This week, the United States Senate has released a report detailing the types of international tax shelters Apple has used to avoid paying US federal taxes, as well as taxes in Europe. The amount of tax savings may be surprising to the uninformed; up to $74 billion over 5 years. It was not shocking to me when the panel also determined that the single largest US corporation did not break any tax laws to accomplish this. Yet, even though no laws were broken, Apple CEO Tim Cook is speaking before the congressional committee to explain the company’s actions.
The whole thing is a sideshow though. Independent journalists have been pointing out these loopholes for decades among all the largest United States corporations. The irony is these loopholes would not even exist if it weren’t for the very same people carrying out this investigation. And these very same people are not very likely to change anything, because lets face it, those who fund their campaigns earn the most from these loopholes in the first place (I’m not suggesting here that Apple is behind these loopholes either, although I wouldn’t be surprised if they had tax lobbyists like every other public company).
It’s always good when the media sheds some light on stories like this. However, without any serious changes to campaign finance laws, we are not likely to see any big changes. And on top of that anyway, multinational company taxes are complicated by the simple fact that they operate in multiple countries, and no country’s tax codes look alike. A real solution to this “problem” would need to be met with international support, and we all know how easy that is.
Apple has recently announced that it will move manufacturing production of one of its PC lines exclusively to the United States in 2013. The speculation is the iMac line, as some of the newer units have already been labeled with “Assembled in USA”. The cost of this move is going to cost the electronic behemoth $100 million. Even though it is a wonderful PR move for Apple, it reeks of financial disaster. Investors already know this, which is why the stock dropped 5% the day before the announcement. It’s a terrible idea for two reasons: 1) this will undoubtedly lower the margin of profit per PC or it will 2) raise the price of PCs. Apple already charges a premium on its PCs relative to the rest of the commercial computer industry, so raising its prices could be harmful. Not raising the prices of the PC line will lead to smaller margins, which will hurt Apple’s bottom line. Throw in the $100 million capital to jump start this effort, and you are creating some real pain for investors.
On the contrary, Apple has so much cash that it uses 100-million-dollar-bills as toilet paper. Apple also makes the majority of its money from iPods, iPhones, and iPads – so sacrificing one of its desktop production lines for good PR might actually make it a pretty reasonable marketing move. All in all, the move will probably end up being a wash for the company and have very little or no impact on the company. So… sorry for wasting your time reading this post. Email your rage at email@example.com
If you listen to our show, you may actually think I’m a strong Apple hater. This is not the case – I just present myself that way in front of Basement Rob to try and get him fired up. Since 2004 my personal computer has been a Mac of some kind and it will continue to be that way for the forseeable future (hell, Basement Rob was a hater until I annoyingly shoved my plastic Macbook down his throat!)
So today I write to complain about this article in Forbes, that says very clearly if Steve Jobs were still around, iOS 6 never would have been released. This sentiment exists mainly because of some amusing bugs in the recently released Apple Maps application, which forcefully replaces the Google Maps application that used to be standard in iOS. The writer asks:
If Steve Jobs was alive, would he have introduced Apple Maps with rough edges? Did the meticulousness that went into Apple products die with Steve Jobs? Has Apple squandered the trust of users built up by Steve Jobs over years in one swoop?
Then he says “These are the important questions for Apple investors to ponder.” Really? I’m pretty sure the only question Apple investors are asking right now is “when will this baby hit $1000!?”. Don’t be so fucking naive Forbes – Steve Jobs was around when they released the iPhone 4 for Christ’s sake – remember that debacle?