Trump’s Tax Reform Could Benefit Apple, Other Multinationals


20 bookmarks. First posted by danielbentley 18 days ago.


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6 days ago by danimad
"To Understand the Benefits of Tax Reform, Start by Understanding Apple's Taxes" via
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8 days ago by edelagrave
At the risk of seeming immodest, I view myself as pretty knowledgeable on how businesses make money. After all, I earn a living explaining the mechanics of that…
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9 days ago by kohlmannj
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At the risk of seeming immodest, I view myself as pretty knowledgeable on how businesses make money. After all, I earn a living explaining the mechanics of that process to readers, and pride myself in looking under the hood to understand how the gears and pistons connect to drive the engine. via Pocket
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9 days ago by schmitz
At the risk of seeming immodest, I view myself as pretty knowledgeable on how businesses make money. After all, I earn a living explaining the mechanics of that process to readers, and pride myself in looking under the hood to understand how the gears and pistons connect to drive the engine. But with corporate tax reform looming as potentially the biggest boon to business in decades, I realized that I had a lot to learn about the way big corporations treat taxes.
Naturally, I knew that companies don’t actually pay anywhere near the official U.S. rate of 35%. And that multinationals get a big break by keeping offshore earnings abroad instead of sending the money stateside. But what do companies actually send the Treasury in cash? What do they expense now but reserve the right to pay later, in fact, any time they want? What foreign income can they exempt from all taxes? I kept hearing terms like “taxes paid,” “effective tax rate,” and “deferred tax liability” without understanding how they shaped reported earnings and cash flow, and swelled the $2.6 trillion-and-growing horde sitting in foreign subsidiaries.
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9 days ago by rgl7194
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9 days ago by breau
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9 days ago by skinnyj
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Good piece by Shawn Tully for Fortune:

I figured that if this reporter found corporate taxes baffling, so did lots of sophisticated Fortune readers. So I dug into the financials of Apple to grasp how the world’s most valuable publicly traded company accounts for taxes. Albert Meyer, a forensic accountant and former academic who runs investment firm Bastiat Capital, helped explain how and why Apple books or defers taxes on different categories of income, and which rates it applies to each category. With his help, I present a primer on taxation of multinationals, using Apple as a case study.

I still don’t quite understand the whole thing, but I have a much better grasp than I did before. And I’m more convinced than ever that Apple is doing something complicated, not something devious.

It’s important to emphasize that Apple actually pays a lot of tax compared to other U.S.-based corporations with immense foreign earnings, and takes a highly conservative approach to tax accounting. […]

For FY 2016, Apple booked total pre-tax earnings of $61.4 billion. On its income statement, Apple showed a “provision for taxes” of $15.685 billion. That number is an expense that’s deducted straight from pre-tax income of $61.4 billion to yield net income of $45.7 billion. Hence, its reported “effective tax rate” was 25.6% ($15.685 billion divided by $61.4 billion), well below the official 35%, but on the high side for multinationals, many of which are in the teens.

The news coverage on Apple’s tax avoidance would lead you to believe (and in fact has lead many to believe) that Apple pays a lower effective tax rate than most companies, when the truth is they pay a higher rate than most of their peers.

And later:

It’s important to note that Apple is extremely responsible in the use of this exemption for reinvested earnings. Many multinationals report that they intend to plough all of their foreign profits into operations, and hence, don’t make any accruals for U.S. taxes on their offshore earnings. Apple the rare tech titan that books large annual accruals that lower net income.

The problem isn’t Apple’s tax structure, it’s U.S. law. You can argue that Apple should voluntarily pay more in taxes than they’re legally obligated to, but no one who holds such views would ever get hired as a finance executive at a large publicly held company.

 ★ 
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9 days ago by josephschmitt
Good piece by Shawn Tully for Fortune:

I figured that if this reporter found corporate taxes baffling, so did lots of sophisticated Fortune readers. So I dug into the financials of Apple to grasp how the world’s most valuable publicly traded company accounts for taxes. Albert Meyer, a forensic accountant and former academic who runs investment firm Bastiat Capital, helped explain how and why Apple books or defers taxes on different categories of income, and which rates it applies to each category. With his help, I present a primer on taxation of multinationals, using Apple as a case study.

I still don’t quite understand the whole thing, but I have a much better grasp than I did before. And I’m more convinced than ever that Apple is doing something complicated, not something devious.

It’s important to emphasize that Apple actually pays a lot of tax compared to other U.S.-based corporations with immense foreign earnings, and takes a highly conservative approach to tax accounting. […]

For FY 2016, Apple booked total pre-tax earnings of $61.4 billion. On its income statement, Apple showed a “provision for taxes” of $15.685 billion. That number is an expense that’s deducted straight from pre-tax income of $61.4 billion to yield net income of $45.7 billion. Hence, its reported “effective tax rate” was 25.6% ($15.685 billion divided by $61.4 billion), well below the official 35%, but on the high side for multinationals, many of which are in the teens.

And later:

It’s important to note that Apple is extremely responsible in the use of this exemption for reinvested earnings. Many multinationals report that they intend to plough all of their foreign profits into operations, and hence, don’t make any accruals for U.S. taxes on their offshore earnings. Apple the rare tech titan that books large annual accruals that lower net income.

The problem isn’t Apple’s tax structure, it’s U.S. law.

 ★ 
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9 days ago by rufous
Trump’s Tax Reform Could Benefit Apple, Other Multinationals via
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18 days ago by danielbentley