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Apple - wealthiest tax evader on earth

joko104

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Apple is debt free and has $145 BILLION in cash. $103 BILLION of it is in offshore accounts.

Stockholders were increasingly becoming frustrated at lack of dividends reflecting that profit and stock was falling fast - from $700 a share to $400 a share...

SO... Apple came up with a great idea. It would borrow super cheap government bond money - $17 Billion - and give that to the stockholders - thus avoiding any income taxes whatsoever.

Clever, huh? But damn that 60 year old Mom & Pop hardware store owner making $300,000 a year pre-tax not willing to pay 39% of it just in federal taxes.


"
company has to execute. This is no substitute for that.”
By raising cheap debt for the shareholder payout, Apple also avoids a potentially big tax hit. About two-thirds of Apple’s cash — about $102 billion — sits overseas in lower-tax jurisdictions. If it returned some of that cash to the United States to reward its investors, it could have significant tax consequences for the company. In some ways, the bond issue is a response to that tax situation.
“They have been so successful with their tax planning that they’ve created a new problem,” said Martin A. Sullivan, chief economist at Tax Analysts, a publisher of tax information. “They’ve got so much money offshore.”
The $17 billion debt sale by Apple is the largest corporate issuance on record, surpassing a $16.5 billion deal from the drug maker Roche Holding in 2009, according to Dealogic.
Apple joins a parade of large companies issuing debt with astonishingly low yields. Last week, Nike sold bonds that mature in 10 years that yielded only 2.27 percent. In November, Microsoft set the record for the lowest yield on a five-year bond, issuing the debt at 0.99 percent. In comparison, the yield on the 10-year Treasury on Tuesday was 1.67 percent, while the five-year note yielded 0.68 percent.
“If you look at these big companies like Apple and Microsoft doing these big, low-cost bond offerings, it’s a way for them to raise money in an effort to create better returns for their shareholders,” said Steven Miller, a credit analyst with Standard & Poor’s Capital IQ. “The bond markets are practically begging these corporations to issue debt because of how cheap it is to raise money.”
On Tuesday, Apple issued six different securities, with maturities ranging from a three-year note yielding 0.45 percent to a 30-year bond that yields 3.85 percent. The largest piece, a $5.5 billion issue, is a 10-year yielding 2.4 percent. While good for the company, longer-term bonds with yields this low can fall steeply in price if interest rates go up, hurting investors who hold them. Still, $3 billion of the Apple debt are notes whose interest rates are periodically reset."

FULL STORY HERE:
http://dealbook.nytimes.com/2013/04/30/apple-raises-17-billion-in-record-debt-sale/?hpw
 

sangha

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Who the hell is buying billions in long-term low-yield debt instruments?

I'm no financial whiz, so can someone tell me why that sounds like a good idea?
 

Bronson

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Who cares

/shrug

Obama is robbing us blind, wasting trillions and none of you ever seem to care about that.

So why should anyone care what Apple does with it's own money?
 

joko104

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Who the hell is buying billions in long-term low-yield debt instruments?

I'm no financial whiz, so can someone tell me why that sounds like a good idea?
Because they don't pay taxes on debt. They do pay taxes on profit.

If I had $100 Million offshore, if I take $10 Million of it into the USA, it is $10 Million profit. If I borrow $10 Million - using the $100 Million as the surety, I pay no tax. Thus, if the interest I am paying on the debt is lower than the taxes I would pay on the income, I come out way ahead. The interest Apple is paying ranges from less than 1% to about 3%. The average is 2.4%

The tax rate on corporate income is 26% and 25% for dividends.

Do the math. That is an approximate 23% savings. On 17 Billion dollars, that avoids $3.9 BILLION in taxes.

A tad over-simplified, but that's the idea of it.

Do you understand it now? Apple claimed nearly all it's income was from it's offshore companies in tax havens. Due to crashing stock values, they have to get money to stockholders. They do not want to pay taxes on the income. So they borrow the money super cheap, call it a debt, and pay off stockholders that way. "Debt" isn't "income" so they pay no taxes. That is the new way corporations get their offshore money into the USA tax free. They take out loans against the offshore money. This interest is 1/8th to 1/10th what the taxes would be.
 

joko104

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This also is an example of what "offshore" means. It does NOT just mean "cheap foreign labor." It means no taxes.

By having at least part of it's product made or done in no or low tax countries, it is not USA taxable even if for USA sales and despite Apple is USA based.

Thus, on the $102 BILLION offshore, Apple avoided $25 BILLION in taxes. Plus avoidance of USA regulations, employee laws and now, of course, also ObamaCare.

Why would Apple even want factories and service offices in the USA given that?
 

RabidAlpaca

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I see the true moral of the story being that the government should not be giving money to companies, especially at super low interest rates. At two something percent, their interest rate is less than inflation, so it's essentially free money.

This is their problem and it's something they need to handle themselves, but that's hard to do when Apple is buying our politicians like packs of cigarettes.
 

PeteEU

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I see the true moral of the story being that the government should not be giving money to companies, especially at super low interest rates. At two something percent, their interest rate is less than inflation, so it's essentially free money.

This is their problem and it's something they need to handle themselves, but that's hard to do when Apple is buying our politicians like packs of cigarettes.
It has all to do with US corporate tax law and more importantly international tax law and tax havens. As long as countries allow tax havens to exist, then we will have this problem. Even if the US corporate tax law is changed and companies would have to pay less in difference between US tax rate and that of the country where the money is coming from.. it wont change anything since the companies will still stay registered in the tax haven and still pay nothing in tax to the US (or UK or France or Germany and so on).

For example.. lets say the US corporate tax rate is lowered to say 15%. That would mean Apple if it wanted to get the money back to the US it has overseas, would have to pay 2%- 15%.. aka 13% in taxes of the money stored in Ireland. I think Apple would rather let it rot in Ireland than pay that. Rather take out massive loans to pay dividends, since those loans can be moved across borders and hence paid back outside the US..

Then the right would say.. lower the tax rate even more!.. Only way you would get close to having that money back in the US, would be to lower it to the lowest rate out there in tax haven land.. and that is from 0% to 2% when it comes to Apple. Which means the US taxpayer would get nothing at all, while loosing out massive amount of tax revenue because of the massively lowered tax rate.

So basically you are going to have to give corporations a total tax break to get Apple to take its 120 billion back home, so it can give it to its shareholders.. not like it is going to invest that money LOL!

So one has to ask.. is that what you want?

Basically countries need to hit down hard on tax havens, who are causing most of the problems. Allowing Ireland, Gibraltar, the Channel Islands, Dutch Antillies and so on, to be tax havens for the biggest companies on the planet.. not only gives these companies a massive advantage over companies that are not big enough to take advantage of these havens, but also screws over the tax payer big time.
 

ttwtt78640

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Who the hell is buying billions in long-term low-yield debt instruments?

I'm no financial whiz, so can someone tell me why that sounds like a good idea?
Anyone that wants bonds that pay more than the U.S. treasury is willing to.

The answer has a lot to do with the frenzied state of the bond markets. Companies are issuing hundreds of billions of dollars in debt to exploit historically low interest rates. They are also feeding strong investor demand for high-quality corporate bonds as an alternative to money market funds and Treasury bills, which are paying virtually nothing.
 

sangha

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Because they don't pay taxes on debt. They do pay taxes on profit.

If I had $100 Million offshore, if I take $10 Million of it into the USA, it is $10 Million profit. If I borrow $10 Million - using the $100 Million as the surety, I pay no tax. Thus, if the interest I am paying on the debt is lower than the taxes I would pay on the income, I come out way ahead. The interest Apple is paying ranges from less than 1% to about 3%. The average is 2.4%

The tax rate on corporate income is 26% and 25% for dividends.

Do the math. That is an approximate 23% savings. On 17 Billion dollars, that avoids $3.9 BILLION in taxes.

A tad over-simplified, but that's the idea of it.

Do you understand it now? Apple claimed nearly all it's income was from it's offshore companies in tax havens. Due to crashing stock values, they have to get money to stockholders. They do not want to pay taxes on the income. So they borrow the money super cheap, call it a debt, and pay off stockholders that way. "Debt" isn't "income" so they pay no taxes. That is the new way corporations get their offshore money into the USA tax free. They take out loans against the offshore money. This interest is 1/8th to 1/10th what the taxes would be.
I understand why Apple is taking on the debt, which is what you explained

What I don't understand is why others are buying the debt
 

davidtaylorjr

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Apple is debt free and has $145 BILLION in cash. $103 BILLION of it is in offshore accounts.

Stockholders were increasingly becoming frustrated at lack of dividends reflecting that profit and stock was falling fast - from $700 a share to $400 a share...

SO... Apple came up with a great idea. It would borrow super cheap government bond money - $17 Billion - and give that to the stockholders - thus avoiding any income taxes whatsoever.

Clever, huh? But damn that 60 year old Mom & Pop hardware store owner making $300,000 a year pre-tax not willing to pay 39% of it just in federal taxes.


"
company has to execute. This is no substitute for that.”
By raising cheap debt for the shareholder payout, Apple also avoids a potentially big tax hit. About two-thirds of Apple’s cash — about $102 billion — sits overseas in lower-tax jurisdictions. If it returned some of that cash to the United States to reward its investors, it could have significant tax consequences for the company. In some ways, the bond issue is a response to that tax situation.
“They have been so successful with their tax planning that they’ve created a new problem,” said Martin A. Sullivan, chief economist at Tax Analysts, a publisher of tax information. “They’ve got so much money offshore.”
The $17 billion debt sale by Apple is the largest corporate issuance on record, surpassing a $16.5 billion deal from the drug maker Roche Holding in 2009, according to Dealogic.
Apple joins a parade of large companies issuing debt with astonishingly low yields. Last week, Nike sold bonds that mature in 10 years that yielded only 2.27 percent. In November, Microsoft set the record for the lowest yield on a five-year bond, issuing the debt at 0.99 percent. In comparison, the yield on the 10-year Treasury on Tuesday was 1.67 percent, while the five-year note yielded 0.68 percent.
“If you look at these big companies like Apple and Microsoft doing these big, low-cost bond offerings, it’s a way for them to raise money in an effort to create better returns for their shareholders,” said Steven Miller, a credit analyst with Standard & Poor’s Capital IQ. “The bond markets are practically begging these corporations to issue debt because of how cheap it is to raise money.”
On Tuesday, Apple issued six different securities, with maturities ranging from a three-year note yielding 0.45 percent to a 30-year bond that yields 3.85 percent. The largest piece, a $5.5 billion issue, is a 10-year yielding 2.4 percent. While good for the company, longer-term bonds with yields this low can fall steeply in price if interest rates go up, hurting investors who hold them. Still, $3 billion of the Apple debt are notes whose interest rates are periodically reset."

FULL STORY HERE:
http://dealbook.nytimes.com/2013/04/30/apple-raises-17-billion-in-record-debt-sale/?hpw
Is it legal? Then why does it matter if they are buying the stocks to avoid taxes? Taxes in the country are ridiculous and it sounds as if Apple is just being smart with its money.
 

RabidAlpaca

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It has all to do with US corporate tax law and more importantly international tax law and tax havens. As long as countries allow tax havens to exist, then we will have this problem. Even if the US corporate tax law is changed and companies would have to pay less in difference between US tax rate and that of the country where the money is coming from.. it wont change anything since the companies will still stay registered in the tax haven and still pay nothing in tax to the US (or UK or France or Germany and so on).

For example.. lets say the US corporate tax rate is lowered to say 15%. That would mean Apple if it wanted to get the money back to the US it has overseas, would have to pay 2%- 15%.. aka 13% in taxes of the money stored in Ireland. I think Apple would rather let it rot in Ireland than pay that. Rather take out massive loans to pay dividends, since those loans can be moved across borders and hence paid back outside the US..

Then the right would say.. lower the tax rate even more!.. Only way you would get close to having that money back in the US, would be to lower it to the lowest rate out there in tax haven land.. and that is from 0% to 2% when it comes to Apple. Which means the US taxpayer would get nothing at all, while loosing out massive amount of tax revenue because of the massively lowered tax rate.

So basically you are going to have to give corporations a total tax break to get Apple to take its 120 billion back home, so it can give it to its shareholders.. not like it is going to invest that money LOL!

So one has to ask.. is that what you want?

Basically countries need to hit down hard on tax havens, who are causing most of the problems. Allowing Ireland, Gibraltar, the Channel Islands, Dutch Antillies and so on, to be tax havens for the biggest companies on the planet.. not only gives these companies a massive advantage over companies that are not big enough to take advantage of these havens, but also screws over the tax payer big time.
That's the fundamental flaw in logic: We don't have a right to their money. If they earned it, it's theirs. Our taxes are exponentially higher than they need to be to run a proper government. Simply closing the loophole doesn't fix the fundamental problem in the first place. Besides, Apple could just as easily become an Irish company that sells things to the US. How would that help us?
 

PeteEU

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That's the fundamental flaw in logic: We don't have a right to their money.
Disagree... there is no flaw in the logic. All people and companies have to pay taxes as mandated by the law. That is how modern society works and saying that we as a society dont have a right to "their" money is utter bull****.. yes we as a society do.. we all have agreed on taxes and a burden sharing. Without that, we would have no society and no country. The question is how much of "their" money that society is expected to have access too.. that is the real question and can change over time.

If they earned it, it's theirs.
Yes, minus the taxes they are suppose to pay... the amount of % that everyone else pays of course. Which is not what actually happens.. hence the problem.

Our taxes are exponentially higher than they need to be to run a proper government.
No they are not. The US has a massive deficit going on and always has. Yes it is spending too much, but it is also not collecting anywhere near what it should. They are in fact too low and full of loopholes that allow the wealthy to get away with not paying their share of the burden. Your tax system is in fact favourable to big business over small and medium business and that is a massive problem. You are stifling innovation and growth by allowing big corporations to get away with paying next to no taxes vs their smaller competition who can not avoid paying the full burden. For example, a small chain of local dinners pays the full burden of US corporate tax law, where as McDonalds and Burger King do not.. because McD can hire expensive lawyers and tax consultants to move around their sales to avoid paying taxes.

Simply closing the loophole doesn't fix the fundamental problem in the first place.
Getting rid of off shore tax havens would fix a large part of the problem, not all problems, but a large part. Fixing that loophole would also mean that you could lower the tax rate for all.

Besides, Apple could just as easily become an Irish company that sells things to the US.
Err that is what it already does.. Apple is not an American company and has not been for decades. They might be officially registered in the US but its main taxable parts are registered in tax havens overseas and even locally in the US and all sales are funnelled through those areas regardless of where they happen. Even in the US, Apple funnels most of its sales through a P.O.Box in Nevada (or is it California) to avoid most US taxes (local, state and federal). In Europe, all Apple sales are sales officially done in Ireland despite 99% of sales being outside of Ireland. Same for Amazon who's official sales are in Luxembourg despite me buying it in Spain and it being shipped from France or Germany. The problem is the ability to move sales and money from one country (or region) to another and hence move the tax burden.

And that leads us back the fundamental problem with the tax code in most countries and off shore havens.. the ability of the wealthy and big corporations to move and hide their wealth and hence avoid paying their true share of the tax burden is the fundamental problem of todays society.

What should be done, is that the point of sale is the taxable country. So if Apple sells an iPhone in New York, or Athens or Berlin, then the taxes on the profit on that sale must be taken in said country... not in Ireland, or Barbados or X off shore tax haven. That small change would kill off most tax havens for big business in an instant. Then the only problem would be the wealthy who are registered in one country for taxes and actually live in another with high taxes... /wave Gibraltar.

This is a very serious problem and more and more people, both regular joes and politicians are waking up and realizing the total warped tax code we have on this planet that favour the few over the many.. in a massive way.
 

RabidAlpaca

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Disagree... there is no flaw in the logic. All people and companies have to pay taxes as mandated by the law. That is how modern society works and saying that we as a society dont have a right to "their" money is utter bull****.. yes we as a society do.. we all have agreed on taxes and a burden sharing. Without that, we would have no society and no country. The question is how much of "their" money that society is expected to have access too.. that is the real question and can change over time.



Yes, minus the taxes they are suppose to pay... the amount of % that everyone else pays of course. Which is not what actually happens.. hence the problem.



No they are not. The US has a massive deficit going on and always has. Yes it is spending too much, but it is also not collecting anywhere near what it should. They are in fact too low and full of loopholes that allow the wealthy to get away with not paying their share of the burden. Your tax system is in fact favourable to big business over small and medium business and that is a massive problem. You are stifling innovation and growth by allowing big corporations to get away with paying next to no taxes vs their smaller competition who can not avoid paying the full burden. For example, a small chain of local dinners pays the full burden of US corporate tax law, where as McDonalds and Burger King do not.. because McD can hire expensive lawyers and tax consultants to move around their sales to avoid paying taxes.



Getting rid of off shore tax havens would fix a large part of the problem, not all problems, but a large part. Fixing that loophole would also mean that you could lower the tax rate for all.



Err that is what it already does.. Apple is not an American company and has not been for decades. They might be officially registered in the US but its main taxable parts are registered in tax havens overseas and even locally in the US and all sales are funnelled through those areas regardless of where they happen. Even in the US, Apple funnels most of its sales through a P.O.Box in Nevada (or is it California) to avoid most US taxes (local, state and federal). In Europe, all Apple sales are sales officially done in Ireland despite 99% of sales being outside of Ireland. Same for Amazon who's official sales are in Luxembourg despite me buying it in Spain and it being shipped from France or Germany. The problem is the ability to move sales and money from one country (or region) to another and hence move the tax burden.

And that leads us back the fundamental problem with the tax code in most countries and off shore havens.. the ability of the wealthy and big corporations to move and hide their wealth and hence avoid paying their true share of the tax burden is the fundamental problem of todays society.

What should be done, is that the point of sale is the taxable country. So if Apple sells an iPhone in New York, or Athens or Berlin, then the taxes on the profit on that sale must be taken in said country... not in Ireland, or Barbados or X off shore tax haven. That small change would kill off most tax havens for big business in an instant. Then the only problem would be the wealthy who are registered in one country for taxes and actually live in another with high taxes... /wave Gibraltar.

This is a very serious problem and more and more people, both regular joes and politicians are waking up and realizing the total warped tax code we have on this planet that favour the few over the many.. in a massive way.
Proportionally speaking, Europe isn't in any better shape debt wise than America is, and they have frighteningly high taxes, especially on the middle class and poor. Hell, if you're the working poor here in Germany, you'll still be taxed around 25% just on income. That doesn't include the 100% gas tax, the property taxes, and the millions of other taxes.

A typical middle class worker in Germany has an overall tax burden close to 60-70%. It's not about income, it's about expenditures. As you mentioned, the US is spending far more than it takes in. We need to reduce spending, because as Europe shows, no amount of tax will cover politicians' desires.

I could get on board with your suggestion about tax at point of sale. That would simplify the tax code a good deal. I would want it to come with a decrease in taxes though from the top rate. No reason for companies to pay 30-40%.
 

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Apple is debt free and has $145 BILLION in cash. $103 BILLION of it is in offshore accounts.

Stockholders were increasingly becoming frustrated at lack of dividends reflecting that profit and stock was falling fast - from $700 a share to $400 a share...

SO... Apple came up with a great idea. It would borrow super cheap government bond money - $17 Billion - and give that to the stockholders - thus avoiding any income taxes whatsoever.

Clever, huh? But damn that 60 year old Mom & Pop hardware store owner making $300,000 a year pre-tax not willing to pay 39% of it just in federal taxes.


"
company has to execute. This is no substitute for that.”
By raising cheap debt for the shareholder payout, Apple also avoids a potentially big tax hit. About two-thirds of Apple’s cash — about $102 billion — sits overseas in lower-tax jurisdictions. If it returned some of that cash to the United States to reward its investors, it could have significant tax consequences for the company. In some ways, the bond issue is a response to that tax situation.
“They have been so successful with their tax planning that they’ve created a new problem,” said Martin A. Sullivan, chief economist at Tax Analysts, a publisher of tax information. “They’ve got so much money offshore.”
The $17 billion debt sale by Apple is the largest corporate issuance on record, surpassing a $16.5 billion deal from the drug maker Roche Holding in 2009, according to Dealogic.
Apple joins a parade of large companies issuing debt with astonishingly low yields. Last week, Nike sold bonds that mature in 10 years that yielded only 2.27 percent. In November, Microsoft set the record for the lowest yield on a five-year bond, issuing the debt at 0.99 percent. In comparison, the yield on the 10-year Treasury on Tuesday was 1.67 percent, while the five-year note yielded 0.68 percent.
“If you look at these big companies like Apple and Microsoft doing these big, low-cost bond offerings, it’s a way for them to raise money in an effort to create better returns for their shareholders,” said Steven Miller, a credit analyst with Standard & Poor’s Capital IQ. “The bond markets are practically begging these corporations to issue debt because of how cheap it is to raise money.”
On Tuesday, Apple issued six different securities, with maturities ranging from a three-year note yielding 0.45 percent to a 30-year bond that yields 3.85 percent. The largest piece, a $5.5 billion issue, is a 10-year yielding 2.4 percent. While good for the company, longer-term bonds with yields this low can fall steeply in price if interest rates go up, hurting investors who hold them. Still, $3 billion of the Apple debt are notes whose interest rates are periodically reset."

FULL STORY HERE:
http://dealbook.nytimes.com/2013/04/30/apple-raises-17-billion-in-record-debt-sale/?hpw
They aren't tax evaders. They are tax avoiders. There's a significant difference. We should not be blaming companies for taking advantage of the laws as they are written. We should be blaming the people who write the laws.
 

ttwtt78640

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They aren't tax evaders. They are tax avoiders. There's a significant difference. We should not be blaming companies for taking advantage of the laws as they are written. We should be blaming the people who write the laws.
That would require tossing out "good guys" (those in your party) which might allow "bad guys" (those in the other party) taking over those representative slots. Our congress critters, of both parties, take advanage of that basic partisan political reality to reward the rich with "special" tax breaks in exchange for campaign cash.
 
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fmw

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Apple is debt free and has $145 BILLION in cash. $103 BILLION of it is in offshore accounts.

Stockholders were increasingly becoming frustrated at lack of dividends reflecting that profit and stock was falling fast - from $700 a share to $400 a share...

SO... Apple came up with a great idea. It would borrow super cheap government bond money - $17 Billion - and give that to the stockholders - thus avoiding any income taxes whatsoever.

Clever, huh? But damn that 60 year old Mom & Pop hardware store owner making $300,000 a year pre-tax not willing to pay 39% of it just in federal taxes.


"
company has to execute. This is no substitute for that.”
By raising cheap debt for the shareholder payout, Apple also avoids a potentially big tax hit. About two-thirds of Apple’s cash — about $102 billion — sits overseas in lower-tax jurisdictions. If it returned some of that cash to the United States to reward its investors, it could have significant tax consequences for the company. In some ways, the bond issue is a response to that tax situation.
“They have been so successful with their tax planning that they’ve created a new problem,” said Martin A. Sullivan, chief economist at Tax Analysts, a publisher of tax information. “They’ve got so much money offshore.”
The $17 billion debt sale by Apple is the largest corporate issuance on record, surpassing a $16.5 billion deal from the drug maker Roche Holding in 2009, according to Dealogic.
Apple joins a parade of large companies issuing debt with astonishingly low yields. Last week, Nike sold bonds that mature in 10 years that yielded only 2.27 percent. In November, Microsoft set the record for the lowest yield on a five-year bond, issuing the debt at 0.99 percent. In comparison, the yield on the 10-year Treasury on Tuesday was 1.67 percent, while the five-year note yielded 0.68 percent.
“If you look at these big companies like Apple and Microsoft doing these big, low-cost bond offerings, it’s a way for them to raise money in an effort to create better returns for their shareholders,” said Steven Miller, a credit analyst with Standard & Poor’s Capital IQ. “The bond markets are practically begging these corporations to issue debt because of how cheap it is to raise money.”
On Tuesday, Apple issued six different securities, with maturities ranging from a three-year note yielding 0.45 percent to a 30-year bond that yields 3.85 percent. The largest piece, a $5.5 billion issue, is a 10-year yielding 2.4 percent. While good for the company, longer-term bonds with yields this low can fall steeply in price if interest rates go up, hurting investors who hold them. Still, $3 billion of the Apple debt are notes whose interest rates are periodically reset."

FULL STORY HERE:
http://dealbook.nytimes.com/2013/04/30/apple-raises-17-billion-in-record-debt-sale/?hpw
If you have some evidence that these companies are breaking tax laws, then you should be telling the IRS, not us. If you are just angry that the corporate tax laws aren't what you like, you should be telling your congressman, not us. We can't help you in either case.
 

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Proportionally speaking, Europe isn't in any better shape debt wise than America is
Not exactly true. Government debt as a whole is lower than in the US by a considerable margin (EU only)... it is not even over 100% EU wise, where as there are individual countries that are higher yes.

, and they have frighteningly high taxes, especially on the middle class and poor.
Depends on your definition of "frighteningly high taxes" is. I am willing to pay 40% of my paycheck in taxes if it gives me near free healthcare and education.. and most Europeans are. The key here is what you get from the high taxes.

Hell, if you're the working poor here in Germany, you'll still be taxed around 25% just on income.
You are forgetting the base deductible that exists everywhere. Chances are the actual burden on the working poor as you call them, is actually very little if any.

That doesn't include the 100% gas tax, the property taxes, and the millions of other taxes.
Nope there I agree, but dont forget many of those taxes are as much social engineering taxes as they are income generating. For example, high taxes on cigarettes or petrol are done to force people to stop smoking and buy more economical cars. But yes some taxes are more income generating than anything else.. and need to stop.

A typical middle class worker in Germany has an overall tax burden close to 60-70%.
No that is not true and most studies I have read shows that. The lower income peoples are mostly exempt for payroll taxes and so on, so the actual burden is much lower.

It's not about income, it's about expenditures. As you mentioned, the US is spending far more than it takes in. We need to reduce spending, because as Europe shows, no amount of tax will cover politicians' desires.
Its about both. Most European countries had very low budget deficits if not surpluses leading up to the crisis. The crisis caused problems, with big deficits, because the income went down dramatically due to unemployment and the need to have more payouts to unemployed and especially saving the freaking rich people in the banking sector. In the US it is a whole other problem. You dont have the tax income to pay for the outlays and have not had for most of the last 70 years. That means your taxes are too low compared to what you expect the government to provide. Now you can change what you expect the government to provide, but it does not change the fact that at the moment even with basic changes then you wont balance the budget without tax increases and reforms. The only way you can fix it here and now, is to get rid of SS, Medicaid and care and dump half of your military forces.. that aint gonna happen and would cause massive economic problems in the short and medium term and make the US a 3rd world country over night. It would basically cut out trillions of your GDP overnight.

I could get on board with your suggestion about tax at point of sale. That would simplify the tax code a good deal.
actually it would take a bit more. Why? Because of local and international accounting rules. Fact is many countries already have the tax at the point of sale, but companies use accounting rules to ship the actual profits overseas before you reach the taxing part. It is called "administrative fees", usually labels as goodwill costs or licence fees or franchise fees to a parent company which is registered in a tax haven. That part has to be stopped as well. We have seen it with Starbucks in the UK. The UK is the second biggest market for Starbucks in sales and yet it has managed to not generate almost no profits in over 10 years.. why? Because before the profit is figured out, a massive administrative cost is put into on the bill, a cost that moves money from the UK to their Luxembourg HQ. And wupti, the profit is gone and in the case of companies like GE in the US, it can easily turn into a red numbers which are tax deductible and hence GE has gotten billions back from the feds.

For example.. You sell a product for 100 euros, and after basic fabrication costs and sales costs you have a profit of 20 euros on that sale. Then you add a licencing fee of 40 euros and suddenly you have no profit at all but actually selling at a loss. Oh the horror.. But no worries, you have another product that sells for 1000 euros and only costs 300 euros to make and 200 to market.. so you have 500 euros in profit.. but alas... the licencing fee is now 490 euros that goes to your parent company in Ireland.. and wupti only 10 bucks is taxable. But remember the other product that was giving 20 euros in loss.. ups there goes the over all profit!

The above sounds stupid, but it is actually what is happening daily across the world and is being done by the big multinationals.

It is actually this accounting method that has to be stopped along with for filling the tax on profit at the point of sale principle.

I would want it to come with a decrease in taxes though from the top rate.
I agree, but with one issue. For the top rate to fall, then it would require that the tax law for wealthy people had to change. As it stands now, wealthy people have the ability to be tax registered in one country but live and work in another...This has to stop. As an example is Gibraltar. There are many very very very wealthy people who are tax registered in Gibraltar and meeting the conditions (owning a small apartment), but in actual fact live and work out of Marbella, Spain (which is 80km or so from Gibraltar). But they pay no taxes on their income because officially they are tax liable in Gibraltar. Hell some only have a boat registered there and that is enough to be a tax citizen there.

It is the above issue that has to change and we have to hit down on hard. You should be taxed fully where you physically live and the requirements must be very strict.

Taxes are the devils work, but we all have to bear the burden.. and nothing pisses people off more than a few privileged wealthy people being able to run away from that burden just because they were lucky enough to strike it rich.

No reason for companies to pay 30-40%.
Companies should pay 20-30% tops, but that should mean they should actually pay that on profits.. at the moment the average company in the US (top 100) pays like 2% or something like that.. despite the 32% rate. That has to be stopped!
 

Harshaw

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I wonder if this is what the OWSers had in mind when they took time out to hold a vigil for Steve Jobs.
 

ItAin'tFree

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I see the true moral of the story being that the government should not be giving money to companies, especially at super low interest rates. At two something percent, their interest rate is less than inflation, so it's essentially free money.

This is their problem and it's something they need to handle themselves, but that's hard to do when Apple is buying our politicians like packs of cigarettes.
No need blaming that on Apple or any other corporation. Politicians are the ones that shake them down for cash, even if they don't want to play.
 

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Apple is debt free and has $145 BILLION in cash. $103 BILLION of it is in offshore accounts.

Stockholders were increasingly becoming frustrated at lack of dividends reflecting that profit and stock was falling fast - from $700 a share to $400 a share...

SO... Apple came up with a great idea. It would borrow super cheap government bond money - $17 Billion - and give that to the stockholders - thus avoiding any income taxes whatsoever.

Clever, huh? But damn that 60 year old Mom & Pop hardware store owner making $300,000 a year pre-tax not willing to pay 39% of it just in federal taxes.


"
company has to execute. This is no substitute for that.”
By raising cheap debt for the shareholder payout, Apple also avoids a potentially big tax hit. About two-thirds of Apple’s cash — about $102 billion — sits overseas in lower-tax jurisdictions. If it returned some of that cash to the United States to reward its investors, it could have significant tax consequences for the company. In some ways, the bond issue is a response to that tax situation.
“They have been so successful with their tax planning that they’ve created a new problem,” said Martin A. Sullivan, chief economist at Tax Analysts, a publisher of tax information. “They’ve got so much money offshore.”
The $17 billion debt sale by Apple is the largest corporate issuance on record, surpassing a $16.5 billion deal from the drug maker Roche Holding in 2009, according to Dealogic.
Apple joins a parade of large companies issuing debt with astonishingly low yields. Last week, Nike sold bonds that mature in 10 years that yielded only 2.27 percent. In November, Microsoft set the record for the lowest yield on a five-year bond, issuing the debt at 0.99 percent. In comparison, the yield on the 10-year Treasury on Tuesday was 1.67 percent, while the five-year note yielded 0.68 percent.
“If you look at these big companies like Apple and Microsoft doing these big, low-cost bond offerings, it’s a way for them to raise money in an effort to create better returns for their shareholders,” said Steven Miller, a credit analyst with Standard & Poor’s Capital IQ. “The bond markets are practically begging these corporations to issue debt because of how cheap it is to raise money.”
On Tuesday, Apple issued six different securities, with maturities ranging from a three-year note yielding 0.45 percent to a 30-year bond that yields 3.85 percent. The largest piece, a $5.5 billion issue, is a 10-year yielding 2.4 percent. While good for the company, longer-term bonds with yields this low can fall steeply in price if interest rates go up, hurting investors who hold them. Still, $3 billion of the Apple debt are notes whose interest rates are periodically reset."

FULL STORY HERE:
http://dealbook.nytimes.com/2013/04/30/apple-raises-17-billion-in-record-debt-sale/?hpw
What is the point of this supposed to be, and what does any of it have to do with tax evasion? Tax evasion is illegal, right?
 

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Apple is debt free and has $145 BILLION in cash. $103 BILLION of it is in offshore accounts.
Sounds like a well managed company that has reserves to do a lot of R&D. Great for them!

Stockholders were increasingly becoming frustrated at lack of dividends reflecting that profit and stock was falling fast - from $700 a share to $400 a share...
Good companies pay dividends when they cannot put the cash to work themselves. Apple obviously isn't one of these companies. If people wanted dividends, they should have invested in a company that is known for paying them.

SO... Apple came up with a great idea. It would borrow super cheap government bond money - $17 Billion - and give that to the stockholders - thus avoiding any income taxes whatsoever.
PERFECT!

Clever, huh? But damn that 60 year old Mom & Pop hardware store owner making $300,000 a year pre-tax not willing to pay 39% of it just in federal taxes.
Don't blame Apple... blame our idiot, overextended, incompetent Socialist government.

Why don't they reduce the burdens on everyone and unleash the free market?
 

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It has all to do with US corporate tax law and more importantly international tax law and tax havens. As long as countries allow tax havens to exist, then we will have this problem. Even if the US corporate tax law is changed and companies would have to pay less in difference between US tax rate and that of the country where the money is coming from.. it wont change anything since the companies will still stay registered in the tax haven and still pay nothing in tax to the US (or UK or France or Germany and so on).

For example.. lets say the US corporate tax rate is lowered to say 15%. That would mean Apple if it wanted to get the money back to the US it has overseas, would have to pay 2%- 15%.. aka 13% in taxes of the money stored in Ireland. I think Apple would rather let it rot in Ireland than pay that. Rather take out massive loans to pay dividends, since those loans can be moved across borders and hence paid back outside the US..

Then the right would say.. lower the tax rate even more!.. Only way you would get close to having that money back in the US, would be to lower it to the lowest rate out there in tax haven land.. and that is from 0% to 2% when it comes to Apple. Which means the US taxpayer would get nothing at all, while loosing out massive amount of tax revenue because of the massively lowered tax rate.

So basically you are going to have to give corporations a total tax break to get Apple to take its 120 billion back home, so it can give it to its shareholders.. not like it is going to invest that money LOL!

So one has to ask.. is that what you want?

Basically countries need to hit down hard on tax havens, who are causing most of the problems. Allowing Ireland, Gibraltar, the Channel Islands, Dutch Antillies and so on, to be tax havens for the biggest companies on the planet.. not only gives these companies a massive advantage over companies that are not big enough to take advantage of these havens, but also screws over the tax payer big time.
One possible solution would be to have a "value added" tax to tax-haven products sold in the USA. Thus the tax is taken upfront and at least makes sales in the USA fair between foreign and domestic production in relation to sales in the USA.
 

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One possible solution would be to have a "value added" tax to tax-haven products sold in the USA. Thus the tax is taken upfront and at least makes sales in the USA fair between foreign and domestic production in relation to sales in the USA.
While I can see the idea, the problem with this is the idea of freeish world trade. Plus the problem is, that there are no "tax-haven" products, since they are produced in countries that are not per say tax havens... it is just the profits that are shifted to said tax-haven countries.

Let me give you and example.. Apple, Ireland stands for a vast majority of all Apple profits. Originally it was a handful of people who stood for that profit.. in fact it was mostly down to one woman heh.. but that has changed some what since the bad PR hit Apple over this and even now days it is a few thousand employees that work in Ireland who generate the vast amount of profits, where as the rest of the Apple employees world wide are actually "loss making".
 

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Sounds like a well managed company that has reserves to do a lot of R&D. Great for them!
Apple dont spend much on R&D.. they rely on others and pretty much always has.

Good companies pay dividends when they cannot put the cash to work themselves. Apple obviously isn't one of these companies. If people wanted dividends, they should have invested in a company that is known for paying them.
Apple pays dividends... they opened the box, and let the genie out. That is why the investors are complaining.

Don't blame Apple... blame our idiot, overextended, incompetent Socialist government.
You mean Reagan, Bush 1, Clinton, and Bush 2? Or just the years of Democratic control..

Why don't they reduce the burdens on everyone and unleash the free market?
Because no company wants that, especially Apple? Had the free market actually existed, then Apple would have died long ago, but government allowed... in fact pretty much forced Microsoft to bail out Apple back in the day.

Sorry but the burdens on ordinary people are far far far far far far far far higher than any burden that has been on Apple or any big corporation the last 30 years... and that is exactly the problem. Big corporations have generated record profits, paid less and less taxes and cut work forces to insure higher profit margins and profits for the shareholder, who mostly also does not pay any where near the taxes of ordinary people..

Your right wing utopia is already here Zimmer, and it is hell on earth..... because it is right wing policies over the last 30+ years, that has allowed this cluster**** to form and exist.
 

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The U.S. government makes the rules. Complaining that players are succeeding at the game in ways government couldn't envision seems silly. If they can't pass legislation to prevent tax evasion, that's government's fault, not private players. If government can't regulate, how in the world do some leftists even conceive of the notion they could not only regulate, but also be full participants and be effective at it?
 
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