy on May 01, 2012, 08:24:54 AM
QUOTE(jcarter @ May 1 2012, 08:37 AM) <{POST_SNAPBACK}>
But dont they take a look at their income during the year and adjust their estimated tax payments up?
Thats the smart way to do it, then come the next year, they/you/I wont get hit with a big payment.
Thats the smart way to do it, then come the next year, they/you/I wont get hit with a big payment.
Nope - that's not the way it's done for corporations:
QUOTE
How Much to Pay
The IRS general rule is that you must pay the smaller of:
90% of your total expected tax for this year, or
100% of the total tax shown on your last year’s return. Your last year tax return must cover all 12 months.
The IRS general rule is that you must pay the smaller of:
90% of your total expected tax for this year, or
100% of the total tax shown on your last year’s return. Your last year tax return must cover all 12 months.
For some reason or other, the IRS figures that individual taxpayers are more adept crystal ball gazers than corporations and demands that they estimate their income ahead of time and pay installments based on those estimates. Given the size of the payments involved, and the complexity of the situation, you can perhaps understand this approach.
Post by: jcarter on May 01, 2012, 08:56:40 AM
Think of all that Apple dough that the govt could spend during the year!
Post by: Xairbusdriver on May 01, 2012, 08:58:47 AM
However, once the rules are inserted or changed, anyone, individuals included have every right to take advantage of them. No doubt the NYTs and its owners do likewise. Pots calling kettles black?Speaking of those who write the tax rules, our illustrious State legislators have provided their constituents with a unimaginable tax CUT in the coming months and years! They actually reduced the sales tax on (items defined as) groceries by...please sit down if near any sharp cornered furniture... .25%! That's right!
Judy and I have been talking for days on how we'll spend this extra money in the coming year; a new car, a romantic cruise, new carpet, new shoes, etc. We finally decided that we'll just go to Panera for a couple of muffins (I'll have a Cobblestone - a mini Monkey Bread) and some coffee.
Post by: Paddy on May 01, 2012, 10:49:59 AM
QUOTE(Xairbusdriver @ May 1 2012, 09:58 AM) <{POST_SNAPBACK}>
I'm not sure the word "shenanigan's" is an accurate word in tacit's otherwise good explanation of corporate tax computations. Although that word is quite apt for those that lobby for and those who vote to insert the rules into the enormously over complex tax code. Of course, many corporations help pay those lobbyists and a few even "buy" those who do the voting... However, once the rules are inserted or changed, anyone, individuals included have every right to take advantage of them. No doubt the NYTs and its owners do likewise. Pots calling kettles black?
Speaking of those who write the tax rules, our illustrious State legislators have provided their constituents with a unimaginable tax CUT in the coming months and years! They actually reduced the sales tax on (items defined as) groceries by...please sit down if near any sharp cornered furniture... .25%! That's right! Judy and I have been talking for days on how we'll spend this extra money in the coming year; a new car, a romantic cruise, new carpet, new shoes, etc. We finally decided that we'll just go to Panera for a couple of muffins (I'll have a Cobblestone - a mini Monkey Bread) and some coffee.
However, once the rules are inserted or changed, anyone, individuals included have every right to take advantage of them. No doubt the NYTs and its owners do likewise. Pots calling kettles black?Speaking of those who write the tax rules, our illustrious State legislators have provided their constituents with a unimaginable tax CUT in the coming months and years! They actually reduced the sales tax on (items defined as) groceries by...please sit down if near any sharp cornered furniture... .25%! That's right!
Judy and I have been talking for days on how we'll spend this extra money in the coming year; a new car, a romantic cruise, new carpet, new shoes, etc. We finally decided that we'll just go to Panera for a couple of muffins (I'll have a Cobblestone - a mini Monkey Bread) and some coffee. I didn't realize that there WERE any states that charge sales tax on FOOD. Yikes. But indeed, there are. And of course, the two states that charge the full rate, with no offset, are two of the highest poverty rate states in the nation. Figures.
http://www.cbpp.org/cms/?fa=view&id=1230Post by: tacit on May 01, 2012, 10:27:18 PM
The first year I was in business as a corporation, I discovered after doing my taxes that I paid more in corporate income tax (as a percentage of net income) than Microsoft did, and Microsoft was the most profitable company in the world that year.
There are all sorts of sneaky things large, publicly-traided corporations can do that little fish like me can't do. One of them is to report stock options as "expenses," even if they're not exercised. So if a company makes a million dollars in profit, they can offer their CEO a million dollars' worth of stock options and then claim that they made no profit...even if the CEO doesn't take the options.
So what that means is that I paid an effective tax rate of about 30% that year, whereas Microsoft's effective rate was something like 19% that same year. Oh, well, business as usual I guess...
Post by: kimmer on May 01, 2012, 11:11:36 PM
Post by: jchuzi on May 02, 2012, 05:49:15 AM
Post by: Xairbusdriver on May 02, 2012, 09:44:09 AM
QUOTE
the tax code needs to be reformed so that there is a level playing field. Any bets on how likely that is?
The problem with taking that bet is the extremely high probability of not living long enough to collect on it! It might be something to include in your Will. However, it might require inserting language into the Will of the other party. And I'm not certain how many generations forward a Will can control... In the end, I can see this being a huge bonanza for two or more attorneys! 
tacit, you get what you pay for. You obviously didn't pay enough to your 'lobbyists!'
I think the corrolary(?) is, "You have to have money to make money." The "making" part is now called 'lobbying' you representatives. Of course, in other countries, this 'lobbying' cuts out the middleman and is just called a 'bribe.' kimmer, I think the reaction of your friend's husband is rooted in the same mistaken 'emotional' relationship we too often have with corporations and their products. "Don't confuse me with the facts!"
OT: The concept that a corporation is a person re-enforces these emotional reactions to them. We think we should be seen as their 'friend' because we bought something they make. Why do they not treat us as a 'friend?!' We take any action we consider to be negative toward us as personally directed against us.
Example: Apple just announced the dates for the next WWDC last week. They always have more developers wanting to attend than they have room for. This year, the tickets were put up for sale at 5:30 AM Pacific time. Naturally, not many left coast developers were up at that time. From the hue and cry, you would think Apple made a conscious decision to keep these developers out of the Conference!
Apple could have made that decision. I think it more likely (and much less emotional?) that an actual person failed to check with a supervisor on when the site would open for sales. Or someone failed to notice the default time setting in whatever form was used to set up the server. Or maybe a dozen other human mistakes could be found. The point is, a corporation is not a person but the actual people who are the corporation can and often do hide be hide the layers of organization and manage to avoid taking responsibility for mistakes that humans always make.
Most developers, especially those who couldn't get tickets, think it was a mistake, even a huge one. I can understand and even agree with that idea. But reacting on how the mistake was made without knowing the facts is a waste of energy, in my opinion. Refusing to buy a product because of an emotional opinion about an organization with no emotions is simply irrational, again, in my opinion. And that's the only opinion that counts, right?!
Post by: kimmer on May 02, 2012, 01:14:44 PM
QUOTE(Xairbusdriver @ May 2 2012, 06:44 AM) <{POST_SNAPBACK}>
kimmer, I think the reaction of your friend's husband is rooted in the same mistaken 'emotional' relationship we too often have with corporations and their products.
Bingo! I'd use the "thumbs up" smilies, but it's too happy. HA!
QUOTE
"Don't confuse me with the facts!"
Isn't this often the response, though?
Post by: krissel on May 04, 2012, 11:37:20 PM
Aside from the attention any article gets by including "Apple" in the headline, I've been wondering why the NYT has it in for our 'favorite' company. So I went looking to see who owns the major portion of the holding company and I came across the family who has owned it forever and whose son is presently publisher.
Here's the Wikipedia article on him (note the picture, hmmmmm....)
http: //en.wikipedia.org/wiki/Arthur_Ochs_Sulzberger,_Jr.
Ok, not sure why the original link wasn't working, I dragged it from the page..... checking...
For some reason our board does something to the link which ends up sending you to a page not found at Wikipedia.
So copy the address above and then remove the extra space between the : and // and you will get to the page.
Post by: Xairbusdriver on May 05, 2012, 10:33:50 AM
QUOTE
For some reason our board does something to the link which ends up sending you to a page not found at Wikipedia.
The board sw may not like that ASCII 'comma'? 
I suppose that Wiki entry is similar to others about corporate 'leaders.' Pretty boring stuff. I'd hate to be the staffer who got the 'award' to create it... as cheaply as possible so as to keep the penny 'pincher' happy. "Let's see, how much would it cost to use legal pad pages over creating a RTF?... How many paper pages would be allowed to scrapped, with or without recycling them?
Maybe if I used my kid's crayons... How about that roll of toilet paper... " Reminds me of the "bio" sent to the folks preparing the "Memory Book" for our 50th Reunion of our HS class. One guy just sent a copy of his latest resumé! I hope he wasn't disappointed that no body 'hired' him...
Post by: dboh on May 05, 2012, 05:56:43 PM
QUOTE(kimmer @ May 2 2012, 12:11 AM) <{POST_SNAPBACK}>
but she is now disgusted with Apple and her hubby is adamant that he won't spend money on an Apple anything.
Remind him that GE -- about a billion times bigger than Apple -- basically pays about 3% and then suggest he either put things in perspective or start stocking up on candles.
Post by: kimmer on May 05, 2012, 08:09:23 PM
QUOTE(krissel @ May 4 2012, 08:37 PM) <{POST_SNAPBACK}>
For some reason our board does something to the link which ends up sending you to a page not found at Wikipedia.
Having too much time on my hands (again, I was waiting on Sneakers and my Kindle wasn't handy - LOL!) ... I think it's the period at the end of the link. I tried putting the correct link to a word/phrase and it always leaves the period off -- see below where the period shows up at the end of the phrase. Silly of wiki to have a period at the end of a url, because I would guess it causes all kinds of probs in many places.
this won't work so don't click here but see the period at the end instead of in the url.
Here's the code showing the period where it belongs:
CODE
[url="http://en.wikipedia.org/wiki/Arthur_Ochs_Sulzberger,_Jr."]this won't work so don't click here but see the period at the end instead of in the url[/url]
QUOTE(dboh @ May 5 2012, 02:56 PM) <{POST_SNAPBACK}>
Remind him that GE -- about a billion times bigger than Apple -- basically pays about 3% and then suggest he either put things in perspective or start stocking up on candles.
Ohhhh ... good idea. I'll see her this next week and share your wisdom.
Post by: krissel on May 05, 2012, 09:56:19 PM
QUOTE(kimmer @ May 5 2012, 09:09 PM) <{POST_SNAPBACK}>
QUOTE(krissel @ May 4 2012, 08:37 PM) <{POST_SNAPBACK}>
For some reason our board does something to the link which ends up sending you to a page not found at Wikipedia.
Having too much time on my hands (again, I was waiting on Sneakers and my Kindle wasn't handy - LOL!) ... I think it's the period at the end of the link. I tried putting the correct link to a word/phrase and it always leaves the period off -- see below where the period shows up at the end of the phrase. Silly of wiki to have a period at the end of a url, because I would guess it causes all kinds of probs in many places.
this won't work so don't click here but see the period at the end instead of in the url.
Here's the code showing the period where it belongs:
CODE
[url="http://en.wikipedia.org/wiki/Arthur_Ochs_Sulzberger,_Jr."]this won't work so don't click here but see the period at the end instead of in the url[/url]
I had tried the link with (hand added later) and without the period but I couldn't get it to work either way.
Post by: eric j on May 08, 2012, 02:37:54 PM
On reflection, having started this topic, I now doubt that it truly belongs in “Tech”. Perhaps I may conclude my contribution with one or two items:-
The real source of my unease is the finance sector. FWIW here is a clip from October 2011.
http://rt.com/programs/keiser-report/keiser-report-195-max/
Not all of the views proffered correspond to my own, especially with regard to silver and I expect that some will find Max Keiser’s comments unpalatable.
What are our chances of reducing the power of the finance sector?
IMHO very poor. Politics are local, finance is global.
Leaving Apple aside, here is a slide show illustrating how transfer pricing has been applied on a global basis to reduce tax liability:-
http://www.guardian.co.uk/flash/page/0,,2201916,00.html
I rest my case.
eric j