Part of the wider debate is Ireland’s generous corporation tax rate of 12.5%. Late last month, the European Union did something about it.
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When the European Commission came out last week and said that Apple had benefitted from a very particular anti-competitive deal with the Irish Government and now had to pay back taxes of approximately 13 billion euros the government was first out of the traps with their comments.
“This decision is bad”, House Speaker Paul D. Ryan, R-Wisconsin.
Reacting to the G20 summit announcements Alison Holder, head of policy and advocacy and the charity ActionAid said: ‘We are encouraged by the prime minister’s commitment to create a fairer economy. Republican Orrin Hatch accuses Europe of “targeting” American businesses.
Richard Boyd Barrett, of People Before Profit, accused Apple of wilful tax evasion, and “robbing” the people of Ireland. She called corporations’ support for a lower tax rate on foreign earnings than on domestic earnings “nuts”. The rate in the United States is the highest in the world at 39%. One is the growth of intellectual property such as patents, brands and software as a source of profit, which is easily shifted between foreign jurisdictions.
Intellectual capital is hard to see, measure, value, and track. The commission otherwise wouldn’t have a right to directly intervene in a country’s tax affairs.
In 2011, as in previous years, every Apple product sold in Europe, Middle East, Africa and India was recorded as a sale by Apple Sales International in Ireland. And it keeps most of the money there. He is also anxious that the higher taxes paid by Apple in Ireland would reduce the amount of taxable money by the USA from Apple too. According to testimony before the Senate panel, this maneuver and others saved Apple $7.7 billion in US taxes in 2011 alone. It maintains a worldwide network of tax havens to park its global profits, some of which don’t even have any employees. Apple noted in a submission to the Subcommittee: “Since its inception, Apple determined that AOI was not a tax resident of Ireland”. It’s still considered Irish.
As a result, over last decade alone Apple has amassed a stunning $231.5 billion cash pile overseas, subjected to little or no taxes.
Pricing power, of course, is what Apple’s all about.
And why isn’t the competitive enforcer complaining that every country in the European Union (with the exception of Germany, with its add-on taxes for pension and health care) has a lower corporate tax rate than the United States, which is 39.1 percent? The stockholders then pay another tax on the dividends they receive from that same stream of already taxed income.
Why can’t this loophole be closed?
Apple’s European and worldwide headquarters are located in Cork, Ireland. But neither will happen because Big Tech, Big Pharma, and Big Franchise have enough political clout to stop them from happening.
Richard Boyd Barrett from People Before Profit said “we fundamentally object to the fact that we are having this debate when we don’t have detail of the Commission ruling”. It launched a diplomatic offensive in 2013 to reject the USA senators’ accusations that it acted as a tax haven for companies like Apple, issuing its embassies from Beijing to Buenos Aires with rebuttal points.
In other words, they want another tax amnesty. The United States, he says, should “be the tax shelter”.
If in spite of those expectations Ireland is forced to accept Tim Cook’s $14.5 billion, however, Apple may have found a way to pay for it.
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Robert B. Reich was Secretary of Labor under President Bill Clinton.
