Five months after Mr. Cook’s testimony, Irish officials began to crack down on the tax structure Apple had exploited. So the iPhone maker went hunting for another place to park its profits, newly leaked records show. With help from law firms that specialize in offshore tax shelters, the company canvassed multiple jurisdictions before settling on the small island of Jersey, which typically does not tax corporate income.
Apple has accumulated more than $128 billion in profits offshore, and probably much more, that is untaxed by the United States and hardly touched by any other country. Nearly all of that was made over the past decade.
Apple is the largest company in the world, so they’re the big target – but tons of other companies engage in the same shady activities.
Every euro or dollar Apple, Google, and Facebook dodge in taxes is a euro or dollar regular folk like you and I have to pay instead. These companies make use of all the facilities and infrastructure paid for by our tax euros and dollars, but then turn around and stab society in the back by extracting vast sums of wealth from it without paying their fair share of taxes. It’s exactly this reason why the divide between rich and poor is growing exponentially, which in turn is destabilising our communities because it becomes ever clearer that the Tim Cooks and Mark Zuckerbergs of this world get to live under a different set of rules than you and I.
I am lucky to live in an incredibly solid welfare state, where, while exceptions exist, we take care of each other (interestingly enough, The Netherlands is also one of the biggest shady tax havens in the world). A welfare state is built upon the concept of the strongest shoulders carrying the heaviest burdens, and the knowledge that Joe Billionaire is capable of paying more into the system than Jane Minimum Wage. When this system of trust breaks down – as it clearly is at risk of – our society breaks down. The fact that Tim Cook et al. have the gall to claim their 0.0002% tax rate is “fair” just rubs more salt in the wounds of any regular person who dutifully pays her or his 20-40% taxes every year.
Sadly, any meaningful change to the tax codes of the US and the EU will be blocked through the corruption and bribery Apple, Google, Facebook, and so on engage in on a daily basis. Unless we break these giants up into small companies that aren’t ‘too big to fail’, our societies will grow ever more at their mercy.
What country do you live in?
https://www.bleepingcomputer.com/news/security/mozilla-wants-to-dist…
He wrote it in the next sentence. Try reading next time.
Just Google “Tax Haven” and you’ll see British Isles is a top hit.
Edited 2017-11-07 10:24 UTC
Complaining about companies trying to maximize their profits is like complaining about water being wet.
Fact is that these companies really didn’t do anything illegal, else they would be prosecuted and sentenced.
Instead of fighting the logical conclusion of a corrupt system, we should really rethink how we spend tax money.
It always amuses me to see people complain about individuals and companies not paying enough taxes, yet no one bats an eyelid when the governments spend billions on dead-end projects.
Local example: Do i want to spend 3.275.046,50 euros on a bridge to let frogs cross the highway? (https://img3.vildaphoto.net/asset/l/76063.jpg)
No, no i don’t.
I’ve worked many contracts for our government, including the for the central income and social tax administration. You wouldn’t BELIEVE the amount of money that gets burned on dead-end and useless projects. The absurdities encountered there …
Buy hardware for project, project fails … can’t sell hardware because government agencies are non-profit, store multi-million euro hardware stash in basement. Rince, wash, repeat … many times per year, over and over and over.
The problem is that whenever a government decides to do something, it is tens of times more expensive than it would be if a private company did it, and it doesn’t even matter if they fail, because hey … tax money … economic equivalent to renewable energy …
If we didn’t have these problems, we wouldn’t need to impose such high taxes, and companies wouldn’t do these things.
Now, go ahead, downvote away.
Afraid you’ll be disappointed in me, since I voted you up.
You’ve hit the nail about as squarely on the head as it can be hit.
I doubt the govermnent built that road. There was certainly a public tender for pouring the bitumen, and the private company that offered the lowest price was selected.
If you are aware of corruption of officials with private companies or illegal agreements to raise prices, it is your duty to denounce it to justice.
I have also worked on projects partially funded by public money, given to a private company that payed my salary. The secret is that it allows a part of the wealth produced in a country to be used to pay locals. It’s far from perfect, of course, but all industrialized countries do that.
Correction: Apple is not even the largest “private” company. There are MANY larger state owned enterprises. Like the NHS for example is VASTLY larger.
Here is a list of largest private companies in the world:
https://en.wikipedia.org/wiki/List_of_largest_companies_by_revenue
Apple is at nr 9.
Come now, we’ve established long ago that “facts” and “accuracy” are not exactly Thom’s forte.
However, Apple *is* the largest public company when judged by market capitalization: https://en.wikipedia.org/wiki/List_of_public_corporations_by_market_…
It also has the biggest old sock stuffed with cash: https://www.forbes.com/pictures/eejk45ejdld/apple/
So Thom certainly wasn’t wrong, at most he could have been a bit more specific (but so could you).
Yes but when you include government controlled companies like NHS or DHS, then you have to realize that their “sock full of money” is the taxpayers themselves and their children as well as future generations. Apple does not have that privilege.
That’s no different with “too big to fail” ~private companies and how they were bailed out with public money during, for example, last financial crisis…
No. You need to learn what “largest” means.
Is Apple the richest? Sure.
Most sales? No. Not even close. Walmart’s revenue is more than twice (2x) as much as Apple. Profits no… But revenue.. WAY more than Apple.
Largest? Not even close. Walmart has 2.2 MILLION employees. Apple has slightly over 100,000.
Does Apple have the most real property (land/buildings/etc). Once again, not even close.
So.. How the heck do you think Apple is the largest company in the world?
RICHEST DOES NOT EQUAL LARGEST
> Like the NHS for example is VASTLY larger.
I guess there is more people in that world that want having good health than having good electronic devices.
Crazy, isn’t it!?
I’m always amused by those who view taxation as a duty. I suppose it feels better than viewing it as the state reaching into your pocket with a gun pointed at you. Liberty!
D’aww! Always the cutest thing on the web – sheltered westerners who aren’t either dead or working in a mine because of the state pampering them complaining about taxes.
Europeans who are so used to being ruled by kings that they are just as happy to be ruled by bureaucrats with an army.
Who should pay for infrastructures, armies, educations, governments, countries’ expenses and investments ?
I think this is about a profound and very deep problem of the current era. After WW2 a system of social democracy was built across the western liberal democracies based on strong welfare states and proactive government management of the economies to prevent mass unemployment. The reasons this happened are very complex and mostly to do with the nature of total war and total national mobilisation in WW2 but what it amounted to was the taming of the excesses of capitalism via democratic political controls exercised via national democratic political systems.
Since the late 1970s the post war social democratic system has largely broken down and globally capitalism has lurched from one period of crisis to another (stagflation, mass unemployment, both public and private debt crises, the financial crash and now perpetual stagnation). This whole process is very complex but at its core is the fact that as the global economy has opened up, as trade has accelerated, as communist command economies collapsed or were transformed into capitalist economies, as capital flows were freed from control, so the large leading capitalist firms have essentially escaped democratic control. Large capitalist enterprises now operate at a planetary level and can move their operations, factories, labour sources and money around more or less freely to maximise profits. Meanwhile national political entities are forced to compete against each other and undercut each other to create favourable financial and tax system that will attract these large global companies. The scandal of tax avoidance is just an aspect of that dynamic.
The real problem for progressives is that the obvious solution – scale up government beyond the nation state to match the global reach of these companies – has one terrible and currently insurmountable flaw. The flaw is that the emergence and successful construction of real functional political democracy was built on the base of national identity – of the national demos – and nobody knows how to build a really functional and organic transnational democracy (up until now at least). The EU was partially meant to address this problem but the result is the woefully undemocratic EU system and even the limited system that has been built has triggered a series of national populist oppositional movements (of the left and right) seeking to repatriate political power to the nation.
The German political economist Wolfgang Streeck has written a great deal about this, particularly in his excellent book ^aEURoeHow Will Capitalism End? Essays on a Failing System^aEUR. His view – and one a share – is that we are entering a very difficult time where capital has globally broken free from democratic oversight and control, and nobody knows how to build transnational democratic systems that might be able to assert popular sovereignty over it. We are in for a bumpy ride.
Interesting read, thanks for posting this.
…so uh, we agree?
Tony, wtf is happening. I’m scared. Hold me.
Don’t spoil the moment – just feel the love
Don’t worry, he possibly meant to sneak in some Apple defense, for example something like ~”it’s not Apple’s fault, it’s the system!” ;P
Wow, best comment on any site i have seen in quite a while.
The sad part is indeed that there is absolutely no solution in sight currently. Maybe we are seeing the limit of democracies?
EU seems totally incapable of making any major decisions because there are so many different interests represented, and most governments are so terrified of their voters that everything gets muddled and no one has a master plan, except trying to get reelected. Some of the geeks in the EU Commission might think they have a plan, but they will probably never present anything that is understandable by non-bureaucrats. Probably we need simpler rules, not more bureaucracy. But they cant even decide where the parliament should reside ffs.
This is fueled by todays media who are also desperate to stay in business in this social media age, and are throwing themselves like hungry piranhas over all kind of news that can somehow be twisted to resemble a scandal of some sort, and then we can all spend time reading about non important shite instead of getting in depth information allowing us to figure out who to vote for.
The mainstream politician today is so afraid to say or do something wrong that they spend a lot of time and words saying and doing nothing, while no one are really trying to identify, much less fix, the real problems we face. The fact alone that most of our laws these days are so complicated that the politicians don’t understand the stuff they vote for i see as a huge problem.
The ironic part is, that all our problems are social of nature, and not technical, even something like CO2 emissions could be solved in a relatively short time if everyone decided to do so. Of course it wont happen, because everyone thinks of themselves first and are waiting for everyone else to blink.
No wonder the extremist parties are winning everywhere, they have clear understandable messages that a lot of people can at least partly identify themselves with.
The real tragedy of the EU is that hubris and misjudgment has meant it has strayed a very long way from what many of us once hoped it would become. After I emerged from post 1968 mad delusions of imminent revolution I spent a long time working inside the system trying to make things better. I spent the last twenty years of my working life working full time on EU projects. I was a tremendous enthusiast for the EU project precisely because I thought a strong united Europe was exactly the sort of entity that could stand up to the power of international capital.
I didn^aEURTMt want to overthrow capitalism anymore I just wanted to tame it and thought the EU a good instrument for that. Unfortunately I began to feel that the entire project had gone horribly wrong, basically after the Maastricht Treaty when so much economic power was ceded to essentially non-democratic entities whilst making no progress on a political or social union. Then when the crash came and I watched the enormous and pointless cruelty inflicted on the Greek people I realised that the EU had morphed into something I found it hard to defend (I still voted Remain though). The weakening of democracy in Europe – and the EU is a significant factor in that – is truly scary.
Now I agree with Wolfgang Streeck that the coming era will be a strange and difficult one as capital can now operate globally almost free of restraint by democratic governments – as it did in the first half of the 20th century (and look what happened back then).
I wrote a long two part account of how and why my views on the EU changed, with a fairly detailed account of its main design flaws, and would happy to post links if it was appropriate/acceptable.
Some very enlightening comments.
Some very familar themes.
I’ll also add that …
– many politicians are different from private sector business owners in that the former have not gained the experience to be qualified to manage the citizenry’s financial/infrastructure issues while the latter are left to their own financials/devices to make a venture possible
– When is the last time a “poor” person paid you a wage ?
It is the “rich” person that pays you a wage. The term “rich” is a metaphor not for the less common “silver spoon” entity but for the more common self-made entity that gauged/approached risk and was able to make a venture flourish. Sympathetic versions of these “self-made” entities are the one’s that should be managing democratic governments but instead democratic elections often result in selection of the popular poor-choice candidate instead of the “right” candidate.
– It is strange to have BIG givernment managed by politicians that have no (or very little) experience in running a major entity (like a major corporation). Thus, we have politicians who have little experience in risk but are in a risky situation in that they affect the action of government.
The solution should be SMALL government to promote conditions for a better management of government.
– a small government does not imply a potential for a lack-lustre welfare system.
Did you just make all that up or did someone tell you it?
The problem is politicians letting companies evade taxes. Read the story again.
Politicians. Let. Companies. Evade. Taxes.
Besides corruption… there is also the fear of retaliation.
If Europe wanted to really make Apple, Amazon, Google pay what they owe, they fear that the few large companies that export in Europe, for example German car manufacturers or Airbus, would suffer from similar retaliation by the US goverment, and become uncompetitive.
This blackmail help allowing all large companies to evade taxes.
More: Robert Reich On ‘Saving Capitalism’: Citizen Activism Is Giving Me Hope https://www.youtube.com/watch?v=szOYCrXb2vE
If the average person on the street cared they should show their distaste for this business practice by not using the companies products. At the end of the day these are corporations who’s have a responsibility to their share holders. If as a consumer you care don’t spend money on these vendors. The ramifications to the share holders will be felt within a few quarters.
Meanwhile, Thom gives a mixed message …he advocates sending more money Apple’s way (not only by himself, also people he influences by stuff like http://www.osnews.com/story/30055/Another_year_the_iPhone_is_still_… )
You can like a company’s products and hate the company’s actions. It’s not mutually exclusive. Apple has made some wonderful products, but I hate what they became when Job’s came back. It’s even worse since Job’s died and Cook took over. I’m just lucky I don’t have a job that requires I use Apple products, so I’m free to boycott them despite liking their products.
Yes, but there’s a bit of a jump from liking company products to recommending them (that’s more than simply buying – but this works, too, as you yourself are an example) when disliking the company
…a bit of a dissonance.
And yeah… I was sort of an Apple fan a decade ago, liked Macintoshes Classic and LC475 that we had in high school, bought an iPod in a place where they were very rare (I think I can count on the fingers of one hand the number of times I’ve seen one; not counting mine of course) …but they stopped being likeable; I guess the success has spoiled them…
That said, I still have to get a ~classic Mac, with ADB peripheral bus, to play with Connectix QuickCam (the first webcam, that I got for the price of 2 beers; I like webcams, I kinda collect them
)
Edited 2017-11-08 19:27 UTC
“Every euro or dollar Apple, Google, and Facebook dodge in taxes is a euro or dollar regular folk like you and I have to pay instead.”
The only people who benefit from corporate taxes are lawyers and accountants.
“Corporations do not pay taxes, they collect them, passing the burden to consumers as a cost of production. And corporate taxation is a feast of rent-seeking – a cornucopia of credits, exemptions and other subsidies conferred by the political class on favored, and grateful, corporations.”
George Will.
https://en.wikipedia.org/wiki/George_Will
Nonsense.
If corporations were taxed the appropriate amounts, as you say, they would pass this on as a cost to the consumer.
This would rightly affect their bottom line and viability and market acceptance of their products in general, leading the consumer to make a more realistic choice of how they spend their money – voting with their wallet.
Instead, corporations are ‘subsidized’ by not being properly taxed, allowing them to build scale that they should not rightly be able to, based on cost of business model that is not real.
This in turn leads to ‘too big to fail’ situations, and decreased competition; which allows further unchecked sale price inflation.
Corporate sold items costs more, so consumers pay more. Consumers are poorer as a whole, which affects labor rates, as they are now more likely to accept lower pay rates just to cover living costs, which feeds back into the same cycle.
Meanwhile these corporations pocket the gross difference in sales vs COB
Corporations were never meant to be money making machines.
They were constructs designed to allow groups of individuals to work together in a streamlined way towards a common goal.
There is a comment in this thread somewhere about corporations ultimately being accountable to their shareholders: I counter this with the fact that at their inception, corporations had a responsibility to do good for the people of the system that hosts them.
Unfortunately since the 60’s and 70’s, capitalistic powers have systematically attacked, eroded, and co-opted the corporate machinery that was intended as a TOOL of the people, so much so that we don’t even remember that corporations are anything other than private ventures to make people rich.
Edited 2017-11-08 14:30 UTC
They are just following laws. Seems like the issue isn’t that corporations are “dodging” the taxes, but moving to more favorable tax locations. he wasn’t wrong saying that they are following laws, because that is what is allowing them to do this.
Seems like it’s not corporations you should be mad at, but lawyers and lobbying power. Those are the things that should be illegal, IMHO. Fix those things and you can fix what you find as bad behavior.
> Seems like the issue isn’t that corporations are
> “dodging” the taxes, but moving to more favorable
> tax locations.
Then why all of them did as much as possible to hide where they move their money in the end!?
Why don’t they do it transparently, so that customers can know where their pocket money will end and how much will or won’t stay in their respective country, fueling local economy which make them benefits a bit from their own money spent. Or not at all.
They take very complex road to hide this for big companies which are not trying to dodge anything.
Anyway, consumers have the ultime power here. Companies can’t dodge taxes if customers stop buying from them.
Simple.
There are two major social “covenants” in play here, however big companies are able to use them to their advantage very well.
First is the company being a separate entity for tax purposes,
and the second one is that they are being multinational (note: I do work for a big company as well, however I am small myself in the mist).
When professionals come together and build a partnership, that company will most likely be “pass thru”, which means if they have 45% personal tax rates, then the profits of the partnership will be divided and taxed at personal rates (after deducting valid business expenses). This is reasonable and easy to understand.
However things became complicated when the company became a separate entity by itself. The “founders” or “owners” might not be actively working in it anymore (or might be able to do a very limited amount of work compared to size), and not every employee can be a shareholder to give a perfect division of revenue. Then there was a compromise. The company will be taxed at 25% as a separate entity, while owners will be taxed 20% when they withdraw profits from it (these numbers are made up). The total would still be 45%, however timing and individual tax burdens are distributed.
However companies found clever ways to postpone or even completely avoid paying 25%, at least reducing that number to a much smaller ratio in practice. All the techniques they used sound perfectly reasonable in isolation, however when a savvy group of accountants build complex algorithms for tax purposes the end result might not be what’s initially desired.
The same can be said for individual owners / investors / stockholders for those companies. They will also find ways to avoid the mentioned 20% rate.
The end result is the total 45% easy to calculate tax rate becomes much smaller in practice. Unfortunately this is not easy to avoid without a much larger overhaul.
(There is also the issue with companies being international. If a large company design something in Ireland, produces it in China, stores that in Brazil, and sells to a customer in Argentina, while being headquartered in USA, which country receives how much tax becomes an interesting question. The company will use its leeway to maximise the legal options to have as much profit with as little tax burden as possible).
Anyways, even though I do not like the final tax rates Apple or other companies are paying it would be difficult to change it will small modifications. We need a major overhaul, while keeping it just. Fortunately people are already having these discussions, so I’m hopeful for a better social deal.
Are our tax dollars helping the environment?
Are our tax dollars reducing the risk of war?
Are we sanctioning (blockading) countries, but too cowardly to declare formal war?
Are our schools preparing kids for the future?
Is the government spending within it’s budget?
Are the public servants we elect putting citizens’ interests before their own?
Are our public roads and infrastructure maintained properly?
Is the public healthcare available a model of efficiency?
Folks, this is not a new story. The government keeps getting bigger and bigger. They have no particular expertise in solving problems. Indeed their mission continues to grow despite obvious incompetence and constitutional limits.
It would be better in most cases to let the private sector work things out. When there is an issue to have courts that can adjudicate things. For example if pollution from my property hurts another property I should have to pay to clean it up.
I’m sorry if this offends my fellow citizen, but generally speaking I don’t trust you to solve my problems for me, and then send me and the children a bill for 150% of what it took to ‘help’ me. Less government (privatize where possible) and smaller taxes would help raise the standard of living around the world.
Newsflash: most people around the world HAVE minimal / barely functioning government. And they very much envy you your comfortable, sheltered, and cozy western welfare state.
Edited 2017-11-13 23:51 UTC