[malux85]

I used to think this -- but then I heard the argument that if Apple was to behave "ethically" and pay the taxes that technically the law requires that they dont, then the shareholders can sue the company for not acting in their best interest.

Even if the above isn't true (not a lawyer) we cannot rely on ethics alone, it will have to be enforced by law, otherwise nobody will do it

[vesinisa]

> if Apple was to behave "ethically" and pay the taxes that technically the law requires that they dont, then the shareholders can sue the company

Well yes, but you know there's a shade of gray between engaging in complex, aggressive tax planning schemes and handing out unsolicited donations to the IRS.

A company's board is perfectly within its mandate to say it pays tax for its profits where it is incorporated, when the profits are made (and not delaying foreign profits in a tax havens). Because this is the very normal thing that almost all normal corporations do. The board is just as well within its mandate to say they do it for PR reasons to demonstrate corporate social responsibility.

For example, Nokia during its heyday happily paid a fair share of its taxes in Finland, eventhough they definitely had access and capability for all the tax dodging schemes in the world.

[pembrook]

You must admit the irony in that Nokia example...

If Nokia had instead gone to the lengths Apple does to cut taxes and invested that money back in the company they might still be thriving as an independent entity today...ultimately generating far more benefit for the Finnish economy over the long run than being a shrinking Microsoft division.

[vesinisa]

I admit to the irony, but sadly they could have never saved enough profits to turn around the company. They could have at best delayed the inevitable further down the road..

[Nursie]

Not so sure really, they likely would have burned through it anyway, such was the scale of the management screwup there.

[barrkel]

There's another way to twist that: cheating the people out of their government's revenue is a fine way to build up negative goodwill. That has a longer term cost.

[alehul]

This is very true.

There was a recent incident in France in which people protested outside an Apple store for them to "pay their taxes."

Apple wasn't explicitly breaking the law, however customers are entitled to vote with their wallets, and showing their vote will likely have some effect on the company.

[jotm]

You're joking right? The tax deals and some protests will not affect Apple's bottom line in the slightest.

Customers vote with their uncaring brains, which will pull out the wallets just as they did before.

[alehul]

Clearly some customers are not uncaring.

I'm not saying that one protest will have a massive impact on Apple's bottom line; just that:

1. protesting is a sign that the tax issue is an area customers care about, and those out protesting are likely a very small minority of those who feel that way.

2. the act of companies' feigned goodwill for a net profit could extend to any area customers care about, including legal vs ethical tax practices.

[pillowkusis]

this is not exactly true, no[0]. The law's intent is to give shareholders a means of legal action if the leadership at a company destroys shareholder value for their own gain.

0: https://www.nytimes.com/roomfordebate/2015/04/16/what-are-co...

[Groxx]

As one who isn't familiar with all this: "not exactly true" means very little. How does it behave in practice?

[ABCLAW]

That's a great argument in theory, but that isn't the way those laws work. The thought experiment is trotted out frequently to justify any type of corporate race to the bottom.

It isn't anything more than a misleading misreading of corporate law.

[matt4077]

This supposed legal responsibility to be cut-throat capitalists is somewhat mythical. You can't just give money away without justification. But management has extremely wide discretion in their decision-making. Almost all companies donate to non-profits, for example. Yes, you can argue that it is good for PR. But that argument also works for anything else that someone, somewhere, would consider "ethical behaviour".

Specifically for this case: there is no obligation to establish a super-complicated tax structure to lower your tax rate to 0.5%. Otherwise, 498 of the Fortune 500 would run afoul of it.

We probably can't rely on ethics, or, to use the term I prefer, "integrity" (doing the right thing even when nobody is looking). But that doesn't mean that we cannot fault companies for behaving unethically. If we expect people not to always exploit each others weaknesses in the pursuit of money, why not expect the same from companies? Corporations are people, after all.

[exDM69]

> then the shareholders can sue the company for not acting in their best interest.

I hear this argument often with tax avoidance and I'm not buying it. Has this ever happened to any company out there?

[toomuchtodo]

> but then I heard the argument that if Apple was to behave "ethically" and pay the taxes that technically the law requires that they dont, then the shareholders can sue the company for not acting in their best interest.

I've never considered central banks printing money to acquire majority interests in public companies in order to compel them to pay their taxes while preventing shareholder actions against them for doing so until this comment.

[ridgeguy]

If Apple wanted to prioritize benefits to its home country (America) by avoiding use of ex-U.S. tax minimization schemes, it need only ask its owners (shareholders) for permission to do that.

I think Apple has enough market power to put shareholder return and tax benefits to its nation of origin at similar priorities. It would be interesting to see what Apple's shareholders would say, if asked.

[rayiner]

That’s not really true, if it ever was. These days, officers and directors are quite insulated from law suits like that. The decision to pay more than you have to has to reach a level of just lighting money on fire, not taking less conservative tax positions.

Activist shareholders are the bigger source of risk.

[megy]

> then the shareholders can sue the company for not acting in their best interest.

Sure, this COULD happen, but it is so rare to happen that it is incredibly unlikely. And has there even been a case of shareholders suing for a company not evading taxes enough? I doubt it, since all companies DO NOT do this.

[Nursie]

We cannot rely on corporate ethics, that much is obvious.

But we can still make damn sure we expect ethical behaviour, and lobby for change where we can, and make our displeasure known through our purchasing habits and more direct communication.

[sumedh]

> then the shareholders can sue the company for not acting in their best interest.

Has it ever happened before where shareholders have sued because a company was paying "fair" taxes?

[dannyw]

Also, the shareholders will just replace the board with one who would get the best returns for the investors.