General Politics Discussion [ARCHIVED] • Page 371

SpaceX: Explosion at Cape Canaveral launch pad

 

Wasn't there a thing recently where the Navy was forced to stop relying on its use of Windows XP?

 

On the EU and how Apple actually pays taxes:

....resulting in the European Commission’s complaint that Apple only paid a tax rate of 0.005% on revenue from its Ireland-based Apple Sales International subsidiary.

That 0.005% number immediately raises red flags, but not the populist ones the European Commission is trying to wave: rather, there is no way that Apple could report a corporate tax rate of 26.4% in 2015 while simultaneously paying only 0.005% tax on its worldwide revenue. And, in fact, they are not: Apple Sales International revenue is being taxed, it’s just not being collected, at least not yet. Understanding that makes the European Commission’s actions a lot more difficult to understand.

How Apple Pays Taxes…Eventually

As I am painfully aware, the United States is one of the few countries in the world that taxes both its corporations and citizens on global income; in contrast, most other countries use a territorial system in which they only collect taxes on profit-generation that occurs in territory they control (the U.S. conveniently also uses a territorial system for foreign companies operating in U.S. territory). What this means for a company like Apple is that the U.S. taxes the company not only on profits made on sales in the U.S. but also sales in the rest of the world. The situation isn’t quite as bad as it seems: any tax Apple pays to a foreign country is deducted from its U.S. taxes (more on this in a moment), but the key takeaway is that Apple owes the U.S. taxes for all of its profits worldwide, including those at Apple Sales International.

Now, there is one very important loophole that you have all head about: Apple doesn’t actually pay those taxes until it brings the money back to the United States. Rather, it adds the taxes it owes as an accrued tax liability on its balance sheet ($24.1 billion at the end of FY 2015) and keeps the cash in the bank. Apple can then proceed to use that cash for its business (reducing its accrued tax liability) or, whenever it does repatriate it, send the U.S. Treasury its fair share. This is how you reconcile the tax percentage numbers I called out above: Apple reports a 26.4% effective tax rate, but when it comes to Apple Sales International its actual cash outflow when it comes to taxes is indeed 0.005%.

Remember, that 0.005% is about operations that are integral to Cork: Apple’s contention is that everything else that happens at its Ireland subsidiaries is an extension of Apple’s activities in the U.S. (primarily Cuptertino). Indeed, Apple Sales International already sends Apple around $2 billion a year to pay for its share of R&D costs (basically, Apple Sales International pays a percentage of Apples R&D spend equivalent to its percentage of Apple’s overall revenue).

Apple’s argument is that all of the value is created in the United States, and thus it is the U.S. that should collect the taxes (eventually). To that end the “head offices” that the European Commission is complaining about aren’t untaxable, they’re simply places to hold Apple’s cash until it pays the U.S. And, by extension, Apple didn’t form a special deal with Ireland, they simply came to an understanding that some of the work Apple did in Cork was in service of its U.S. business and thus not a part of Ireland’s territory (and thus tax authority).

The European Commission has taken a much more narrow view in which Apple Sales International is its own company, one that pays significant licensing fees to Apple in the U.S. for the technology it then sells to customers all over the world (including the European Union); and, given that it is its own company operating in the territory of Ireland, it ought pay Irish income taxes.

The European Commission

One of the weirder parts of this story is that the European Union has no authority on the tax policies of individual nation-states. However, the European Union does have authority to regulate competition, including banning state support of individual companies, and over the last few years the Commission has interpreted that to include tax breaks. That is the basis on which it is demanding Apple pay Ireland. It seems to this observer to be quite a stretch even in the Commission’s narrow view of Apple Sales International as a standalone company: what advantage is Apple Sales International gaining relative to its competition?

The story is even uglier in the context of the actual role Apple Sales International plays in Apple’s corporate structure: from this point of view there is absolutely nothing about Apple Sales International that has any bearing on the Commission’s remit, nor anything Apple is guilty of beyond generating significant profits that the Commission feels entitled to and will retroactively change the rules to get.

Ireland

Ireland’s government is in the unfortunate positions of having to argue that they don’t want billions of dollars from Apple; that’s pretty terrible politically. Their position is understandable, though; Apple could have set up this entity anywhere in the world, because their bottom-line position is exactly right: all of the value is created in the U.S. Because Ireland was cool with this they got thousands of jobs and a decent bit of cash for the trouble. Now that is all in jeopardy (not just from Apple, but from the many other American companies who have also set up their European operations in Ireland).

The United States

It is actually the United States, not Apple, that suffers the biggest financial hit if this stands up in court. Remember, Apple’s plan all along was to pay taxes to the United States; being forced to pay Ireland instead will simply give them a big deduction in their U.S. tax bill. In other words, every single dollar that Apple pays Ireland is a transfer not from Apple to Ireland but from the U.S. Treasury to Ireland.

The U.S. has only itself to blame: the current state of the corporate tax code, with its artificially high base rate, global tax basis, and tax deferrment loophole leaves any CEO charged with fufilling his or her fiduciary duty no choice but to set up the sort of entities Apple has, particular given the moral hazard implicit in the fact the U.S. always ends up giving a repatriation tax break every decade or so. A saner corporate tax code would result in Apple and everyone else repatriating cash and paying taxes immediately, to the benefit of both the U.S. Treasury and the U.S. economy.

Apple

I’m 2,000 words in because this topic is so complex and, frankly, I’m not sure whether I’ve succeeded in making the case that Apple didn’t do anything wrong here. And that’s despite the fact I’m a professional analyst and you are all already very knowledgable about these topics! What chance does the company have to make its case to a skeptical public? This is a PR hit without question, but the company’s management is doing exactly what they have a fiduciary duty to do.

That said.

It was a little over one year ago that Tim Cook made what I called an “unfair and unrealistic privacy speech” where he claimed that “morality demands” an approach to privacy that basically delegitimized Google and Facebook’s business models (which Cook also characterized incorrectly). It was easy for Cook to say because Apple’s business model is compatible with a very strict view of privacy, but needless to say Cook didn’t make any allowance for that reality.

One could absolutely argue that Apple is morally wrong here: if they think their value is created in the U.S., then they should be repatrioting their money and paying their taxes, because it’s the right thing to do. That they aren’t shows that Cook’s moralizing only goes as far as what is good for Apple’s bottom line.

For me, I defend Google and Facebook’s advertising model, and I defend Apple’s right to follow the letter of the law in taxes, and I do think they’re getting the short end of the stick from the Europrean Commission. Moreover, I’m hopeful this episode will finally lead to meaningful reform of the U.S. tax code. I do hope, though, that we can get a lot less moralizing along the way.

 

Well, now I'm gonna have to go look it up. Haha.

 

wtf is going on with youtube now?

 

Given how this country treats people in poverty when it comes to welfare spending, it occurs to me that the act that allows these sorts of things to occur needs to be dismantled. That was my point of contention with Clinton's acts. I don't care if other presidents have done it or have claimed more. The liberal commentariat can reduce this to the lowest common denominator if they like with those sorts of fact. My concern is with the broader systemic framework that somehow makes his permissible.

 

Advertisers don't want to be associated with "offensive material". It's bullshit but Youtube is well within their right to do it.

Given enough outrage they'll have to cave or risk a competiting platform challenging them for top video player (Would be tough to usurp youtube at this point given market penetration and how great their video player actually is).

 

Would you remove veteran pensions as well? Over a certain income? Your concern seems to always come down to a broader systemic framework — because you don't like the government's framework at all. So I have to ask, do you really think this specific government entity: basically government pensions for former employees, is going to go away? I don't understand what you're mad about here. That former Presidents get pension money? Should they not? Why? Should it be tied to their income? And how is that tied in with welfare? Did someone not get welfare because of this? They're unrelated, and separately audited, programs.

 

Trump actually got certain people to self-deport

 

How would a competing platform challenge them if all they had was "offensive material" advertisers already balked at? Not a great business model there.

 

Political Crisis: Antonin Scalia’s Vacant Supreme Court Seat Has Become A Hookup Spot For Local Teens

 

To be fair, in the tech sector, nearly every machine (lab equipment, heavy machinery, etc...) I've ever used runs on some version of windows XP or earlier. This includes $250,000 state of the art equipment bought in the last year.

 

it mostly seems kind of absurd to me that companies would want to pull their ads from successful videos at all honestly. ive watched more ads on youtube than almost anywhere else in the last year.

 

XP is a hell of an OS

 

Sounds like the YouTube thing is hitting like, everybody. Seems like a horrible move on their part.

 

Because some of the top content providers on youtube can be deemed offendive by the guidelines they've put out now. I'd say coarse language in and of itself isn't really offemsive.

 

Yeah, but why would another company be able to make money on those videos if YouTube can't? I agree that it's not offensive, but I don't think a competing service will be able to come along and monetize those same videos for these creators on a new competing platform. How is Vimeo going to get a better CPM?

 

The marketing department would use words like "brand affinity" to talk about drawing positive associations with your brand and the audience. If you were able to have your ad shown before cute cuddly kittens and are paying the same CPM to have it shown in front of the Angry Video Game nerd screaming obscenities and being kind of a dick, depending on the brand you're advertising, you probably have a preference. YouTube should probably have a better system in place for what ads go where, cause maybe Rockstar Sports Drink would want to be on the AVG channel[1]. I dunno how the ad buying system works, I had assumed it was basically like GAW where you could bid on keywords that appear in the video topics, but it looks instead like they're just giant ad buys across very high traffic videos with limited targeting. My second guess is that YouTube had pretty damn good metrics about where and when videos and watched, clicked, and responded to ... my assumption without reading any articles on this is that if they remove monetization from videos where it's not working, push it to videos where it is, that'll probably lead to a better response per ad which, in turn, means they can charge more. But that's just a guess. From an ad buying standpoint, my thoughts are that most advertisers are very specific about where, and how, they spend their buy - and targeting is very important to them.[2]

(This is why after you get to a certain size tying your revenue to an outside ad network is a bad idea.)

[1]: AVG channel could go sell that sponsorship themselves, and make more money.
[2]: I had multiple potential ad buyers over at AbsolutePunk.net reject the proposal simply because of the name. Nike was one of them. Just because of the name of the website. I got a good lunch at W+K out of the meeting at least.

 

I still think, over a long enough period of time, this thread is going to make Dom hate me.

 

No, I don't think presidents should receive pensions or further money, once they have left office or in office for that matter, but I digress.

"Did someone not get welfare because of this?"

This question sticks out to me. You understand what I'm actually critiquing here, yet this is the question you asked. I suppose I can put it more directly: in the past forty or so years, the social safety net has been eroded significantly. Clinton put the finishing touches on welfare as we know it, thereby increasing poverty exponentially. (Here, I am using Clinton as an example, for fear I'll be accused of simply having a personal hatred for Bill and Hillary alike). Given that a robust safety net is not afforded to the rest of the public, it is hard for me to justify a providing them with one. Before you refer to it as a pension, let us again recall what the article was referring to:"It was passed in 1958 to “maintain the dignity” of the presidency by helping former commanders in chief avoid hard times..."

Dignity and the moral belief that they need to "avoid hard times" isn't something that is considered universal; rather, it is bound up in these ideas of importance and elitist structures that confer moral worth upon a handful of people, whilst consigning whole masses of people to poverty without much relief. I am of the opinion that this privilege should not be afforded to the elite. This argument should be familiar to many liberal, as it is similar to that which was used against republicans who were trying to undermine Obamacare (they have government provided healthcare, but deny it to others).

 

A presidential candidate is literally fighting on Twitter with another country's president.

This ...

 

I find it kinda funny that Trump is so brazen on Twitter after having "no response" to Nieto saying this to his face ...