Thursday, 6th March 2014

APPLE: MORAL HAZARD

Every so often, an individual piece of journalism provides a perspective, hitherto unseen or unacknowledged, that makes a mockery of whole swathes of public debate. Just such a piece appeared in today's Australian Financial Review.

Neil Chenoweth reports that Apple has shifted an estimated $8.9 billion in profits from its Australian operations to Ireland in the last decade, via Singapore, to avoid tax. Legally, of course.

So last year, for example, Apple reported pre-tax earnings in Australia of only $88.5 million after it sent an estimated $2 billion of income from its Australian sales to Ireland.

Apple pays no tax in Ireland because the company is managed and controlled in California. It pays virtually no US tax either because US law is based on where a company is legally registered.

Thus none of the billions in profits Apple moves to Ireland from Australia and elsewhere is taxable.

So while the rest of us tie ourselves in knots over the entitlement of SPC, or union wage claims, or the impact of the carbon tax, remember that Apple Sales International pays less than 50¢ in tax on every $1000 of income. Apple reported $20 billion in sales in Australia over the past 4 years. 

This presents us with more than a budget problem. It's a cognitive problem.

Nick Feik
Politicoz Editor

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RBA member says economy has turned a corner

"Australia’s economy may have shaken off the threat of a serious downturn, helped by resurgent household spending and booming exports, according to prominent Reserve Bank of Australia board member John Edwards... The rebound in growth spurred hopes Australia was successfully ­making the shift from being driven by mining investment to other sources of demand, such as home construction."

Qantas Sale Act: Pressure builds on Labor to support law changes

"The Federal Government will this morning introduce legislation to remove all foreign ownership restrictions from Qantas, despite it facing certain defeat in the Senate. Labor is refusing to back the Government's legislation to lift the Qantas Sale Act... Meanwhile the Australian Council of Trade Unions says it is unacceptable that Qantas has not given its workers details about mass job cuts and plans for the airline's future."

How Ireland got Apple’s $9bn profit

"US tech giant Apple has shifted an estimated $8.9 billion in untaxed profits from its Australian operations to a tax haven structure in Ireland in the last decade, an investigation by The Australian Financial Review has found. Last year Apple reported pretax earnings in Australia of only $88.5 million after it sent an estimated $2 billion of income from its Australian sales to Ireland via Singapore."

The boats always come back

"Pacific Solution Mark II is starting to feel like another staging post. Generous and welcoming Australia may have to take them after all. But not swiftly. We’ll leave them in limbo for years like the last time and hope that all we learnt then about endless detention’s impact on people - violence, self-harm and mental collapse – will discourage refugees."

Also: Scott Ludlum's much-discussed Senate adjournment speech 

Opinion round-up

Railing against a 'left' that no longer exists (Jonathan Green, The Drum)

Why I lament the lack of moderate voices on the right (Paul Matthewson, Guardian)

Six months on, it's time Labor got off the floor (Jack Waterford, Canberra Times)

The conservative crusade against the ABC (Don Watson, The Monthly)