back to article Surprise! Tech giants dominate global tax-dodging list of shame

Tech firms are the largest corporate tax dodgers in the US, according to a new report from Oxfam. The charity has published a special report on "how America's dysfunctional tax system costs billions in corporate tax dodging" called Broken at the Top [PDF], and at the top of the top are computer companies. Apple is the number …

  1. Martin Gregorie

    US tax rate?

    The average US tax rate of 31.5% sounds a bit low judging from what my US friends have told me over the years. So, is that just the federal rate, i.e. it doesn't include state and city taxes?

    1. Preston Munchensonton

      Re: US tax rate?

      That's an average rate. The important number is the marginal rate, which at the national level is 35% for corporations. Adding in local and state taxes on corporations raises things for certain US locales to over 50%.

    2. David 132 Silver badge

      Re: US tax rate?

      So, is that just the federal rate, i.e. it doesn't include state and city taxes?

      Probably. As you suggest, there are federal taxes - which operate in bands, similar to the UK - then state, county and city taxes. For example, where I am in Oregon, I pay federal & state income taxes, but no sales tax or city ordinance taxes. However, my property tax (roughly analogous to UK council tax) is pretty high - approx $12K/year, and of course there's healthcare costs too. If I were to move ~10 miles down the road to a different community, I might get lower property taxes, but then incur additional city taxes levied for things like (additional funding for) law enforcement, schools, etc. that have been voted in by local residents. Those tend to be minor, but they add up.

      It's swings and roundabouts. Personally I think it's great - it empowers communities to decide their own priorities, and also imposes a degree of financial discipline. As in, make taxes too high, and people will simply vote with their feet.

      Overall, I'm paying a lower proportion of my income as taxes compared to the UK. And when I've had to deal with the local, State and Federal bureaucracy, I've found them to be incredibly helpful and a real pleasure to deal with. Mindblowing.

      1. Mark 65

        Re: US tax rate?

        Personally I think it's great - it empowers communities to decide their own priorities, and also imposes a degree of financial discipline. As in, make taxes too high, and people will simply vote with their feet.

        I'm sorry, but that is just nonsense. Local government has always shown itself to be fiscally irresponsible. Who cares how much you spend when it's someone else's money? Need more? Just raise the taxes. Very much the same with council tax.

        As for people voting with their feet, that is simply crap. There is a reason taxes get levied on dwellings and that's because it is simply impractical to just keep selling up and re-buying elsewhere in order to try to lessen your tax bill. For the average punter the dead money involved in that two-way trade more than negates any saving. Again, that's why you levy taxes on property and residency.

  2. Preston Munchensonton

    Lies, Damn Lies, and Statistics

    Of course, left out of the Oxfam headline blurbs is the actual cause for the tax avoidance**, that being that the US uses a world-wide taxation scheme, i.e. all revenues earned world-wide by the corporate entity. The vast majority of nations use a territorial scheme instead, including all the members of the EU except Ireland and Greece. The US, on the other hand, as the distinction of sitting in the same tax scheme class as Zimbabwe (and Ireland and Greece, among others).

    If the US would shift to a territorial scheme with a lower marginal rate, they would have a windfall of cash coming back to their shores. As it stands, this is more of the same "cut your nose off to spite your face" politics from both sides of the political aisle.

    1. pete 22
      Flame

      Re: Lies, Damn Lies, and Statistics

      "If the US would shift to a territorial scheme with a lower marginal rate, they would have a windfall of cash coming back to their shores."

      Bullshit. I remember that tax holiday thing that Bush had. It all went to the shareholders and CxO's. Just like it always has.

      I think the USA should do away altogether with corporate taxes and instead bring back tarriffs. Also, capital gains should be taxed like gambling.

      1. a_yank_lurker

        Re: Lies, Damn Lies, and Statistics

        Tax holidays are one time deals what is needed is major reform of the US tax laws.

      2. maffski

        Re: Lies, Damn Lies, and Statistics

        ' I remember that tax holiday thing that Bush had. It all went to the shareholders and CxO's. Just like it always has.'

        Isn't that rather the point of profits? Rewards for the risk of investment.

      3. Charles 9

        Re: Lies, Damn Lies, and Statistics

        "I think the USA should do away altogether with corporate taxes and instead bring back tarriffs."

        They can't..Free trade treaties mean they CAN'T levy import tariffs with penalties. And this is before the problem that tariffs are a two-way street.

  3. Anonymous Coward
    Anonymous Coward

    Wait so this behaviour isn't illegal, yet it's a list of shame. Wake up and smell reality, if a corporate can use a loophole within the law, to its advantage, it's going to. End of story.

    1. Mark 65

      That's why you pay your lobbying levy as a corporate, to make sure those loopholes continue to exist.

  4. Anonymous Coward
    Anonymous Coward

    I do have to question why Oxfam is spending money producing reports like this rather than using the money on its charitable endeavours.

    Maybe they have high hopes of getting some of that extra tax money should the government ever get its hands on it.

    1. Anonymous Coward
      Anonymous Coward

      Maybe they have high hopes of getting some of that extra tax money should the government ever get its hands on it.

      Probably true. Last year, according to their own annual report 48% of Oxfam revenues were from government. When you look at where they get their public sector money from you understand why they are blathering about the US tax position: They got £46m from the British government, £12m from the Swedish government, £76m from assorted UN and EU quangos, but only £6m from US public sector bodies.

      Given the relative size of the economies concerned, the US is an obvious target. Although to give some context, the US Agency for International Development has a $35bn budget, not sure why the colonials would feel the need to give any additional funding to a British charity. And indeed, if our rebellious cousins did get a windfall from US corporations repatriating cash, it would hardly make a dent in the c$600bn government budget deficit forecast for 2016.

      1. Tom 38

        ...the US Agency for International Development has a $35bn budget

        Problem is, that barely covers the annual fixing bill for the bits of the world they blew up last year, and probably has to go to neo-con Military-Industrial-Complex companies that assisted in the blowing up in the first place</tinfoilhatapplied>

  5. Anonymous Coward
    Anonymous Coward

    How many Oxfam emloyees use iPhones ?

    Stop using iPhones and lead by example then. Oxfam is wasting money on reports telling you that a small privilleged minority is srewing the majority.

    Welcome to reality and the history of mankind!

    There's no better explaination for this than in the movie Team America:

    "Dicks f@ck pussies, but they also fuck a$$holes".

    And while our civilied governments put up a nice facade for their citizens, the f@cking continues in the background and everyone wants to have the biggest dick.

    1. Steve Davies 3 Silver badge

      Re: How many Oxfam emloyees use iPhones ?

      By your measure they should also stop using any Microsoft Product. no windows

      No HP Printers or PC's.

      etc

      etc

      etc

      time for Oxfam to invest in Abacus makers then?

      I know it is nice to pick on Apple because they present a nice fat juicy target. But any legislation will sweep up all the other US companies identified in their report as well. You can't be selective in this and not come in for at least some comment.

      Seriously though, the US Law needs reform and then this problem would cease to be one but their insistence that they pay US Tax on every cent no matter where earned (on this planet and beyond) is the root cause of this. But they won't do that now will they? Apple (not the worst) and the other companies spend an awful lot of money lobbying people in DC. Vested interests and all that.

      So life goes on and nothing changes especially this year because all those 'cough-cough' elected representatives don't want to rock the boat and not get returned to the Washington Pig feeding trough in November.

      1. Anonymous Coward
        Anonymous Coward

        Re: How many Oxfam emloyees use iPhones ?

        "Seriously though, the US Law needs reform and then this problem would cease to be one but their insistence that they pay US Tax on every cent no matter where earned (on this planet and beyond) is the root cause of this. But they won't do that now will they? Apple (not the worst) and the other companies spend an awful lot of money lobbying people in DC. Vested interests and all that."

        But they'll tax dodge no matter what the tax law. They'll dodge taxes simply because they're taxes. Fiduciary duty demands it. It's like Little Johnny and the Stationery Closet (Discworld reference). That's probably one reason the US targets global profits: because of tax dodging. It's only sovereignty that hampers them.

        Frankly, if I could set up the rules, ANY company that wished to trade in America MUST establish a physical presence somewhere in the country (to lock in enforcement power), THEN enforce tax policy to center on ALL activity within my borders AND to regulate imports such that all activity must occur at fair market value, with supply chaing paperwork to demonstrate this (to avoid them tax dodging by exposing "sell for a dollar" tactics which can then be assessed punitively to discourage the practice. That should take out most of the loopholes and establish firm rules of the game. The only way to dodge proper taxes from that point would be to not do any business with America's 400 million people.

        1. John Brown (no body) Silver badge

          Re: How many Oxfam emloyees use iPhones ?

          "Fiduciary duty demands it. "

          No, fiduciary duty demands they run the company in the interests of the shareholders. It may not be in the interests of the shareholders to keep billions overseas if those billions could be used back at home to build the company, for R&D, for dividends, or even to improve the home country (via taxes) for the shareholders and everyone else.

          1. Charles 9

            Re: How many Oxfam emloyees use iPhones ?

            Shareholders can invest offshore, too, and the R&D, building, etc. can occur practically anywhere in the world now thanks to the global economy. As long as you can keep the transportation costs down (which you can usually mitigate through economies of scale), you can keep more of the cake then you would if you built at home. As for dividends, there are other ways to pay off investors that avoid taxes such as by using stock options and investment vehicles that aren't assessed for taxes until their sold, and "Tax Planning 101" says inherited investment is re-based, wiping out the capital gain and any taxes associated with it.

    2. Anonymous Coward
      Anonymous Coward

      Re: How many Oxfam emloyees use iPhones ?

      How many Oxfam emloyees use iPhones ?

      I don't know. But I would draw attention to the fact that their CEO's total pay was only around £150k, better than I'm on, but for the CEO of a c£400m a year business that's very modest. Whilst I'm not wholly aligned with Oxfam's agenda, I'll take my hat off to the fact they don't appear to be lining their own pockets. With support costs of 8% of income they're a little bit on the high side (I'd have thought 5-6% was good), but it's not outlandish. Fundraising was another 8%, the balance was on a mix of humanitarian and development, with a modest 5% on campaigning and advocacy.

      And that balance on campaigning and advocacy is where the money comes from for this report. Looks to me like Oxfam are actually rather well governed, and spend their money wisely. Whether they merit £190m of government money is another separate question...

  6. Anonymous Coward
    Anonymous Coward

    Is the register socialist?

    Hmm, weird, garbage, socialist article. If the companies pay more tax, consumers pay more, and workers lose their jobs. As always when politicians "help". So no thank you mr politician, please abolish taxes altogether, since tax is theft as we all know.

    When everyone voluntarily pays for what he uses, all of a sudden, the service providers have an incentive to deliver service and not shit like todays government.

    1. Charles 9

      Re: Is the register socialist?

      If taxes are evil, then they're a necessary evil. Otherwise, how does the country operate? How do you pay soldiers, police, firemen, road workers, and so on? Many of the above once were private enterprise but then saw their leverage and became protection rackets. As for the roads, would you want tollgates at every junction?

      1. Anonymous Coward
        Anonymous Coward

        Re: Is the register socialist?

        How do you pay soldiers, police, firemen, road workers, and so on?

        Debt. Do pay attention!

        http://www.usdebtclock.org/

      2. CrazyOldCatMan Silver badge

        Re: Is the register socialist?

        > How do you pay soldiers, police, firemen, road workers, and so on?

        Why - you sell subscriptions of course! It's been done before and *nothing* ever went wrong! Honest!

        In fact, it would allow a quality service to be delivered to the rich without having to worry about the poor, huddled masses.

        (Do I need a /sarc tag here?)

        1. Charles 9

          Re: Is the register socialist?

          "Why - you sell subscriptions of course!"

          I mentioned that already. They became protection rackets ("Shame what could happen to your house, hmm hmm?") which was why the government had to step in and take them over.

    2. Anonymous Coward
      Anonymous Coward

      Re: Is the register socialist?

      Some good, some bad, but at least we would get rid of the US Army the NSA but then again the NASA too. (what do you Americans eat).

    3. John Brown (no body) Silver badge

      Re: Is the register socialist?

      "Hmm, weird, garbage, socialist article. "

      I bet you are one of those who says "socialist" with the same tone as McCarthy said "communist".

      And yet you post as one of the AC "collective" so as not to be an individual standing up for your own rights and freedom of speech.

  7. Anonymous Coward
    Anonymous Coward

    P.S. If the politicians want more tax money, change the laws. But don't be surprised if workers lose their jobs and companies move somewhere else.

  8. Anonymous Coward
    Anonymous Coward

    re: the pic

    No, boss. Like this.

    You're holding it wrong.

  9. Gigabob

    Since when is this news?

    This is why Ireland exists and in the US you file in Wyoming, Delaware and Nevada. Apple runs the bulk of sales through an office in Nevada due to favorable tax treatments. It is easy-peasy to classify the "product value" around intangible IP that is assigned to a PO box office. So the factory can exist wherever - and deliver costs - while the IP (profit) is sold out of a tax-haven office. For those who have been in a Cannabis Fog for the past two decades - that is the high tech blueprint for monetization.

    Do you wonder why the Tech firms have large government lobbies - given the absolute idiocy that surrounds the garbage legislators propose for the tech community? It is to maintain the status quo on taxes. Tax policy has not impacted job creation significantly for over a decade. In fact several studies have shown that at the gross macro levels - job growth correlates to increased taxation.

  10. nilfs2
    Childcatcher

    Don't raise taxes...

    ...instead, make people and companies spend some of the stash they have in the banks doing nothing; money hoarding is the biggest enemy of our economy.

    1. John Brown (no body) Silver badge

      Re: Don't raise taxes...

      I'm pretty sure that most banks are not just sitting on piles of depositors' cash. They are lending it out to earn interest. It''s pretty the main foundation stone of the banking industry. Simplisticly, the difference is that Apples $160b is being lent out and working on behalf of the banks instead of Apple choosing what to do with it. The actuality is probably that Apple, MS, IBM, et al are employing their own accountants and share dealers to manage and invest the money on their behalf. When you have billions to play with , spending a million on high flying staff to use it to earn more is a no brainer.

  11. tom dial Silver badge

    The article evidently is about federal taxes on income, so references to state and local income, property, or sales taxes are misleading.

    With that in mind, the average federal income tax rate for individuals appears to be slightly over 10% of total income at present, with an additional Social Security + Medicare payroll tax a bit under 8%, for a total slightly below 18%, a lot less than the 31.5% stated in the article.

    States with income taxes (seven have none, and two more tax only dividend and interest) probably have average rates in the neighborhood of the 5% I pay in Utah. Adding that to the federal average of 18% (and the article is about federal taxes) still gives only about 23%, and adding local income taxes (where they exist) would likely raise the average rate by no more than 2 or 3 per cent., giving an average of, say, 26%, still quite a lot lower than the 31.5% the article claims. New York, especially New York City, and California appear to squeeze a lot harder than most, but certainly are not typical.

    Other taxes do add significantly to the individual tax burden, and depending on circumstances there probably are quite a few people who pay more than half of their income in some form of tax, but that would not be federal taxes, for the most part, and it would not be income based.

POST COMMENT House rules

Not a member of The Register? Create a new account here.

  • Enter your comment

  • Add an icon

Anonymous cowards cannot choose their icon

Other stories you might like