"The Irish government has said “Ireland is confident that there is no breach of state aid rules in this case."
Ireland may feel confident about that, but the rest of the world isn't.
Steve Wozniak has spoken out against Apple's tax affairs, saying all companies ought to pay 50 per cent in taxes. Speaking to BBC Radio 5 Live he said: "I don't like the idea that Apple might be unfair - not paying taxes the way I do as a person. "I do a lot of work, I do a lot of travel and I pay over 50 per cent of anything …
"which is why the commission has sent a reminder to Ireland to request the missing data"
That note is going to get lost in the email. Got to enjoy the EU, "sent a reminder." If they still fail to respond, they will get yet another reminder. If they do not respond at that point, the EU will put a note in their permanent record. If they do not respond at that point, they will receive a reminder that a note has been put in their permanent record.... A bit different from the previous European diplomacy system, where your reminder was an invading army.
He is an Australian resident for tax purposes (and actually on the way to naturalize as a cittizen). The amount he earns puts him into a bracket with a max 45% and effective 30-45% rate. Adding the health insurance levy and other taxes you probably get close to 50% - the maximum possible effective tax rate for an Australian resident. I doubt it is above 50% though.
He could be counting the indirect taxes that every citizen pays: VAT (GST/Sales/MWSt), levies and duties, fuel taxes are all government revenue. In the UK, HM Revenue collects nearly as much from VAT as it does from direct income taxation.
Corporations are exempted from these, as their purpose is to ultimately to collect these taxes on behalf of the government.
In that vein, there's also a very logical argument that corporations should pay no tax at all on their profits, because their purpose is to distribute profit to their shareholders, and you can then tax those shareholders on that income, and tax them at a higher rate than currently. (for Corporate shareholders, you just keep applying the profit distribution until you reach a living human who can be taxed on income).
Doing this would prevents the ludicrous situation where shareholders of Apple receive a piddling, miniscule dividend, while the company sits on hundred billion dollars of cash that it can't spend anywhere. (... until the US treasury department does another one of its once-a-decade corporate tax amnesties)
Such a system can only work if every country accounts for income and tax in a compatible way, to avoid double-counting or non-counting. The OECD "BEPS" guidelines are a start in this, but some nations are slow to fully implement them (and not Ireland, Luxembourg or Netherlands... think a little more star-spangled)
"In that vein, there's also a very logical argument that corporations should pay no tax at all on their profits, because their purpose is to distribute profit to their shareholders, and you can then tax those shareholders on that income, and tax them at a higher rate than currently. (for Corporate shareholders, you just keep applying the profit distribution until you reach a living human who can be taxed on income)."
And that's why everybody will (pretend to) leave the profits in the corporations, accumulating without ever being taxed. In reality, they will of course siphon them out either as "fringe benefits" with lower tax rates, or none at all; or the really big boys will shuffle them around and extract them off-shore. That "very logical argument" is only "very logical" for the fat-cats, or their more-or-less unwitting patsies.
If you could treat the entire world as a single economy. there would be a "logical argument that corporations should pay no tax" because, as you say, the money lands up in the end in the pocket of some identifiable human.
However, the world isn't a single economy and the problem with this approach is that the profits generated, say, in the UK end up as tax revenue in the domicile of the shareholder. Which in reality is no better than the tax revenue ending up in Luxembourg or Ireland if the shareholders are predominantly in a different tax jurisdiction.
And, incidentally, the shareholders of Apple have historically preferred to get their money through speculative increases in Apple's stock value rather than in dividends because the tax treatment of capital gains was more favourable.
And let's not assume that "logic" is the aim of taxation: it's the maximisation of revenue and the minimisation of resistance. You earn income, you pay income tax, you pay national insurance, which is just more income tax, you pay sales tax/VAT out of your taxed income, you pay fuel duty for your petrol and excise duty on your car and pay VAT on the duties, you pay tax on interest on money you've saved out of taxed income and if you accumulate enough taxed income during your lifetime you pay a further chunk of tax on it when you die. You could replace all of this with a simple sales tax or income tax but the headline rates would be so eye-watering that there would be riots. Successful taxation is the art of frog-boiling.
"Adding the health insurance levy and other taxes you probably get close to 50% - the maximum possible effective tax rate for an Australian resident. I doubt it is above 50% though."
I'm sure there are many other taxes on consumers such as sales tax and the like which push it up a bit further.
Sorry but you can't say you are taxed >50% on all you earn because you spend some of your earnings on things that include tax. You are taxed the amount you pay in tax on your earnings. You can include NI (in the UK, presumably similar elsewhere), to claim otherwise is misleading for dramatic effect.
If he is a US Citizen then he may also be having to pay tax there, despite living overseas. US citizens have to file tax returns even if they don't live there.
Quoting the IRS web site:
If you are a U.S. citizen or resident alien, the rules for filing income, estate, and gift tax returns and paying estimated tax are generally the same whether you are in the United States or abroad. Your worldwide income is subject to U.S. income tax, regardless of where you reside.
We all pay a lot more tax than just income tax, but most of us don't employ accountants to work out exactly how much of our income goes on tax. Consider that here in the UK most purchases include VAT. We've already paid income tax on our earnings, but 20% of a lot of or spending also goes to the tax man. Then there are duties on things like fuel and booze. Then we have things like council tax. Taxes paid on things like insurance. All those things add to the tax we pay overall. Add that up and see how much of your earnings actually goes to the public purse.
You get to deduct any foreign tax paid from your US taxes, so unless you are working in some tax-free expat middle east job you don't actually pay any US taxes.
- if you are working in a tax-free middle east expat type job, then they normally pay your Panamanian holding company, which pays you in etc etc etc
"You get to deduct any foreign tax paid from your US taxes, so unless you are working in some tax-free expat middle east job you don't actually pay any US taxes."
No; you can't deduct from SE tax. Any work not done for a foreign corporation is subject to this tax, so for example if he gets paid to go speak at some event, or if you freelance, or whatever.
The math for a CA resident who is a millionaire is:
Federal tax: 39.6% (Obama repealed W's gratuities)
Social Security (Pension): 0% (it stops at $118,000 income)
California: 13.3% (CA introduced an excessively-rich tax and a millionaire tax!)
Santa Clara (County): 0% (I don't think they've started levying an income tax, they didn't when I lived there, just a sales tax).
Los Gatos: 0% (I think).
Simple, eh? Note that employees only "pay" 1.45% medicare, but their employer's pay the other 1.45%; self employed people pay both halves. I don't know if CA cities and counties can levy income taxes, normally in the US they only levy purchase (sales) and wealth (property) taxes, but some cities levy income taxes.
There are marginal effects that raise and lower the rate (particularly the limitation on Schedule A deductions) but by the time you hit millionaire status they've all worked themselves out. (After all, the highest ever US tax rate was over 100% in the 1990s, but only very poor people ever suffered from that misfortune.)
Most rich USians assume that state taxes are deductible on Schedule A, reducing the effective rate of the federal tax (by a factor of (1-state)), but the Schedule A limitation kills that for millionaires, so the number in the end should reduce to simple addition.
Yeah, but if what he said isn't interesting, then the journos just have to make something up don't they? I mean, its not like the journos actually have any moral requirement to tell the truth is it - their job is just to wind you up enough to make you click on the link or write a comment....... oops!
I think if you add up everything tax you pay you would be astonished.
This is for the State of Montana, USA.
taxes and fees on electric, natural gas, phone, internet, cable...
We don't have a state sales tax, but we do have "resort" taxes.
My town is trying to push through their application as a resort town and pass an additional gas tax.
Taxes (registration fees and property tax) on automobiles
property taxes (city and state)
Hotel "bed" tax
Special Road Improvement Districts, park taxes, sidewalk fees, tree fees (you have trees? here's a tax. We won't do anything to them or help you trim them but pay up. Oh, you don't have trees? Here's a tax for not having them!) These are in addition to tax money set aside in the budget from the property taxes.
This is for Joe Blow citizen that doesn't have taxable investment income, secondary sources of income, etc.
Other states have sales taxes from the state, county, city, and even neighborhood in some cases (generally a leftover from a town tax when the town got annexed into a bigger city).
I know there is quite a bit more that I'm missing - but you get the drift.
Taxes are part and parcel of civilization. We have to have them to fund things for the public good.
My contention is that all of these chips at the stone are wearing it down to gravel. Waste, corruption, abuse, unnecessary services...
I hadn't heard of the BEPS guidelines but I'll have to read up on them.
Woz must be under the impression that Companies are surprised at the end of the year when they open their tax bill. The expected taxes are factored into the the product cost at the beginning of the year by the Bean Counters.....
Eliminate corporate taxes all together. Implement a 20% sales tax ( on new goods only ). The more stuff you buy the more taxes you pay. The rich buy more stuff with higher price tags, they would pay more taxes. Eliminate taxes on food and minor house hold good.
by implementing this just on new goods, the value for used goods would suddenly go up and recycling would happen more.
folks that don't make much money, could go through life paying little or no taxes by shopping at 2nd hand stores.
50% of income being taxed is robbery.
5% is all they need, thats state, federal, combined.
We have criminals not morons, running the country.
Enough is enough already, hopefully someone like Trump can shake Washington up.
And to nay sayers about the 5%, the tighter the budget, the better things run. The more you have, the more you waste. And THEY have way too much. Spending 1.3 million dollars to break into one iPhone is a prime example of wasted spending.
Steve gave away his schematics at the homebrew computer club. Woz, Lee Felsenstein, and a few others could care less about money from us - in contrast with Bill Gates who wrote us a cease and desist letter for sharing a paper tape of his BASIC compiler. It is documented that Jobs took advantage of Woz over and over. Woz would work for fun, and Jobs would profit from it. I remember when Woz used to pull Apples out of inventory for his friends. Jobs didn't like that at all.
That might be true - but look at what each of them did with their money. Steve Jobs kept his to himself. When it came to charity he was a famous miser. Bill Gates is one of the largest donors to multiple charities - including ones he started himself. He might have been after the money from the beginning whereas Jobs grabbed it later, but what each of them eventually did with their money was completely different.
I hope everyone realizes that corporations don't actually pay any taxes anywhere. You could tax a corporation at 50% - they'd just raise the price of their product to compensate. The consumer who buys their product would be the one paying that 50% tax. The exception is if there is a competitor in a country that doesn't have to pay that 50% tax. They can keep their prices low, undercut your company, then your company goes out of business and now your better off - right?
All taxes are paid by the consumer in the end. By taxing corporations the government has basically hired them as a tax collector, they collect the tax from their customers as part of their products price, and then forward that tax on to the government.
It's like those socialist policies where someone gets something for "free" from the government. They might be getting it for free, but the government neither produces a product it sells nor makes money any other way except through taxes. They pay for that "free" support to that person by taxing those who do not need that free support extra to cover the cost. The person paying that extra tax then has less money to use for what they want for themselves.
It's funny how - at least in the US - there's always this call that the rich have to pay their fair share, as if they aren't already. Here's the numbers from the Wall Street Journal. The bottom fifth of earners ($0 to $24K) are 4.5% of the income but pay nothing in taxes (they get back 2.2% more than they paid). The middle fifth ($47 to $89K) paid 5.9 % of all income taxes. And the top fifth (>$134K) paid 83.9% of income taxes. (http://www.wsj.com/articles/top-20-of-earners-pay-84-of-income-tax-1428674384).
Everybody always feels they pay too much taxes and that someone else should be paying more so they can pay less. I don't doubt there are issues. Some people and corporations definitely shelter their income in some ways to pay less taxes. If they are doing it in an illegal way they should be punished. But the reality is that for the most part, those who make more - pay more. And if someone's paying less than they should due to a legal loophole they are exploiting - don't complain about them, complain about your politicians - their the ones who wrote the rules.
So you know that corporations pay the tax that they are required to, everywhere, right? Almost every country has enacted one tax law or another which is supposed to "entice" business to setup within their jurisdictions. Abiding by those laws does not make the companies law breakers or "bad guys", it makes them law abiding companies. If you (or the population) don't like the fact that they pay less tax as a result then you need to take that up with the governments concerned, not the companies who are paying the tax bills they are given.
I think nunyabiznes points out why USAians hate taxes soooo much. They have to pay all those different taxes, and figure it out for themselves (albeit the IRS has already done the calculation for most people, but is not allowed to share this information with the person). And once they are aware of your existence, you're never allowed to escape - even years after leaving the states, you will be taxed on income you've made in other countries.
Scrapping corporate taxes and just taxing the end "person" who owns the shares doesn't work: so many companies drive profits through corporate shells that you'd just force structures that prevent any taxes being made.
There is a lot of extremist beliefs around any taxes = socialism; it is clear that many have drunk of the Kool-aid which states only free markets are acceptable. Mixed market economies are of course best for their citizens, as there are a variety of services which are best provided by government (healthcare, the army, policing) rather than hoping the market will provide. (This doesn't mean current systems are perfect, just before the straw man arguments start.)
You made sense until you added healthcare as a service the government is best at. The government may be able to supply it to more people - but that doesn't make it the best. If that were true there wouldn't be as many Canadians traveling to the USA and paying a private entity to have a procedure done because they either couldn't get it from the Canadian system or the waiting time was so long they'd be dead before they received it.
Not saying the government can't do healthcare - but I don't believe it has proven to be the best at it. They might be able to provide a minimal level of health care to the most people, but that is about it. If they can afford it there are a lot of people who will pay for their own care in order to obtain a better level of that care.
Fair enough; it doesn't quite fit with the other services.
OTOH, I think that governments that provide healthcare do tend to have markedly better outcomes for any given level of spending. For example, the USA spends as much per capita as the UK, yet only gets medicare and mediaid, whereas the UK seems to get an entire healthcare system.
I know that economists all love Singapore, but if you ask those doctors who have worked there you find out that plenty of patients use up all their funds, then their families funds. Then a family member develops an acute leukaemia.... should they be punished for the original patient's profligacy?
I'd disagree that governments can only provide a minimal level of health care: I have seen world class care in the public system in various countries I have worked in, and the public system routinely bails out private healthcare when it gets too hard. (I should admit that the "world class care" is not as common as I'd like and patients deserve; I don't think it is all that common in the US private system either though...)
Finally, of those who cannot afford to pay for their own care as a result of bad luck (wrong parents), should they not receive appropriate levels of healthcare? (DOI: had the right parents. That's the reason for good grades, medical school, post grad exams, etc. If you think otherwise is normal I'm afraid that's naive.)
Yeah jobs would be spinning in his grave after hearing Woz's comment, but I like Woz for saying it. I'm not an apple fan but I have a feeling if Woz was CEO I might respect them. From this tax bs, to child labor, apple is just like the mob and a cult in one. Good for Woz for speaking up. All companies should pay their taxes, then we wouldn't be in as big of a mess as a country as we are.
He only like built the frigging machine the whole company was founded on -- but, hey, who cares about little details like that when you can drink the kool-aid with the other Steve.
One heck of a Reality Distortion Field, to cling on for that long after its creator is dead.
I think I lost a bit of respect for Woz with this statement, well, I can't blame him too much because he's always been -shall I say- too naive? Big Govt isn't gonna go around and spend his 50% to feed the poor, they gotta feed the bureaucrats first, and they always feed themselves with a big spoon!
If he wants to play taxes so bad he should be starting philantropic foundations instead of telling other companies what they should do with their money.
I hate it when "already rich" people want allegedly-rich people (i.e. those trying to BECOME rich) to pay confiscatorily high tax rates like that. It ensures THEY have their private "I am already rich" club, keeping the rest of us from entering.
flat tax rates are the ONLY *FAIR* tax rates. otherwise, it's just a sneaky way to continue separating 'haves' from 'have nots'. because the dirty secret is that "the rich" do not pay THAT kind of tax rate, EVER. Yes, maybe on 'wage income', but that's a FRACTION of what they REALLY earn, and THAT money is often taxed at a LOWER rate (say 'capital gains' and 'tax shelters'). And THEY know it, and TOO MANY of us do NOT know it, and they use this "tax the rich" nonsense to FOOL everybody in to thinking they CARE or something, but it's a BIG! FAT! LIE!!! They just want themSELVES to keep their "wealthy" status and keep OTHERS from joining "the club".
So surely they ought to be paying income tax as well?