No one accused Apple of having violated US tax laws. The Senate hearings merely exposed how Apple is dodging income taxes by doing what multinationals do: taking advantage of handouts and loopholes that Congress hands them. Now it turns out that much of the discussion was based on a fairytale.
Entries in Taxation (28)
On paper, Apple has no reason to borrow. Last time it issued bonds was in 1996 when it flirted with bankruptcy and absolutely had to get its hands on some moolah. After Steve Jobs returned in 1997, Apple wisely stayed away from Wall Street and did its own thing. But that era is over. And a new era is dawning upon the icon: Wall-Street engineering.
Luxembourg, with a population of just over half a million, smaller even than the other speck in the Eurozone, Cyprus, ranks in the top three worldwide in per-capita GDP. In a Eurozone wealth survey, it had the highest average household wealth. Only Cyprus, a former off-shore banking center in the Eurozone, came close. Yet Luxembourg is threatened with ruin.
Austria would fight to maintain bank secrecy, declared uppity Finance Minster Maria Fekter. She is worried. After squashing Cyprus, gutting its offshore financial and money laundering center, and destroying its main resource, the EU has now trained its big guns on Austria and Luxembourg.
Contributed by Doug Casey, Chairman, Casey Research: "Another reason for having a second passport – certainly if you're an American – is that nobody anywhere in the world wants to open a bank account for you. It's a subtle and indirect form of exchange control that the US has already imposed."
Eurozone countries are falling like dominos. Next: Slovenia. But bailouts – by taxpayers in other countries – keep banks from collapsing, governments from defaulting, and investors from incurring well-deserved losses. In the US, President Obama’s budget, with its new taxes, is causing heart palpitations left and right. But how do countries really stack up?
“The government imposed the income tax burden in the first place,” said former California Republican legislator Tom Campbell about the process of filing tax returns. “So if it wants to make it easier, for heaven’s sake, why not?” But two companies that sell tax preparation software and services have been lobbying tooth and nail against making it easier—and won.
For corporate welfare queens that know how to leverage worldwide tax systems, France offers a free ride. But as the French government tries in a vain and desperate effort to make ends meet, it’s not only going after multinationals and their tax optimization schemes but also smaller companies that are gasping for air. Revenues from aggressive collections—“not far from blackmail,” an insider says—have jumped, one of the rare areas of growth in France.
Last year, the government extracted $1.1 trillion in taxes from us individual taxpayers. But now it will pay, along with the states, $429 million of our taxes to the coolest Silicon-Valley beauty queen: Facebook. In net tax refunds! Part of a vast package of juicy corporate welfare programs. Facebook isn’t just hogging our data; it’s gobbling up our money.
Prime Minister Ayrault himself presided over Monday’s meeting of the National Anti-Fraud Committee. “A first for a head of government,” he said at the press conference, to hammer home just how important this was. But he wasn’t worried about run-of-the-mill fraud that might fleece an old lady of her life savings. He was worried about people not paying their taxes. And he had a remedy.
Contributed by Chriss Street. State tax collection beat Governor Brown’s Budget by $4.3 billion, or 39.1%, last month—due to two one-time events that took place by December. But in what should be very disturbing to giddy state politicians and lobbyists who are cranking up for a new spending spree, January sales taxes plunged by $582.7 million, or 27%.
Contributed by Chriss Street. President Obama claimed in his weekly radio address that the “fiscal cliff deal” reduced the deficit by $737 billion over the next ten years; in November he’d demanded $1.6 trillion in tax increases and refused the Republicans’ initial offer of $800 billion. By contrast, Ronald Reagan should have been called the “Great Negotiator” for the spectacular deals he was able to negotiate.
“We’re engaging in trench warfare,” proclaimed Alain Afflelou, head honcho and founder of an eyewear company with 1,200 stores in France and other countries. He was talking about the tax fiasco that split France in two. He was done with his country. He’s moving to London. One of France’s so-called fiscal exiles. And now there are “unprecedented waves” of them.
“Paradox” is what the New York Times called France’s ability to attract more foreign investment than any country other than China and the US. A paradox because it shouldn’t. Investors should be scared off by labor laws, tax rates, the cost of labor, and mud-wrestling bouts over nationalizing some industrial plants. But turns out, multinational corporations pay practically no income taxes in France. And it has reached the boiling point.
Contributed by Chriss Street. 80 million “baby-boomers,” born between 1946 and 1964, moved out of their peak spending years. The U.S. government over the last five years squandered $7.6 trillion on Keynesian demand-side stimulus to resuscitate this demographically shrinking demand. But with only 23 million born between 1995 and 2012, “Generation Z” is too small for demand-side stimulus to revive the economy.
The French government is trying to reign in its deficit by jacking up taxes, including the capital gains tax—an old philosophical pillar of the French left. But an explosive essay published last Friday hit a nerve with entrepreneurs, venture capital investors, artisans, and mom-and-pop business owners. And their anger, which spread across the social media, the papers, and finally TV news, turned into an open revolt.
The final amount that the US government owes at the end of fiscal 2012 (September 30) is, drumroll, $16,159,487,013,300. It owes it, in no particular order, to the Saudis, US citizens, the Social Security Trust Fund, the Chinese, the Japanese, the Russians.... It amounts to about 103% of GDP. An earsplitting hangover from a debt binge that robbed the future. But there are winners.
France is mired in a stagnating economy. The private sector is under pressure, auto manufacturing in a depression. Unemployment hit a 13-year high. Over 3 million people are out of work. Youth unemployment of 22.7% belies the catastrophic jobs situation in ghetto-like enclaves. Gasoline and diesel prices are near record highs. So there are a lot of very unhappy campers. And it could turn ugly.
The arm-wrestling between the US and Switzerland over funds that US citizens have stashed away in Swiss bank accounts has been going on for years. In Germany, a similar fight has broken out, albeit with more consideration for the rich. Other governments, desperate for moolah, are also going after their own with funds in Switzerland. Now it turns out the Swiss themselves, long praised for their tax compliance, also evade taxes. But it’s “officially silenced to death.”
Euro optimism is once again gushing through the system on the hope that the debt crisis could be wished away with a nod by German Chancellor Angela Merkel or with a wink by the Bundesbank at the European Central Bank, which is dying to print unlimited amounts of moolah to buy sovereign bonds—and old bicycles, if it has to—in order to force yields down for debt-sinner countries like the US Spain and Italy. But in Greece there has been an incident.