Taxing Apple just taxes you

“This week the U.S. Senate brought Apple executives before one of its publicly held sub-committee hearings,” Mark Reschke writes for T-GAAP. “The topic was Apple using Ireland and other techniques to avoid paying U.S. taxes on products and services sold off-shore.”

“Among all the Congressional hubris that took place, one big fallacy remains: Corporations do not pay taxes, we do,” Reschke writes. “For every dollar or tens of dollars taxed and regulated onto companies, whether it be Apple, Coke or Bob’s Deli, we pay those costs.”

Reschke writes, “In reality, companies pay zero taxes, as they simply pass those costs down the line to the consumers of their products. Thus, we pay every dime of every regulation and tax bestowed onto corporations, every – single – dime.”

Much more in the full article here.

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Don’t tax Apple, tax its shareholders – May 24, 2013
If Apple paid more tax, we might pay less or something – May 22, 2013
Apple CEO Tim Cook pounds another nail into the Keynesian coffin – May 22, 2013
Apple CEO Cook makes no apology for company’s tax strategy – May 22, 2013
Apple CEO Tim Cook charms Capitol Hill – May 22, 2013
Rush Limbaugh: ‘High-tech lynching: Senate attempts to crucify Apple’ – May 21, 2013
Nobody on U.S. Senate committee laid a glove on Apple CEO Tim Cook – May 21, 2013
Senator Rand Paul: Senate committee ‘should apologize to Apple for bullying one of America’s greatest success stories’ (with video) – May 21, 2013
Ireland: We have no special tax rate deal with Apple – May 21, 2013
Apple prepares for Washington onslaught: CEO Tim Cook isn’t taking any chances with senators looking to grandstand – May 21, 2013
Watch Apple CEO Tim Cook’s live testimony before U.S. Senate, starting at 9:30am EDT – May 21, 2013
U.S. Senate investigation found no evidence that Apple did anything illegal in avoiding taxes – May 20, 2013

98 Comments

  1. A corporation which does not build in its costs for taxes into the prices of its products and services is a corporation which won’t be around very long, because those taxes will be paid out of the capital of the business.

    “No,” you say, “they will pay their taxes out of their profits.” Guess what, folks? That means that they BUILT IN THE EXPENSES FOR TAXES INTO THE PRICE OF THE PRODUCT!

    Let me repeat: to make a profit, ANY business must build ALL of its expenses into the pricing of its products and services, or it will lose money (i.e., the expenses will be paid out of the pockets of the owners) and eventually go under.

    If you don’t understand this simple fact about business, kindly work for someone else, and hire an accountant to take care of your personal finances, since you’re simply not qualified.

  2. Basic economics. If the government taxes a corporation more, they can do two things. They can either let it cut into their profit margins, or they can increase the price of their products (if the market will let them sell their products at a higher price).

    Likewise, if the government cuts a corporation’s taxes they have the same two options in reverse. They can lower the price of their products, or they can let their profit margins increase.

    Since markets (supply and demand) usually dictate prices, taxes usually affect profit margins more than anything else.

    1. “Since markets (supply and demand) usually dictate prices, taxes usually affect profit margins more than anything else.”

      Bullshit. Talk about an oversimplification. The first part of the above is true, but the second part is bullshit. For starters, it’s what the other guys are doing that affects you. It’s all relative.

      Imagine if nobody sold diet soda. But you did. You wouldn’t give a fuck what your competition was charging because you don’t have any. Then you constrain your pricing based on what the market is willing to bear. But higher prices means inflation and that carries over to people’s earnings, minimum wage, etc. So it’s a push pull thing. You can get away with charging a bit more because you know this to be true. As soon as competition comes around, you might not be able to charge as much.

      In other words, you didn’t factor in how much you’d pay in corporate taxes. You just took into consideration what the market will bear, the fact you have no competition, and the idea that you can contribute to driving up people’s salaries and minimum wage through higher prices.

      So you don’t give a shit about corporate taxes because you’re greedy and you know you have options to hide the profits: pay people more, invest it, tie it up in things that take away from the corporations taxable earnings, etc.

      In other words, you’ve oversimplified it and that’s why basic economics is bullshit because people’s theories fail to take into account the multitude of options and variables that exist around business and people on planet earth today.

      Case in point: Apple and many other companies continue to demonstrate that you can pay very little taxes and still have huge profit margins. So the idea that companies’ profit margins are heavily influenced as a function of a corporate tax rate X is bullshit.

    2. Brain much? A tax is a tax. All passed on to customers. The govt acts like all companies are profitable. Everything has competition. if a tax cuts into profit margin and a competitor from Korea has the advantage the why even be in business. You can never think it is only greedy corporations. I’m a corporation with 2 employees. I have competition. All taxes hurt my bottom line and influence the decision to even be in business. When did paying taxes become cool? Who fights for taxes?? Especially when the govt wastes so much money. Only govt has no competition. They have no clue why to be efficient. As sure as anything investors will put their money in a more profitable situation. Overtax anything and it will die. Obama has never run a lemonade stand. Just a big go t tool The government is your “partner” when you make money with YOUR money. The govt does nothing for you if the business fails. Even when they make it fail.

  3. Corporations do not pass on corporate tax to customers. The tax is assessed on profits, long after the product has been sold. Corporate tax reduces a corporation’s cash reserves, reducing the amount which could be reinvested or distributed as a dividend. Unless you own Apple shares you will not pay extra for an Apple product irrespective of the rate of tax paid.

  4. This article makes as much sense as “if you lower taxes then prices will drop” or “of you lower taxes them it will create jobs”

    I can’t find evidence that either of these statements are true.

  5. Of course we pay taxes… and we’ll have to if we want a society to exist.
    Now, of course, the question of having necessarily a “society” to exist can be matter of discussion…

    1. Of course if taxes are lower you can drop prices. Idiot. You can be more competative. You an the hire more with the increased demand and need to satisfy it. As for taxing to build society. Please don’t put the. Ash in the hands of democrats. Look what a fine job they done with Detroit Baltimore new Orleans I can go on. And can apple put friggin cursor key on this damn keyboard. Christ. Much to be desired.

      1. Can you site evidence where this has happened?

        If you lower tax, then this would presumably apply to all. So price competitiveness is irrelevant. No one would need to drop prices.

        Presumably consumers would have more money to buy the products at the higher price, and the company would make more profits.

        So, again, site ANY evidence you can find where a tax cut was followed buy a drop in the consumer price index.

        Any evidence…please…show me.

  6. Some of the comments here make it clear why we get some of the policies from government that we do. If someone can not understand that all costs (ALL) are passed on to the consumer from any company or corporation, then we deserve what we get. The consumer ultimately pays for everything in a well functioning society. Even those who get something for nothing will ultimately pay, or their offspring will. As Margaret Thatcher said. ” The problem with socialism is that pretty soon you run out of other people’s money.”

    1. Yeah and some people think those nice lovely companies out there that have my best interests at heart will drop prices if a taxes were reduced. Any exec would simply give themselves a raise, or pay off some loans. And build a new pool it take a corporate trip to Thailand.

  7. Gosh, Apple is sooo evil! No other company makes customers pay taxes! This article, and most comments, is so far beyond the bounds of human logic, it is pathetic!

  8. well,… an interesting discussion, all in all.

    i do have to wonder though about those who assert that corporations functionally pay no taxes – and in fact should not have to pay any taxes at all – because they simply pass along the cost of those taxes to the consumer through higher prices.

    so, are we to assume then that if a corporation, say mr. apple for instance, had to pay no taxes whatsoever, that they would then automatically lower their prices, or might we reasonably assume that they would most likely use the lack of taxes to increase their profit margins and thus increase their bulging bag of plunder held off-shore?

    although i shouldn’t like to be thought of as harboring an overly suspicious turn of mind, my guess would be the latter.

    for those of you who assume the former, may i suggest that you are engaging in magical thinking ? because if that is what you believe, you might also be prone to the notion that the rise and former flourishing middle class, which was brought to us courtesy of the unionization process, resulted not from the sacrifices of those who risked, and in many cases, lost both their livlihood and their lives in the struggle for workers rights, but rather stemmed directly from the beneficence of our industrial titans, instead.

    yes that is right, it wasn’t really the “socialists” and “progressives” that first proposed and then won us the 40 hour week, negotiated raises in wages, health benefits and paid vacations.

    no actually it all resulted from one snowy night when john d rockefeller, henry ford, e.h. harriman, george pullman, andrew carnegie, mr. peabody the coal magnate and a number of other gentlemen of means all retired to the mr. rockefeller’s drawing room, after a sumptous dinner, to enjoy a few bottles of port and some fine cuban cigars.

    “well boys,” says john d. says he, “we are all richer than croesus, we have more money than we know what to do with. whaddya say we give our worker a raise, cut back their work week from 12 hours a day 6 days a week to something more manageable. and while were at it, lets give them some paid vacation time as well. they have made us wealthy beyond our dreams, it’s time we shared some of that bounty with them”

    and by god, that is exactly how it came to be.

    the point of the tale is that no, corporations generally have no interests beyond increasing their profitability, and yes corporations should and must pay taxes. for in the process of making those profits they use much of the energy and travel infrastructure of america that we as taxpayers funded the construction of. they have obligations, as american corporations to both the nation and the citizens of this nation. we pay taxes they must pay taxes too.

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