Apple in Ireland

 

The European Commission slams Apple with an unpaid tax bill of billions of dollars. Around $14.5 billion.1

Apple and Ireland, where Apple pays infinitesimal taxes on European sales, claim the judgement overrides Ireland’s tax laws.

Apple, of course, wants to skip out on paying the higher taxes in the countries in which they sell their products. Thanks to the EU’s open borders, Apple takes the money it earns in France, moves it to Ireland and claims it as income in Ireland.

Ireland, for its part, in a bid to keep the few thousand jobs Apple provides, gives the company nice little tax breaks reducing an almost 15 percent tax rate to less than one percent on average. These tax breaks are not allowed under EU trade policy. Moving your profits from one country to another for tax breaks is further considered uncool.2

Apple runs its European operations through Ireland, where the corporate tax rate is 12.5 percent, compared with the 35 percent statutory rate in the United States. But the European Commission found that Apple set up a system that allowed it to pay even less.

. . .

Apple attributed its European profits to phantom “head offices” in Ireland, the investigation found. These offices “existed only on paper and could not have generated such profits,” the commission said. In fact, Apple recorded all of its European sales in Ireland rather than in the countries where the products were sold, the investigation found.

The “tax treatment in Ireland enabled Apple to avoid taxation on almost all profits generated by sales of Apple products in the entire” European Union, the commission said.

We can all rest assured, though, that Apple, instead of paying the back taxes, will instead spend billions protesting the ruling.

Tim Cook, Apple’s CEO, argues that the ruling harms Ireland’s business climate. And we know that the “business climate” is far more important than the services you and your fellow countrymen receive in return for paying your taxes. Or didn’t you know that, as David Harvey writes, “it is the duty of state power to create a good business climate for solid profiteering”?3 It’s not to protect citizens or our well-being. It’s to ensure the wealthy continue to build inordinate amounts of money and power without contributing to the overall welfare of society by even so much as paying their taxes.

Cook says Apple won’t bring its profits back to the U.S. from Ireland and other low-cost countries as long as the tax rate is 35-to-40 percent:

We’ve said at 40 percent, we’re not going to bring it back until there’s a fair rate. There’s no debate about it. Is that legal to do or not legal to do? It is legal to do. It is the current tax law. It’s not a matter of being patriotic or not patriotic. It doesn’t go that the more you pay, the more patriotic you are.

I would argue that, for companies, yes, paying taxes is damn near the definition of patriotism. What else are they going to provide?

The U.S. disagrees with me, it seems:

The investigations also create a sore spot for the Obama administration: It has been frustrated by U.S. companies that it says are dodging American taxes, even as it forcefully defends those same companies against European authorities.

. . .

“Perhaps the [European Commission] decision will spur the U.S. authorities to step up their own efforts to collect more taxes from Apple. Apple may be a tax cheat, but Apple is our tax cheat,” said Steven M. Rosenthal, a fellow at the nonpartisan Tax Policy Center.

. . .

But the $14.5 billion in back taxes is just a slice of Apple’s cash stockpile. The firm has more than $200 billion in cash, most of it held overseas where it cannot be taxed by the United States. It also has borrowed money at low rates over the past few years.

It sounds stupid and reductive when I say this is all done by and for wealthy elites like Tim Cook and others. “Money and power!? What is this? The mob? An alien invasion?4 A conspiracy theory?”

Seriously? Do you really consider me one for conspiracy theories?

It’s the truth. The wealthy and/or their political servants will always find a way to be above the rules.

Give me a better explanation.

Sadly, few note that as the world struggled through the Recession, Apple was hoarding money by not paying all Irish, American or other European taxes.

On a personal financial note, I only today found out from my bankruptcy lawyer that the IRS was/is auditing our 2014 tax returns. They’d filed an objection to our bankruptcy, saying we owed nearly $15,000 in taxes that year. Before he even called them to note that $15,000 would work out to a 50 percent tax rate that year for us, they filed an amendment yesterday reducing that considerably. So our monthly payment will go up $4.

What’s odd is that I keep reading articles like this one that say:

Thanks to budget cuts, audit rates have plummeted, especially for the biggest corporations, with armies of sophisticated tax preparers. Criminal tax prosecutions have nose-dived, too.

In some districts, the IRS has openly acknowledged that scofflaws owing under $1 million will get a free pass because the agency no longer has the resources to go after them.

That acknowledgment is bad, as is the fact that I’m drawing attention to it. Tax cheating is more dependent on perceived probability than actual probability of getting caught.

With such a small budget, why would they focus on someone making just over $50,000 a year? (Did I hear you just whisper, “The wealthy“?)

So, I guess, that’s all to say:

“Personal responsibility is, after all, for the workers and not for the capitalists.”5

 


Notes:

1. I questioned The Washington Post‘s Jim Tankersley on his claim that this case has nothing to do with other countries’ tax rates by focusing on the Irish tax cheat and that only Ireland is getting the back taxes. I think they are both involved. In fact, the back taxes are those owed under other European countries’ tax rates. Ireland just happens to be the beneficiary of it all. I may be wrong, and I’m awaiting Mr. Tankersley’s response setting me straight. If I’m correct, I do feel he’s being a little disingenuous in his current shading of the argument.

people really aren’t arguing that Apple should pay more taxes. They’re arguing about who they should be paid to.
― Tim Cook’s defense of Apple’s tax strategy, annotated – The Washington Post


2. Apple’s tax bill is nearly as much as Ireland’s entire health budget. And they have universal, single-payer (socialist!) health care for all.
3. Harvey, David D. The Enigma of Capital: And the Crises of Capitalism. New York, NY, United States: Oxford University Press, USA, 2010. Kindle.
4. I’ll give you that if you’ll give me the liberty to define “alien invasion” as the massive infusion of Russian and Chinese money into real estate purchases in American cities and note the increase in costs that go with them.
5. Harvey, David D. The Enigma of Capital: And the Crises of Capitalism.

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