“This decision has angered those who like to inveigh against ‘tax avoidance’ and ‘corporate greed,'” Damodaran writes. “But the culprit is not Apple; it is the over-complex US tax system. Apple’s actions can be explained by two features of the tax code: its treatment of foreign income and its bias towards debt over equity.”
Damodaran writes, “How do you fix the problem? There are those who believe that it is the patriotic duty of every US corporation to maximise taxes paid, a belief that is in conflict with a company’s fiduciary duty to its shareholders, many of whom may not share this belief. Indeed, many are foreign investors. To those with a punitive bent, the solution is to tax all income at US tax rates, irrespective of whether it is returned to the US or not. While that may appeal to egalitarian impulses, it will force US-based global companies to pay a large price to remain based in the US. Many will choose to leave. Another solution is to lower the US corporate tax rate towards that of other large economies and not tax foreign income as US income. This suggestion will attract populist anger but may actually result in more taxes being collected and greater investment in the US.”
Read more in the full article here.
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Tagged: AAPL, Apple shareholders, Apple tax rates, finance, opinion, tax holiday, tax repatriation, U.S. corporate taxes, U.S. taxes
