Tag Archives | corporate interests

Apple avoids billions in taxes, and it all looks legal; those guys really are smart

By on May 21, 2013 in Creative, Internal Revenue Service, Tax Planning Strategies

Lawmakers are using words like “gimmicks” and “schemes” to describe how Apple Corporation has used a web of subsidiaries spanning the globe to avoid taxes. There are hearings this week at which Congressmen are expected to say they are shocked, shocked, to hear of tax loopholes being exploited.

As The New York Times reported, Congressional investigators have determined that “some of Apple’s subsidiaries had no employees and were largely run by top officials from the company’s headquarters in Cupertino, Calif. But by officially locating them in places like Ireland, Apple was able to, in effect, make them stateless — exempt from taxes, record-keeping laws and the need for the subsidiaries to even file tax returns anywhere in the world.”

One of Apple’s Irish affiliates reported profits of $30 billion between 2009 and 2012, but because it did not technically belong to any country, it paid no taxes to any government, The Washington Post reported. Another paid a tax rate of 0.05 percent in 2011 on $22 billion in earnings, according to the report.

It’s not expected that any of this will be determined to be illegal–just a highly proactive use of the existing tax rules. Interviewed by The Times, University of Southern California law professor Edward Kleinbard, a former staff director at the Congressional Joint Committee on Taxation, gets the Quote Of The Week Award. “There is a technical term economists like to use for behavior like this,” said Kleinbard. “Unbelievable chutzpah.”

Corporations say DOMA is a big tax hassle

By on February 28, 2013 in Gay marriage, Internal Revenue Service, Tax Issues

I always say that everything’s about taxes. The current legal wrangling about gay marriage proves it once again.

More than 200 companies have signed onto a brief filed with the Supreme Court saying that the Defense of Marriage Act has become an administrative hassle, forces them to discriminate against different classes of married employees, and should be overturned so that same-sex couples receive federal recognition.

I’ve written previously about United States v. Windsor, which the Court is likely to hear in March. Ms Windsor was married to Thea Spyer and inherited Spyer’s property in 2009, but also was hit with a large estate tax bill that would not have been assessed if She had be a He. Companies including Apple, Nike, Starbucks, Marriott International and Walt Disney, filed in support of Ms Windsor’s case.

As Erik Eckholm wrote in The New York Times in summarizing the brief’s argument, “Treating heterosexual and same-sex married employees differently under federal law, the brief said, imposed high administrative costs as companies maintained dual systems of tax withholding and payroll. It results in extra tax burdens for both companies and employees with health plans, and can affect payments including retirement, pension and life insurance as well as having a bad effect on morale.”

Tax pandering season in high gear

By on February 22, 2012 in Elections, Politics

The tax pandering season got into high gear with both President Obama and Presumptive-Nominee-In-His-Own-Mind Mitt Romney coming out with tax reform proposals on Wednesday.

As The Washington Post points out, Romney would cut all individual income tax rates by 20%.

But beware! Here’s Joe the Tax Guy’s Rule Of Across-the-Board Tax Cuts: Across-the-board cuts favor the Top 1%. A 20% tax cut for someone earning $10 million is enough to pay cash for an extra vacation home or two. A 20% cut for someone earning $50,000 is enough for an extra Happy Meal or two.

Obama would cut the top corporate tax rate from 35% to 28%, with the loss in revenue made up by closing loopholes that already effectively leave most corporations paying significantly less than 35%. As The New York Times points out, Republicans and business groups want an even lower rate and no change in the current system of business breaks and loopholes.

Joe the Tax Guy’s Rule of Business Tax Cuts: When proposed rate cuts are supposed to be paid for by closing business tax loopholes, there will probably be new loopholes created…or no change to the old ones.

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Health insurance: the sand in the gears of the American economy

By on October 31, 2011 in Politics, Socialism in America, The Economy

One bit of good news on the health insurance front: Despite some trial balloon suggestions, health insurance premiums in 2011 will continue to be tax-deductible for all self-employed professionals.

That’s the good news. The bad news is, the system of actually getting health insurance is still an unholy mess. And the system forces people into arrangements that any reasonable person would consider ridiculous.

For example, I have clients who are getting divorced, and have amicably reached agreement on all their issues. They get along with each other as well as people can under such circumstances, and they still care about each other. But they’re choosing to put off making the divorce final.

The reason: when the divorce is final, one spouse is going to lose the health insurance provided by the partner’s job. And neither of them want to see that happen. So while they’re moving on in their lives emotionally, legally they remain stuck together.

Health insurance is the sand in the gears of many Americans lives. Fear of losing or not having health insurance stops people from changing jobs. It keeps them from trying to start a new business. Losing a job is bad; losing the health insurance attached to it can be catastrophic.

And of course, you can still lose your health insurance even if you don’t lose your job. Wal-Mart is slashing employee health insurance benefits, the New York Times reports, eliminating coverage for anyone who works less than 24 hours a week and reducing coverage or hiking premiums for many other employees. Some Wal-Mart workers earn so little they may qualify for their state Medicaid programs.

If you are under 65, the fact that you could not get a health insurance policy for yourself will freeze you in place, even if you could retire early with full benefits. The state of Oregon, recognizing that, is even considering offering continued health coverage to employees who retire early as a way of getting more high-earning people off of the state payroll.

Until we have a system where everyone is guaranteed health coverage regardless of their employment status, we’re going to have a self-imposed, or, more accurately, insurance-company-imposed, drag on the economy.

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IRS backs off from challenging political heavyweights

By on July 14, 2011 in Deductions, Internal Revenue Service, Politics, Tax Policy

Should big political donors pay gift tax? IRS won’t say

Earlier this year the story broke that the IRS had notified five bigfoot political donors that they could owe gift taxes on secret contributions made to nonprofit political advocacy groups which then shuttle the money over to political campaign efforts. The New York Times weighed in with an editorial, saying, “The Federal Election Commission should be policing some honest disclosure here, but it has abdicated its responsibility. So it is commendable that the tax agency has the will to enforce existing law, particularly if it puts some caution in the minds of donors preparing to flood the next elections with secret money.”

Eh, never mind.

This month the IRS did a rarely-seen bureaucratic backbend, dropping any audit programs aimed at bigwig political moneybags. In a three-paragraph memo, an IRS deputy commissioner said, “This is a difficult area with significant legal, administrative, and policy implications with respect to which we have little enforcement history.”

Translation: IRS is backing off, and another barrier is removed to a 2012 flood of political advertising beyond anything we’ve ever seen. Did the agency come under political pressure? Who knows. But when Senator Orrin Hatch says in a statement, “The decision today ensures that the IRS remains free from even the hint of undue political influence,” does it make you think that maybe there was some political influence?