“It is fascinating to watch left wing ideologues and simpleminded idiots (though I repeat myself) gleefully call for the Irish nation to douse itself in petrol and light a match where corporate taxation is concerned,” Aaron McKenna writes for TheJournal.ie. “‘It is simply unfair,’ they will shout time and again, ‘that these big corporations use our little country to reduce their tax liabilities when the ordinary Irish worker is struggling with water/property/income/taxes in general.'”
“As in all aspects of life, these folks seem to believe that someone else owes them a living,” McKenna writes. “Just as those who are more successful than them should be paying 90% income tax rates according to the manifestos of many of our left wing parties, the corporations present in Ireland should be forking over far more of the global profits they wash through Ireland because, well, they have the money the lefties want.”
“Sorry, because fairness. What they seem to miss is causation. Yes, there are a multitude of corporations sitting in Ireland, employing hundreds of thousands directly and indirectly, but only having a small portion of their profits pass through as taxable in this state,” McKenna writes. “That, in a nutshell, is why they are in Ireland. It’s not the only reason, but it is the seed, the germ, the zygote brought together by tax planning and our position in the world.”
“The next time you hear that the Irish state is prepared to fight the EU Commission over purported tax deal investigations, don’t roll your eyes. The Irish state isn’t fighting for corporate profits, it’s fighting for the jobs that we have in this country thanks to our corporate tax regime,” McKenna writes. “The Eurocrats and the left and the begrudgers can think again – tax competitiveness is the foundation stone that built Irish prosperity and that will drag us out of the mess we’ve been in the past years.”
Read more in the full article here.
MacDailyNews Take: Apple has repeatedly and confidently stated that they didn’t do anything that was against the law. Therefore, unless the EC tries to change the law retroactively, if that’s even possible, or tries to collect taxes retroactively in some other fashion, Apple is in the clear.
There was no special deal that we cut with Ireland. We simply followed the laws in the country over the 35 years that we have been in Ireland. If the question is, was there ever a ‘quid pro quo’ that we were trying to strike with the Irish government – that was never the case. We’ve always been very transparent with the Irish government that we wanted to be a good corporate citizen… If countries change the tax laws, we will abide by the new laws and we will pay taxes according to those laws. – Apple CFO Luca Maestri
SEE ALSO:
Apple announces 1,000 new jobs in Ireland as EU tax ruling nears – November 11, 2015
Apple tax probe won’t hurt Ireland, Finance Minister Noonan says – October 5, 2015
EU’s Vestager says will not complete tax inquiries of Apple, others in second quarter – May 5, 2015
Apple warns of potential ‘material’ financial damage from European tax probe – April 29, 2015
Apple may have to pay Ireland 10 years of back taxes – April 30, 2015
Ireland’s Prime Minister: Apple has nothing to fear from end of ‘Double Irish’ tax avoidance strategy – November 4, 2014
Apple says it may lose Irish tax break – October 31, 2014
Ireland to end tax lures that drew U.S. firms – October 14, 2014
EU tax probe spotlights Ireland’s allure for multinationals – October 13, 2014
EU watchdog to give reasons for inquiry into Ireland’s tax treatment of Apple – September 29, 2014
European Commission accuses Apple of prospering from illegal Irish tax deals – September 28, 2014
EU threatens expanded probe into Ireland’s tax practices regarding Apple, Googles, other companies – June 20, 2014
EU’s investigation of Apple’s taxes isn’t going to cause the company any problems – June 13, 2014
EU launches tax avoidance investigations on Apple, Starbucks, Fiat – June 11, 2014
Not in Taxes anymore: On site at Apple’s famous Irish ‘headquarters’ – November 2, 2013
Regan: U.S. tax code spurs loveless foreign corporate ‘marriages’ – May 13, 2014
Ireland to close Apple’s tax loophole, but leave bigger one open – October 15, 2013
G20 think tank OECD proposes blueprint for global crackdown on tax avoidance – July 19, 2013
Thomas Sowell on Apple, corporate taxes, and ‘the road to serfdom’ – May 28, 2013
Taxing Apple just taxes you – May 24, 2013
Don’t tax Apple, tax its shareholders – May 24, 2013
If Apple paid more tax, we might pay less or something – May 22, 2013
Apple CEO Tim Cook pounds another nail into the Keynesian coffin – May 22, 2013
Apple CEO Cook makes no apology for company’s tax strategy – May 22, 2013
[Thanks to MacDailyNews readers too numerous to mention individually for the heads up.]
Why is this a left wing thing? Fact, company search the world for a place where it could pay little to no taxes. It found a place. The world changed, countries decided to created new treaties, laws and rules to unite for some reason or reasons. Change occurred. Company did not adjust to new possible reality.
Or how about their is only so much money in the world and when one person, group of people, or company is holding on to most of the money, all that is left is credit for the rest. Not really the same as money. Just think, if the world was on a gold standard. It would be worst. There is truly only a specific amount of gold in the world.
The tax bill is going to be at least a few billion plus, otherwise apple would not feel the pain. Lawyers are going to make a lot of money.So the question becomes did you really save anything any money with this tax strategy? How much? And, now the laws will be rewritten to insure that never happens again.
What brings in the most money selling products or not paying taxes. In order for the world to work money must be in circulation. It’s better to have governments spend it, then to ask the rich, companies included, to build roads, bridges, feed the poor, build schools, put in sewer systems, field an army, navy, air forces, police, firefighters, banking system, prisons, etc. Why? Well, the thought is everyone who has a concern, an interest, has a say, can add input into what, who, how, but, because there are others with different thoughts, in order for something be to done compromise must take place. no one person has there way.
Wealth creation is not a zero sum game. There is no pie.
No matter how you slice it, when it comes to income and wealth in America the rich get most of the pie and the rest get the leftovers,” writes a critic of income inequality. “The people who are in the top 1% today earn a larger share of the income pie than the people who were in the top 1% twenty-five years ago,” notes economist Russ Roberts, a non-critic.
One implication of the pie metaphor is that wealth is a zero-sum game: there is a fixed amount of houses, cars, medicines, etc. to go around, and the more Steve Jobs gets the less is left for the rest of us. That may have had some plausibility 250 years ago when most wealth was in the form of land. But today, when an iPhone [5s] verges on outdated technology, it’s impossible to miss the fact that wealth grows. Roberts puts the point this way: “The pie is not constant. So your well-being can grow even when your share of the pie falls if the pie is getting sufficiently larger.
Wealth is created by, and morally belongs to the individual creator.
Learn somthing, for a change, here.
There are well-known “institutional” as well “network” effects associated with wealth creation. A hard-working, smart, educated person stranded on an island cannot achieve a high standard of living or amass wealth. A good living standard and wealth accumulation are unusual to achieve in poor, undeveloped countries. (A good education itself is unlikely.) It generally takes a wealthy country to produce wealthy individuals.
Generally speaking, those who amasses wealth do so due to the wealthy nation they live in. With the help of the nation’s educational, cultural, legal, police, and political systems. And thanks to educated and reasonably well-off citizens. (Eg, The Koch brothers would probably not amount to much if they had been born, raised, and lived in, say, Zimbabwe.)
Some wealthy people consider any taxes paid to local, state, or national governments to be the moral equivalent of “robbery” of their hard-earned wealth. Yet they should think of taxes as a thankful payback to the system that allowed them to amass wealth in the first place.
There is nothing immoral about taxes. It is our civic duty. It makes perfect sense for those with increasing levels of wealth to pay a little more (of each increasing level of wealth) in taxes. Our current tax system burdens the less-well-off more than the more-well-off, which does not seem fair. Those taxes go back into the system to create a wealthy nation, with public education, laws, security, care of the unfortunate, and good job prospects for citizens, all of which help produce the wealth of individuals.
Perhaps you could directly reply to the primary topic in the article – the economics ramifications in Ireland. When you do that I’d like to know what you think about the six-figure loss of jobs and many, many billions of pounds/euros/dollars of economic contraction that will result. Are you seriously advocating for this pain and suffering in order to promote your economic ideology?
That’s not fair to label WoN’s comment as ideology. He stated his views based on reasoning. Whether you agree with his conclusions or not, using reasoning is not ideology.
Your question to him is fair, but the need to slap negative labels on others is not constructive.
Isn’t ideology the reasoning one accepts? Reasoning is based on facts (but not always all facts), bias and value put on each fact weighs the reasoned position.
michaele — Your comment is addressed to me although it applies equally to the previous poster to whom my post is a response. Specifically, the statement that “Wealth is created by, and morally belongs to the individual creator.” As stated, I believe wealthy people and corporations owe a moral debt to the society from which their wealth was made possible, and they should be pleased to pay their fair share of taxes on their earnings and/or accumulated wealth. This is not an insightful comment. Most people have an exquisite sense of fairness, and I think most would agree with the general opinion that the beneficiaries of a system should support the system.
Now, as requested, here is what I think about job and economic losses in Ireland if the corporate tax laws are changed. For what it is worth, my ancestry is Irish and I am a PhD economist. First, I regret any job and economic losses by anyone. Yet not all jobs and economic activity are equal. We regret the loss of jobs and economic activity relating to the defunct horse carriage business, even as we enjoy job creation and economic growth of the automobile industry. I would also regret the loss of jobs in producing ethanol, if the US were to rescind its law requiring the addition of ethanol to gasoline, but those jobs never should have existed in the first place because it is not economically justifiable. It does not reduce the production of CO2, it does not reduce the cost of gasoline when all costs are considered, and it distorts the demand for, and supply of, the agricultural production of grains as food. (Farmers plant less wheat and more corn, because the demand for corn has been increased to satisfy the demand for ethanol production.)
This is the same situation as many jobs in Ireland that exist simply so that large corporations can take advantage of Ireland’s unusually favorable corporate tax rates to shelter some of its profits. I am sorry those jobs would be lost if the tax laws are changed, but those jobs really should never have existed in the first place. Ireland (and other “tax shelters”, like Swiss banks …at least before the US IRS figured out their game!) are beggaring-their-neighbors by “arbitraging” tax rates. Technically speaking, that is not creating economic output; it is simply changing pockets of where the cash goes. Instead, Ireland (and any other country involved in tax rate arbitrage) should instead focus their energies on producing real economic output and creating wealth.
As the world’s economy becomes more interconnected, we will need to figure out how to tax profits around the globe more fairly, so that individuals and corporations can be taxed appropriately, without “gaming” the system by moving profits arbitrarily to tax shelter locations. But that is another topic. Thomas Piketty’s book, _Capital in the Twenty-First Century_, recommends this sort of thing. It is a fabulous, eye-opening book if you have not read it.
When the wealthiest 10% are paying the vast majority of our taxes, and 50% of our people are paying almost zero, how do you possibly figure that the less well off are more burdened?
Thelonius Mac — When Warren Buffet earns a lot of money but pays a lower average rate of income tax than his secretary, who presumably earns substantially less — that is what many would consider “unfair”. Warren Buffet himself thinks it is unfair.
In pretty much any country, the wealthiest people pay a majority share of taxes. The tallest people play basketball. It is sort of logical. Tax income is not gonna come from the poor.
We cannot honestly expect the many people who barely make ends meet contribute substantially to income taxes. As people earn increasingly more, they should be taxed increasingly more, too. This is why most taxes are derived from those earning substantial incomes.
Over the years, the discrepancy in the increases in income between the wealthiest 10% and the remaining 90% (and the wealthiest 1% compared with the 0.1%, and the wealthiest 0.01% compared with the top 0.1%, is staggering. There is nothing preposterous aobut the wealthy paying more in taxes than the poor.
All that means is they have all the money. Taxes you pay are based percentage of. The more you make of the more you pay.
Even if there were a flat tax of 4%, the top 10% would pay more taxes.
So you must think a valid plan is to pay people more so they can pay more. Let’s end all tax deduction and close all loopholes. That’s fair, right? Now the tax code is real simple.
Taxes are immoral. It’s the survival of the fittest. It takes a nation of moral citizens. Taxes play a supremely small role until they tend toward overbearing. The purpose of taxes should be to pay for a well defined govt. when it bloats, it should and will bleed.
Why do you go by that stupid republican logo. What is it? Is it, “Once a Republican ALWAYS a Republican”. Politics is not a stupid game where you choose to be a certain team regardless of weather they win a trophy or not…..supporting them through thick and thin.
Politics is real life, real pain inflicted on those that can be victimized by politicians and it can be life or death. You have been wearing these political colours for years. Are you saying you NEVER will consider the other side. Grow up!
Those who can’t think for themselves use labels (for themselves and others).
To someone like 2014/16, screw ups by the other (Democratic) team are reprehensible but screw ups by his own team need to be ignored, rationalized, denied.
You can’t make an independent thinker out of a dependent mind.
I was a registered Republican from age 18 until I was in my mid-30’s. That’s when I started paying attention to things. These days I am a “Decline to State” because my beliefs don’t easily fit into one point of view.
You should try learning something, First For many, many decades, the US economy, both at federal and state level, has done better – far better – under Democrat leadership. Employment, GDP, debt levels, income, poverty, etc. etc. http://politicsthatwork.com
Here is a link to the 2013 paper by Alan Blinder and Mark Watson of Princeton University. They found US economic growth was greater (and fairly substantially so) under democratic presidents than republican presidents. https://www.princeton.edu/~mwatson/papers/Presidents_Blinder_Watson_Nov2013.pdf
“It’s better to have governments spend …” This is why it’s a “left wing thing.”
How about it’s the only real solution! Not left wing or right wing. I would to hear how you would pay for those things the public uses. Or perhaps you are suggesting americans lower their standard of living.
But the article is about Ireland…???
No. The author whines about how many jobs and how much money Ireland would “lose” IF the country changed its *corporate tax policy* to be in line with most other EU countries. The article is more about taxes than about Ireland, per se.
More spending isn’t a right or left issue. Its one of the few things they both agree on.
Left: Lets raise taxes and RAISE SPENDING. (Drain the country now)
Right: Lets lower taxes and RAISE SPENDING. (Drain the country’s future.)
Conservative: let’s shrink government to its defined role, determine the cost of it and tax accordingly. You are paying are largesse tax through waste, fraud and abuse because it’s too big to govern itself.
Dear Bob,
Your understanding of economics, especially macroeconomics, wealth creation and productivity is about zero. Your comments indicate you know very little about the subject you are commenting on.
After reading your comment twice in order to be sure about what you are saying, I can safely say you are exactly the type of person the author refers to in the first paragraph.
But his big words sound so educated to the mind with a redistributionist bent from the start.
Oh the injustice that mega corporations like Apple, Google and Microsoft should be made to pay their fair share of tax. In Australia these entities use tricky accounting to offshore profits made in the country so they pay almost no tax. This is completely unacceptable – they take the benefits that are provided by a first world nation – highways, clean water, public transport, law enforcement, etc but don’t contribute.
This kind of corporate greed and selfishness is completely unacceptable.
Well it’s a good thing they don’t pay their employees anything, either, isn’t it? And it’s a really good thing those employees don’t have to pay income taxes, or the customers and sales taxes, or…
Ah, yes. The trickle down effect. How is that working so far? The gap between the rich and the poor must be narrowing, right? The rich aren’t just storing their acorns away in other countries or tax havens, right? It’s not their business to take care of humanity, right? Selfishness and greed is their business. They don’t fear the uprising of the masses because they build private (and public) armies to protect them and their entitlement. They have nothing to learn from Russia or France where the peasants revolted and rose up. The rich are immune from being concerned about the poor. After all, they are appointed by God Himself to be rich, right.
I supposed they pay no property taxes, no employment taxes, no social services taxes, no welfare taxes, no road use taxes, no sales taxes, no VAT, no petrol taxes, no sewer taxes, no environmental taxes and lord knows they pump zero money into the local and national economies where they do business.
What is completely unacceptable is your lack of knowledge and ignorance about the overall level of taxes paid by ANY business is any developed nation. It is staggering regardless of the label attached to what is paid.
Vote out the MPs who allow the loopholes. It’s that simple.
What part of MDN’s take didn’t you all get?
Businesses have income and outgo. The difference between the two is profit. Outgo, or costs, include land, physical plant, payroll, machinery, maintenance, utilities, raw materials, processing, outsourcing, packaging, shipping and distribution, advertising, etc., and corporate taxes.
Income includes the money taken in from the sale of goods and services. The price of the iPhone or Mac that you buy is determined, in large part by all the costs involved in producing and marketing it, including the corporate taxes. Corporate taxes (not sales taxes) are a cost of doing business just like payroll or advertising.
When we buy the goods, we pay the corporate taxes, the corporation doesn’t. If corporate taxes rise, the cost of goods rise, and the price you pay for them increases. Therefore corporations, and other businesses, should not pay taxes because they don’t anyway, you and I pay them as part of the price.
Corporate taxes are a way governments fool people into thinking that someone else is paying the taxes when in reality they are taxing us, the consumer. If you want Apple to pay more in corporate taxes, be prepared to pay more for your iPhone.
This is basic Econ 101, but sadly many of you won’t understand it. No argument to the contrary will make it less so, no matter how hard you try. If you do try, you are one of those who can’t (or won’t because of ideology) understand it.
TL:DR You pay corporate taxes, corporations don’t. Lower corporate taxes = lower prices.
Apple’s not going to pay more in corporate taxes, because the US also taxes foreign income. Even though Apple pays an extremely low rate on its foreign income in Ireland, reportedly only 2%, they are also booking the balance of the US tax rate, a net of 33%, on about 2/3rds of that foreign income. Net net, Apple shows a global net effective tax rate of 26.3%. If Apple didn’t book that US tax on its foreign income, it’s net effective tax rate would be about 12%.
The upshot is, whatever extra tax Apple is forced to pay in Europe, will be dollar for euro deducted from the tax Apple has already booked in the US. There will most likely be no material effect on earnings. Apple’s past income statements will likely remain the same.
One further point… Corporations make up most private retirement plans. As taxes increase on them and prices don’t rise in pace with the taxes, profits decrease and retirement plans lose value. When you attack corps, you attack the public in a two-pronged approach.
Apple just announced she will hire about 1000 new personnel in the country.
If corporate taxes rise, the price of goods does not necessarily rise. If corporate taxes fall, the price of goods does not necessarily fall. Corporate taxes are just ONE factor that weighs into the price of goods.
However, I do believe it would be close to 100% accurate to say:
If the costs of land, physical plant, payroll, machinery, maintenance, utilities, raw materials, processing, outsourcing, packaging, shipping and distribution, advertising, and corporate taxes ALL rise, the cost of a good will most likely increase.
Corporate taxes being, of course, one of the least influential of the 13 listed. For an average mid to large size company, I wonder how many of them would see a rise in corporate tax and NOT try to, say, decrease one of the other costs to compensate?
What you said is correct. But it doesn’t negate the fact that we, not corporations, pay what ever taxes are levied against them.
As long as when you say “we” you’re talking about those people that buy the products, not the general populace. However, that’s a bit of an oversimplification, too, as companies make money in different ways that don’t necessarily include strictly a transaction between a consumer and a company.
A corporation’s customers pay whatever taxes are levied against them… Yeah, that CAN be said, its just an odd way of saying “Customers exchange money for goods and services, then corporations use that money to cover expenditures, one of which is taxes”
profit = sum of all sale prices – sum of all costs
To maintain and increase profit (what every corporations shareholders are asking it to do) any increased cost will eventually result in increased prices.
It doesn’t matter if a cost increase is higher taxes or more expensive paper clips. Increasing a corporations costs will drive up prices.
Saying hand wavy stuff like “company’s make money in different ways that don’t necessarily include strictly a transaction between a consumer and a company” doesn’t change economics. It doesn’t matter how complex the transactions are or who the parties are. Profit for any transaction, no matter how complex, is its price minus its costs.
What you say makes zero sense.
First, profit is product price – costs. This is a very simple equation. Any increase in costs is highly likely to result in increased prices because companies work to maximize profit.
Second, an increased cost in one dimension rarely creates a new potential for decreased costs somewhere else. That is nonsense. Companies are always seeking to lower costs, they don’t just do that because one cost went up.
Your disagreement is with the original poster’s definition of cost.
Who cares what the Irish think. Socialists or capitalists in Ireland are of no concern to the rest of Europe that gets to see little of the Corporate tax take from billions of $ of sales because Apple funnel the lot through their sweetheart deal.
It’ s the rest of Europe that believe tax dollars should be paid in the country in which the product is sold.
What’s blatantly ‘unfair’ is the outrageously high US tax rate of FOREIGN made profits. Does #MyStupidGovernment want that money brought into the USA and put to work? Apparently NOT.
MDN wrote: Therefore, unless the EC tries to change the law retroactively, if that’s even possible, or tries to collect taxes retroactively in some other fashion, Apple is in the clear.
As I’ve covered here in the past, the EU does not allow ‘Ex Poste Facto’ laws. IOW: It is illegal for them to create retroactive laws. They can change the future, but CANNOT touch the past.
As others have predicted: If, after the EU loses their case against Ireland and Apple, they attempt to FORCE Ireland to change their corporate tax laws, Ireland will LEAVE the EU rather than be the victim of EU dictatorship.
IOW EU: Lay off. Diversity rules! You can’t stop it. Ireland benefits from doing things its own way.
When an article begins by calling the left wing ((ie. Liberals) “simple minded idiots”) there is no reason to read further, because the closed minded prejudice of the author has been revealed.
Regardless of the merits, if there be any, in the article’s argument: I was born in Ireland and raised in Germany and the United States, so I resent the “world owes me a living” remarks on behalf of my Irish parents and forebears who were treated as second-class citizens when they arrived on a foreign shore, amongst a melting-pot of other races and nationalities, to help a fledgling nation become a great one.