Tuesday, June 18, 2013

Ben Graham and Warren Buffett both Advocate Index Investing

Perhaps shocking to some folks, but even the great Benjamin Graham (the father of value investing and Warren Buffett's mentor) became an advocate of indexing as the best investment strategy (click here to listen to this Jack Bogle speech at about the 55 minute mark).

Tuesday, June 11, 2013

Apple's Effective Federal Tax Rate is NOT 25% - it's likely less than 10%

Apple Computer was in the news recently as their CEO Tim Cook took some heat while testifying in front of Congress about the US Federal Corporate Income Tax.  The controversy around Apple revolves around how it is that Apple's "effective tax rate" is roughly just 25% when the US Federal Corporate Income Tax Rate is supposed to be 35%.  What I find shocking, is that Apple is able to get away with claiming they pay an "effective tax rate" of 25% when it is actually closer to 9.5%.

On pages 36-37 of Apple's 2012 Annual Report (SEC Form 10-K) the company states:

"The Company’s effective tax rates were approximately 25.2%, 24.2%, and 24.4% for 2012, 2011, and 2010, respectively. The Company’s effective rates for these periods differ from the statutory federal income tax rate of 35% due primarily to certain undistributed foreign earnings for which no U.S. taxes are provided because such earnings are intended to be indefinitely reinvested outside the U.S."
The second sentence above attempts to imply