Apple Will Start Paying Back Taxes to Irish Government Next Month
macrumors.com
macrumors.com
It seems crazy to me that Ireland is "not allowed" to set taxes as low as it would like to attract foreign investment. Even states in the US can freely do that!
Ireland is not being penalized for having taxes that are too low, but, in the words of the EC[1]:
> Ireland granted undue tax benefits of up to
> €13 billion to Apple. This is illegal under
> EU state aid rules, because it allowed Apple
> to pay substantially less tax than other
> businesses. Ireland must now recover the
> illegal aid.
Ireland is perfectly within their rights to have Apple pay the same taxes they've been paying already going forward. But to do so they need to adjust the general corporate tax rate, not just give Apple specifically those illegal benefits.
https://www.jsonline.com/story/news/politics/2018/02/05/foxc...
Its good the EU has rules in place to prevent this destructive behaviour.
It's not just that. The race to the bottom isn't really a thing because companies cost states money. They require the state to increase the resources they spend on transit capacity and emergency services etc. The only reason states want companies is because the amount of taxes they pay exceeds the amount of expenditures they require. So there is no race to have zero taxes, the competition is only to tax companies no more than the amount of government services they consume. Which isn't especially problematic.
The real problem is that if states make special rules for large companies, it gives them an advantage over smaller companies, which destroys local businesses in favor of international ones. Then next year some other place gives the huge company a better deal and the city is devastated because the company displaced a huge chunk of the local economy and now they're leaving and taking it with them.
If states want to compete by having low taxes, great. But nobody should be getting special treatment like that.
Setting aggressive tax breaks to lure companies for a short period of time guides companies to jump state over state, with less revenue to each state. The aggressive tax breaks might better be revised in the States.
Furthermore, was it that the Irish tax break to Apple was below that permissible by Irish law itself?
The reason why Ireland do not do this is that they would go bankrupt. Their budget relies on the fact that all the other companies in Irland pay the normal tax.
Ireland allegedly used to do this quite a bit back in the day.
The Amazon HQ2 campaign is a pretty good example how companies are using tax competition to instigate a race-to-the-bottom. There's no doubt that Amazon would house these employees somewhere. So the payoff is essentially zero-sum. All that's changing is that Amazon is playing different populations against each other to save on tax.
Rules against such behaviour are just an effective method to avoid a prisoners' dilemma by the most obvious method known to anyone playing the game: communication, and binding agreement.
Now there is an argument that some locales may need to use tax policy if they are behind in every other feature, i. e. education, infrastructure etc.
But in fact the EU is a rather successful model of flexibility in that regard: Just look at the incredible economic success of eastern Europe and the Balkans after the end of the cold war, or Portugal, or even Ireland itself. Just compare Belarus to its EU neighbours to get a sense of what's possible.
How did this work? The EU does allow for tax incentives or subsidies where regions need to catch up. They also created an enormous system of direct transfers to allow investments into the factors that make regions competitive, such as infrastructure or rule-of-law.
As a matter of fact, Ireland simply agreed to the rules, and their scope isn't a matter of any "natural law". If countries agree to conduct themselves by certain rules than that's that. Of course every single rule may occasionally diverge from what any single country would otherwise do, or the rule wouldn't be necessary. But, just as with any intentional law, these rules taken as a whole have empirically been extremely beneficial to its signatories.
But regarding that idea:
You make some interesting arguments in favor of states essentially forming a "cartel" in order to avoid driving taxes too low.
But then how do you decide what "too low" is? Who gets to decide what a reasonable tax rate is? If we're a bunch of people in lonely Isolated State and we vote to set our tax rates very low, does it seem reasonable that some central government strongly controlled by more populated states can say, "no, that's not fair"?
On an emotional level, I'm very sympathetic to the idea that the group of people deciding policy in a region should not be too far removed from that region.
(Of course, that it still might actually result in globally worse outcomes. But it might actually be worth it, just to avoid the unjust feeling of "policy dictated by people far away".)
Even then, I'm not convinced it actually results in worse outcomes. California has very high taxes, and is nevertheless a very popular destination. Some sort of centralized system that required all states to have CA levels of taxation seems like it would almost certainly be worse overall...
(I'm more thinking out loud than trying to make an argument.)
[0] https://www.reuters.com/article/us-eu-apple-taxavoidance/ire...
It is true that those banks had various lenders in Germany/France/wherever, and that the consequences of an all-out collapse of the Irish economy would have had negative effects in those countries as well.
But presenting it as some sort of altruistic sacrifice to allow them to rescue Ireland from a potato-based future is just adding moral bankruptcy to the other.
It's also frustrating to see such uninformed hatred, considering EU funding of 44.6 Billion Euros since 1976 was what essentially allowed an agrarian society to catch up with Western Europe in the first place.
Plus, obviously, a large fraction of those 18% of Irish living abroad are beneficiaries of the EU's open borders.
[0]: https://ec.europa.eu/ireland/about-us/impact-of-EU-membershi...
No, it looks like they are putting the money in escrow while both Apple and Ireland appeal the charge. From the original article:
>..As expected, the report states that Apple and the Irish government have reached an agreement to set up an escrow account to hold the money while both sides appeal the August 2016 ruling in Europe's highest court.
Seems like they are taking a long term perspective rather than a short term boost to their tax-base.
But this is not where this money will go. When all is said and done, if Apple still owes that much, it'll be divided with the rest of the EU according to Apple's sales. Thanks to its tech hubs (it seems every other person on the train is a software engineer), Ireland may end up with some part of it, but most certainly not all.
https://www.reuters.com/article/us-eu-apple-taxavoidance/ire...
Come on about rules tho, man. History is messy. People are stupid and evil ( as well as good, obviously ). We live in an age where we have a great pretence of goodness, but really our nature is the same. I'm sure there a lot of double dealing happening behind the veneer of rules. And I think you're naive/uneducated in history if you think not.
And your theory is as outlandish as any global Jewish conspiracy stuff. An entire nation of people from across the political and social spectrum have connived to defraud the rest of the world based on a sneaky tax-policy plan enacted over 3 decades ago which has survived 2 European treaties, 5 changes of government and requires the entirity of the "Irish" to be liars. It's an ugly comment with even uglier undertones.