“Pfizer’s corporate U.S. exit should be a wake-up call to the American public, but I doubt that it will be,” Ray Ernst writes in a letter published in the Wall Street Journal. “Perhaps when iconic Apple decides to leave we will get the message. After all, Pfizer ‘only’ has $144 billion retained overseas (and earned overseas, for those thinking it is from the U.S.); Apple has $190 billion overseas.”
“Since 2005, corporate earnings retained overseas have increased from $0.5 trillion to $2.1 trillion (about 300%!)” Ernst writes. “National politicians lead us to believe that the Earth revolves around them and Washington; yet they do nothing.”
“Intel Corp. testified to Congress on Nov. 19 about how it is testing its drone technologies overseas and may move its drone R&D overseas,” Ernst writes. “Americans should read the congressional testimony that shows the arrogance of Washington and the high-flying bureaucrats at the FAA. These are all highly skilled technology and manufacturing jobs; you know, those middle-class jobs paying $60,000-$130,000 that we used to have.”
Read more in the full article here.
MacDailyNews Take: Newsflash: Corporations don’t pay taxes, you do.
“Corporate taxes” are simply passed along to the consumer. It’s how the government sneakily double-taxes its citizens. You’re taxed on your income and then again on what’s left via higher prices across the board.
Apple should rattle their rather imposing saber. The threat of cold hard cash disappearing is about the only thing that prompts some people into action in Washington DC.
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
SEE ALSO:
Think Ireland’s corporate tax is unfair? Wave goodbye to Apple and thousands of jobs if it’s changed – November 14, 2015
U.S. companies now have $2.1 trillion overseas to avoid corporate taxes – March 4, 2015
Intel CFO: Obama repatriation tax proposal ‘lipstick on a pig’ – February 4, 2015
U.S. Congress, Obama take Apple CEO Cook’s advice, eye corporate tax changes – February 3, 2015
Obama targets foreign profits with tax proposal, Republicans skeptical – February 2, 2015
Senator Rand Paul finds Democratic partner for tax repatriation holiday – January 30, 2015
Businesses hopeful Republican control of U.S. Congress will break tax-reform gridlock – November 5, 2014
Not in Taxes anymore: On site at Apple’s famous Irish ‘headquarters’ – November 2, 2013
Regan: U.S. tax code spurs loveless foreign corporate ‘marriages’ – May 13, 2014
Ireland to close Apple’s tax loophole, but leave bigger one open – October 15, 2013
G20 think tank OECD proposes blueprint for global crackdown on tax avoidance – July 19, 2013
Thomas Sowell on Apple, corporate taxes, and ‘the road to serfdom’ – 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
Our politicians always talk about greed but they never notice that they are the greediest of all.
We need less government and less government spending and a balanced budget.
You will only balance the budget with draconian cuts in Medicare and Social Security spending. Good luck with that.
Whatever percentage you’re thinking of cutting from medicare and social security, propose the same percentage cut for defence and military spending as well, and then we can talk.
“A good compromise leaves everyone mad.”
– Calvin
Considering what we see going on in the world around us, only a fool would cut defense and military spending.
Then again, I wouldn’t cut Medicare or SS either.
We should chop down the size of government and eliminate waste to balance the budget. Rather than incentivize government agencies to ‘spend their budget if they want more funds next year’, we should ask them to cut their budgets if they want any funding next year.
“only a fool would cut defense and military spending. Then again, I wouldn’t cut Medicare or SS either.”
Exactly, we’re on the same page. One set protects Americans abroad, the other set protects Americans domestically. Both have issues that should be addressed but both are sacred cows.
Defense is actually a Constitutional requirement.
Medicare and SS are not. (That has always been the citizens requirement)
I’m for cutting welfare before Medicare/SS though.
“We should chop down the size of government and eliminate waste to balance the budget. Rather than incentivize government agencies to ‘spend their budget if they want more funds next year’, we should ask them to cut their budgets if they want any funding next year.”
THIS is one of the biggest problems in government spending..
Social Security is funded by it’s own premium in the form of a dedicated payroll tax. Social Security benefits have never been paid from general revenue and are not ‘spending’- it is the payment of an investment through an insurance plan.
DavGreg, you are a pretty funny guy. First, the social security fund has no actual money in it, just IOUs from the federal government. All the social security “investment” money has been spent on other government needs.
Second, social security now takes in less money in social security taxes then it pays out. This problem will only worsen in the future thanks to the demographics of our aging population.
The bottom line is social security is doomed in the future. The feds will need to print more money to pay the IOUs in the social security account and then print even more money to make up for the shortfall in income to the fund vs. the outflow from the fund.
If you are under 50, don’t plan on getting any social security checks when you retire.
Social Security trust fund bonds are no different in effect than the Treasury Notes sold as investments on a regular basis. The full faith and credit of the government- a.k.a. the American people.
Prior to the Reagan/ O’Neil Social Security agreement there was no trust fund, it was set up as Baby Boomers paid up the shortfall of the “Greatest Generation” and pretended their own benefits due to a population bulge moving through the population. It was intended to deplete- after the Baby Boomers are gone the fund should be exhausted.
Anyone who tells you otherwise either does not know what they are talking about or is being disingenuous.
To drive home DavGreg’s point:
The ONLY time Social Security is part of the federal budget is when it is RAIDED for cash to support the budget, which IMHO should be illegal.
IOW: Social Security never hurt the budget. But the budget HURT Social Security.
Yes kids, the right-over-the-edge propaganda pundits lied to you regarding Social Security. They do that. A lot.
We do not need, and can not afford “less government”! The problem is that our government is incompetent. What we need is a government that WORKS! Right now we have a congress with a single digit approval rating, because they are not, or can not do their job. Our congress has been so focused on partisanship and devisive politics over the past 15+/- years they have become completely disfunctional.
How can businesses be expected to operate and thrive in this environment? We have regulations that are so complex and convoluted that they are difficult to understand, let alone interpret and follow. It is easy for regulators, and courts to become petty tyrants when the laws are so poorly written. We are experiencing the radicalization of our own government with current politics. When those on the radical right and left refuse to negotiate and compromise we end up with nothing, we the citizens, and our businesses are the ones that suffer.
Our 2 party system, with it’s partisan politics is our problem. We, the electorate are also the problem for continuing to support the disfunctional. If your representative or senator votes along straight party lines (which virtually all do) then they are the problem. If you go in the voting booth and vote a straight party ticket, then you are the problem! Only by working together, and working hard, can America be great. The truly productive businesses in our country have a whole lot more to worry about than taxes, really!
How can we not afford less government? Isn’t it more expensive to have a big government?
The amount of waste has been written about since at least the Grace Commission and indeed, citizens don’t see that government waste is dollars out of their personal pockets.
WDC insists it must grow 5% every year and that has resulted in personal average after tax disposable incomes dropping for years.
We can’t grow this country if disposable income continues to drop. It is impossible.
Your main problem isn’t that your government is expensive, it’s that your government is both expensive and ineffective. An effective government would at least give you all something to show for your money.
Take it from this Brit, the idea that smaller government leads to wonderful things doesn’t play out well in reality. Our current government has been trying to bleed services dry for five years with cutbacks, all they managed to do was stall the economic recovery by doing so. So much so that they’ve pretty much abandoned the policy now, even though you’ll never hear them admit it.
The amount of personal gain of all politicians is MICROSCOPIC compared to the ultra-rich. Most of the wealth of the country is in the hands of a tiny number of people… the greediest of all.
And puh-lease don’t give by “job creators” and “earned it”.
If the ultra-rich were job creators, the US would be booming right now – since they have more money than ever.
The middle class are the real job creators — IF they have money to spend.
Shhhhh!!! Demonstrating common sense is banned on the Internet.
“Repatriate” what has never been patriated? Oxymoronic Washington DC Orwellian doublespeak.
Corporate taxes are paid by those that purchase a company’s products, goods, services. Which is as it should be. The GAP’s Corporate Taxes are NOT paid by me 🙂
Of course, the usual double-speak. Corporations are people, but yet (unlike people) they shouldn’t pay taxes.
Corporate privilege. You can’t even give a corporation a proper death penalty for capital crimes, its “brain cells” can just go off and form another “person” with a different name.
Apple doubled-down on America when it decided to build its spaceship HQ there. It’s not going anywhere, since it’s not a real spaceship.
What, don’t ruin it for me. I was secretly hoping it really was a spaceship.
They wasted $3B on Beats, I’m sure they can write off a building and turn it into a homeless shelter.
Not necessarily. Apple could easily open up Apple (USA) Inc, transfer The Mothership to the new subsidiary to run as an admin and R&D HQ, and move the main corporate holding company, the one that actually declares the profits, elsewhere.
Interesting question “If Apple Leaves, Will We Get the Message?”
I’d lead towards a resounding “no” but I think it’s even more dramatic that that. One could make it more dramatic, by saying that Apple has left, it’s been out of the building for a while but that doesn’t really quite fit because Apple is Apple, they have been the power to be your best for long, they still think differently. It may have look like they left, but the are not the ones moving away from humane ethic, and morality.
If it’s not Apple that has really has moved, then it becomes obvious what has really moved and is moving away further every day and is becoming more and more diametrically opposed to Apple’s values and other humane life supporting concepts.
The movement is so dramatic that there is no little vestigial awareness left as the karma builds up to the point where it is more recognizable in the parlance of our day.
The point is, that Apple is not the one that has exited the humanity building.
In 1952, corporations paid about 33% of all taxes. Today the figure is under 10%. Guess who’s making up the difference?
http://www.politifact.com/truth-o-meter/statements/2014/aug/28/bernie-s/bernie-sanders-says-tax-share-paid-corporations-ha/
Ignorance is bliss.
(FROM YOUR ARTICLE…)
“That said, the measurement Sanders used may not be the best. Economists told us that it would be more useful to know what corporate taxes were as a percentage of gross domestic product.
But looking at it that way, the general pattern also holds. In 1952, corporate taxes accounted for 5.9 percent of GDP, a figure that has fallen to 1.6 percent today.
So Sanders has a point that corporate tax collections have plummeted as a percentage of all taxes collected, even as corporate profits have hit record highs. But a range of economists offered two bits of cautionary context worth considering.
• The year 1952 is somewhat cherry-picked. That year ranks third-highest in history for corporate taxes as a percentage of GDP. “It was a time when the U.S. was the colossus of the world economy and faced very little competition from foreign-based firms,” said Daniel Mitchell, a Cato Institute economist.
That said, even as recently as 1979, corporate taxes accounted for 2.6 percent of GDP, a full percentage point higher than today. So the decline is real, even if you use a subsequent year.
• Today, most business income is taxed through the individual income tax code, rather than the corporate code. This concerns a distinction only a CPA could love. One type of corporation, a “C-corporation,” pays corporate income taxes on its profits. Another type, the “S-corporation,” pays taxes on its profits through the individual income-tax returns of the owner.
“Changes in tax rates and rules for C- and S-corps contributed to more firms becoming S-corps and thus paying individual rather than corporate income tax,” said Kyle Pomerleau, an economist with the Tax Foundation. That has boosted individual income-tax collections and reduced corporate income-tax collections.”
Even politifact says his whole statement is “cloudy” due to the changes corporations pay taxes now, yet at the end say his claim is mostly true.. lol. When you cherry pick data (article does state that also)
I don’t like Politifact and I do NOT like the socialist sanders… you think taxes are bad/high now on people? LMFAO. If the socialist gets in (he won’t) taxes will be insane.
In Democratic Socialist countries, taxes are higher, but so is the quality of life. I’m willing to make that trade-off. Just think how much you’ll save on insurance when we (finally) move to single-payer…
Governments ROLE is not to run your life… read our constitution.
If you want to have everything done for you so you can sit at home and be lazy fine.. but I DON’T WANT TO PAY FOR IT.
I do not want to pay for YOUR schooling… YOUR food.. YOUR anything.
Save on insurance…. lmfao. pay 60-70%+ of your income to the government so SAVE????? on insurance?
So if you pay an additional $100 to save $10… you saved money????????? Or did you just lose an additional $90…
Socialism also removes your ability to think clearly it seems. “Free” is not free when it comes to socialism..
Cherry picking tiny European countries and showing them off as Socialist ‘success’ stories is very, very misleading.
Thankfully Sanders is unelectable, but it is frightening that a loony toon like him is even in the running.
““Corporate taxes” are simply passed along to the consumer. It’s how the government sneakily double-taxes its citizens.”
This isn’t entirely correct. Apple, like most every other company, seeks to maximize profits by pricing products and services at the peak amount to match demand. They don’t do the math and see that a product should cost $299 to maximize profit, but then add their corporate tax rate on top of that, because doing so would reduce profits.
And just as corporations do this, our government should do this. Our corporate tax rate should seek to optimize tax revenues. It’s a little more complex with jobs being a variable for domestic tax rates, but for repatriation, it’s very simple, our statutory tax rate is the highest in the world thus companies are choosing to leave the money abroad.
We should reduce this to a level that maximizes tax revenue. That there is 2.1 Trillion sitting abroad, and that our rate is the highest in the world, are indications that we’re not maximizing tax revenue and we could do so by lowering repatriation rates.
Cutting the corporate tax rate in the U.S. would do little to discourage companies from moving overseas to dodge American taxes, according to a new Reuters analysis of the half-dozen largest companies to launch so-called inversion mergers last year.
From Forbes:
One common argument is that high tax rates cause companies, both U.S. and foreign, to invest elsewhere. But in a 2010 study Steve Fazzari of Washington University looked at thousands of companies and found that taxes really don’t have that much impact on corporate investment. What matters most to companies is the cost of capital, which dictates how large a return companies will make when they, for example, open up a new plant.
Newsflash: Corporations don’t pay taxes, you do.
And that’s why our infrastructure is crumbling around us… and why the middle class is almost nonexistent… and why we don’t have better, less expensive health care…and why we pay more for everything, and generally get much less I could go on but I hope you get the picture.
There’s this myth of what corporations actually pay in taxes. Yes, we have a top tax rate of 35%. But through loopholes and ingenious accounting most companies pay far less.
From Time mag:
Few of the biggest U.S. businesses are paying that rate right now; indeed, most are paying much less – 115 of the companies in the S & P 500 paid less than 20% in tax over the last five years. And 39 firms paid less than 10%.
The US needs tax reform, but this Congress and President are not the ones to do it.
I find it interesting that many of the same people who bitch about Tim Cook making statements on some political issues would like to see him threaten to take Apple out of the US as a political statement.
In the more generic- if Corporations want to be exempt from taxes, here are the new rules:
1- No political contributions.
2- Open tax records
3- No lobbying
4- No trade associations
5- Ban on ownership of property
6- Charter expires after 50 years and corporation must be dissolved.
7- No corporate personhood.
8- Executives and Directors are criminally and civilly liable for corporate behavior.
Do all that and I’ll support a Corporate Income Tax rate of 0%.
DavGreg, hard to argue with your point here. All 8 points make a whole lot of sense, hence, Congress would never touch them.
Personally, I most like #8. If executives and directors were throw in a cell for company crimes, especially if they had to share that cell with Babba who was looking for a girlfriend, white collar crime would drop to zero.
No on 5-6-7 Yes to the rest.
1-2-3 Hell YES.
The suggestion that corporate taxes result in consumers being taxed twice is an over simplification.
True, we are taxed on our income but why should all consumers subsidise the purchases of a few?
If corporate taxes were abolished, the direct taxation burden on everyone would increase. The only people that would benefit are those that own the firms in the first place. Additionally many self employed people would change their legal statuses to avoid taxation.
Why should a decorator working for a company be taxed whilst the one that is a one man band wouldn’t?