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Sun May 26, 2013, 04:29 PM

About That Apple Tax Dodge

http://www.workinglife.org/2013/05/24/about-that-apple-tax-dodge/


from the Working Life blog:


About That Apple Tax Dodge
Posted on 24 May 2013.


When I wrote about Appleís tax dodge, some people responded, and I saw other similar comments, that Apple was just doing what was legal and you canít fault a company for taking advantage of the tax code. Which sort of missed the point.

I think the good folks at the Citizens for Tax Justice have it right:

First, our corporate tax system is failing to do its job of taxing corporate profits. Second, virtually no one in America can understand this until someone explains how individual corporations are dodging their taxes. Third, the corporations themselves will, quite naturally, lobby Congress to defend and even expand the loopholes that facilitate their tax dodging.


And, even better:

The truth is that corporations like Apple lobby for as many tax loopholes and breaks as they can get. We may see them as morally culpable. Or we may think itís natural for people to ask for the very best deal they can get ó just as children naturally argue for the latest bedtime possible and the largest quantity of ice cream possible.



16 replies, 1956 views

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Response to marmar (Original post)

Sun May 26, 2013, 05:10 PM

1. Maybe our tax code should have no loopholes for business and no deductions for individuals.

No deductions for mortgage interest and no deduction for dependents. As long as some get deductions it opens the door to everything else.

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Response to former9thward (Reply #1)

Sun May 26, 2013, 06:07 PM

3. Flat tax

Make it 15 or 20%, or wherever it needs to be to pay the government's bills for this next part:

First 250k of income is tax-free.

Apply it to individuals and businesses, no deductions.

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Response to shawn703 (Reply #3)

Mon May 27, 2013, 01:46 PM

16. Then that is a progressive tax, not a flat tax

Just a heads - up!

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Response to former9thward (Reply #1)

Sun May 26, 2013, 06:53 PM

8. Harder than it sounds

Today, we tax companies based on their profits, not their revenue. That seems fair. If you eliminate all deductions, you are eliminating the deduction for expenses, which means that you are taxing revenue instead of profits.

Let's take two examples. I run a business in which I buy two parts for $1 each, fasten them together, and sell the set for $10. My profit is $8. You are my distributor. You buy them from me for $10 and sell them for $12. Your profit is $2. In the current tax system, I pay a tax on my $8 of profit and you pay a tax on your $2 in profit. If we can't deduct our expenses, I pay a tax on my $10 in revenue and you pay a tax on your $12 in revenue. This change doesn't hurt me much, but it completely kills low margin businesses like yours.

Obviously, we need to allow companies to deduct business expenses. But what constitutes a business expense? That's where the trouble starts. It gets tricky fast when you start trying to define those things.

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Response to FreeJoe (Reply #8)

Sun May 26, 2013, 07:03 PM

10. Nicely put.

 


[hr]
[font color="blue"][center]Stop looking for heroes. BE one.[/center][/font]
[hr]

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Response to FreeJoe (Reply #8)

Sun May 26, 2013, 08:07 PM

15. Taxing profits and allowing expenses to be deducted simply opens the door

 

to what we have, a completely perverse system that allows those that benefit the most to pay the least for the very system that allows them to exist.

The fundamental problem is that our system allows the true costs of production to be externalized (hidden) and subsidized by the whole society to the exclusive benefit of the owners. This is what your example and its underlying premise demonstrates.

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Response to former9thward (Reply #1)

Sun May 26, 2013, 07:07 PM

11. The problem is that we've grown very accustomed to those deductions

 

and people make financial decisions based on those deductions. Whether it's the mortgage deduction or student loan interest deduction.

Additionally tax deductions can encourage certain policies that better the country as a whole. For example, the deductions for buying electric cars or solar panels. Without that, it's hard for the government to encourage good social policies.

What we would be better off doing is blocking corporations from getting tax deductions. They can far better afford the cost of an unexpected expense, where as an individual would have trouble if their mortgage deduction went away suddenly.

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Response to mythology (Reply #11)

Sun May 26, 2013, 07:18 PM

12. The mortgage deduction was one of the causes of the 2008 crash.

It allowed and encouraged people to buy homes too big for them and they couldn't afford them. Other countries don't have this deduction and they do ok. The deduction is corporate welfare for the real estate industry. I differ with you about government giving subsidies to corporations. I don't believe in crony capitalism. Let them rise or fall based on merits and demands for products or services. We taxpayers should not have to subsidize them. Also end the welfare for Big Agriculture with the farmer subsidy to not grow food.

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Response to former9thward (Reply #12)

Sun May 26, 2013, 07:32 PM

13. I hardly think people were buying homes they couldn't afford

to get the mortgage deduction. They were getting them to flip. And they were suckered into ridiculous payments by taking variable interest or no interest loans which they thought they could flip before the payments kicked in and took them down.

The overpriced housing market due to easy loans and predatory banking practices is what led to the housing fallout not Mortgage deductions.

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Response to marmar (Original post)

Sun May 26, 2013, 05:52 PM

2. k&r

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Response to marmar (Original post)

Sun May 26, 2013, 06:13 PM

4. Of all the big corporations

 

Apple is one of the few that doesn't do much lobbying, at least until very recently. They relied on the loopholes created by others; they did not lobby for those loopholes. I remember that when Jobs was alive, their lobbying budget was minuscule compared to Microsoft or IBM.

Then again, Jobs was a big player and he could do the lobbying without the budget part.

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Response to marmar (Original post)

Sun May 26, 2013, 06:18 PM

5. We don't need a regressive flat tax, we need to close the corporate friendly - as in we paid for it

 

exemptions, write-offs, good will, and deductions for salaries and perks in excess of what the president of the USA gets.

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Response to marmar (Original post)

Sun May 26, 2013, 06:22 PM

6. I Am Not Willing To Accept The Premise

That everything these companies are doing is legal as I have seen reports that estimate that the uncollected taxes every year exceeds $60 billion. When companies are too big to audit (meaning too powerful to audit) they will take advantage of that. Just as the IRS cannot enforce the "exclusive" provision of social welfare organizations they cannot enforce a number of tax provisions that end up being euphemistically called loopholes.

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Response to marmar (Original post)

Sun May 26, 2013, 06:37 PM

7. I saw an article today that said Ireland is considering changing their tax laws

To prevent Apple from doing what it did. The problem is they'll just find another country to do it in.

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Response to marmar (Original post)

Sun May 26, 2013, 06:58 PM

9. The fault is the government that allows it.

 

The government of the people and for the people has a severe bias.

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Response to marmar (Original post)

Sun May 26, 2013, 07:39 PM

14. Du rec. Nt

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