back to article The truth about Apple's mind-boggling low tax rate

The New York Times has revealed, as a simple matter of fact, that Apple's cash-paid tax rate for 2011 was only 9.8 per cent. Which is a stunningly good result from the fruity tech titan's bean counters and one that should be applauded by us all, if only it hadn't been calculated using the wrong tax year. First, let's look at …

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  1. Thomas 18
    FAIL

    Estimates

    So the rate they paid is either an overestimate (25%) of which some goes to other countries or could be refunded or it's an underestimate of 9.8% of which some additional profits tax has to be paid later.

    I think the worrying thing we can all take away is that nobody (including the government presumably) actually knows how much taxes they actually paid in taxes. Yay for bureaucracy.

  2. Arctic fox
    Mushroom

    On this occasion I am willing to accept the iPhanboi argument that.......

    .....Apple is no worse than any other example of "BigCorp" in the US, the UK or anywhere else for that matter. Whether or not that is anything to boast about is of course another matter.

    1. Captain Save-a-ho
      IT Angle

      Re: On this occasion I am willing to accept the iPhanboi argument that.......

      Apple is a leader in tax avoidance, based on their origination of schemes like Double Irish and treating distributors as commissionaires instead of retailers. Even with the values of the tax numbers being wildly inaccurate, there's no question that Apple is avoiding a lot of taxes from the State of California (8.84%) and the US government (whopping 35% corporate rate). I would certainly not be shocked that they effective rate on all profits is less than 10%, though not all profits were earned in the US as the author points out.

      1. Arctic fox
        Happy

        @Captain Save-a-ho.. I do not dispute your figures - they appear entirely believable.......

        .......my point really was that they are all at and in the process they are hollowing out the tax-base to a degree that is causing the same society that they are dependent upon for their profits enormous harm by their behavior. Fundamentally I am saying that BigCorp in this context are a bunch of bastards - Apple is simply the poster-boy/example.

        1. Franklin
          Thumb Down

          Re: @Captain Save-a-ho.. I do not dispute your figures - they appear entirely believable.......

          "Fundamentally I am saying that BigCorp in this context are a bunch of bastards - Apple is simply the poster-boy/example."

          Actually, in this particular case, I think General Electric is the example. I seem to recall that they have an effective *negative* tax rate; that is, the US Treasury pays them money (in the form of "tax incentives" for building manufacturing plants in the US, which they then transfer to a shell company organized offshore so as to avoid paying tax on revenue generated from that plant, or something like that).

          "People always moan about tax avoidance but when pressed about it they would not:

          1. Offer to pay more tax themselves on their income (unless they have too much money to possibly spend of course).

          2. Offer to pay more for a product so the company can pay more taxes."

          I notice option 3 is missing from your list: Expect the company to take a lower profit. A company that's got approximately $100,000,000,000 in cash on hand is clearly making sufficient profit to afford to pay more tax without throwing people out of work or raising their prices.

      2. Giles Jones Gold badge

        Re: On this occasion I am willing to accept the iPhanboi argument that.......

        People always moan about tax avoidance but when pressed about it they would not:

        1. Offer to pay more tax themselves on their income (unless they have too much money to possibly spend of course).

        2. Offer to pay more for a product so the company can pay more taxes.

        1. Anonymous Coward
          Anonymous Coward

          Re: On this occasion I am willing to accept the iPhanboi argument that.......

          I'm perfectly willing to give a greater amount of my income to the government so companies can avoid paying more tax on increased income from a higher price.

        2. John H Woods Silver badge

          Re: On this occasion I am willing to accept the iPhanboi argument that.......

          Sorry, but the fact that "people" would not offer to pay more tax, quite apart from the fact that they are effectively taxed much more than corporations - and have a lot less wiggle room in terms of clever accounting - has nothing to do with this argument.

          Companies are either paying enough tax or they are not. And, as they have a duty to perform as efficiently as possible whilst remaining within the law, it is the laws which may or may not need to be changed.

          1. SoulReaper

            Re: On this occasion I am willing to accept the iPhanboi argument that.......

            "...quite apart from the fact that they are effectively taxed much more than corporations..."

            Fixed:

            "I have to pay several thousand in taxes and apple only pays 3.3 Billion. Boo hoo, thats not fair, they should pay more."

        3. Anonymous Coward
          Anonymous Coward

          Re: On this occasion I am willing to accept the iPhanboi argument that.......

          There is a difference between offering to pay more and hiring a bunch of lawyers and accountants to figure how how to pay less.

      3. jonathanb Silver badge

        Re: On this occasion I am willing to accept the iPhanboi argument that.......

        If you take profits per country as being proportional to sales (which they are not, it is much more complicated than that), then I guess a bit less than half of Apple's profits are made in the USA.

        There is another point to note which is that taxable profit is not the same thing as accounting profit.

        Take for example the costs of developing the iPad. Under accounting rules, that is treated as an expense over the life of the product. For development costs related to a specific iPad model, that would be about a year, but for the stuff related to coming up with the general idea of selling a giant sized iPod touch, that would be expensed over probably about 10 years. In the UK, for corporation tax purposes, you can claim all that expenditure as an expense for tax purposes when you actually spend the money, which would be before you sell a single fondleslab.

    2. Anonymous Coward
      Anonymous Coward

      Re: On this occasion I am willing to accept the iPhanboi argument that.......

      Quite right, although I am curious how the Google-haters will respond to this.

      1. Anonymous Coward
        Anonymous Coward

        Re: On this occasion I am willing to accept the iPhanboi argument that.......

        "Quite right, although I am curious how the Google-haters will respond to this."

        I think they will have to accept that all large globo-corps are enthusiastic exploiters of tax law complexity and cross border tax arbitrage. The Yank ones are world leaders in this, so all much of a muchness between (say) Apple, Google and Amazon. Of course, our idiot politicians are to blame - the companies concerned are merely complying by all the treaties that fuckwit ministers signed without understanding, and the gazillion pages of the tax code, merrily added to each year by fuckwit representatives/MPs who rubber stamp it without even reading it. The more complex they make, the more chance to exploit it.

        But given one of the foundation pieces of current UK tax revenues is a tax specifically on employment (employer's NI), you wouldn't expect any of the rest of it to make sense would you?

        1. Anonymous Coward
          Anonymous Coward

          Re: On this occasion ...

          > Of course, our idiot politicians are to blame - the companies

          > concerned are merely complying by all the treaties that

          > fuckwit ministers signed without understanding, and the

          > gazillion pages of the tax code, merrily added to each year

          > by fuckwit representatives/MPs who rubber stamp it without

          > even reading it. The more complex they make, the more

          > chance to exploit it.

          I don't think the MPs are idiots, or fuckwits, they have worked out very smartly that business friendly legislation (like who wants to be business-unfriendly!) is easy to pass, rarely contested and rewards them very well. In particular tedious tax-law favours are mostly only reported in Private Eye since they are so unpopular as a topic for conversation among the voting public. Once political parties stopped being ideology driven government became a popularity contest rewarded by one-step-away-from-legally-bribery backhanders.

  3. Anonymous Coward
    Anonymous Coward

    Double standards

    It's funny how we all hate paying tax and try hard to get out of it, yet when some company is accused of dodging tax we start mounting high horses.

    Maybe people (or companies!) who criticise people for tax dodging should be required to add a 10% tip to their next tax return and decline a couple of tax breaks?

    1. JimmyPage
      Flame

      Re: Double standards

      The thing is, for the average Joe, on PAYE* it is pretty damn IMPOSSIBLE to avoid paying tax. Even if you wanted to. But as soon as you move into the league of the Masters Of The Universe, you can set up companies, pay yourself in dividends, in foreign currencies (and accounts) etc etc etc.

      That is why the man in the street hates tax evasion so much.

      *UK-based refererence

      1. The Boojum

        Re: Double standards

        Agreed.

        Plus the hypercorps spend large sums lobbying lawmakers to obtain a tax regime as favourable as possible to themselves.

      2. bitmap animal
        Mushroom

        Re: Double standards

        The article says that the Apple company paid around £2,000,000,000 in taxes. That is in addition to what they will have paid for the various employees taxes plus the shareholders will be paying taxes their incomes and the VAT and duty they will have paid.

        How much tax did you pay last year? Was it as much as that?

        Thought not.

        1. andreas koch
          Facepalm

          Re: Double standards

          Aaaawww, sniff sniff. How sad. Those poor people...

        2. Bluenose
          FAIL

          Re: Double standards

          Actually as percentages go yes I did. I paid my 40% plus my 11% NIC up to the 40% mark and then an additional 1% above that. At the same time I saw my VAT payments increase, car tax and fuel taxes increase and half a dozen other little taxes that the govt levies on me each tax year.

          At the same time Apple, Google, IBM, Microsoft and co are all paying less tax as a percentage of their income than I do on my salary. Apple in the UK would pay a tax for employees which is employers NIC but they do not pay employee taxes, we the employees pay that money out of our salaries.

          In terms of amounts, paying £2 billion would not be a problem for me if I still had £29 billion left to play with, to be honest even paying £30 billion and being left with a £1 billion would be pretty nice.

          1. Keith Williams
            Joke

            Re: Double standards

            Wow, 1 for you and 30 for me? That's way worse than 1 for you and 19 for me. There could be a song in that.

          2. Anonymous Coward
            Anonymous Coward

            Re: Bluenose

            There are many out there who will think that you haven't paid enough. After all you are working and earning enough to be in 40% bracket therefore you should be taxed more to pay for those less fortunate. Personally I think we all pay far to much for far to little.

        3. crtc
          Trollface

          Re: Double standards

          Because it must be so hard existing on the £19billion leftover. ..

          Always amusing seeing a response that can't differentiate between the amount of tax paid and the proportion of what you earned is taken as tax..

        4. Jack Ketch
          FAIL

          Re: Double standards

          As a proportion of my income, much more. What's your point?

      3. Anonymous Coward
        Anonymous Coward

        Re: Double standards

        Tax Evasion = Illegal.

        Tax Avoidance = Legal, because not illegal.

        Tax Mitagation = Legal, because explicity allowed for, e.g ISA.

        1. Nev Silver badge

          Re: Double standards

          "Tax Evasion = Illegal."

          Just get your head or corp tax affairs to have lunch with the head of HMRC and the evasion/avoidance point becomes moot.

          1. andreas koch
            Joke

            @ Nev--Re: Double standards

            Especially if it involves one giving just that to the other one...

            SCNR

      4. Anonymous Coward
        Anonymous Coward

        Re: Double standards

        Use an ISA to save money? That's tax avoidance.

        Have any premium bonds? That's tax avoidance.

        There are any number of schemes the average Joe can use to avoid paying tax (especially on savings), you just don't think of them as tax avoidance.

    2. Anonymous Coward
      Anonymous Coward

      Re: Double standards

      I agree with OP. My effective tax rate last year was actually in the range of 17% - which if you take the 9.8-25% rates posted in the article, is slap bang in the middle of the range.

      I could have gotten it slightly lower if I had kept better records on other taxes paid but given the fact that it was a slightly lower effective rate than previous years, yet I had a higher gross income than the previous tax year. You can see what the problem is with the system... I earned more yet paid, effectively, less tax. I can see how this scales up to bigger companies.

  4. Anonymous Coward
    Anonymous Coward

    What a good corporate citizen GE and Apple are

    ...or not. It's a disgrace.

  5. Mectron

    since

    Apple Charge at least a 50% premium on every single Apple product. how about a FIX 50% taxes on all the cash Apple possess.

  6. Anonymous Coward
    Anonymous Coward

    Overly simplistic view of the world hooo

    "why should something made in China and sold in Germany raise cash for the US government?"

    Because all the way through this process, the company enjoys the protection of the US government. Their products are protected by US patents, respected in other nations through treaties negotiated by the US government. they can work in china because of herculean diplomatic progress between the chinese and US governments. And perhaps most importantly, because Apple agreed to it. Apple are a multinational company with unparalleled cash reserves. If they wanted to move their corporate headquarters to a tax haven, they could probably buy a nation and establish their own tax haven, but they want all the benefits of being a US company without paying any of the taxes, which is why they're campaigning for a tax holiday on offshored earnings.

    1. This post has been deleted by a moderator

    2. Drew V.

      Re: Overly simplistic view of the world hooo

      Right. Also, if every private company in the world were able (or allowed) to do what Apple does, then most nation-states would simply collapse.

      This is all happening on the backs of the many companies and citizens who do make fair and responsible contributions to the state, without which, it's "Mad Max to the Thunderdome", trying to beat a lizard to death with your bricked iPad for dinner, and banging the metal backs of two iPods Classic together to start a fire.

      1. Anonymous Coward
        Anonymous Coward

        Re: Overly simplistic view of the world hooo

        You make it sound like countries' only source of tax revenue is from corporate taxes. Wrong. You pay personal income taxes, right?

        I own a company with one employee (myself). I pay ~35% in income tax. Do you want my company to also pay 35% in "corporate tax" so my effective tax rate will be 57%? Great, thanks.

    3. Volker Hett

      Re: Overly simplistic view of the world hooo

      I'm not sure about China, but I do know for sure that Germany wants it's cut, too.

      Hey, we too paid some 12 Billion Euros to defend freedom and democracy at the Hindukush!

  7. Piloti
    Thumb Down

    A thought strikes me.....

    When Apple collects it's 30% from all the Apple walled-garden fans who simply hand over their credit detials without a moments notice, does Apple pay tax on that or is it somehow "lost" in the ether... ?

    It would be interesting to know how much UK Tax Apple has paid.

    1. Anonymous Coward
      Anonymous Coward

      Re: A thought strikes me.....

      I thought the article mentioned iTunes being run (funneled?) through Luxembourg:

      "they do indeed sell iTunes stuff through Luxembourg"

      Not being familiar with the tax laws in play I can't say what that means, but I doubt they'd be doing that just for the hell of it.

      1. Blackbird74

        Re: A thought strikes me.....

        The big ISPs have been doing that for years. When you sign up online, the registration server is in Luxembourg, though you would never know unless you check the IP.

        Nothing new here (but not saying it is entirely ethical either).

      2. Destroy All Monsters Silver badge
        Holmes

        Re: A thought strikes me.....

        It just means 15% VAT instead of 21% and up.

        Check the last paragraph here (services sold via Internet):

        http://www.fiduciaire-lpg.lu/tva-e-commerce-luxembourgeoise.html

        With the Eurozone failures discussing "VAT alignment" (i.e. let's steal from everyone equally as this will keep our governments running a few minutes longer before the guillotine comes out) this is probably not going to last too long.

    2. Tim Worstal

      Re: A thought strikes me.....

      Apple UK tax? Almost nothing.

      On retail through the stores and that will be about it.

      iTunes in Luxembourg, wholesale and channel through Ireland. So just UK retail, almost certainly. And there's some fun stuff that goes on there too.

    3. Volker Hett

      Re: A thought strikes me.....

      Since Mastercard and Visa work for free and Servers and big data pipes don't cost money, I think they just keep the loot.

  8. jai

    i wonder...

    how much tax the New York Times manages to avoid paying...

    1. David Kelly 2

      Re: i wonder...

      Just for fun research the NYT's current problem with golden pension plans. NO ONE at the NYT works a day past their 65th birthday because the pension plan is so rich.

  9. andybird123

    "For example, thanks to a one James Gordon Brown, here's how the UK system works: the taxman will ask you, "How much do you think you're going to make this year, and why don't you send us that?" You even have to pay interest if you get the calculation wrong, such as if you have a good last week of the year or something."

    erm... what?

    corporation tax is based on your last financial years actual profit figure, where did you get this statement from? because it makes no sense to me

    1. Tim Worstal

      Not quite

      Large companies (umm, I think over £1.5 million in profits?) have to make estimated payments through the year. And these should be based on estimations of current year profits.

      1. andybird123

        Re: Not quite

        it still happens after the quarter end though, so it's not an estimate of future income it just means you have to do full accounts on a quarterly basis and you still get 4 months after the quarter end to actually make the calculation/payment

  10. Andrew James

    What idiot came up with the idea of looking at tax paid in the year as a percentage of revenues for the year?

    You should be comparing like with like. Taxes paid in the year relating to revenues in the year. The historical deferred tax paid is added to that, and the deferred tax held until a future period is deducted from it, which generally will pretty much net itself off anyway.

    You cant do a cash-flow as a percentage of revenue, thats just ridiculous. Because revenue does not equal cash received. So you're not comparing apples with apples (see what i did there?).

    If they're saying the tax bill in 2011 is $9.8bn then they should be comparing it to the appropriate years sales. Else they're just retarded.

  11. Anonymous Coward
    Anonymous Coward

    Simplified taxation

    Yet another argument, if one were needed, for the drastic simplification of tax codes: corporations pay X% on their takings; private individuals pay Y% on their income; tax avoidance and evasion becomes a federal crime. Tax law becomes understandable by everyone, tax avoidance becomes much harder, and as an added bonus many accountants would be made redundant.

    1. andybird123

      Re: Simplified taxation

      we already do pay tax on takings, it's called VAT

    2. Andrew James

      Re: Simplified taxation

      Much of what Apple does to reduce their tax bill is simply shuffling profits and costs around their various worldwide outposts to best take advantage of the appropriate local tax rates. There is no problem with this really.

      A simplified version of this is happening at the company i work for.

      There was companies throughout Europe & Asia all making profits ... but then at the same time there are also loss making companies with old equipment and high salaries due to historlical deals at companies bought out by the group etc. These loss making companies are kept in order to reduce the overall profits of the group.

      Company A in Germany makes 100m trading profit in the year. Should pay tax on that. Doesnt.

      What it does is offer a significant rebate for inter-company trading to Company B that is based elsewhere and makes a loss. The loss of Company B is significantly reduced, but its still a loss, so no tax is due. The profits of Company A are thus reduced, and taxes are lower.

      Magic.

      But overall these loss making companies help the economies of the countries they are based in because they're keeping people employed and saving the state having to support them.

      1. Anonymous Coward
        Anonymous Coward

        Re: Simplified taxation

        oneway of doing this is to buy all your equipment from a central supplier, owned by the parent company.

        Iive had to beg my CCM for £10 worth of ram(as valued by bargain basement PC world) because our in house supplier wanted £212.

        never checked where they were based, not suprised if luxemburg or some such.

        The words "profit transfer" come to mind.

  12. Anonymous Coward
    Anonymous Coward

    9% High?

    They need to take a leaf out of Amazons books (pun intended) how see how low you can really go....

    1. Anonymous Coward
      Anonymous Coward

      Re: 9% High?

      The joke here is people keep quoting 9% without reading the article and realising the error - the guy based taxes paid in one year against revenues from the same year not appreciating taxes paid this year are against last years profits!

  13. unbound

    Amusement...

    "Which is a stunningly good result from the fruity tech titan's bean counters and one that should be applauded by us all..."

    Followed by "...in fact one so sufficiently damn stupid, that one has to wonder if ignorance or mendacity played a part at some point." which would certainly apply to the first statement.

    I applaud the smashing of NYT sloppy work, but the author is a bit of pot himself.

  14. ManxPower

    Rate .vs. Actual

    It is often repeated the USA has "some of the highest corporate tax rates in the world". This is true. It is also often repeated the USA has "some of the lowest corporate tax rates in the world." This is also true. In the first case, the tax rate they are referring to is the tax rate in the tax code -- before deductions, etc. In the 2nd case, they are referring to the tax rate after all the deductions. Dog Bless America!

    1. David Kelly 2

      Re: Rate .vs. Actual

      At 39.5% the USA is #1 in the world with the highest corporate tax rate.

      Then Congress creates incentives, and credits, and deductions, all targeted at supporters to reduce their effective tax rates. So in short only the stupid pay the highest tax rates. We tax stupidity!

      Consider the expiring long terms capital gains tax rate of 15%. "Boo hoo hoo, Mitt Romney only paid 13.8% after giving millions away to charity. Thats not fair!" Problem with that argument is that his investments paid 39.5% on the profits which were then used to pay dividends which he paid another 15%. That is over 48% total tax on profits used to pay dividends.

      1. Ken Hagan Gold badge

        Re: Rate .vs. Actual

        "So in short only the stupid pay the highest tax rates. We tax stupidity!"

        So in short only those who can't afford their own full-time tax adviser pay the highest tax rates. We tax poor people!" There. Fixed that for you.

        Oh, and if you still believe that the squillionaires who screwed the economy a couple of years back are smart, then you should look forward to some enormous tax bills under your preferred system.

  15. Yet Another Anonymous coward Silver badge

    That's shocking

    If Apple are paying anything like 10% tax in the US they need to get some better accountants.

    Hint - assigning all your core patents to a company in the Caymans and then have them charge you a huge licence fee on every product sold, works for their competitors.

  16. Anonymous Coward
    Anonymous Coward

    The bigger question.,

    Is who pulls apart El-Reg articles when they are full of FAIL?

    1. diodesign (Written by Reg staff) Silver badge

      Re: The bigger question

      Well, you guys seem enthusiastic to point out where we drop the ball.

      C.

  17. Anonymous Coward
    Anonymous Coward

    Welcome to Progressive Taxation, Socialism, and Communism

    Welcome, my friends, to the glory of Socialism, Communism, and Progressive Taxation.

    As long as looters, through their greed, want to get money from people who create wealth via tax by putting a government gun to their heads - there is always the opportunity that people will leave.

    As long as governments want to transfer wealth from someone income tax, they will create tax loop holes to keep those people creating jobs in their juristiction - there will always be tax loopholes.

    When The State taxes those who create wealth, via politicians who get elected by transferring wealth to The Looters who elect them, and politicians try to create incentives for wealth creators to remain - inequities always happen.

    Money is a representation of work - there is wealth as long as people work (or have worked in the past.)

    The solution is called The Fair Tax. http://www.fairtax.org/

    Tax only those who purchase retail products, the tax remains where the purchasers are, who are making the purchases, and the governments where those people exist can re-distribute the money as they see fit. If people associate to create jobs, there should be no penalization of job creation through tax - only reward.

    No one escapes the The Fair Tax: drug dealers, prostitutes, foreign companies, domestic companies, manufacturers, educators, help desks, software creators, music creators, video creators, etc. It is fair on everyone. If communities of people (governments) want to make drug dealing and prostitution (in their juristiction) illegal, that is their business. If a company wants to operate in the U.S. or Ireland, that this their business. Under The Fair Tax, the tax is fairly collected at point of purchase.

    Economies in Asia and Europe self-destructed under Progressive Taxation (the U.S.S.R. did not last long.) People in Europe, once they retire, move to places where their money lasts the longest (Turkey is a nice destination, from what I hear.) Those who earn enough to be looted can (and will) abandon the economies where they earned their wealth, for their own self-preservation (and who can blame them.) When this occurs, the wealth merely gets put to work in those other juristictions.

    Under Communism & Socialism - those wealthy enough to create jobs can just as easily pack up their bags and move elsewhere, leaving a destitute state. With Progressive Taxation in representative governments, the looters merely vote their representatives into office to drive out those who have the capacity to create wealth, leaving a destitute state.

    Progressive taxation is ancient, in an economy where people can create anywhere, live anywhere, and sell anywhere.

    End progressive taxation and the evils of inequity which it drives in modern economies. Adopt The Fair Tax.

    If I am wrong, vote me down, but leave a comment why.

    1. Anonymous Coward
      Anonymous Coward

      Why you are wrong.

      You're a frothing-at-the-mouth McCarthyite red-menace-scare-spreading throwback to the 1950s. The fact that you've used words like "communism" and "socialism" to describe the utterly capitalist globalised corporatist world economic system that we are currently living under indicates that you are making up new meanings for words as you go along, or to put it another way, talking crap. Here's a clue for you: if the workers don't control the means of production, it's not "communism" or "socialism".

  18. Anonymous Coward
    Anonymous Coward

    Article make no Sense

    You lost me at this point.

    "Here's the rub: how on Earth can you pay your quarterly taxes on your profits before you've reached the end of the accounting year and totted up your expenditure and actual winnings? Well, quite, you cannot. So, one answer is that the taxes that Apple paid, actually coughed up the cash for, in 2011 are based on the profits that they made in 2010."

    Without any serious advanced accounting system I pay quarterly personal and business taxes. Estimated taxes of course. BUt I could actually calculate my quarterly profits at the end of each quarter if it was necessary or required. And on December 31st 2012 if I was so inclined could file my taxes for the entire 2012. Why in heavens name do you assume that Apple could no do the same.

    So ok I did not read the full article. but if the first few paragraphs are so full of nothing ness why read further.

  19. Andy Fletcher

    Why should something made in China and sold in Germany raise cash for the US government?

    Considering it's somehow legal for a German company to send home the profits made from selling UK citizens their own rainwater, I'd put Apple pretty low down the list of bad guys.

    1. Anonymous Coward
      Anonymous Coward

      Re: Why should something made in China and sold in Germany raise cash for the US government?

      Using Chinese slave labor to net Apple CEO Tim Cook $378 Million in ANNUAL compensation and record profits is enough to hang him by his testicles for a couple months.

      http://online.wsj.com/article/SB10001424052970204257504577151510292401788.html

  20. SoaG
    Holmes

    I'm Shocked! Shocked!

    "ignorance or mendacity played a part at some point"

    In the NYT? Say it ain't so!

  21. Anonymous Coward
    Anonymous Coward

    It's just populist to have a go at Apple and (for that matter) many large corporations for 'dodging' tax when in reality they usually create a lot of jobs and pay a lot of taxes. Put it this way - do you recon the US government are glad Apple exists paying a lot of tax in the US or would they rather that hole was filled by Samsung - probably with all the cash going back home...?

    Another one is Vodafone - people in the UK bitch they have done what every other company does (legally look for ways to minimise the tax it has to pay - do you pay MORE than you need to?). When you think about it for a minute would you rather Vodafone (based in the UK and paying UK tax) were there or would you rather they moved to Switzerland (for example). Also compare them to their peers - would love to see a comparison of taxes paid to the UK government for Vodafone (probably lots) and T-Mobile / Orange / Three (probably relatively very little).

    Then remember Vodafone pays a lot of dividends to shareholders (many of which are also UK based so taxed in the UK). Any tax Vodafone did or did not 'dodge' which typically ends up as profits which the UK government taxes anyway or dividends they again get a share of.

    Would be lovely to think tax the rich (and companies) and then tax them more but in reality a higher tax rate does not equal higher tax revenues - especially in the medium to long term. Tax too much and you have to decide is it better to have % of something or nothing.

    1. Richard IV

      Not just populist

      Essentially your argument seems to be that job creation and large tax payments (in numbers if not proportion) wash away the sins of the rich. Martin Luther got titsed off at this kind of thinking a good 500 years ago and I'm very much inclined to agree with him.

      What excites the bee in my bonnet is the principle that a multinational should be taxed according to where it does and has done its labour and where its income is genuinely generated. Those single accountant offices in tax havens do not represent a significant proportion of labour and the intra-company transfers they handle do not represent where the money was made.

      The same goes for the arbitrary basing of intellectual property. How much work on that patent was done in the well-known genius zone of the Cayman Islands? Any? How did the Cayman Islanders manage to fool someone with PhDs from England's 3 great universities (Oxford, Cambridge and Hull) into giving away a patent that has, in the 3 months since, generated earnings of $1 billion worldwide for just $20? What percentage of your R&D staff did you actually transfer to Ireland because your accounts seem to be saying that it was all of them or at least all of the productive ones? Just 5? Wow! They must be fecking amazing! The amount of accountancy weaselling to claim similar with a straight face beggars belief.

      This is the immoral side of tax avoidance - as opposed to the engagement in doing things that the state wants you to (like providing jobs, saving for the future, not being a shit). It's not hard to spot - if it looks complicated and there doesn't seem to be a logical reason (other than tax avoidance) for it, it's probably dodgy on the spirit if not the letter of the law and one has to ask whether we should be allowing companies to trade on that basis*.

      *Yes, I know I'm being hopelessly idealistic asking for moral trading in a country with one of the biggest "defence" industries in the world and has overseas territories that account for fully 50% of the world's tax havens, but there you go.

  22. Anonymous Coward
    Anonymous Coward

    Corporate taxes

    You make it sound like Apple is paying next to nothing in taxes. I don't know what corporate taxes are defined as, but I'm sure Apple has a huge tax burden otherwise. All of its employees pay income tax. Most of its customers pay sales tax on its products. Most of its facilities, offices, and stores will pay property taxes. etc. It wouldn't really bother me if their "corporate tax" rate was 0% considering what they're contributing to the economy and government.

    Also, 9% might sound low to you, but I swear I read an article last year about how Google pays less than 3%...

  23. Anonymous Coward
    Anonymous Coward

    "BUt I could actually calculate my quarterly profits at the end of each quarter if it was necessary or required."

    Not so simple - there are all sorts of adjustments for depreciation, carried losses etc. The point is the guy made a massive (basic) boo boo by trying to say Apple paid X in 2011 against profits in 2011 when in fact the tax they paid in 2011 was against profits in 2010.

    You could have the opposite - if 2010 had been a great year and 2011 lousy they would be paying a huge amount of tax on 2010 profits in 2011 - do the sums there and they could be paying 100%+ tax.

    1. Anonymous Coward
      Anonymous Coward

      In theory, to calculate your estimated quarterly taxes you are supposed to use a pretty complicated worksheet that amounts to an abridged version of your annual taxes. I'm sure depreciation is in there somewhere. But really, if you are able to correctly calculate your annual taxes at the end of the year, why wouldn't you be able to calculate your quarterly taxes at the end of the quarter?

      Thankfully my own taxes are simple and consistent enough that I can just pay 35% of my income and it's close enough...

  24. Anonymous Coward
    Anonymous Coward

    Maybe a flat tax rate would be good for all ?

    It's unconscionable to think citizens pay 15%-37% and some companies pay 0% to 10%.

    1. Anonymous Coward
      Anonymous Coward

      Re: Maybe a flat tax rate would be good for all ?

      It's pretty conscionable. Companies pay the salaries of the citizens who are paying 15-37%.

  25. Anonymous Coward
    Anonymous Coward

    Apple still does not pay it's "Fair Share" because of Tax Loopholes

    The US Federal Tax rate on income over $18.333 million is 35% if Apple were to pay based only on income and not use tax loopholes. With all the loopholes my understanding is that Apple pays perhaps 9.8%

    What is unfair is that I personally pay 34% of gross earnings because I make over $75,000 (See http://en.wikipedia.org/wiki/Corporate_tax_in_the_United_States and am not allowed access to any of the corporate tax loopholes that Apple and others like GE have been provided with by our Federal government. (after corporations bribed each and every politician involved, with campaign contributions and more)

    Why the hell should I pay a greater or equal percentage of my gross income than Apple or GE?

    This is the specific reason why we need a complete overhaul of USA Tax Code (and why we will never get it)

    BTW, Neither company are creating appreciable numbers of jobs in the USA so do not believe THAT LIE.

  26. arrbee

    Rather than worry about corporate tax shenanigans, I suggest a simple legal change that removes the concept of limited liability for all commercial organisations. If capitalism is the system we should use, then lets use it properly.

    1. Anonymous Coward
      Anonymous Coward

      Maybe I miss the point but how would that make companies pay MORE tax?

      Even if the company structure did not offer limited liability - who then takes on the liability - the Directors 'run' the company but do not 'own' it (unless they are also shareholders) or would they just take out a massive insurance policy anyway.

      So what is your point??

  27. just_me
    Facepalm

    "Here's the rub: how on Earth can you pay your quarterly taxes on your profits before you've reached the end of the accounting year and totted up your expenditure and actual winnings? Well, quite, you cannot. So, one answer is that the taxes that Apple paid, actually coughed up the cash for, in 2011 are based on the profits that they made in 2010."

    I suggest the author stay away from discussing anything financial. All corporations in the United States are required to pay estimated taxes through the year. The estimated taxes are NOT based upon last years taxes paid. They are based upon most recent quarter revenues and expenses. Calculations are run quarterly if not more often. This is why they often have large expensive software systems to track financial accounting. (see Costpoint for example) It allows a company to see what their outstanding tax liability is during the year. There is also a penalty in the United States, if you estimated tax payments are under actual by a percentage ( I think the number is something like underpayment by 10%). Small businesses and self-employed individuals often have similar rules.

  28. Anonymous Coward
    Anonymous Coward

    @Anon2 --- Why you are wrong.

    Anon1> Welcome, my friends, to the glory of Socialism, Communism, and Progressive Taxation. As long as looters, through their greed, want to get money from people who create wealth via tax by putting a government gun to their heads - there is always the opportunity that people will leave.

    Anon2>> The fact that you've used words like "communism" and "socialism" to describe the utterly capitalist globalised corporatist world economic system that we are currently living under indicates that you are making up new meanings for words as you go along, or to put it another way, talking crap.

    The move towards socialism, communism, and fascism world-wide is undeniable.

    One of the largest growing economies in the world is self-proclaimed communist, where the state owns much of the economic sector.

    More private resources are being taken over by governments world-wide (i.e. former private energy exploration is ever increasinly being taken over or limited by governments world-wide such as: oil in various middle eastern nations or venezuela most recently; precious metals for electronics in china; new oil exploration basically turned-off in the united states, etc.; student loans in the u.s. under the guise of health care reform; u.s. take-over of general motors.) The most critical monopolies are driven by governments, not by corporations.

    The shift of nations towards fascism is most interesting (the u.s. government forced the ceo of gm to resign, forced the sale of chrysler to foreign interest by edict, drop charges against baton-wielding black panther for voter intimidation by a presidential administration of similar ethnicity, the call by a president to his own ethnicity in the congressional black caucus to "take off your bedroom slippers, put on your marching shoes", the refusal of the executive branch to prosecute black panthers after making public statements to pay for the lyncing of a hispanic man under investigation, targeting and/or killing of american citizens of non-ethnic commonality on foregin soil, etc.)

    In north africa and middle east - governments stick your religion on your birth certificate and you are not allowed to change it, except in the direction of the non-native religion of the land. The religion being considered set at "birth" is merely a way to isolate ethnicity. When someone wishes to identify with the non-dominate religion, they are not legally allowed, and if they publicly say they wish to associate otherwise, they can be killed for apostacy. If it was not about ethnicity, it would not be assigned as birth, and they would not kill people.

    There is an argument for the increasing trend from capitalism.

    Anon1> Economies in Asia and Europe self-destructed under Progressive Taxation (the U.S.S.R. did not last long.) People in Europe, once they retire, move to places where their money lasts the longest (Turkey is a nice destination, from what I hear.)

    Anon2>> Here's a clue for you: if the workers don't control the means of production, it's not "communism" or "socialism".

    As long as individual workers have the freedom to control their own production, produce as they desire, acquire capital, save capital, and spend capital - there is capitalism. (The more a worker earns, the more the government penalizes them through higher percentages of tax - increasingly penalizing the acquisition of capital is not capitalism... yet it is advocated by socialism and communism.)

    When individual workers are legally discouraged or denied the ability to control their own production, there is communism, socialism, and fascism. (Progressive taxation with income cliffs significantly discourage individual increases in production, by forcing the worker to take home LESS MONEY for incremental increases in production!)

    When a groups of people (i.e. government) puts a gun to the head of others (through law enforcement) to take away the capital the worker acquired or the worker saved, you have socialism. When a group of people (i.e. government) tells individual workers what they can not produce (via laws/rules), you have socialism.

    When a government owns increasing quantities of resources/rights and indivuals own fewer quantities of resources/rights, you have communism. When laws restricting individual ownership and individual rights increases, the trend towards Socialism.

    A simple reading of the communist manifesto easily describes the global movement towards communism from the time it was written. (1. renting of land to mineral exploration, income redistribution of taxes; 2. progressive income tax ; 3. death tax; 5. taking over of educataional loans; 6. internet regulation/kill switch; 8. "fair" wages, some too high, some too low; 8. establishing vollunteer corps; 9. encouragement of suburban growth; 10. compulsory citizen education in government operated schools.)

  29. Steve Williams
    Thumb Down

    Attributions?

    Would have been polite to attribute much of this information to the Forbes article of April 18th.

  30. Tim Worstal

    Possibly

    "Would have been polite to attribute much of this information to the Forbes article of April 18th."

    Same author....

    1. Steve Williams
      Unhappy

      Bang to rights...

      I should have looked at the top of the article. Congratulations on calling out the NYT's article.

  31. I think so I am?
    Facepalm

    Thoughts

    I always wondered what the actual tax rate in the UK would be if very one paid what they're supposed to. I would hazard a guess that as a % it would be less than it currently is - we also wouldn't wast so much money on litigation, accountants and lawyers, c'est la vie

  32. Dozy
    FAIL

    What a dickhead

    The author has exposed himself to be an idiot, who doesn't understand American Tax regulations and laws.

    The NYT article is well researched and strongly grounded in evidence. Even Apple themselves haven't raised any objections to the basis of the article. See:

    https://www.nytimes.com/2012/04/29/business/apples-response-on-its-tax-practices.html?ref=business

    El Reg continues its slide into irrelevance........

  33. Anonymous Coward
    Anonymous Coward

    "It's unconscionable to think citizens pay 15%-37% and some companies pay 0% to 10%."

    Except you miss the point - the company makes profits and pays tax on those - what remains is paid out to the shareholders who then pay tax AGAIN. So if the company pays less tax there would be more dividends paid out - either way the government wins.

    1. Dozy
      Holmes

      Except that Apple doesn't pay any dividends.......

      1. Anonymous Coward
        Anonymous Coward

        Well wrong - Apple have recently announced they will be paying them this year and 'generally' that is how it works - i.e. profits get taxed, what is left typically gets issues as dividends (or sometimes share buy backs) and those in turn get taxed.

        The problem is - if you tax at a high rate in the UK (for instance) the company may just relocate to Ireland, Switzerland (quite legally) and pay less tax - and why not.

        People bitch at Vodafone - before you do consider how much tax is paid on T-Mobile/Orange, O2 or Three profits earned in the UK but sent back to their respective countries. When Kraft buy Cadbury's the profits on your Dairy Milk - where do they end up?

  34. Anonymous Coward
    Anonymous Coward

    A flat tax rate would be better - why not make everyone pay 20% - would get rid of a lot of avoidance / tax efficiency. At the moment you pay one rate on capital gains but another on income - so of course if you can you would make gains not income.

    20% on companies profits, 20% on income, 20% on capital gains, 20% VAT

    ... but as you reduce taxes you would have to reduce benefits paid as well to people who would have paid higher rates previously. May as well keep increasing the personal allowance to reduce the tax rate for the lowest earners - it's pointless as you end up topping up their salaries with benefits anyway.

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