The IRS is sending out more than 125,000 notices to individuals who made $400,000 or more and failed to file returns between 2017 and 2021.
It's estimated that the richest Americans are dodging $150 billion worth of taxes every year.
This is why IRS funding is a good thing.
— Robert Reich (@RBReich) March 20, 2024
Tis the Tax Season, and while very few people enjoy paying taxes, most of us accept that taxes are the price of civilization. So this might help your mood a little…
IRS chief zeroes in on wealthy tax cheats in AP interview https://t.co/ff3z6fzbGe
— The Associated Press (@AP) March 20, 2024
IRS Commissioner Danny Werfel has a message for high-wealth tax cheats who are wrongly deducting private jet travel and otherwise shorting the government on their taxes: Pay your fair share so “others aren’t shouldering the burden of funding our government.”
Werfel, who will hit the one-year mark at the helm of the IRS in April, said in a wide-ranging interview with The Associated Press that the agency will expand its pursuit of high-wealth tax dodgers with new initiatives in the coming months and is using tools like artificial intelligence to ferret out abuses and taking the fight to sophisticated scammers…
“It’s having an impact,” Werfel said. Large corporate filers and others are “taking notice that the IRS is ramping up our scrutiny, and I think that will inevitably result in more compliance” — and revenue…
Werfel has been in a race against time to show how improvements to the agency can benefit taxpayers. He said agency priorities include customer service improvements like answering the phones faster and making sure the rich “pay their fair share.”
The agency also is piloting a program for people to file their taxes directly to the agency without the help — or cost — of private commercial software.
Werfel said more than 50,000 people in 12 states have started using the new Direct File system to complete their taxes. The free online tool is available for people with very simple W-2s and who claim a standard deduction for their federal income taxes.
The Direct File rollout has drawn some consternation from commercial software firms like Intuit, as well as Republicans who argue there are free filing programs that already exist.
But so far, Werfel says, “people are telling us that they found it to be quick and easy, and everyone certainly loves that it’s free. And their No. 1 question is: Are we going to have this again next year?”…
After years of looking the other way at tax cheating by the wealthy, especially under Trump, @POTUS Biden has the @IRSnews focused on enforcing our tax laws.
My piece for @thenation today has the goods:https://t.co/ySGWsfJfWs— David Cay Johnston (@DavidCayJ) March 1, 2024
Good explainer from David Cay Johnson, at the Nation — “The IRS Finally Takes the Gloves Off”:
The Internal Revenue Service last week announced a crackdown on writing off the personal use of corporate jets as a business expense. Taking improper tax deductions for private jet flights is the newest target of a reinvigorated IRS, which, under the Biden administration, has begun aggressively pursuing wealthy tax cheats.
On Leap Day, the IRS also announced plans to initiate 125,000 examinations “focused on high earners, including millionaires, who failed to file tax returns” on an estimated $100 billion of income, an average of $800,000 per case.
The IRS said it would also increase examinations of partnerships—another area where cheating has long been rampant—and in general will scrutinize more returns filed by people making more than $1 million per year, especially if they owe large tax debts, own multiple shell companies, or have overseas bank accounts.
These new audit policies clearly signal to business owners and executives that the Trump-era practice of looking the other way at high-level tax cheating is over. The IRS said that the rate at which the IRS audits poor, middle-class, and upper-middle-class Americans will not change.
This is welcome news for honest taxpayers, because when those with the highest incomes cheat, everyone else must pick up their burden in one of three ways: They pay more taxes, receive less government services, or bear the interest on increased government borrowing…
The tax gap (the gap between taxes owed and taxes collected) was $688B in 2021 — nearly half the size of last year’s deficit.
For every $1 the IRS spends auditing rich tax cheats, it can collect $12.
If the GOP truly cared about the deficit, they would fund the IRS, not gut it.
— Robert Reich (@RBReich) March 21, 2024
Thousands of millionaires haven’t filed tax returns for years, IRS says
About 125,000 notices will be sent to high-income earners, including 25,000 people with income more than $1 million, the tax agency said. (No paywall.)https://t.co/oa1I1R8JC8
— Cat, Reigning Typo Queen👑NO DMs (@typocatCA) March 1, 2024
Middle class people don't evade their taxes because they're overwhelmingly W2 employees who pay withholding during the year and have clear, straightforward deductions, especially now https://t.co/nZGWU59m9X
— The okayest poster there is (@ok_post_guy) March 1, 2024
"He'll let tax cheats off the hook" is a top voter concern about Trump pic.twitter.com/H0CMchT4yD
— James Medlock (@jdcmedlock) March 7, 2024
And while we’re at it, another very significant ‘housekeeping’ proposal…
The ultra-wealthy will stop paying into Social Security for the rest of the year on Saturday. Rather than making these individuals pay their fair share, MAGA Republicans want to cut your earned benefits. We must #ScrapTheCap and enhance #SocialSecurity for all Americans. pic.twitter.com/CJduUJt0fl
— Rep. Ted Lieu (@RepTedLieu) February 29, 2024
Social Security is a critical lifeline for millions of seniors – especially folks without a good union job and retirement. We need to protect and expand Social Security, not cut it – and one powerful way to do that is to make the ultra-wealthy pay their fair share. #ScrapTheCap pic.twitter.com/HWRNjeLbOS
— AFL-CIO ? (@AFLCIO) February 29, 2024
jackmac
Go get ’em. Long overdue enforcement.
Baud
They’re going to pull out all the stops to defeat Biden.
schrodingers_cat
@Baud: Even the _”liberal” NYT and the trustfund “progressives”
Brachiator
It’s good to see the IRS go after non-filers. They deserve to be nailed.
OTOH, tax legislation that could provide additional tax breaks to low-income families and small businesses is currently stalled in the Senate. The House passed its version of the Tax Relief for American Families and Workers Act of 2024 on January 31, due to some rare bipartisan cooperation. But the Senate has sat on the legislation, with the usual right wing suspects braying that lower income taxpayers don’t deserve a break.
I don’t know anyone who used IRS Direct File, but I would like to see it succeed. And this is coming from someone who worked in the tax industry for quite a few years.
The best system would be for the IRS to calculate most people’s taxes and allow for adjustments.
NotMax
This is a BFD.
US sues Apple for illegal monopoly over smartphones.
hrprogressive
I wish our tax code wasn’t essentially just a giant shell game. I’m sure you’ve often heard from right of center quote-unquote “libertarian” types who complain about how byzantine and gargantuan the IRC actually is, and on that very specific point alone, I agree with them.
Of course, while their “solutions” amount to dumb-ass statements about taxation being akin to “theft”, my solution would be to strip it down as much as possible, make it a progressive structure whereby everyone from individuals and corporations pay more as they accumulate more, and make sure that tax breaks and deductions benefit individuals and bona fide small businesses and that’s it.
It’ll never happen but I can have a pipe dream huh.
Jay
https://www.nysscpa.org/article-content/humphreys-county-mississippi-is-the-most-heavily-audited-in-u.s-040419#sthash.lxIG7u3p.dpbs
Funny, that.
Doug R
One of the actual good uses of AI-wading through reams of data using fairly simple rules to look for patterns to flag for the humans.
Poe Larity
These poor people don’t make enough to have good tax accountants. Barely enough to fly first class to Tahiti every season and parking for the Bentley. Premium parking at LAX is $75/day now!
Brachiator
@NotMax:
I think that this is as misguided as the earlier attempt to go after Microsoft over Internet Explorer.
Also, I have never bought or used an iPhone.
Steve in the ATL
@Poe Larity:
only proles fly out of LAX. Private jets leave from VNY.
schrodingers_cat
@NotMax: Another reason for social media outrage merchants to hate Garland.
dmsilev
@NotMax: From what I’ve read, the DoJ has adopted a rather contrived definition of “monopoly” in order to bring this suit. Apple has a bit over a majority share of the smartphone market in the US, but it’s like 55%, not the 90+% that e.g. Microsoft had in the PC market when that antitrust suit was filed in the 90s.
Very much not my area of expertise, so I’m sure I’m missing something.
dmsilev
Re: that last tweet (or whatever) from the AFL-CIO: Even without any cap, would Musk or Cook pay much into Social Security? Most of their money comes from stock grants of various sorts, not payroll checks, and I don’t think grants of those sorts are subject to anything except capital gains taxes. So, to make a real difference, we’d have to change the tax laws a bit more thoroughly than just “lift the cap”.
TBone
FAFO from the Judge to Blago:
https://chicago.suntimes.com/blagojevich/2024/03/21/federal-judge-rips-rod-blagojevich-tossing-ex-governor-lawsuit
NotMax
@dmsilev
Quick take: Monopoly in the sense of ant-trust, not of gross market share.
Locking consumers into the proscribed boundaries of an Appleverse which downplays, throttles or outright denies functionable third-party competition on its OS.
The EU has already forced Apple to begin prying open those doors overseas.
SpaceUnit
So up until now people could make 400K and not file their taxes for years and the IRS just looked the other way? Holy shit.
TBone
@NotMax: 👍
SoupCatcher
@Steve in the ATL:
Also known as the filming location for the airport scenes in Casablanca.
satby
@Jay: well @Brachiator: can probably correct me, but I suspect the high proportion of EICC triggers a lot of those audits, because it’s not uncommon for two parents filing separately to claim the same kid for the credit when only one is entitled. I was subject to one of those audits (normally just a letter you reply to with documentation) when my ex-husband tried to claim one kid although he was not the custodial parent AND he was tens of thousands of dollars in arrears on child support. I “won” the audit.
Quadrillipede
10 minutes from The Root on Black Joy:
gwangung
@dmsilev: It’s not aimed at a monopoly to end users, but at Apple’s practices towards developers, where it’s own products are favored. One of the examples used is the Apple wallet.
BellyCat
Apple endeavors to offer a unified and secure platform for users of both OSX (computers) and iOS (mobile phones and tablets).
While I have a number of quibbles, I’m free to walk away, and I’ve tried other platforms. The reason I don’t is simple: I’m willing to pay slightly more for products that integrate extremely well and (largely) meet my needs, that I don’t have to worry about, give undue attention to, or swear at frequently (looking at you, Windows).
Might some of their policies be less than ideal for developers (and competitors)? Possibly if not likely. Same is true for most large companies. Proving where and how consumers are harmed by Apple seems a tall order, frankly.
brantl
Time for the rich to pony up. Maybe they’ll have to sell their ponies.
Another Scott
@dmsilev: A few years ago it was the case that only Apple was making money on smart phones. Palm is dead, Nokia is dead, Blackberry is dead, HTC was bought by Google and they’re not making money, LG is dead, Samsung is big but struggles, etc., etc. (Who knows if any of the Chinese brands are making money.)
I wouldn’t be surprised if that were still the case, and if so, that’s a warning sign about a distorted market.
When even Microsoft had to get out of the market, that says that Apple really is the gorilla in the space, no matter how many different kinds of phones are available at the moment.
Cheers,
Scott.
Brachiator
@satby:
Yep. A lot of this is not any kind of detailed audit, but just a request for clarification.
However, there are some people at all income levels who try to cheat on their taxes to get credits. So, a fairly common plot is the use of unsubstantiated business income on a Schedule C in order to maximize the earned income credit. This is sometimes not the fault of the individual taxpayer, but the work of unscrupulous tax preparers who jack up their fees based on the false credits they create for their clients.
brantl
@BellyCat: Not really, they’re anti-competitive streak drives higher prices. I would’ve thought that was obvious, frankly.
BellyCat
@Another Scott: Does Samsung really struggle financially with their phones? My impression is that they are the recognized leaders for quality Android phones.
TBone
@Another Scott: exactly.
BellyCat
@brantl: Having strict criteria for developers to meet for inclusion on Apple’s platforms, which is higher than what is required of other platforms, is not necessarily anti-competitive. (ETA: it’s just a higher standard.)
The actual details matter here.
Another Scott
@SpaceUnit: Some people have weird ideas about taxes. My in-laws didn’t file returns after they were 80 or so because, they told us, they were “too old”.
:-/
(They didn’t have anywhere near $400k a year in income!)
There are lots of reasons why someone might not file (e.g. missed filing one year because of event X, then nothing happened, and they worry about what will happen to the old years if one starts filing again since they’re on the edge and cannot afford to pay a big back tax bill, etc.). What matters is having a system that separates the crooks and schemers and cheats from those who mess up.
Cheers,
Scott.
Brachiator
@Another Scott:
I don’t see how the DOJ suit corrects errors in judgement by other companies.
Also, is there equal concern over Microsoft becoming big in the gaming industry?
I don’t keep up with gaming, so maybe there was deep scrutiny of this deal.
Brachiator
@Another Scott:
There is a fairly common and entirely wrong myth that after some undefined age, you don’t have to pay individual income tax anymore.
I’ve also had people tell me that people are always supposed to get a refund when they file their taxes.
Martin
@BellyCat: I think the weird thing about this case is that antitrust is usually employed against companies that consumers dislike. It’s always been a kind of democratic lever – if consumers dislike this market structure, the feds will intervene and change that.
But consumers don’t dislike Apple. Consumers generally love Apple. So the DOJ risks public backlash on this one. I don’t think it’ll be too bad because the things they are focusing on will either show serious ramifications during trial or most people don’t actually care about – that if there’s a market change, most people really wouldn’t notice.
It’s an odd political decision – to go after the nations most valuable and one of the most liked companies by consumers. And to do it in an election year, as if the GOP won’t lie its ass off about the remedies they are seeking here.
The main consequence I see in what the DOJ is focusing on is that parental notifications are basically toast. The EU just annihilated them for phones sold there, and my guess is that’s collateral damage for phones sold in the US. If you wanted to keep your 12 year old off of TikTok, the most effective tool for doing so is about to be wiped out.
Bill Arnold
@BellyCat:
Indeed.
I am not an apple fan (don’t particularly like macbooks), but do own an old iPhone (8 years?), and just installed a new security patch in the last few weeks.
I appreciate their diligent maintenance of their brand as a seller of more secure devices. They take it seriously, including the actual engineering and technical details, and offer security updates longer than (most?) other vendors.
I appreciate the restrictions (or some of them at least) on developers who want to sell in the App Store.
wjca
Well, at least that’s an incentive to file. :-)
Seriously, considering the costs (penalties and interest) of underpaying significantly, there’s actually something to be said for paying enough in withholding and estimated taxes to be sure you get at least a small refund.
SpaceUnit
@Another Scott:
I know people don’t file if they’re unemployed or if their income is under a certain amount. But to earn 400K or more and to simply not bother to file seems crazy. I’d expect the IRS to be on that in a heartbeat.
Formerly disgruntled in Oregon
@NotMax: Thanks – good explanation.
Baud
I don’t know if DOJ will prove its case, but there’s no exceptions to anti-competitive conduct for companies I like.
BellyCat
Or less desirable products.
The EU was probably right in their decision to require Apple phones to use a standardized USB-C port, even though I find it’s more prone to “pocket lint” issues and the little tab inside the slot is more likely to get broken when cleaning attempts are made. For this reason alone, Apple’s Lightning plug may actually be functionally superior, from a durability point of view. What Apple should have done was license it to other manufacturers—but that’s not how Apple rolls, often to their detriment.
Another Scott
@BellyCat: Samsung is huge and they make all kinds of stuff. The company overall is at the mercy of the memory chip market and similar things. And they make very good phones, but they’re not a cash factory the way the iPhone is for Apple.
AppleInsider.com (from February 2023):
Other companies are shipping lots of phones, but Apple is making almost all the money.
The fact that Apple feels no pressure to cut its prices while it’s sitting on $2.65T market capitalization is another thing that shows that there isn’t sufficient competition. (Samsung’s market cap is about $397B.)
My $0.02.
Cheers,
Scott.
Baud
It’s funny watching libs worry about the government being too aggressive against the world’s largest corporation.
Delk
Parents are just tired of their kids being bullied for not having the right color chat bubble when they bully their nonbinary classmates.
Brachiator
@BellyCat:
I can understand this also, but could it slow down development of better connectors in the future? The EU is essentially saying that USB C is good enough. Based on what?
I kinda sorta believe that tech innovation has largely been self-correcting with respect to anti-trust when it comes to products and services.
Gvg
@satby: There can be a lot of that. My sister claimed a foster child we had for most of the year per law. The prior foster mom tried to claim him also. He is now my nephew-adopted. Later on someone got his SS# and tried to scam Medicaid which covers foster kids. Presumably someone in the hospital records area was crooked. Foster kids SS# has to be in too many data bases. Luckily if they are adopted, they get a new SS# and the old one won’t work anymore.
We heard a lot of variations of the non custodial parent claiming the kid every year. It’s best to file fast every year if you have that kind of ex. Fixing it can take a long time and delay any refund, so claim first if you should.
BellyCat
@Martin: Indeed, there would be much hue and cry if parental notifications got axed.
My eight year old can only install what is approved on his iPad and I am more than fine with that.
Figuring out a way to better lockdown (Google’s) YouTube content for kids merits DOJ efforts more than what readily appears here with Apple.
But if they really want to beat up Apple, require them to have a purchase option for all apps: one without ads!
BellyCat
@Brachiator: Agree completely.
And… Apple’s reluctance to license their connectors could legitimately be called anti-competitive in this context.
Harrison Wesley
Twenty-some years ago I got into hot water with the IRS (which I richly deserved), and it was only because my cousin found me a good tax lawyer that I don’t sleep in the swamp. I file every year even though I haven’t owed anything in a long time, since my only income is my Railroad Retirement check. Not exactly living large, but, as previously stated, it’s my own damn fault.
Another Scott
@Brachiator: My various beefs with Microsoft started in the DOS 2.x, QEMU, DESQView, WordPerfect, OS/2, etc., etc., days. And continues to this day.
Yeah, other companies have made mistakes.
But the market is still broken when a giant corporation is making most of the money. If competitors cannot make money, then they won’t compete in the space and the situation will get even worse. And monopolists don’t stay in one part of the market – they move out into, say, Music, and TV, and Banking, and Cars, and … (not that they will be successful in every area, of course).
We’ve been here before.
MS’s monopoly killed lots and lots of innovation in the small computing space. It’s taken decades for Linux and similar things to get back some of that vibrancy.
If we want a thriving personal computing and communications ecosystems for the long term, we need competition and that means other companies need to be able to earn a living by being more than subcontractors for the IP rentiers. Monopolies are bad, no matter how smooth and shiny their products can be for a while.
My $0.02.
Cheers,
Scott.
Brachiator
@Another Scott:
Samsung similarly feels no need to cut prices on its phones either. There are even noises that the use of AI in phones will lead to an additional rise in prices.
Jackie
@satby: Same thing happened to me; not only did I win the audit, all my ex’s expected refund came to me as part of the child support he was waaaay behind with. 😂
Betty
@TBone: Marvin K.Mooney. one of my favorite quotes!
Jeffro
PLEASE GO TO GREAT (AND OBVIOUS) LENGTHS TO DEFEND WEALTHY TAX CHEATS, GOP!
I’m begging you! ;)
BellyCat
@Another Scott: Not disagreeing; there needs to be a level playing field.
First movers attuned to the market and responsive to the needs and desires of consumers often gain momentum which places them well ahead of competition. Look at Amazon, for example. Are they a “monopoly” or just unlikely to have meaningful competition? Should Amazon be broken up?
Citizen_X
What is that jerk stranger than fiction or whatever going on about “not anyone making serious coin?” Is it something anti-Semitic? Probably a good guess.
Maybe they mean it’s only earned income, and not capital gains, etc. Okay, but we’re talking about income tax, so… As Reich points out, it involves nearly 700 billion $ unpaid, so no small thing.
And the nonsense about “the middle class is next” is just pulled out of his ass. Anyone complains about going after the rich, tell ‘em they want us middle-class people to pay more.
Martin
That’s a really bad misread of how we got here. Microsoft didn’t so much get out of the market, they were pretty much never trying to be in it – at least from the outset.
Microsoft builds platforms, mainly for enterprise. As such, RIM (Blackberry) was the entity holding the space that made the most sense for Microsoft.
Apple had an entirely different view of things. Their focus is on consumer platforms, not enterprise, and there was no consumer mobile platform until Apple created it. Microsoft could have done that years before Apple, but it’s not what they do. The big question at the time was:
Microsoft was after RIMs market, not Apples. By the time they saw the threat, that Apple was going to take RIMs market, and that they figured out the consumer platform, it was pretty late in the game. They made a mobile OS that was competing against an established *free* OS – Android. They were late. They missed their timing. They wound up buying the market leading mobile phone maker (Nokia) but Nokia was already collapsing and Microsoft couldn’t save it. Had they made that move 2 years earlier, I think we’d have a different landscape.
Everything that Microsoft did accomplish it did not because of technical acumen, but because they had enough cash to buy their way into a market they had neglected. By the time Apple launched iPhone they had 8 years of hardware and software development invested. They launched on an architecture (ARM) that they co-invented and had more expertise in that Microsoft had in any architecture. And Apple had a retail footprint that could reach consumers, which Microsoft was also late to, and couldn’t really commit to in the same way.
Microsoft was way out of their depth. They are not a consumer electronics company, so they *should* have failed. The competitor Apple should have had was Sony, but they had their own problems with diversification and loss of focus. RIM wasn’t interested in consumers. Nokia was, but Nokia’s vision for the consumer market was wrong, they didn’t have the technical ability to match Apple.
It’s not that Apple cheated to win this market, it’s that they had the right vision for the market.
Apple is still the only company making real money on phones, but there are reasons for that. A LOT of markets go down a pretty common path of a race to the bottom. That’s what nuked the PC market from being a place to make money. That’s why TVs make no money. In the near term they look like wins for consumers because you can now buy a PC for $300, but companies like HP, who were engineering-centric companies couldn’t keep paying for engineering at that price and ultimately became channel managers, just slapping their logo on generic hardware. Tech markets need engineering investments, and each time this race to the bottom happens, it’s Apple who doesn’t engage in that, who is left to take the market by holding prices and building value into the product. If you take that approach away, you lose technological progress by starving the market from investment in engineering talent. It’s been a recurring pattern in the market for 20 years now.
And while it’s bad for one company to keep threading that needle over and over, there are things the feds could do to prevent that other than basically demanding that Apple also race to the bottom. For instance, Apple spent at least 6 years (I know someone who was on the team and know when he started working on this, it may have been even sooner than that) developing ApplePay, which isn’t just Apple’s tech, but is also the modern EMV contactless payment standard. Apple brought them the encryption, the one-time use, the tokenization and worked with them to build the standard. Of course Apple has an advantage on that – but it’s also cheaper for consumers because it removes so much fraud from the system. It’s really up to the banks to decide whether to return that money to you or not (cash back, usually). Now, Congress could look at this development and say ‘yo, you don’t need as much in merchant fees now that this fraud has been reduced, let’s lower those fees’. But Congress doesn’t understand that. And Congress could have gone to the payment systems and said ‘this level of fraud is unacceptable, let’s come up with a standard to eliminate it’ but they didn’t do that either. Apple was the player who came in and fixed it, and it should have been a public benefit, not a corporate one, but government wasn’t interested. That’s not Apple’s fault, and consumers are better off that at least *somebody* was interested in solving the problem.
PaulB
I’m not going to challenge the rest of your comment, but this one I definitely will. Not only is it likely, it’s pretty much definite that this is precisely what Apple is doing, and has been doing for years. There are multiple documented actions that Apple has taken that block third-party vendors and developers from gaining access to Apple’s APIs, store, and customers. There have also been multiple class action lawsuits filed to correct some of these issues.
ETA: This has nothing to do with “strict criteria.” This is about quite deliberate actions to block and degrade the customer experience and the performance. As you quite correctly note, “The actual details matter here.”
Brachiator
@Another Scott:
Not necessarily true.
And of course Apple has apparently bailed from dreams of getting into the auto industry.
I almost would like to see Apple get into banking. God knows that is a corrupt industry.
The success of Apple’s M series chips, used in MacBooks and iPads appears to be spurring competition by Intel and others. How is this a bad thing?
Betty
We received an unusual tax notice saying the IRS had paid us $20.61 in interest last year which we needed to report when we filed our return. Not sure what happened, but we did receive refund for what I believe was correcting an error on last year’s return.
NotMax
@Another Scott
Microsoft and phones make The Bickersons look like cooing, smoochy lovebirds. Witness the Kin.
:)
schrodingers_cat
Is anyone in the mood for some music from Hindi movies. I can share what I am listening to right now.
dnfree
@Bill Arnold: I bought a very expensive Samsung tablet through Verizon maybe 10 years ago or so. After two years, I tried to install an app I needed and was told I needed a newer version of Android. (I think they were up to Jellybean.) Both Verizon and Samsung told me my $900 tablet could not have the operating system updated, and each blamed the other. That was the absolute end of me and Android in any form. I now have an iPhone and iPad that I have been able to update for a lot longer than that.
Brachiator
@Gvg:
Yep. Very good advice. People in these situations should file early if they can.
And keep copies of Social Security cards and other documents that can document custodianship.
PaulB
If you received your prior year’s refund late (I received mine in September (!)), the IRS is required to pay you interest on the refund money that you should have had in your hand months earlier. That interest is then taxable in the subsequent year’s filing.
dnfree
@Another Scott: Time for the quote from way back in the day….The only way Microsoft will ever make a product that doesn’t suck is if they start making vacuum cleaners.
Matt McIrvin
I’ve never been audited but I’ve tangled with them a couple of times: once when I’d made a mistake and neglected to file a document so they tried to tax me twice for some stock options, and another time when a former employer was apparently neglecting to pay the withheld taxes on the back pay we’d already had to wheedle out of him.
My experience with the IRS is that they come on scary with the sternly worded letter but are extremely reasonable if you call back and make a good-faith effort to clear things up. One of the most destructive myths of the tax-revolt era that spawned Reaganism was the idea that they were some kind of pointlessly malevolent ogres out to screw the common man.
BellyCat
@Martin: Righteous rant!
And while it’s bad for one company to keep threading that needle over and over, there are things the feds could do to prevent that other than basically demanding that Apple also race to the bottom.
Exactly. The race to the bottom is what stalls innovation. And this lawsuit against Apple appears to be what happens when the lead innovator is piled onto by those that can’t catch them.
Martin
@Another Scott:
So, this is again a misunderstanding of Apple. Apple doesn’t feel pressure to cut prices because their consumers don’t want them cut. It’s not like there isn’t a shortage of Samsung phones that are much cheaper that consumers can buy.
Apple has for a LONG fucking time set prices, held them firm, and added value. They are a technology company and their focus is on holding prices and investing to make the next generation of product better, or introduce a new category of product (like iPhone, like iPad, like Watch, like AirPods, like AVP). When the iMac was first introduced in 1998, it had a base price of $1299.
Go check out the starting price for an iMac now. It’s $1299. It’s stayed that price give or take $100 for 26 years. Inflation accounted, it’s gotten slightly cheaper each year, but what you get has gotten better each year. It’s not a 233 MHz processor, it’s a 3.2GHz processor that Apple designed, which is now the highest performance portable processor you can get. Consumers have gotten a lot of additional benefit from that $1299. And Apple has sacrificed market share in order to keep enough gross margin to maintain and expand their engineering. Since then they’ve made 2 processor migrations, and completely rewrote the operating system. No other company has successfully done either. They now design the most performant mobile processors you can buy, the most performant portable (laptop) processor you can buy. They’ve leapfrogged Intel, not by taking away Intel’s market (Apple asked Intel to make the processor in iPhone and they declined – they even had an ARM license at the time, which they sold because they wanted to preserve the x86 moat).
The fact that you can get more performant PC processors from AMD and more performant GPUs from Nvidia is mostly because Apple threw enough cash into foundry partners like Samsung and TSMC that they were able to overtake Intels in-house efforts. Apple broke Intels monopoly by both out-engineering them on Apple Silicon, but also by doing so with an architecture that anyone could license and go to a foundry like TSMC that anyone could hire. That has radically changed the microprocessor landscape for the better for everyone but Intel. Anyone can follow Apple if they can pull the engineering together.
There’s an argument that the only reason the last two processor nodes happened when they did was because Apple funded them. the latest fab cost $80B to build – and Apple is the only entity willing to make those investments *up front*. Lots of people with that money are willing to place an order once it’s built, but Apple puts up money to build that nobody else will do. That’s not anticompetitive just because the competition has made their decision to not lend, or not put up cash for a guaranteed order. That used to be the role of the federal government, but until the CHIPS act, they refused to play that role.
The main problem the US has is that US finance is wildly risk adverse. Why lend money for a fab like that when you can hire some quants to squeeze just as much money out of the rental market with less risk? It is a recurring problem that Apple is the only player willing to make big risks. I mean, they gave up the dominant PC architecture (Intel x86) for their own designs, taking all the risk of getting it wrong, not being able to keep up with the market, working through foundries they didn’t own, and so on. It was a bet the company move, and they did it. Why aren’t others? Why doesn’t Google invest more in their quite decent mobile phones? They have the cash. But they aren’t interested – there’s more money in search ads, etc.
Baud
@BellyCat:
In the early days of antitrust, the big companies argued that it would lead to “ruinous competition.” Race to the bottom is the new version of that, I guess.
BellyCat
@PaulB: As an Elizabeth Warren fan, who argues strongly in favor of guard rails for freemarkets, I’m definitely open to better understanding the details (which I am not yet familiar with here).
Matt McIrvin
@Martin:
Well, they actually had two largely separate projects going. The other one was trying to take the T-Mobile Sidekick’s market with a lower-cost youth-oriented phone. That was an even bigger flop, which I was directly embroiled in.
BellyCat
Because Apple has realized that manufacturing in China ain’t as smart as virtually everybody else seems to believe and that’s embarassgaging to other US companies and their stockholders who have exported manufacturing to China?
NotMax
FYI.
iOS vs Android Quarterly Market Share for USA, China and India.
Penetration in the world’s most populous country – India – for Android is down … to 90%.
Sister Golden Bear
@Steve in the ATL: Actually it’s SMO (Santa Monica Airport), flying out of the Valley would be just gauche.
Martin
@Brachiator: Apple bailed from the auto market because the industry is busted. It’s going to fail. But it has enormous interia, and it’s going to be a zombie market for a long-ass time. But in 80% of US cities, transportation costs are higher than housing costs. People spend more money to get to work than to put a roof over their heads. That’s wildly unsustainable, and it’s a bill that will ultimately come due.
The only viable, long term market for cars is as a low-end disruptor and consumers aren’t interested in that, and neither is the government. There are too many jobs tied up in this race to the top, but when 30% of households can’t afford even a *used* car, you have a society-wide problem, because this country cannot sustain having 30% of the population unable to get to a job. This is the real reason why cities are making this big transit pivot – they can’t afford to stick with cars. It took Apple a while to figure it out, but they made the right call.
Apple’s greatest ability – the thing that drives *everything* in the company is their ability to identify a market and work out a strategy to enter that market (go-to-market). That was the thing Steve Jobs was great at, and left behind as the core part of Apple’s culture. What will the next market be, and how to we align ourselves with it. It’s how they won the phone market – because RIM and Nokia and Microsoft all got that wrong in various ways. In terms of tech, they were using more or less the same hardware as everyone else, and yet they still won it. The iPod was mostly a failure until the iTunes Music Store came out. People didn’t have use for a digital music player that couldn’t play their CDs, but they *wanted* more flexibility in buying music, and the iPod enabled that to happen, and that’s what make the iPod successful.
And this is the sort of thing that the DOJ doesn’t really understand, that the EU doesn’t really understand. They want to regulate tech the same way as they would A&P, and you can’t do that – they don’t work the same way. That’s not to say they shouldn’t be regulated – they do – but you need a new box of tools to do it, and neither the EU or the US appear interested in doing that – and that’s unfortunate.
It’s not that other people don’t have good ideas. I’m sure there are startups that can envision the Apple Vision Pro. But there’s $10B or so in R&D behind that thing. How do you enable a market to work when the entry costs are that high? They can tell Apple to not make that product, but that doesn’t open a path for someone else to unless the feds are willing to front the $10B.
A LOT of Apple’s more recent successes needed levels of financing that were otherwise impossible to acquire. Nation-state levels of financing. Why did the feds bail out the auto companies in 2007? Because there were only two entities in the US that had $40B in cash to give GM – Apple and the US government (there were sovereign funds in other countries, etc. but it really needed to come from the US). No bank had that kind of cash. No private equity fund had it. The next process node for semiconductors is predicted to cost $120B to build out. Who is going to pay for that? Or do we just not do it?
My son is an EE in the semiconductor industry. He designs components and occasionally has to crawl around inside of one of these machines. A few months ago he was inside a machine, about the size of an SUV, that cost $380M to make. This stuff is fantastically expensive – and all of the cost is on the front-end. That’s how much money Trump is failing to secure for his bond, and that’s for *one* machine. Apple sells about 225 iPhones each year. They need exclusive use of dozens of those machines just to make the semiconductor in the phone, let alone all of the other parts, the engineering work to design it all, assembly, distribution, etc. Probably $20B just in equipment just to make one part. A new auto plant costs about $2B to build, and will last a decade before it needs to be renovated. That $20B in equipment will be obsolete in no more than 24 months before they need to replace all of it. In many cases 12 months.
There is no financial infrastructure for this industry any longer. Either the participants in the market put up the cash, or it never gets made.
BellyCat
@Baud: That’s funny.
Looking back, Andrew Carnegie was more into “ruining competition”. That bastard would drop his prices below his own cost just to shut down a smaller steel competitor, which he then would buy cheap. He did it *because he could*.
So… Apple clearly has it wrong—they are RAISING their prices higher than their competitors to shut them down. BRILLIANT!
All kidding aside, I’m no Apple Fan Boy ™. They made LOTS of mistakes in the early days and lost PCs to Microsoft right out of the gate. They have now pretty much lost education (their prior focus) to Google’s Chromebooks
However, they have aleays taken audacious “consumer centric” risks. But since the invention of the iPhone-Not-A-Phone, these risks have paid off economically. WAY bigger than anyone thought possible, including me, as I thought they were dead. Today, like their products or not, consumers are better off for their — and their competitors’ —efforts.
That’s the nature of good innovation. I just wish Google would give them a better run for their money.
Sister Golden Bear
@Brachiator:
I’m generally an Apple fangirl, bur the thing is in the specific case of USB-C, Apple was digging its heels in against a superior technology. The Lightning connection has limited throughput, and switching to the USB-C connection has revolutionized iPhone videography because it enables people to connect flash drives that can handle the massive amounts of data needed for high-resolution video — which wasn’t doable previously.
I dabble in iPhoneography, but the consensus among pro videographers is that the quality of the iPhone 15 Pro using the hi-def Apple Pro 422 HQ codec is generally good enough to use for B-roll in professional work.
Brachiator
@Sister Golden Bear:
Very interesting. Thanks.
catclub
I have a hard time imagining they even exist. How does the IRS not know about them? Do they not receive either w-2 form or 1099 forms – like anyone with an investment account gets annual 1099’s reporting capgains and interest and dividends.
Is the IRS getting the copies but never doing anything about no matching income tax form filed??
Martin
@BellyCat: No. China is a complicated situation.
A HUGE problem the US has is that we have wildly underinvested (due to lack of coordination) in some key engineering areas. Mainly industrial engineering. If you want a domestic manufacturing base, you need to be throwing off a LOT of industrial engineers, and we don’t. The main gap is 2-year degrees – folks who are hands on in the production process, who understand what is being made and how it’s made, can oversee component flow, equipment use and maintenance, testing etc. There’s a certain number of eyes on the ground you need, and these 2 year IE degrees really fit the bill.
The US turns out, effectively, 0 people with his training. Honestly, DeVry is the source of what we do throw off. If you go up to 4 year degrees, we turn out about 5,000 per year. Apple (directly or through their suppliers) hires about 20,000 per year. The US doesn’t have the right workforce. It’s a structural problem. Public community colleges and technical schools were defunded to such a degree they couldn’t keep their technical programs running, and fairly sketchy for-profits held onto what we do have. China doesn’t throw off a lot of advanced degrees (their population come to the US for those) but they throw of a shit-ton of these AA-level technical degrees. Like hundreds of thousands of them. Their infrastructure for training technicians is fantastic. The US is almost non-existent.
So, that’s 1 reason why China pulled down so much manufacturing – they have the labor force for it. Some of this is international product scale. No one durable good product has sold at the scale of iPhone in history – not even close. The Honda Cub is regarded the previous record holder – produced since 1958 they’ve made about 150 million of them in total. Apple most popular phone model covers that in 18 months. The sheer scale of manufacturing for a global product is a brand new problem, which the US is poorly positioned for. Where even in the US would Apple find the million assembly workers to assemble them. That’s 25% of the entire US manufacturing industry.
China’s other benefit is that they aren’t financially conservative. They will invest and build a factory before they know who needs it. China’s advantage is speed – and that’s what the tech industry needs. Products have shelf lives of a year. You need to go from design to product in consumer hands in no more than 18 months, and that’s almost impossible in the US, not because of federal regulation, but because your lender is going to ask you to jump through 15,000 hoops before they give you the cash because they are so risk adverse. So you either need to self-finance (which Apple does a lot) or you need a market where those investments happen naturally – which China does. Why did we rely on China so much for PPEs when Covid hit? That speed. California went to BYD for masks, something they didn’t even make, and got the first shipments of masks in less than 2 weeks. It wasn’t a lot, but the fact they could go from 0 to product in 2 weeks was amazing.
Apple’s big problem in China is that Apple has a lot of IP, which China wants to influence. This isn’t a problem most companies have. So China wants to leverage access to their labor to get an encryption back door in iOS, or user data stored on the other side of the great firewall, or whatever. It’s these bigger IP/platform problems that are becoming untenable for Apple, where if they were making Instant Pots – there’s no ask there for China. It’s cookware – what spying they could do on you is pretty useless, compared to what they could get out of a platform like iPhone.
Apple has been trying to diversify their manufacturing for a long time – over a decade. But it’s really hard at their scale to do that. Nobody has ever made a global durable good before. iPhone is the first global, ubiquitous durable good.
Sister Golden Bear
@Martin:
Microsoft’s mobile OS, while definitely innovative in various ways, was had a UI that was substantially different than either iOS or Android. Which despite some differences are largely similar.
Needless to say app developers weren’t that interested in having to develop things twice. While iOS and Android each have design guidelines, in the real world most companies build apps that are a blend, aside from some relatively minor core UI differences.
It was a replay of the browser wars, where Microsoft tried building out an Internet Explorer-only version of HTML, which failed to catch on outside the MS-walled garden enterprise environments, because nobody wanted to have to code things twice to get stuff to work on IE vs. other browsers.
Omnes Omnibus
@catclub:
Not all financial transactions are reported to the IRS. You will notice if you are reporting stock sales, there are three options for type transaction: A. proceeds and basis reported, B. proceeds but not basis reported, and C. neither proceeds not basis reported.
Martin
@BellyCat: They were always going to lose education.
Apple’s entire shtick is that the buyer of the item is the user of the item. That’s why their value-add is so customer focused, because the customer is the buyer. In education, the kids don’t buy the product. The teacher doesn’t even. It’s usually someone at the district office making the decision district wide. What *they* want in the product is wildly different from what the user wants – often at odds with each other. They want to remotely administer it, block content, etc etc. It’s hard to make a product that the end-user covets when the person buying it is valuing those kinds of things. Does it work well? The IT guy doesn’t care. Is it fun/easy to use? Don’t care. Is it cheap? We care about that.
As consumers, you can pick what you are willing to pay for. Lots of people pay a LOT of money for a BMW or a higher trim package or more horsepower or whatever – decisions that institution wouldn’t make. That’s why you never get a BMW when you rent a car – Hertz ain’t paying for that – except in small numbers. This is why fleet vehicles tend to not be popular with consumers, and why consumer vehicles tend to not be popular with fleets. Not many people were giddy when the new Crown Vic came out, but a lot of cops were.
Brachiator
@catclub:
I don’t know the details or the scope of the problem here.
But there are lots of financial activity that is not reported completely. Form 1099S, for example, shows gross proceeds, but not reportable capital gain.
Martin
@Sister Golden Bear: You understand that Apple invented USB-C right? And that the USB working group rejected it because they thought Micro-B was going to work out.
Apple needed to ditch the 30 pin and with the USB group fighting reversible dynamic connectors, Apple was left with no choice but to come out with their own. Then, 2 years later the USB group accepted USB-C but Apple was already committed. When they should have dropped Lightning was more a matter of how much their users had invested in Lightning. Dropping a connector immediately after introducing it has lasting impact on a company. Automakers, with years-long engineering cycles were incorporating Lightning into their vehicles and couldn’t just turn on a dime.
Rather than switch connectors, Apple tried to race to wireless so they could lose the connector entirely and make it a non-issue, but they didn’t quite get there. They were willing to lose folks that needed flash drives. They number in the thousands in a market with a billion users. The EU forced their hand. Still willing to bet they drop the USB-C connector before long.
Another Scott
@catclub: The IRS doesn’t have unlimited staff and capabilities.
There are always constraints.
FAS.org – CRS report (3 page .pdf):
Cheers,
Scott.
Princess
Judging from my FB feed, the normies I know get really het up at the thought of rich dudes not paying taxes. This is a highly motivating issue for them.
Sister Golden Bear
@Brachiator: Predictions are that future iPhones will start taking over indie filmmaking, lower-end commercials, etc. due to the far lower cost of equipment.* It’ll be good enough when good enough is all that’s needed.
Now obviously the iPhone has its limitations compared to a $10K traditional digital camera (let alone something like a $100K Arri). They’re far better in low-light conditions, and iPhone’s don’t have aperture controls, which limits the ability to control depth of field. Apple and other apps are using AI to fake depth of field, which has gotten quite good, but not there yet.
That said, indie filmmakers have been using iPhones for a number of years for commercially released movies, most famously “Tangerine” which was filmed using an iPhone 5S.
*Basically you’re looking at $1K-$1.5 for a camera that also texts and can make phone calls. Plus maybe roughly another thousand or two for things like cage systems for mounting gear (lights, mics, hard-drive. gimbals stabilizers, some pro-grade filters, and perhaps high-end phone lenses, plus good quality mics, and some other things.
Sister Golden Bear
@Martin:
The same is true in the enterprise market, which is why Microsoft dominated the business market. Their product sucked (and continue to suck) for the actual end users, but they made sure that their product worked well for the IT folks administrating them.
It also a larger problem for enterprise software in general, which is why the user experience is so horrid for the vast majority of enterprise. Ask me how I know.
Martin
Sort of. Microsoft was still late to the game, and while their OS did have a different UI, it was not an inferior UI. Developers don’t drive user adoption – user adoption forces developers to that platform. Users come first. Microsofts problem is they didn’t have hardware. This is also Androids problem. Apples innovations have mostly been tied to hardware/software co-development, which their competitors struggle to match. Microsoft was doomed to fail because there was no hardware advantage to their phones, because they were the same phones that were also being sold running Android, which again, was free to the OEM. Microsoft didn’t really appreciate Apple’s hardware advantages until around 2010 when the iPad came out. That was when they decided they needed to make their own hardware because the OEMs couldn’t be relied on to make the kind of hardware they needed. Surface came out of that realization.
The real issue here with mobile apps is that *very* few of them need even to be native apps. Most should be web based apps, but we’ve fucked up the web so badly that you need to escape it to make the kind of service that consumers want. The same forces that have fucked up the web also lead companies to make those blended apps that generally suck on both iOS and Android. Many of the best regarded apps on iOS, at least, are made by a single developer. These things aren’t that hard to make, but you need to care and you need to commit to it. Surely they can afford the very tiny team (3 people) needed to make a first rate iOS and Android apps for their bank or retail chain, etc.
Sister Golden Bear
@Martin:
I’m aware, and I’m also aware of the challenges in switching from Lightning. It was still a bad decision once iPhone videography started taking off, and I really hope they don’t entirely ditch USB-C for wireless, since wireless likely won’t have the necessarily speed for video work. And no, iPhone videographers aren’t a huge market share for Apple, but they’re a prestige market segment. Hence Apple touting that its last major product announcement was filmed entirely on iPhone 15 Pros.
Brachiator
@Sister Golden Bear:
I don’t do video stuff, but am fascinated that it is apparently becoming easier and less expensive to get into this area.
What devices do you use for video editing?
BellyCat
@Martin: Many good points. A confluence of factors have given China the lead in global product production (including low wages for their massive workforce). The US has been short-sighted about training and manufacturing, while our standard of living has (unevenly) increased over decades.
Perhaps the central problem for global product production — especially for technology — is the lack of international IP protection. This is not just about spyware and data stealing, the absence of IP protection fuels countless knock-offs which completely bypass the originator’s sunk R&D costs.
sab
@Brachiator: Yes indeed. My firm is refusing to accept new clients this year, and apparently most other firms in town are also. And the IRS shut down non-credentialled preparers a few years back so people with simple returns really have nowhere to go if they don’t have computers.
Sister Golden Bear
@Martin: I’m not saying Microsoft’s different mobile UI was the reason for failing in the mobile phone market place. What I am saying is that it didn’t help. I’m a professional UX designer, and I took part into those conversations about whether to support the Microsoft UI.
It was a bit of chicken-and-egg scenario for those us facing the issue. Since MS has little mobile phone market share, it didn’t make sense for us to build a completely different UI. But if you did buy a MS phone there were nearly as many apps that you could run on it compared to iOS and Android. Which blunted consumer demand. Again, not the main driver of MS failure, but it was a factor.
I definitely do agree that most mobile apps don’t have to be native ones. I’ve designed plenty of mobile HTML apps, and there’s not a huge amount of additional things you can do natively. But we are where we are….
wjca
I suspect that it comes down to this: the DoJ is full of lawyers. In Congress (and, I suspect, the European Commission), the folks who aren’t lawyers mostly ran businesses, especially small businesses. The number of engineers in any of those places is tiny.
As a result, they don’t know the mindset they are attempting to deal with. Mostly don’t even realize that there is one to know, one that is different from their own.** And so their idea of how to motivate engineers (which is what they are trying to do) is simply not fit for purpose.
** Can you picture a lawyer spending extra hours, for no additional compensation whatever, working on something for work just because it’s interesting? Ha! But the engineers I know (including me) do it rather routinely.
Sister Golden Bear
@Brachiator: I use both a MacBook Air, and a Mac Mini (more horsepower for the dollar). Pros use the high-end Mac Studio. But you can edit video on a iPad or even a iPhone — albeit with less functionality as the device gets smaller. Plus, large, fast hard drives. Lots hard drives if you’re serious. But I didn’t include those costs because someone who’s a pro videographer would need the same equipment anyway. And you can always use less powerful computers and drives, it’ll just take longer to do things.
One of the big game changers is that BlackMagic, a maker of higher-end digital film equipment, released both a free video editing desktop software, and a free filmmaking iOS app — both of which are highly regarded, and pretty full-featured. Many people still use Adobe Premiere and Final Cut Pro though.
It’s really pretty mind-blowing. Back in the day, you’d need an Avid workstation costing hundreds of thousands of dollars to do the same thing.
Ken
Two observations:
“If the IRS can go after a millionaire who isn’t paying his taxes, they can go after you” isn’t the winning argument some Republicans may think, not that this will stop them from running with it.
In the olden days, people who repeatedly broke the law could be declared outside the law, after which they no longer had its protection. Anyone could do what they wanted to an outlaw, including murder, with no legal consequences. Although this is a primitive and barbaric practice, there are times when I understand its appeal.
wjca
I wonder if Apple will decide to create (in house?) the equivalent of 2 year colleges for Industrial Engineering. Build their own workforce, essentially.
That wouldn’t solve the problem for other US manufacturing. But it might encourage a rethink on our education system.
BellyCat
Creative flow. Few things better.
Misunderstandings are pervasive between disciplines. We talk about STEM funding and education, but it should be STEAM (the A is for Arts) for all are creative pursuits and increasingly intertwined.
Steve in the ATL
@wjca: such as all the pro bono work we do?
BellyCat
@Sister Golden Bear: Thanks for Black Magic tip!
(Adobe lost my trust and business, after decades of reliance, when they went subscription only)
wjca
Ah, but are you doing it primarily because the cases are interesting? I suspect the motivation is far more virtue than fascination. That’s not a bad motivation, of course. But it is different.
sdhays
@Sister Golden Bear: I have mixed feelings about USB-C. On the one hand, what you say is obviously true, but on the other, I have had unusually poor experiences with USB-C cables’ reliability. It seems extraordinarily prone to failure (and I’m not particularly hard on my cables).
Melancholy Jaques
@Brachiator:
I feel like this could be a major Democratic Party success if they could make sure to plan it carefully.
Ruckus
@BellyCat:
I’m on my 4th cell phone. That’s nearly 30 yrs with a cell phone. Some of the reason for new phones is that the service and the technology has improved a significant amount since I first got one. My first was a flip phone. Very basic compared to today. And when I got that one I had a job that I traveled around the country for, 8-9 months a year. Pay phones to check in at the office were becoming harder to find, especially a working one. But I’ve had a “smart” phone now for 12+ yrs, the last 7-8 yrs 2 phones of one major brand, named after a fruit. I’m very happy about my choices of brand because they have worked the best and in fact I haven’t had a land line for that last 12+ yrs and I imagine that I never will again. I just do not see the point.
Brachiator
@Ken:
People hate tax collectors and cheer tax evaders. This is even true in the New Testament.
Outlaws are often heroes, especially when they oppose oppressive taxes. See, for example, Robin Hood and Zorro.
ETA. The Star Wars mythology is notable for downplaying taxation as an aspect of the Rebellion.
Ruckus
@PaulB:
Gee, I must be a totally misguided consumer.
I’ve had a cell phone for going on 30 yrs. Flip phone, Blackberry, Android, and now on my second iPhone. Now technology is some/maybe most of the improvement but Apple has been a far better experience than anything prior. Yes I’ve paid more but the experience has been far better. First, it always works. Prior to Apple that was not always the case for me. Once again that may be the total of technology improvement but I am a far happier customer with them than prior.
And I brought my first personal computer in 1978. I’ve had a few computers since then, different brands, different operating systems, including a couple brands from the more commercial side of computing, for business and manufacturing. I used to write programs for the manufacturing side.
Martin
@wjca: I don’t think they can at that scale. It’d be a massive university just to meet their own labor needs, and not high enough on the income ladder to make it a residential program, so they’d need to make hundreds of them around the nation.
Besides, shouldn’t the US *want* to do this for the workforce in general? I used to build programs like this and there was never any governmental interest in doing anything like this – except from the VA. But they didn’t want narrow programs for vets but broader ones – full range of disciplines.
If the US wants a competitive manufacturing industry, they need to take the initiative and help build these programs. They’re very expensive to build, and it’s hard to get a university administration to invest in something like this when they collect the same tuition from a literary criticism program that costs next to nothing to build and run.
Martin
@BellyCat: China’s wages aren’t as low as you might think. Pretty sure a lot of workforce there making stuff for Apple make more than a lot of US manufacturing jobs. There’s a lot of competition there for the skilled workers, which is what Apple wants.
Apple never went there for cheap labor. They went there because China moves fast. Losing a year’s sales of iPhone because it takes an extra year to tip up a factory loses you more money than whatever the labor differential between the US and China is. It’s a huge factor.
There’s a story about Apple management meeting Terry Gou (CEO of HonHai/Foxconn) in China at the site of the first factory that was going to make iPhones. They arrive at this location and there’s an empty field, and some of the Apple guys start freaking out – they were going to have engineers there in a couple of months to start setting up production, and there’s zero indication of construction. And Gou is explaining that the factory will be ready on time and sure enough it was. It took 3 weeks to build from dirt to first equipment rolling in.
Transportation is another factor. Apple moves everything via air freight – they’re the largest air freight customer by a pretty wide margin. Lots of other industries use air freight – flowers, some food like lobster, etc. But none of them are dedicating a whole 747 to their products. China built out that infrastructure – they built ports to receive goods, freight airports, dedicated rail lines to those ports, etc. In the time that the Port of LA got their rail expansion from the port to the two main freight hubs up in LA, Shenzhen grew from 100,000 people to 15 million. They built an airport larger than LAX. The US would rather go after Apple rather than the US freight industry that has completely fucked up domestic freight and passenger rail for the last half century. There’s a reason why Amazon built out their own transportation layer – because the domestic infrastructure is just terrible.
wjca
Of course we should. And we could — after all, we’ve done it before. But will we?
At the moment, we have state governments essentially running post-secondary education. Some private 4 year colleges, but 2 year colleges? There may be some that aren’t selling snake oil, I suppose…. However state governments seem determined to spend money on other things. Once, states realized that funding education was not just good for their residents, but good for their economies and thus for their state budgets going forward. (See the long ago California Master Plan for Education.)
Also the value of making that education affordable to their whole population. That’s “affordable” as in “you can cover tuition, plus minimal living expenses, by working 1/2 to 3/4 time at low wage jobs.” (Think washing dishes.) Now, more important to have a state college with a winning sports program.
Today, that vision appears lacking. On top of which, a significant portion of the population strongly prefer (mostly religious) indoctrination to actual education. Which, where they get control of local schools, produces people unable, and even unwilling, to absorb further education and training.
Not sure how we crush the cultural Luddites among us. Not to eliminate them (probably impossible), but to neutralize them so that the rest of us can move forward.
Ruckus
@Martin:
They might but I don’t think so. how do you charge an iPhone (or any cell phone) without paying $70 or whatever for a charger? I use USB-C charge cables off my computer to the phone. Sure I have the plug in charger that came with my last phone but that’s a pain in the whatever.
Chris T.
Huh, the cap’s up to $168,800 now? I only hit it a few years in my career and it was a lot lower then. But I agree, it needs to be a lot higher or gone entirely.
BellyCat
Since the US can’t catch up to China in manufacturing, the DOJ should sue China for anti-competitive practices. //
Soprano2
@Another Scott: I think my stepson never filed a tax return after he moved to Maui. He was probably owed money from the IRS, but for a reason unknown to us he wanted to keep a low profile.
Another Scott
@wjca: “Show me your budget and I’ll tell you your values.” – Nancy Pelosi.
States are in competition with each other to attract flagship industry. Those industries want subsidies – low property taxes for decades, cheap financing, etc, etc. Property taxes pay for schools, other taxes pay for infrastructure and decent interest rates on bonds. States have to balance their budgets every year – there’s no free money.
As always, TANSTAAFL. The MotUs don’t want to pay for worker education and training. They want a guaranteed market and monopoly rents. They want social praise, but don’t want to contribute to and invest in the society that makes it possible.
And, if a MotU actually does want to do the right thing on taxes and education and training and investment for the future, then their competitors have a short-term cost advantage that makes the MotU liable to lawsuits from those who think that nothing matters but the weekly stock price.
It’s a systemic problem that needs to be addressed. But, I personally get really tired of CEOs whining for years that they can’t find enough trained workers for their subcontractors (Flex) to pay $9/h (or whatever) to assemble Mac Pros in Austin and sell them at a profit, or similar examples. Not when those MotUs are making gargantuan profits.
Amazon gets a lot of grief (fairly and unfairly), but they are in cutthroat competition with MS (cloud) and Walmart (online sales and distribution) and Kroger (groceries, etc) and others. And around DC they are actually doing the work in investing in affordable housing, education infrastructure, worker development, and all the rest.
Apple’s monopoly control via their huge share of industry profits is bad.
FWIW.
Cheers,
Scott.
Paul in KY
@Another Scott: Agree.
Paul in KY
@Martin: Interesting summation.
Paul in KY
@Betty: That was from them holding your refund for a period of time that generated $20 in interest income that they then refunded to you. That is income that must be reported (by you).
the pollyanna from hell
@schrodingers_cat: always
wjca
It might be instructive for states to ask: Why is Silicon Valley, for example, in California? Why is the center of robotics development, for another example, in Massachusetts?
Low taxes? No (it is to laugh). Subsidies? No. The simplest answer is: an educated workforce. Once the products are created and developed, sure you can look for subsidies in low tax states. But if there are serious centers of innovation in cutting edge technologies in, say, Texas or Alabama, all I can say is they’re keeping a very low profile.
satby
@Jackie: Me too 😉
Another Scott
@wjca: Silicon Valley is in California because [ leaving out about 100 steps ] in the 1950-1960s the US military needed small electronics for missiles and fighters and the like. Aerospace companies were based in California, so there was a natural synergy.
Yes, Berkeley was a big draw as well. Similarly for MIT, Harvard, etc., and computing in MA. Government money made the first computers possible, and they needed researchers to do the initial work and create the demand.
A regulated utility, the Bell System, had a big research arm – Bell Labs – that created the first transistor (they needed small switches for the phone networks). Decades of work went into understanding the materials and physics and technology to create the transistor and make it practical. Such giant private company labs are almost totally gone now because companies are chasing quarterly stock numbers.
Bottom line, those were different times. Network effects are real – creating a new Silicon Valley in North Dakota isn’t going to happen quickly no matter how low the taxes. ;-) Pointing to current taxes or current universities misses the big picture. But the big companies still want low taxes and cheap labor if they’re looking to expand.
Regulated utilities were willing to do decades of basic research. Government money was willing to pay whatever it took, for as long as it took, to create new technologies to fill a need. Giant companies (GM, GE, AT&T, Intel, etc.) were willing to do heavy internal R&D but also had heavy government support (e.g. the DARPA VHSIC program).
For too long, we were led to believe that private companies chasing profits and low taxes was the only way to grow the economy. It’s still the default view in most “popular” economics and doesn’t get enough push-back. In many, many parts of real life, decades of work and real, serious investment are actually required to get to where we need to be. Biden’s “Chips Act” is starting to return the US to a sensible investment policy to move technology forward.
My $0.02.
Cheers,
Scott.
wjca
Just FYI, the aerospace companies were and are based in southern California. 400+ miles away from Silicon Valley. That’s like the distance from Chicago to Pittsburgh, or Boston to DC, if that helps you visualize it. A bit far for “natural synergy.”
PaulB
No, just ill-informed. (Sorry, but I had to get that snark out of my system.) Look, nothing in your reply was in any way a response to anything I wrote. Please read my comment again, this time without running it through an internal filter.
My post above was specifically addressed at BellyCat’s comment that it was “not likely” that some of Apple’s policies are “less than ideal for developers (and competitors).” I was simply pointing out that it is, in fact, not only likely, it’s a fact that Apple has repeatedly had such policies and has had to pay out hundreds of millions of dollars to settle multiple lawsuits. For some unknown reason, you chose to take this simple statement of fact personally.
You like Apple products? Great! I would not, under any circumstances, try to persuade you to abandon them. Personally, I don’t choose to use Apple products, mostly because I thoroughly dislike “walled gardens” and, personally, I think that Apple products are overpriced for the value they offer someone like me. I do understand the value of what Apple has tried to do, though, and I have recommended Apple phones, tablets, and computers to relatives and friends who want something that “just works.” For multiple classes of users, Apple has been a godsend.
However, the fact that Apple has, both in the past and currently, engaged in practices that favor its profits over the best interests of its customers is undeniable. They’re a multi-national corporation; that’s what multi-national corporations do. The recourse in such cases is customer lawsuits, third-party lawsuits, government lawsuits, and government regulation. I firmly believe we need more of this recourse in the high-tech world, particularly against companies like Apple, Amazon, Google, and Facebook (not necessarily in that order).
Is Apple any worse than any of the others? Than Microsoft during its dominating heyday? Than Facebook today? Absolutely not. (I’ve worked as a development manager at both Amazon and Microsoft, so bring personal knowledge to the table on some of these issues.) But should their anti-competitive and, at times, egregiously anti-consumer practices continue unchallenged? Also, absolutely not.
I suspect the government will have a tough time winning this case. Nonetheless, I’m glad they filed it, as it will publicize some of the actions that Apple has taken. That can only benefit consumers.
Another Scott
@wjca: Well, if you want to be technically correct…
;-)
Yeah, some liberties were taken in my explanation. ;-)
This is a better one. Wikipedia – Shockley Semiconductor Laboratory:
So, I guess to build a new silicon valley one needs to:
1) Spend decades at a high-power research lab, including doing Nobel prize worthy ground-breaking technology.
2) Piss off management, quit in a huff, and go back home.
3) Get backing from another inventor you know with deep pockets.
4) Set up shop close to mom’s home.
5) Piss off your star employees poached from your former high-power research lab employer so that they leave and start their own companies.
…
n) Be in the right place at the right time to get hundreds of millions or billions in government investments to push your technology
…
;-)
Thanks.
Cheers,
Scott.