Posted on 09/14/2016 7:25:44 AM PDT by Kaslin
For years, Washington lawmakers on both sides of the aisle have attacked big corporations for avoiding taxes by parking their profits overseas.
A few weeks ago the European Union did something about it. The European Union's executive commission ordered Ireland to collect $14.5 billion in back taxes from Apple.
But rather than congratulate Europe for standing up to Apple, official Washington is outraged.
Republican House Speaker Paul Ryan calls it an "awful" decision. Democratic Senator Charles Schumer says it's "a cheap money grab by the European Commission."
P-l-e-a-s-e.
These are taxes America should have required Apple to pay to the U.S. Treasury. But we didn't -- because Ryan, Schumer and other inhabitants of Capitol Hill haven't been able to agree on how to close the loophole that has allowed Apple and many other global American corporations to avoid paying the corporate income taxes they owe.
Let's be clear: The products Apple sells abroad are designed and developed in the United States. So the foreign royalties Apple collects on them logically should be treated as corporate income to Apple here in America.
But Apple and other Big Tech corporations like Google and Amazon -- along with much of Big Pharma and even Starbucks -- have avoided paying hundreds of billions of dollars in taxes on their worldwide earnings because they don't mainly sell physical things like cars or refrigerators or television sets that they make here and ship abroad.
Their major assets are designs, software and patented ideas. Although most of this intellectual capital originates here, it can be transferred instantly around the world, finding its way into a vast array of products and services abroad.
Intellectual capital is hard to see, measure, value and track. So it's a perfect vehicle for tax avoidance.
Apple transfers its intellectual capital to an Apple subsidiary in Ireland, which then "sells" Apple products all over Europe. And it keeps most of the money there.
Ireland has been more than happy to oblige by imposing on Apple a tax rate that's laughably low -- 0.005 percent in 2014, for example. What does Ireland get out of it? Several thousand jobs and a steady flow of global investment.
Apple and other global corporations have perfected the art of playing off one country against another. Even Ireland is appealing the European Commission's ruling out of fear that accepting the $14.5 billion windfall might scare away other global corporations -- undermining Ireland's reputation as a tax haven, which has become a cornerstone of the country's economy.
Apple is one of America's biggest tax cheats. It maintains a worldwide network of tax havens to park its global profits, some of which don't even have any employees. Over last decade alone, Apple has amassed a stunning $231.5 billion cash pile abroad, subjected to little or no taxes.
This hasn't stopped Apple from richly rewarding its American shareholders with fat dividends and stock buybacks that raise share prices. But rather than use its overseas cash to fund these, Apple has taken on billions of dollars of additional debt.
It's a scam, at the expense of American taxpayers.
Add in the worldwide sales of America's Big Tech, Big Pharma and Big Franchise operations, and the total scam is sizeable. Over $2 trillion of U.S. corporate profits are now parked abroad -- all of it escaping the U.S. corporate income tax. To make up the difference, you and I and millions of other Americans have to pay more in income taxes and payroll taxes to finance the U.S. government.
Why can't this loophole be closed? In fact, what's stopping the Internal Revenue Service from doing what the European Commission just did -- telling Apple it owes tens of billions of dollars, but to America rather than to Ireland?
The dirty little secret is that the loophole could be closed. The IRS could probably do what Europe just did even under existing law. But that won't happen, because Big Tech, Big Pharma and Big Franchise have enough political clout to stop the loophole from being closed and stop the IRS from going after them.
Ironically, the European Commission's ruling is having the opposite effect in Washington -- adding fuel to the demand Apple and other giant U.S. global corporations have been making: that the United States slash taxes on corporations that move their overseas earnings back to the United States.
In other words, they want another tax amnesty.
Congress' last tax amnesty occurred in 2004, when global U.S. corporations brought back about $300 billion from overseas and paid a tax rate of just 5.25 percent rather than the regular 35 percent U.S. corporate rate.
Corporate executives argued then, as they argue now, that the amnesty would allow them to reinvest those earnings in America. The argument was baloney then, and it's baloney now. A study by the National Bureau of Economic Research found that 92 percent of the repatriated cash was used to pay for dividends, share buybacks or executive bonuses.
"Repatriations did not lead to an increase in domestic investment, employment or (research and development), even for the firms that lobbied for the tax holiday stating these intentions," the study concluded.
The political establishment in Washington is preparing for another tax amnesty, but what's really needed is a crackdown on corporate tax avoidance.
Instead of criticizing the European Commission for forcing Apple to pay up, American politicians ought to be thanking Europe for standing up to Apple.
At least someone has.
Bottom Line: “I don’t like Apple, they don’t pay enough taxes, so lets go back, reinterpret the law and take their money!”
There is something fundamentally disturbing about this ongoing impulse both here and in Europe to rewrite law without resorting to the actual legislative process.
Townhall has no idea what they are talking about.
This is a EU shakedown to punish successful American companies.
Intel, Microsoft and Google have all gotten the same “treatment”
On the Intel front, Germany was funding Global Foundries and it was (and still) has major process problems.
It was easier to fine Intel 1.2B rather than fix their fab in Munich.
It’s none of our (the U.S.) business. As for Apple and the EU...hey, you got into bed them, enjoy the ride.
Natural consequence of high taxation: people figure out how to avoid it - which may include stopping productivity.
Ronald Reagan, as an actor, noted that he would have made a lot more movies but taxes made it not worth doing.
If the US is wanting 40% of Apple’s profits on top of what’s taxed by other governments, then Apple may just pull out of the US. (The top designer is British and wants to go back anyway).
The pattern is easy to see: demonize and fine successful American companies (Google, Intel, Apple) while trying to subsidize European competitors.
Each action like this by the EU should be met with countervailing tariffs on EU imports, calculated to cause the most pain (e.g., French wine, Airbus).
It boils down to this: Why do you rob banks? Because that’s where the money is.
Thieves see a pile of money and they go after it. And the biggest thieves in this world are politicians.
Despot politicians make the rules then complain when they don’t have the effect they demand.
Competition is the ONLY means to keep things in check. A global government would erase country based competition.
I thought the left loved higher taxes. This should be considered good news for the liberals that run Apple. Oooh... I see. Higher taxes for average people, not for them.
Apple, as a much smaller company in the 1990s, established a European beachhead in the then impoverished Irish county of Cork. At the time, Ireland saw this investment as a mutual advantage and agreed to a favorable tax rate for a growing high tech presence.
It would be a fiduciary crime against the owners (shareholders) not to work for best tax treatment of their investments. Taking advantage of LEGAL provisions in domestic and international tax codes is not criminal.
The USofA has kept one of the highest corporate tax rates in the world and, because of the peculiarities of the same, returning profits to the home country would cause them to be taxed without deductions otherwise available to non-intellectual property companies (Caterpillar, Boeing etc.)
The EU is passing the equivalent of a post-facto tax ruling, saying that Apple should have been paying a tax rate to Ireland that the EU thinks is/was ‘fair’ and computing it back to near the start! The EU Socialists slaver for money and Apple is an easy, AMERICAN, target!
Townhall??? Seriously?
It would be nice if we can reclaim some of that huge mountain of money that went to Communist China,
The Bayer take over of Monsanto is mostly the result of unfavorable US tax laws. As a result the HQ of Monsanto will move to Germany, the US will get even less taxes from Monsanto and jobs will be lost. If we don’t change to Trumps tax plan we won’t have any multinational companies based in the US. I spent 36 year career in international business and without these changes we are in deep trouble.
Apple execs help fund the democrat party and want me to pay higher and higher taxes and support very objectionable things. I say take all the money they have parked overseas. It may shut up their execs.
This is one reason why I refuse to buy any APPLE products
Let me get this straight. Apple profits on foreign soil, are actually profits on U. S. soil?
This must make sense to some ass-hat clown or it wouldn’t be boring me to death here.
These are taxes America should have required Apple to pay to the U.S. Treasury. But we didn’t — because Ryan, Schumer and other inhabitants of Capitol Hill haven’t been able to agree on how to close the loophole that has allowed Apple and many other global American corporations to avoid paying the corporate income taxes they owe.
...
Isn’t Trump’s plan to lower taxes so they bring back the money voluntarily?
Lowering our corporate tax rate here, would mean they wouldn’t have to avoid doing business in the U. S.
Business could be brought back here.
In addition, their large sums of money made overseas could be repatriated without loosing a large chunk of it.
That could mean trillions of dollars could flow back into our nation to facilitate expansion.
It would stop corporations from moving overseas. There would be no need. (I’m talking about the major core of their operations)
How about a novel idea, let’s reduce the cost of GOVERNMENT. Sheesh. Stop raping and pillaging and the companies will come back, bring their money back and we’ll be able to afford those things we need to afford, or “want” to afford.
There is NOTHING anyone can tell me that would explain the legitimate reason, other than a money grab, for us to have 284 different federal organizations doing EXACTLY THE SAME TASK. Or in another situation, a new organization being formed to take the power and budget of 7 other organizations and not only are not one single one of the old ones closed, they ALL got 10-50% increases in their budgets.
Our “giver”ment needs to be trimmed back, pruned, and cut to the bone in some instances. Literally, we have 19 million leeches sucking us dry and the idiots who wrote this article want to just give them more juice.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.