begin quote from:
Apple: You can have taxes or you can have jobs, but you can't have both
| Business Insider | - |
Apple's
official statement on the European Union ruling against its Irish tax
arrangements tells you all you need to know about what is at stake: You
can have taxes or you can have jobs, but Apple is in no mood to deliver
both.
Apple: You can have taxes or you can have jobs, but you can't have both
- 4h
- 121,485
- 112
Apple CEO Tim
Cook.
AP
Apple's official statement on the European Union ruling against its Irish tax arrangements tells you all you need to know about what is at stake: You can have taxes or you can have jobs, but Apple is in no mood to deliver both.
After learning Tuesday morning that the EU expects Apple to pay €13 billion (£11 billion, $14.5 billion) in back taxes, the company said, "It will have a profound and harmful effect on investment and job creation in Europe."
That is not a threat, technically. But it will be seen as one by EU politicians who want to attract new companies to their countries.
Back in 1991, Apple struck a tax deal with Ireland that was completely aboveboard and legal. The Irish government provided Apple with a "comfort letter" that said the company would pay very low rates of tax if it based its European operations in Ireland.
In the 15 years since, Apple has created thousands of jobs in Ireland. By 2015 it had 5,000 employees in the country. Another 1,000 jobs are planned for the headquarters in the Irish city of Cork. This year Apple will open its site near the town of Athenry, with another 200 jobs in the making.
"Apple was now the largest employer in the Cork area with 1,000
direct employees and 500 persons engaged on a subcontract basis.
It was stated that the company is at present reviewing its
worldwide operations and wishes to establish a profit margin on
its Irish operations."
Apple is now the single largest taxpayer in Ireland, so it has
the kind of negotiating strength to get what it wants.
Apple has noted that its tax arrangements were agreed to repeatedly by Ireland's government. The European Commission itself says the agreements were legal, albeit mistaken. But Margrethe Vestager, the European Commission's competition commissioner, made Apple's Irish tax arrangements sound like a scam:
- Apple's effective European tax rate was 1%, on sales of €16 billion or more per year.
- It sunk as low as 0.005% in 2014.
- Apple created a head office that did not exist: "This 'head office' had no operating capacity to handle and manage the distribution business, or any other substantive business for that matter ... The 'head office' did not have any employees or own premises."
- The pact deprived other European countries of billions of euros in unpaid taxes.
That 12.5% rate appears to have been Irish mist. The European money was actually being funnelled back to the US, Vestager says. Apple's Irish operations had a cost-sharing agreement with the US headquarters in which they were allowed to use Apple's intellectual property if, in return, they paid for the American R&D expenses to create that IP. The EC statement says (emphasis ours):
"Under this agreement, Apple Sales International and Apple
Operations Europe make yearly payments to Apple in the US to fund
research and development efforts conducted on behalf of the Irish
companies in the US. These payments amounted to about US$ 2
billion in 2011 and significantly increased in 2014. These
expenses, mainly borne by Apple Sales International, contributed
to fund more than half of all research efforts by the
Apple group in the US to develop its intellectual
property worldwide."
(Critics may also ask how many more jobs would have been created
in Europe if the money generated in Europe had actually stayed in
Europe.)
Vestager's ruling will also be read as a threat by dozens of other international companies who previously used Europe's flexible tax arrangements. The European Commission concluded in October that Luxembourg and the Netherlands granted tax advantages to Fiat and Starbucks. It is investigating Amazon and McDonald's.
The ruling will be appealed. It will be years before it is resolved. It won't hurt Apple — €13 billion is roughly equivalent to only one month's revenue, and Apple has always kept a massive amount of cash stashed in foreign countries precisely because it does not want to move it into jurisdictions where it might be taxed.
The more immediate problem is whether global companies will even bother with Ireland in the future if they cannot get the tax breaks they want — and whether that, in the long term, will reduce the total tax take in Europe.
With that in mind, Apple published a longer statement Tuesday morning reiterating the link between jobs and taxes:
"Beyond the obvious targeting of Apple, the most profound and
harmful effect of this ruling will be on investment and job
creation in Europe. Using the Commission's theory, every company
in Ireland and across Europe is suddenly at risk of being
subjected to taxes under laws that never existed.
"...We are committed to Ireland and we plan to continue investing
there, growing and serving our customers with the same level of
passion and commitment."
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Pay income taxes to a particular country based on the dollar value of sales generated in that country.
Separating your IP and moving it offshore to divert taxes to a lower region is just plain fraud.
We, as a nation, want as many corporations as possible to domicile in the USA so we enhance our own economy especially as to employment and we need to make clear that politicians will not be in position to extort bribes from corporations for favors. Politicians are the real problem here regardless of which party happens to be in power and the USG cannot be trusted in that sense unless there is a permanent policy change where it is made clear that the default corporate rate is 5%. The USG does NOT need to loot every possible source for money.
Corporate and individual citizens are being stripped of every dime that can be squeezed out of them without creating a deflationary depressive debt spiral.
I understand that people are easily motivated by envy and jealousy and have been through all of History so if you manipulate those levers you can get elected and create a failing socialist economic model where the emphasis is on the endless redivision of what exists in a no growth economy as in the Middle Ages in Europe and be assured that such ideas were already ancient 2000 years before Marx was born. The idea is that if we can tear Apple apart we can pass out the pieces when almost certainly a great deal of Apple money is in UST bonds already and circulating through the economy.
Redistribution never works as people have varying interests, values, abilities, and educations and the ownership of property of all types stratifies toward concentration continuously.
The USG creates the money that it needs to fund most of its proposed spending and does not require HEAVY taxes. This is a mistaken idea drawn from pre-modern economies.