Obama tax rhetoric on Apple, other companies’ offshore profits falls short of action

“The U.S. is working with other major economies to curb corporate tax avoidance, an issue that has become a popular political cause in the U.K. and France. The Obama administration wants to prevent U.S. companies from being singled out by European regulators and to ensure that the U.S. doesn’t miss out on any taxes its companies start paying,” Richard Rubin and Jesse Drucker report for Bloomberg. “Obama’s efforts to win congressional backing for his tax proposals have stalled. That stalemate has turned the attention of companies and countries to the Organization for Economic Cooperation and Development, a government-funded group in Paris seeking to combat what’s known as base erosion and profit shifting, or the movement of income to low-tax jurisdictions.”

“In his sixth year in office, Obama can claim relatively few accomplishments on international taxation — an issue he used as a populist applause line during his campaigns and as recently as his Jan. 28 State of the Union address,” Rubin and Drucker report. “Obama’s proposals would limit companies’ ability to defer U.S. taxes on some income they earn overseas, impose a minimum tax on international profits and raise taxes on profits generated from intangibles such as patents… Still, the U.S. doesn’t want hard-to-interpret rules that would lead to expensive tax disputes for U.S. companies or rules that would undercut the U.S. tax base, Stack said.”

“Few in Washington expect much action from the White House and Congress this year on what has become a priority in other countries: cracking down on how multinational corporations such as Google, Apple Inc., and Yahoo! Inc. avoid taxes by shifting profits into tax havens,” Rubin and Drucker report. “Those moves by companies often reduce income taxes by moving profits to jurisdictions without a corporate income tax, including the Cayman Islands and Bermuda… They don’t have to pay the taxes until they repatriate the money, giving companies an incentive to pay as little as possible in corporate taxes and hold the money outside the U.S. Accounting rules allow companies to not count the U.S. taxes on those accumulated earnings, which now total about $2 trillion.”

“The U.S. has also been reluctant to make major changes through tax regulations, even as Obama talks about taking executive actions to sidestep Congress. In particular, he hasn’t repealed the so-called check-the-box rule, which effectively prevents the U.S. from taxing profits moved into haven subsidiaries, said Reuven Avi-Yonah, an international tax law professor at the University of Michigan,” Rubin and Drucker report. “The administration proposed repeal in 2009 and then dropped it after lobbying by companies including General Electric Co. and Johnson & Johnson. The Treasury Department could repeal the regulation without congressional action and hasn’t done so. There is ‘no chance of that, so they are not serious,’ Avi-Yonah said.”

Much more in the full article here.

MacDailyNews Take: The U.S. corporate tax rate is way too high. Obviously.

Under the current U.S. corporate tax system, it would be very expensive to repatriate that cash. Unfortunately, the tax code has not kept up with the digital age. The tax system handicaps American corporations in relation to our foreign competitors who don’t have such constraints on the free flow of capital… Apple has always believed in the simple, not the complex. You can see it in our products and the way we conduct ourselves. It is in this spirit that we recommend a dramatic simplification of the corporate tax code. This reform should be revenue neutral, eliminate all corporate tax expenditures, lower corporate income tax rates and implement a reasonable tax on foreign earnings that allows the free flow of capital back to the U.S. We make this recommendation with our eyes wide open, realizing this would likely increase Apple’s U.S. taxes. But we strongly believe such comprehensive reform would be fair to all taxpayers, would keep America globally competitive and would promote U.S. economic growth.Apple CEO Tim Cook, May 21, 2013

[Thanks to MacDailyNews readers too numerous to mention individually for the heads up.]

Related articles:
Not in Taxes anymore: On site at Apple’s famous Irish ‘headquarters’ – November 2, 2013
Senators Levin, McCain say Ireland faces questions even as Apple tax loophole tightened – October 16, 2013
Ireland to close Apple’s tax loophole, but leave bigger one open – October 15, 2013
U.S. SEC ends review of Apple taxes, overseas cash – October 5, 2013
Obama, world leaders push big companies like Apple, Google to pay more taxes – September 6, 2013
G20 think tank OECD proposes blueprint for global crackdown on tax avoidance – July 19, 2013
Apple again faces scrutiny after paying no UK corporate taxes for 2012 – July 1, 2013
Bloomberg News’ awful reporting on Apple’s U.S. corporate taxes – May 30, 2013
Thomas Sowell on Apple, corporate taxes, and ‘the road to serfdom’ – May 28, 2013
Former Senator Sununu: Congress wrote the tax laws, so why blame Apple for obeying them? – May 28, 2013
Taxing Apple just taxes you – May 24, 2013
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
Apple pays under 2% on overseas profits and it’s entirely legal – November 5, 2012
Google, Apple, eBay shouldn’t pay taxes – people should pay taxes – November 25, 2012
So how much did Apple really pay in taxes? – November 1, 2012
Apple’s showdown with the U.S. government over taxes on offshore cash – July 13, 2012
Apple‘s $74 billion tops list of U.S. tech companies’ overseas cash – July 9, 2012
Apple’s dividend move puts spotlight on foreign cash holdings, repatriation tax reform – March 20, 2012
Apple: Good start; and what about the overseas cash? – March 19, 2012
Apple’s foreign cash hoard piles up: $54 billion and rapidly growing – January 11, 2012
Senator John McCain eyes Apple’s $54 billion overseas cash pile – November 3, 2011
Google joins Apple in push for U.S. repatriation tax holiday – October 3, 2011
Apple lobbies Obama for tax holiday, wants to bring overseas bounty home – August 24, 2011
U.S Senate Democrat Schumer allies with Apple, other multinationals on repatriation tax talks – June 21, 2011
U.S. companies push for tax break on foreign cash – June 20, 2011
Apple, Oracle, Duke Energy, others organize lobbying blitz for tax holiday – February 17, 2011

44 Comments

  1. “In his sixth year in office, Obama can claim relatively few accomplishments.” Period.

    It’ll be the same by the blessed end of his 8th wasted year.

    Obama is a liar and an abject failure.

    1. That’s not exactly true. Hate it or love it, Obamacare was a huge accomplishment, something others have *tried* to do for decades.

      Is it perfect? Far from it. Would it be 1000 times better if Republicans had spent their time helping make it better instead of endlessly trying to simply repeal it? Absolutely.

      There have been plenty of other accomplishments, too….troop reductions in Afghanistan was one, winding down G.W. Bush’s pointless, trillion$-wasting, thousands-dead, “I’ll finish what my Daddy couldn’t” war in Iraq was a HUGE one. We should have never been there.

      Liar? Bush lied about WMD’s in Iraq, which cost *TRILLIONS* of dollars and thousands of lives. I’d bet money that you were a big Bush supporter, too…because he had that “R” next to his name on the ballot (for Republican, of course).

      BUT, if one wants to complain about lack of accomplishments in Obama’s terms, please place the blame where it belongs: Congress (yes, both sides). The Democrats refuse to do anything the Republicans want, and the Reps oppose anything the Dems want. Obama has *tried* to get things done, but the Republicans controlling the House just vote it all down.

      Or did you forget? That’s why the economy hit the toilet several times in the past few years, because Republicans like that moron Ted Cruz refused to pass a budget and the COUNTRY almost went into default.

      Oh, and by the way, I’m not really responding to you, “First 2014…”. I know that responding to you on anything political is like trying to reasaon with a concrete wall. I’m responding purely to remind *other* readers that you’re full of hard-right Republican venom, and you never let the truth get in the way of your story.

      “First 2014…” is one of the many people in this country (sadly, some are in Congress) who FUEL this political stalemate by opposing *everything* the other side wants to do (and I’m talking Democrats *and* Republicans). As a result, nothing ever gets done.

      1. A huge accomplishment, if the goal was to destroy a healthcare system that was once the envy of the world and actually kill people in the process.

        For Obama and his idiotic supporters, it’s always everyone else’s fault but his. How very convenient.

        1. Envy of the world? Are you kidding? Our health *research* is the envy of the world, and we do have the best *doctors* in the world, but the actual insurance/payment/coverage part of it has been an abomination for years.

          I guess for you, it’s very simple, though…to paraphrase your own words, everything is always Obama’s fault. Guess that keeps it simple enough for you to understand who to blame.

          But I catch myself…I’m trying to talk sense to someone who is utterly drowning in Fox News Kool-AId. You gave me exactly the sort of response I expected from you.

            1. I started not to even bother to reply, because you’re simply an offensive excuse for a human being, but I’m bored so I’ll spend 30 seconds giving you three:

              (1) No more denial due to pre-existing conditions
              (2) Elimination of lifetime limits on coverage
              (3) Birth control pills now must be covered without a co-pay. For people in lower-paying jobs, a $20/month co-pay was a big deal and could have resulted in an unwanted pregnancy.

              There are plenty of others. There are also downsides to Obamacare. It’s not perfect.

              Here’s what I find funny….you’re so full of anti-Obama venom that you deny that there are ANY benefits to Obamacare. I’ll gladly acknowledge that there are plenty of flaws in it that need to be fixed, but there *are* good things.

              You’re just too blinded by hatred (or pure ignorance) to see them.

              Has anyone else noticed that anytime someone uses terms like “Obama Messiah”, or “NObama,” or (back in the 2008 election) “McLame” for John McCain, their comments are usually idiotic, pointless, biased, and there’s pretty much nothing of value in them?

              I noticed that back in 2008 on both sides of the debate…any Obama supported calling McCain “McLame”, or any McCain supporter calling Obama “NObama”, etc, usually didn’t know what the hell they were talking about, and were simply an angray and biased partisan.

            2. REPEAL AND REPLACE:

              Republican senators on January 27, 2014 unveiled a plan to replace Obama care law that reflects the limitations on GOP health policy created by the rollout of Obamacare.

              Sens. Tom Coburn, R-Okla., Richard Burr, R-N.C., and Orrin Hatch, R-Utah, would repeal Obamacare as part of the Patient Choice, Affordability, Responsibility and Empowerment Act.

              Considering the backlash against the sweeping nature of Obamacare in general and Obama’s specific broken promise that Americans could keep their health plans if they liked them, the proposal isn’t as bold and disruptive (in a free market direction) as it may have been in a pre-Obamacare world.

              Under the replacement proposal, as is the case with Obamacare, insurers would be barred from imposing lifetime limits on medical claims and required to allow individuals to remain on their parents’ policies until the age of 26.

              Under the rules of Obamacare, insurers can only charge three times as much to older Americans as they charge younger Americans, one of the factors that has driven up the price of insurance for the young. The Coburn-Burr-Hatch proposal would create a federal benchmark allowing insurers to charge older Americans five times as much. However, states would be permitted to set their own ratio below that amount, or opt out of the requirement altogether.

              To address those with pre-existing conditions, who have been among the major targeted beneficiaries of Obamacare, the GOP proposal would require insurers to offer coverage to anybody who has applied as long as they have maintained continuous coverage, regardless of whether they are switching health plans or shifting from employer-based health care to the individual market. The theory is that this would offer some protection to those with pre-existing conditions without having the same effect on premiums as Obamacare’s full ban on the practice. At the same time, the idea is that this would create an incentive for everybody to maintain their insurance coverage, thus negating the need for the individual mandate.

              In consideration of the backlash against the way that Obamacare has disrupted people’s insurance coverage, the new GOP proposal would maintain the employer health insurance bias. Instead of scrapping the employer health insurance tax exclusion, the proposal would merely cap it at 65 percent of the average plan’s costs.

              The savings generated by capping the exclusion would be used to help finance tax credits to be offered to individuals earning up to 300 percent of the federal poverty level (or annual earnings of about $35,000 for an individual). A new division of the U.S. Department of Treasury known as the Office of Health Financing would administer the credits.

              In cases where individuals qualify for a tax credit high enough to cover the cost of a plan but never sign up for insurance, states have the option of automatically enrolling them in a default policy, though the individuals would also have the ability to opt out.

              The proposal would also expand the use of tax free health savings accounts, for instance, by allowing funds to be withdrawn to pay premiums for long-term care insurance and COBRA.

              Instead of expanding Medicaid, as Obamacare does, the Coburn-Burr-Hatch proposal would reform it to give more flexibility to states and allow Medicaid beneficiaries the option of using their tax credit to purchase private coverage.

              In addition, the proposal encourages states to adopt medical malpractice reforms and requires hospitals and insurers to improve price transparency.

              A previous plan introduced by Burr and Coburn in 2009, while Obamacare was still being debated, fully equalized the tax treatment of health insurance, regardless of employment status, and also gave grants to states to set up health insurance exchanges.

              Unsurprisingly after the botched rollout of Obamacare, the new plan doesn’t offer any incentives for states to establish exchanges, though nothing in the proposal would prevent them from doing so.

              Ultimately, the new Coburn-Burr-Hatch plan would not usher in a free market for health insurance in the United States, which would require fully ending the distortion of the tax code and removing far more regulations. What it does do is offer individuals more freedom than now exists under Obamacare.

              Details of the GOP plan:
              http://www.hatch.senate.gov/public/_cache/files/bf0c9823-29c7-4078-b8af-aa9a12213eca/The%20Patient%20CARE%20Act%20-%20LEGISLATIVE%20PROPOSAL.pdf

      2. It is a huge accomplishment just because others have failed? I hardly think so. Yes, there is some good there. But healthcare reform is more needed now than before. Others failed because they couldn’t find reasonable solutions that all would agree on and that would benefit more than it hurt. This shouldn’t have been pushed through because it did in fact hurt a lot. That’s why the Republicans opposed and tried so hard to repeal it. That’s why so many who once support the ACA and Obama have now turned against it and him. I would hardly call it a huge victory.

        “BUT, if one wants to complain about lack of accomplishments in Obama’s terms, please place the blame where it belongs: Congress (yes, both sides).” On that point, I completely agree. There is still the fact that Obama doesn’t have much to offer, in my opinion, but even if he did, neither side would agree on enough to make it happen.

        And yes, Ted Cruz is an idiot. (And I’m a Texan, and lean Republican and even somewhat understand what the Tea Party is trying to accomplish, though they all tend to be much too extremist to be taken seriously.) But how many opportunities have there been to pass a budget prior to the last minute deadline when his antics took the spotlight? And how egregious is the spending that has lead us here? And yes, once again, that is the fault of both sides, but an honest person would admit that it started in the last two years of GWB, when the Dems were in control of both the House and Senate. Bush was no longer directing anything at that point.

    2. Ouch. I know *you* don’t need it pointed out, but for those who don’t get it:

      http://dailycaller.com/2014/02/03/obamacares-biggest-impacts-americans-losing-hours-losing-coverage/

      http://townhall.com/tipsheet/katiepavlich/2014/02/05/more-healthcare-cancellations-coming-down-the-pike-thanks-to-obamacare-n1789867

      http://www.lifenews.com/2013/12/31/more-people-have-lost-insurance-under-obamacare-than-signed-up-for-it/

      “What does this have to do with Apple?”, some of you ask. Well, Apple is the biggest name people are shooting for in the “tax avoidance” arena this article talks about. And Apple is a big employer potentially affected by ObamaCare. (I haven’t actually heard any reports of how OC is affecting Apple employees, so it is somewhat off topic there, but…) Even if the ObamaCare issue doesn’t directly tie to Apple, the fact that both of these issues (taxes and health care) are coming from the same President makes it relevant. In court, you would object with “Relevance?” And I would reply “It goes to the character of the witness.” And the judge would say “Overruled. Continue.”

  2. Corporations don’t pay taxes, they only collect them. Every penny that governments take comes out of the pockets of the company’s customers and shareholders.

    -jcr

    1. This is precisely why all the extreme libertarian calls to lower corporate taxes rings hollow. Nobody is more efficient at collecting and passing on taxes than a corporation. So if governments lightened up on personal income taxes and instead levied a constant fair loophole-free higher tax rate on companies, then everyone would benefit. No more overcomplicated 1040 form to submit annually, and companies would operate as usual — and consumers would reward the most efficient/innovative company that offers the best products and services, as it should be. Personal income tax over complication is the problem, not corporate taxes.

  3. Much as I dislike MDN nosing in on comments. I would really like to see the major political comments here get cut back.

    While political actions and non-actions can and do affect Apple, this is an Apple news related site and not the “I hate your political choices” site. Political discussions and “hate (i.e. your stupid cause you voted for)” comments really do not belong here.

    Just saying.

    1. If you voted for Obama, you obviously are stupid or at least gullible to the point of stupidity. Any normal person saw Obama as a train wreck waiting to happen the first time they heard him lying off a teleprompter in the primaries.

      I get it, you feel badly about your vote.

      You should.

      1. I’m not American, I couldn’t give a flying fsck about American politics, or opinions about who voted for who.
        It’s irrelevant to the rest of the world, who outnumber Americans by a significant margin.

        1. Your ability to reproduce is inconsequential. The rest of the world is irrelevant to Americans (more so now that we have Sam Adams brewery) as our arsenal – nuclear, thermonuclear, and otherwise – vastly outnumbers whatever backwater eurotrash country (I assume) you’re stuck in. By a significant margin.

          Even after all of the damage wrought by Obama, America is still the envy of the world, the shining city on a hill, EXCEPTIONAL. You hate America and feign indifference because you secretly wish you lived in America and you irrationally fear America (even though we could have decided to take over the entire world with the fall of the U.S.S.R., but, precisely because we are exceptional, did not) just like every other piece of eurotrash sitting around doing nothing but collecting entitlements from their failing “european union” and denigrating the one beacon of light on this otherwise refuse-strewn rock.

          1. It’s people like you (and your moronic attitude) who make me embarassed to admit that I’m an American when I travel overseas.

            That’s something I’ve done, by the way…traveled extensively outside the US. Based on your post, you’ve obviously never left whatever redneck-filled backwoods county that you call home or you’d know how most of the world feels about America.

            I can only hope that you’re young….in your teens or 20s, and that eventually you’ll grow up.

            1. I know exactly how some people in countries outside the U.S. view America and I don’t give a shit what they think.

              America is exceptional. Deal with it.

        2. Rorschach,

          Their opinions are not representative of who we are as a nation. They are intolerant charlatans that, with time, will become extinct because they are merchants of unsold wares—awful ideas.

    2. Totally agree, eldernorm. MDN is *full* of fallacious political arguments. Just ignore them, and let these people blow off some steam. They’re still mad about 2012.

      1. Blow this steam off, lemming:

        The debt of the U.S. government has increased $6.666 trillion since President Barack Obama took office on Jan. 20, 2009, according to the latest numbers released by the Treasury Department.

        In the little more than five years of the Obama presidency, the U.S. has accumulated as much new debt as it did in it’s first 227 years.

        http://cnsnews.com/news/article/ali-meyer/debt-6666-trillion-under-obama#nationaldebt

        1. Note that that link is from CNSNews, which is Republican-funded (owned/run by the Media Research Center), so don’t expect “news” from them….just bias.

          From their wikipedia page: “The Media Research Center (MRC) is a politically conservative content analysis organization based in Alexandria, Virginia, founded in 1987 by activist L. Brent Bozell III.”

          Try this article instead: http://www.forbes.com/sites/rickungar/2012/05/24/who-is-the-smallest-government-spender-since-eisenhower-would-you-believe-its-barack-obama/

          Now, who are you going to believe, “CNSNews”, or Forbes.com (one of the most respected financial magazines in the world? I’m gonna lean toward Forbes, but as with anything, taken with a few grains of salt.

          The lesson here: Just because a site has “news” in their name, don’t forget that MANY such “news” organizations are directly funded by either liberal or conservative think-tanks.

          Do your research. Or, to use botvinnik’s term, don’t be a lemming…on *either* side of the political fence.

            1. Actually, it came from the Congressional Budget Office, which shows that you didn’t even read the article. Nowhere in it (or in the one to which it links) does it say it came from the Treasury Department. That’s OK…it probably was over your head, anyway.

              But even so, I’ll give you “close enough”….CBO, Treasury, whatever you want to call it.

              But tell me this…WHERE ELSE DO YOU EXPECT TO GET THE DATA? OF COURSE it came from the CBO, Treasury Department, or some similar agency!!

              You truly prove your ignorance more and more with every post.

  4. note to Washington: the money does NOT belong to you.

    STOP THE OUTRAGEOUS SPENDING. STOP TAKING SO MUCH FROM THE PEOPLE. STOP RUINING THE FUTURE OF MY PEOPLE.

    the county takes its share,
    the city takes its share,
    the state takes it’s share,
    the Federal government is a glutenous entity. it has no concept of pushing itself away from the table when it’s eaten what’s on its plate. it has to take from the plates of not only its own people but the plates from the people of foreign countries. Stop asking my children’s children’s children to pay for those plates.

    HAVE YOU NO DECENCY, you greedy, ravenous, wolfish spoilers of what was a great nation.

  5. The US tax code is do full of loopholes that the average US corporation pays about 12% effective tax rate just like they would anywhere in Europe or Asia. This issue is about American CFO’s trying to get something for nothing. The reason the current tax code will not be changed to make companies pay higher corporate tax is because of the possible fall in the Dow. If companies have lower profits, the share price will fall. The share price moving up is what partially fuels a the US economy. If the stock market tanks like it did under Bush because the tax laws were changed, what good foes that do anybody?

  6. A quick and dirty way to approximate who IS and who ISN’T dodging taxes is just to look at marginal tax rates paid in the last quarter.

    Apple 26.2%
    Google 16.5%
    Microsoft 16.8%

    1. Unfortunately those percentages by themselves do not prove anything about dodging taxes.. You need to also provide the percentage of their liquid assets within jurisdiction of those marginal tax rates.. (e.g. if Apple only had 20% of their assets in the States compared to say another company’s 50%, given the same marginal tax rate it becomes obvious that Apple would be the one more guilty of ‘dodging’ taxes)

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