The tax haven countries should be subjected to overwhelming, crushing sanctions. They deserve to be international pariahs.

What is a "tax haven" country? You realise that the USA has states that act as significant tax havens in some situations, do you? Is Ireland a "tax haven" because it has low corp tax rates? The EU certainly thinks so but the Irish disagree.

It's tough when the "only sane solution" also happens to be a enormous task to even begin talking about. I agree with you, but I also struggling to imagine a time when that overhaul could take place.

I agree, it's a massive undertaking and getting support for something like that is really, really hard. The way I see it, all of that anti-globalism rage that is currently being directed toward foreigners really ought to be directed toward fixing this, since this would actually help (e.g. have more money for a wellfare system to handle unemployment from outsourcing and automation). But unfortunately it's much easier directing rage toward 'weird people with other skin tones and religion' than something abstract like a broken international tax system.

That simply won't work if there's even one country (like the known tax haven islands) that don't abide by it. Unless international tax laws start charging taxes for every penny that crosses a border, things like that will keep happening. There's a huge financial incentive for small countries to become tax havens, they take a relatively tiny amount of money, which for them multiplies their GDP.

But will people travel to this tax haven to buy their computers? Will Apple's employees all move there to write software? Nope.

What we mean by Apple operating in (say) Germany is these things: they make sales there, and they have employees there.

Where the letterhead says they're incorporated... isn't this just an implementation detail? It's like asking where their datacenter is located. It's in the cloud, who cares? It seems to me that making the tax laws care about this is crazy... why do we this?

Why not simply tax the things which cannot move, transactions involving real people who live in particular places?

> Why not simply tax the things which cannot move, transactions involving real people who live in particular places?

that's already happening. Unless you're implying increasing consumption tax (VATS, GST etc), or higher income tax for individuals (payroll tax, capital gains tax etc).

The tax that's "missing" (read: dodged) is corporate income tax - which is a tax on the profits a corporation makes. But if you don't make any profits (read: hide profits using legal schemes), then what _do_ you tax?

To prevent tax-havens, you'd need to impose sanctions against doing business with any entity that is incorporated in said tax haven. But that's a nuclear option, which can cause damage beyond just stopping tax dodge (like harming the citizen of the tax-haven country, since they now cannot import food, for example).

Yes that's exactly what I'm implying.

We tax the money going from a human being into the corporation (VAT etc). And we tax the money coming out (Payroll etc).

The idea that we must tax the company's profits too (if they made any) is what seems strange to me. Because it depends then on defining which bit of a multinational made the profit, and there's no good way to do this. All it seems to do is encourage complicated schemes which the little guys can't afford. And I don't see the advantage over just taxing both ends of the pipe.

I know there are economists who disagree with me, and I don't understand their reasons. But all I'm seeing in the letter (and this thread) is personification, saying "the pipe must pay his share!" but the pipe isn't a person.

apple already pays huge amounts of taxes to germany. It just doesn’t pay large amounts of a specific tax called “income tax” because it isn’t based in Germany.

But "income tax" is a misleading name for this. It's a tax on corporate profits.

The letter wants you to compare this rate to _your_ rate of income tax and be shocked. But this is stupid, the corporation is not a human being.

For those profits to be enjoyed by anyone, they have to be paid out again as salary, or dividend, or recovered by selling shares... and these transactions are all taxed. And, of course, all of this money which is now profit was taxed when whoever bought the computer was charged VAT.

(Who signs the check to the tax man on each of these transactions is irrelevant, but another common way to mislead people for outrage. The tax man stands between you and Apple and demands VAT... and between Apple and their employee and demands income tax... how this is collected is, again, an implementation detail.)

Eliminating corporate income taxes would be the best way to start, given it would benefit society immensely.

How would it benefit society? Reduced state income that could be used to invest in infrastructure and people? Will the companies invest that money with society's interest at best better than the govt would? I don't think so. What do Apple do with their money? They horde it, waiting for a windfall to bring it back to the States and pay low/no corporate tax on the repatriated profits.

You tax things you want less of, not more if. Taxing corporate profits is a tax on investment. Apples actual income tax rate is in excess of 60% if they repatriate.

First, they have to pay corporate income taxes in all their foreign countries. Then, they owe 9% to state of California on what’s left. Then they owe 35% to the US treasury on what’s left. Then they pay the remainder as dividends, and shareholders owe up to 10% to their stars, and then 15-20% to the federal government.

We could likely generate as much or more in tax revenues by eliminating the corporate income tax and treating individual dividend payments as regular income (taxed at 28-38% normally).

This way reinvested profits aren’t taxed, leading to more investment, which leads to more profits and more dividends. And the return on investing for individuals increases, leading to more investment. More investment means more jobs, higher productivity and higher pay.

And hundreds of thousands of corporate tax accountants can now actually be switched to work that benefits society.

Taxes are not a punitive fee. Apple is paying for the public infrastructure and services used in the US. Military, police, fire protection. Health services. Roads. Foreign diplomacy. Legislative access. Executive function. Judicial expertise. All of which they reap a disproportionate reward from.

You could just as well argue that anything Apple sells should be free on account of them wanting more sales, not less. And the goal of government is not to maximize corporate income. For that matter, companies don't really have a right to make more money, only to participate in a fair economy.

This is not accurate. Currently they are paying between 1 and 7% on income, as the Paradise Papers document. If they re-patriated every bit of income to the U.S., they would owe an additional 35%. That brings the tax rate to 36-42% (actually slightly less since the 35% would be on the 99-93% remaining), and that's that.

What they then choose to do with the money after that, and what taxes individuals pay on their own investments, are not part of Apple's tax rate.

Also, good luck getting dividends taxed as normal income rather than capital gains!

Nope, Apple pays a world-wide rate of 24.6%.

https://www.apple.com/newsroom/2017/11/the-facts-about-apple...

And the real rate is actually higher because it doesn't count the deferred taxes they owe and will pay when they repatriate.

The statement from Apple includes "Apple’s effective tax rate on foreign earnings is 21 percent" but that is not the rate they've actually paid. They state elsewhere that they believe the majority of taxes should be paid in the U.S., but they're not actually paying them here, either. Instead they're holding the income off-shore to avoid paying the taxes where they say they should be paid, and waiting for the rate to be lowered or even eliminated in a one-time holiday.

IOW, that 24.6% absolutely does include the money they say they expect to owe when they eventually repatriate those earnings.

In the meantime, they earn returns on the money they've set aside that they "owe" for taxes they aren't actually paying, so deferring the payments is very profitable for them. They've even taken out large loans in the U.S. to pay dividends, because it was cheaper for them to borrow money and pay it back with interest than repatriate this money.

It's fair to say I love Apple, and I've been described as too ardent a defender of their, but they're being ridiculously disingenuous here, and it's clearly working, as you took that sentence from their statement at face value.

I don't know if everything you say is accurate, but grant for a moment that it is. I still don't understand what you think is disingenuous.

There is no law that requires US corporations to repatriate their profits; not choosing to do so means they're deferring a tax liability. What's disingenuous about that?

"What they then choose to do with the money after that, and what taxes individuals pay on their own investments, are not part of Apple's tax rate."

It's not part of Apple's rate, it's part of the rate at which the entire investment is taxed. The US taxes profits on corporate investments in the range of 35-70%, do you really think that's realistic? A business owner has a large number of countries they can just re-incorporate in to be able to keep 3/4s of their profits instead of less than half.

But you know that even if you eliminated corporate tax, companies would not pay out profits as dividends, if there was a loophole around it. And there are loads, of course. Share buybacks, for example.

Yes, you'd have to also tax capital gains at ordinary rates to capture this. I think capital gains should only have inflation adjustments to their basis, they don't need their own special rates.

From the perspective of an investor, there's really not all that much difference between a buyback and dividends.

It would benefit society because we could all spend our outrage on things more productive than pushing on a rope.

The profits were taxed as VAT or something on the way into Apple. They will be taxed again as income tax or something on their way out again. We are free to adjust these rates as we wish.

But trying to tax intermediate steps which seem to be largely accounting fictions (like exactly which puzzle piece of the global empire actually made that profit) seems like a fool's errand.

But overhaul can't happen like "now". It need some initial impulse, an outrage bigger than average etc. Apple case may help this.

That's a good point. I'm not dismissing the PR and awareness value of raging about Apple.

Just hoping that the fix isn't perceived as "going after apple". Going after existing law, tax havens, etc, is more productive.

You mean unproductive and counterproductive.