“European authorities have clamped down on a special deal between Apple and Irish tax authorities, saying the arrangement uniquely favors Apple and is unavailable to other companies,” Rick Newman reports for Yahoo Finance. “Nixing the deal—which lowered taxes on much of Apple’s foreign income to virtually nothing—will force Apple to pay taxes in Ireland at the higher rate other companies pay. The bill: about $14.5 billion.”
Newman reports, “But Apple may get reimbursed for all of that by an unlikely benefactor: the US taxpayer. ‘It’s extremely possible the US taxpayer will have to pay this bill,’ says Stuart Gibson, a former government tax official who’s now editor of Tax Notes International. ‘For every dollar in tax Apple has to repay in Ireland, they may get to reduce their US tax bill by $1.'”
“In a simplified example, if Apple paid $14.5 billion in taxes to Ireland in a given year, and its tax liability to Uncle Sam was $50 billion, it would generally be able to reduce its US income tax by the amount of taxes it paid to Ireland. So it would only owe $35.5 billion in US taxes,” Newman reports. “That’s $14.5 billion in revenue the US Treasury won’t get, which means the government can cut spending by $14.5 billion to offset the loss, or borrow to make up the difference. In reality, the government never cuts spending based on the flow of revenue from a single source, or raises taxes on some other entity in real time. So the difference is essentially made up by borrowing, which is a future obligation borne by US taxpayers.”
Read more in the full article here.
MacDailyNews Take: Yup.
At its root, the Commission’s case is not about how much Apple pays in taxes. It is about which government collects the money. — Apple CEO Tim Cook, August 30, 2016
SEE ALSO:
Morningstar: Apple remains fundamentally undervalued after EU tax grab – August 30, 2016
Obama admin worries EU’s Apple decision will cost U.S. taxpayers; Bernie Sanders applauds EU tax demand – August 30, 2016
Ireland doesn’t want Apple’s $14.5 billion in so-called back taxes – August 30, 2016
U.S. Treasury: The European Commission’s retroactive tax demands on Apple are unfair – August 30, 2016
EU demands Apple pay massive $14.5 billion in taxes plus interest – August 30, 2016
Apple CFO Maestri: Despite EU tax ruling, we will continue to invest in Ireland – August 30, 2016
Apple CEO Cook blasts European Commission for ‘ignoring Ireland’s tax laws, upending the international tax system’ – August 30, 2016
European Commission to rule Ireland’s tax arrangement with Apple illegal – August 29, 2016
Ireland prepares for a fight with EU over Apple tax clawback – August 29, 2016
U.S. government warns EU: Do not hit Apple with a massive back tax bill – or else – August 25, 2016
European Commission denies anti-U.S. bias after U.S. Treasury intervention over Apple, Amazon tax probes – August 25, 2016