[akwoo]

kenberg, on 2013-May-22, 16:50, said:

This is far from the first time I read about these schemes and say, in my usual articulate way, "Huh?"

Money goes to the Irish subsidiary. It cannot come back to the U.S. or we tax it, and it can't be used in "actual operations" in Ireland or they tax it. So it sits there? Do they just go over from time to time to look at it?

I can explain this one.

Basically, Apple wants to have some savings, either a big chunk of emergency cash, or perhaps some money to possibly fund an acquisition fairly far in the future.

If they keep the savings in the US, then they have to pay tax on it right now, and hence they have less money earning interest.

If they keep the savings in Ireland, they don't have to pay tax on it right now. More money is earning compounded interest. Even when they bring the money back and have to pay tax on it then, they will have more money.

It's the same principle with putting money into a traditional IRA. It's better to pay tax later rather than sooner, because paying later means you can earn compounded interest in the meantime.

For a simple calculation, let's say Apple has profits of $100000, they can earn 1.33% interest, and tax is 25%.

If the money is kept in the US, they pay $25000 in tax right away. They put $75000 in the bank. Effectively, they get 1% interest a year (since 25% of the interest is also taxed). After 20 years, they have $91514

If the money is kept in Ireland, they can put $100000 in the bank, and they get 1.33% interest a year. After 20 years, they have $130245 in the bank. Now to actually use the money, they have to bring it back to the US and pay the 25% tax. But then they still have $97684 to use, which is somewhat significantly more than $91514

[helene_t]

Codo, on 2013-May-21, 15:37, said:

If the solution would be so easy that we can find it here, it had been found.

I don't think that is necessarily so. It is quite possible that the solution is widely known except that it is infeasible for political reasons.

[Zelandakh]

akwoo, on 2013-May-23, 01:49, said:

I disagree with this statement.

It is worse than this. You also make it pointless for millions of Americans to go to work, since their tax liability is more than their nett income. So they either become a burden on the State or emigrate to a country where the tax rules are more sensible. Sometimes, people just do not think through the ideas they are proposing. The result of this change would be bad for almost everyone.

[kenberg]

akwoo, on 2013-May-23, 02:07, said:

I can explain this one.

I imagine it is something like what you say, only probably a good deal more complex. I was listening slightly to NPR yesterday, but paying more attentin to my driving so I am not completely sure of what I heard. They were talking about how money gets sheltered in islands, in particular in Manhattan Island. Apparently it is not even necessary to have the money be in Ireland. You put the money in a bank in Manhattan, somehow have it be money for the Irish branch, and then it escapes tax in both the U.S. and Ireland. As mentioned, I was driving and did not catch it all but it sounded as if this Irish money could in fact be used for business purposes in the U.S. and still escape taxation. This would no doubt be better than just drawing interest.

It all appears to be the sort of thing that if I did it, I would either lose my shirt or end up in jail. Or both. The money involved has to be sufficient to warrant hiring a bunch of lawyers and tax advisers who make a good living finding ways to bend a law to an unintended result. This isn't illegal, maybe not even particularly immoral although "he was really good at dodging taxes" is not the obit I would look forward to (not that I am looking forward to my obit in any form).

Should Congress do something about this? Yes, I suppose so, but I can't say I have a lot of faith in the choices they would make. The people who understand this best are not in Congress. Nor are they designing better computers. or doing anything else that is at all socially beneficial. They are out making a buck being clever with tax law.

What else is new?

[billw55]

FM75, on 2013-May-22, 16:11, said:

A flat (not flat rate) tax would get my vote. Divide up the budget by the population and send everyone a bill for a proportional share. Then when a politician runs and advocates a program, people would know how much money it was actually going to cost them.

I don't even know what to say about this. Tens of millions of people would be awash in tax debt far greater than their income. Not only would this be grossly unjust, it would also totally fail as a revenue collection plan, because so much would go unpaid because people don't have it.

In fact this is so stupid I can hardly believe you are serious. If not, that is some top notch trolling, well done!

[Winstonm]

Quote

FM75, on 2013-May-22, 18:11, said:
A flat (not flat rate) tax would get my vote

People I have known who advocate this position also seem to misunderstand that national budgets and deficits do not operate the same and cannot be compared to individual or family budgets, no matter how much more understandable that false comparison seems to make it. We, as a country, do not have to "live within our means" at all times, and there are time when it is clearly a mistake to do so.

As for the flat rate, do you really think that taking $2000 from a family of 4 who earn $20000 has the same impact as taking $20000 from a family of 4 who earn $200,000? Although the mathematics may seem fair, is the result just?

[PassedOut]

billw55, on 2013-May-23, 06:14, said:

...that is some top notch trolling, well done!

Agreed.

[barmar]

kenberg, on 2013-May-23, 05:42, said:

I imagine it is something like what you say, only probably a good deal more complex. I was listening slightly to NPR yesterday, but paying more attentin to my driving so I am not completely sure of what I heard. They were talking about how money gets sheltered in islands, in particular in Manhattan Island. Apparently it is not even necessary to have the money be in Ireland. You put the money in a bank in Manhattan, somehow have it be money for the Irish branch, and then it escapes tax in both the U.S. and Ireland. As mentioned, I was driving and did not catch it all but it sounded as if this Irish money could in fact be used for business purposes in the U.S. and still escape taxation. This would no doubt be better than just drawing interest.

I heard the same story, but the impression I got was that they still can't use it for business purposes in the US. It's an Irish company putting their "savings" in a US bank. To avoid US taxation, they can only take it out to fund operations outside the US. Their reason for doing this would simply be that the US bank is safer or pays better interest than an Irish bank.

I suppose we could put tariffs on money transferred from foreign companies to US banks. But we LIKE money to be put in US banks -- it provides them with more capital to make loans, and that's good for our economy. However, as the story pointed out, we're losing far more in taxes on the money than we gain in the economy.

[FM75]

Winstonm, on 2013-May-23, 07:38, said:

People I have known who advocate this position also seem to misunderstand that national budgets and deficits do not operate the same and cannot be compared to individual or family budgets, no matter how much more understandable that false comparison seems to make it. We, as a country, do not have to "live within our means" at all times, and there are time when it is clearly a mistake to do so.

As for the flat rate, do you really think that taking $2000 from a family of 4 who earn $20000 has the same impact as taking $20000 from a family of 4 who earn $200,000? Although the mathematics may seem fair, is the result just?

It is fair for you to make your "means" statement, but in fact completely inconsistent with how our budgets, deficits, and entitlements programs are being run. Ask the kids in college today if they think it is fair. Some of them are already learning that the "Ponzi scheme" (kick the can down the road, or whatever you like to call it) will fall on their backs, crushingly. Families can run a deficit for a while because a bankrupt estate has no claim on the survivors. The government can only resort to things like devaluation of currency and other really bad things. In Europe they seemed to believe what you believe - and some still do.

Per your flat rate question - Well, if I had been brain-washed/educated (and never questioned it) in school to believe that the Robin Hood approach to taxes was fair, then I would likely agree with you. But if you believe that, then why would you not argue that when you take a train, bus, etc, you should pay some portion of your income, not some portion of what it cost the provider? For you the beer is a buck, for him $100.

The real point here is that this government is ours as a nation. And if people voted as if the money being spent was theirs - as they should be thinking - the behavior of the government and its spending would change to meet what it could get and what its people thought was worthwhile.

Right now politicians have the electorate - as a whole - addicted to OPiuM (Other People's Money). Sure spend money on this, that and the other thing - and tax like you are Jesse James, just don't take my money. In a true sense, they can't escape behaving that way. The system is fixed for them, too. They have to go along to get elected whether they believe in it or not.

Why does this work? First, we have been "educated" to believe that it is fair to tax this way - even though it is a relatively recent idea. Second, we feel entitled to be taxed less if we earn less. We think nothing of taking by force money from others as long as they are doing better than we. There is just something morally repugnant to that idea. Hey, the insurance company is huge, a few thousand in false claims won't hurt them much. That is a transference - people like that prefer not to think of taking money from their neighbors or real people, just people that they don't know (and perhaps envy).

At the end of the day - we have taxation without representation. Kids that can't vote, or have not even been born, will be paying taxes to pay for what our government has promised us, (or emigrate?)! Of course, it is not possible to instantly "balance" the budget, and eliminate the deficit, or the future shortfalls, by an immediate extraction - pro-rata - or any other way. But the system is broken, and when we continue to fail to repair it, we guarantee that it will not only stay broken but get worse.

[dwar0123]

FM75, on 2013-May-23, 14:00, said:

Why does this work? First, we have been "educated" to believe that it is fair to tax this way

I am so well educated that it is hard for me to wrap my head around the idea that you are being serious.

We each should pay into the system what we get out of it. A rich person gets far more out of it, in the quality of their life and the quality of life they can give to their loved ones than does a poor person. Hence they pay more.

Your ideas are stupid, profoundly so. Implementing this idea at anything approaching current spending levels would pretty much regulate 80% of the population as tax evaders. This would forcible restrict government spending to unheard of lows, which is probably your actual goal.

This would require that all the services that the government currently provides now be provided by private industry. You want a highway, pay a toll or support a local money drive for said highway. You want the neighboring city to stop raiding your village, contribute to the local militia. Seriously, this idea has been tried, it's called all of human history where there wasn't a government. It is invariable very bad for everyone involved except the most successful murderous asshole who can set themselves up as the new tyrant. At which point your naïve idealistic utopia ends anyway.

[Winstonm]

FM75, on 2013-May-23, 14:00, said:

It is fair for you to make your "means" statement, but in fact completely inconsistent with how our budgets, deficits, and entitlements programs are being run. Ask the kids in college today if they think it is fair. Some of them are already learning that the "Ponzi scheme" (kick the can down the road, or whatever you like to call it) will fall on their backs, crushingly. Families can run a deficit for a while because a bankrupt estate has no claim on the survivors. The government can only resort to things like devaluation of currency and other really bad things. In Europe they seemed to believe what you believe - and some still do.

Per your flat rate question - Well, if I had been brain-washed/educated (and never questioned it) in school to believe that the Robin Hood approach to taxes was fair, then I would likely agree with you. But if you believe that, then why would you not argue that when you take a train, bus, etc, you should pay some portion of your income, not some portion of what it cost the provider? For you the beer is a buck, for him $100.

The real point here is that this government is ours as a nation. And if people voted as if the money being spent was theirs - as they should be thinking - the behavior of the government and its spending would change to meet what it could get and what its people thought was worthwhile.

Right now politicians have the electorate - as a whole - addicted to OPiuM (Other People's Money). Sure spend money on this, that and the other thing - and tax like you are Jesse James, just don't take my money. In a true sense, they can't escape behaving that way. The system is fixed for them, too. They have to go along to get elected whether they believe in it or not.

Why does this work? First, we have been "educated" to believe that it is fair to tax this way - even though it is a relatively recent idea. Second, we feel entitled to be taxed less if we earn less. We think nothing of taking by force money from others as long as they are doing better than we. There is just something morally repugnant to that idea. Hey, the insurance company is huge, a few thousand in false claims won't hurt them much. That is a transference - people like that prefer not to think of taking money from their neighbors or real people, just people that they don't know (and perhaps envy).

At the end of the day - we have taxation without representation. Kids that can't vote, or have not even been born, will be paying taxes to pay for what our government has promised us, (or emigrate?)! Of course, it is not possible to instantly "balance" the budget, and eliminate the deficit, or the future shortfalls, by an immediate extraction - pro-rata - or any other way. But the system is broken, and when we continue to fail to repair it, we guarantee that it will not only stay broken but get worse.

Sorry, but the tea party is in the padded room down the hall. Go bother them.

[blackshoe]

Winstonm, on 2013-May-23, 07:38, said:

We, as a country, do not have to "live within our means" at all times, and there are time when it is clearly a mistake to do so.

As for the flat rate, do you really think that taking $2000 from a family of 4 who earn $20000 has the same impact as taking $20000 from a family of 4 who earn $200,000? Although the mathematics may seem fair, is the result just?

Please define the times when it is a mistake to "live within our means". I would think during a war would be one, but I can't honestly think of another. And for war, the Constitutional provision that Congress must declare it seems important.

He said he wanted a flat tax, not a flat rate tax, so your example is flawed. And even then taking $2000 from your first family won't have the same impact as taking $2000 from the second. OTOH, if it were $200, it wouldn't bother either family much at all. Not that I expect we could reduce the federal budget that much, given the resistance we would (and do) get from lawmakers to doing that.

[barmar]

You can't compare taxes to purchases prices of products and services.

Purchasing beer or taking the train are voluntary actions. If you can't afford beer, you can forego it. Or you can choose to buy cheap beer, while a rich person may buy expensive beer (so for you the beer is a buck, for him it's $100). A rich person will buy a fancy car, and maybe hire a chauffeur, a poor person will take the subway and train.

Plus, because of welfare, poor people DO pay less for some things: they can get food stamps to reduce what they pay for food.

But taxes are mandatory, everyone has to pay what the government says. You're not buying any particular services with your taxes, they're going into a general pool that's supposed to serve us all as a community. If a rich person can afford to hire a driver, he can afford to put more into the pool.

[Winstonm]

blackshoe, on 2013-May-23, 20:30, said:

Please define the times when it is a mistake to "live within our means". I would think during a war would be one, but I can't honestly think of another. And for war, the Constitutional provision that Congress must declare it seems important.

He said he wanted a flat tax, not a flat rate tax, so your example is flawed. And even then taking $2000 from your first family won't have the same impact as taking $2000 from the second. OTOH, if it were $200, it wouldn't bother either family much at all. Not that I expect we could reduce the federal budget that much, given the resistance we would (and do) get from lawmakers to doing that.

Look at the austerity measures adopted in 1937 and the results from doing so. When aggregate demand is low, the government has to fill that void. Like now both here and in Europe.

[Winstonm]

blackshoe, on 2013-May-23, 20:30, said:

Please define the times when it is a mistake to "live within our means". I would think during a war would be one, but I can't honestly think of another. And for war, the Constitutional provision that Congress must declare it seems important.

He said he wanted a flat tax, not a flat rate tax, so your example is flawed. And even then taking $2000 from your first family won't have the same impact as taking $2000 from the second. OTOH, if it were $200, it wouldn't bother either family much at all. Not that I expect we could reduce the federal budget that much, given the resistance we would (and do) get from lawmakers to doing that.

A flat tax is worse than a flat tax rate, as again it is penal to those who make less. And you are dead wrong in your thinking. To a family who spends 100% of their income (low income families), taking any money lowers spending and affects lifestyle, whereas for upper incomes it only affects the amount of investment in interest-earning accounts.

[blackshoe]

barmar, on 2013-May-23, 22:40, said:

You can't compare taxes to purchases prices of products and services.

Purchasing beer or taking the train are voluntary actions. If you can't afford beer, you can forego it. Or you can choose to buy cheap beer, while a rich person may buy expensive beer (so for you the beer is a buck, for him it's $100). A rich person will buy a fancy car, and maybe hire a chauffeur, a poor person will take the subway and train.

Plus, because of welfare, poor people DO pay less for some things: they can get food stamps to reduce what they pay for food.

But taxes are mandatory, everyone has to pay what the government says. You're not buying any particular services with your taxes, they're going into a general pool that's supposed to serve us all as a community. If a rich person can afford to hire a driver, he can afford to put more into the pool.

A very large portion of what the government "provides" could be privatized. Much of the rest could be provided on a "pay as you go" basis. That would reduce the need for taxes to fund whatever. It would not, of course, reduce the "need" for politicians to find some way to increase their poliitical power, which control of the purse strings does nicely, particularly when the purse is as large as it is now.

[hrothgar]

blackshoe, on 2013-May-23, 20:30, said:

Please define the times when it is a mistake to "live within our means".

Please define "live within our means".

I suspect that your definition and mine vary dramatically.
As a practical example, I think that deficit spending is consistent with "live within our means".

[billw55]

Winstonm, on 2013-May-23, 07:38, said:

We, as a country, do not have to "live within our means" at all times, and there are time when it is clearly a mistake to do so.

hrothgar, on 2013-May-24, 09:26, said:

As a practical example, I think that deficit spending is consistent with "live within our means".

The problem with this thinking is that we aren't living off our own means. We are living off the means of future citizens. It is very easy to approve deficit spending and debt accumulation when you never have to pay the piper. The people who actually have to pay the price don't get a say in the matter, because they aren't here yet, or are too young to vote. If I could go back 50 years and vote out all the politicians who stole from social security for decades, endangering the program for myself and my children, I would do it. A lot of people would. But of course we can't, and neither can those future citizens who will bear our burden appear now to stop us.

Short version, deficit spending is playing with someone else's money. Much easier to rationalize that way.

And for the record, I am not saying we should have no deficit spending ever. But we should have it on average - surpluses in good times to fund deficits in bad times. Unfortunately, nobody in government is responsible enough for that either. Surpluses vanish. Debts don't.

[PassedOut]

billw55, on 2013-May-24, 09:48, said:

And for the record, I am not saying we should have no deficit spending ever. But we should have it on average - surpluses in good times to fund deficits in bad times. Unfortunately, nobody in government is responsible enough for that either. Surpluses vanish. Debts don't.

From Truman through Carter, the government cut debt as percent of GDP during every administration. Under Reagan and Bush I, the debt exploded again. Under Clinton, the debt was explosion reversed and the deficit became a surplus. Under Bush II, the debt exploded again. Under Obama, the deficit he inherited from Bush II has been cut in half.

Both republicans and democrats spend public money in ways I don't like. However, the democrats show more willingness to raise taxes to pay for their programs, whereas the republicans choose to rely upon magic -- 'voodoo' economics. That's why the debt exploded under Reagan and the Bushes, and is why we face such budgetary problems now. As long as folks keep voting for the Norquist free lunch politicians, it will be a fight to get the debt under control.

That's not to say that expenses shouldn't be cut too -- the changing demographics require adjustments to entitlements. I'd love to see taxes come down, but only after the requisite spending cuts have been made. No responsible person disagrees with that.

[ArtK78]

Any one may so arrange his affairs that his taxes shall be as low as possible; he is not bound to choose that pattern which will best pay the Treasury; there is not even a patriotic duty to increase one's taxes.

• Judge Learned Hand, Helvering v. Gregory, 69 F.2d 809, 810-11 (2d Cir. 1934).

There is no patriotic or moral duty to pay taxes if those taxes can be legally avoided. This is the difference between tax avoidance and tax evasion. Tax avoidance is the ability to structure one's business or investments in such a way as to legally minimize one's tax burden. Tax evasion is when one takes actions that are in themselves illegal (such as preparing and signing a false tax return under penalty of perjury) to avoid paying taxes that are legally due.

If Apple can structure its business so as to legally avoid paying taxes to various taxing entities, more power to them.