Paul L. Caron

Thursday, September 8, 2016

Kleinbard, Warren And Others On The EU-Apple $14.5 Billion Tax Dispute

Apple EUFollowing up on my previous coverage of the EU-Apple tax dispute (links below):

Financial Times op-ed: The Myths Behind Apple's Manufactured Tax Crisis, by Ed Kleinbard (USC):

The op-ed responds to the spin put on the case by Apple and its allies, by arguing that the controversy is not a tax case at all. To claim otherwise just confuses the core finding (that Ireland delivered subsidies to Apple in exchange for jobs) with the instrument used by Ireland to deliver those subsidies. The piece further debunks the claim that the US is the jurisdiction with the best claim to tax Apple’s pot of essentially tax-free income. Space constraints required that some of the thoughts had to be truncated a bit; had I unlimited room, I would have concluded the piece with something along these lines:

The myths put forward by the Apple spin machine, abetted by the US Treasury, threaten to fracture international tax administration comity when no tax crisis in fact exists. Tax here was just the instrument for delivering state aid. The US Treasury is expert in detecting tax shams used to disadvantage US tax collections, and should have recognized that the EC similarly is making a sham arrangement argument.

The Hill op-ed: Apple’s Ireland Tax Avoidance Should Spur Major Reforms, by Ed Kleinbard (USC):

The European Commission’s “state aid” investigation of Apple revealed that in 2014 Apple’s aggregate tax rate on its European business was $50 per $1 million of profit. At that rate Apple is not only the world’s largest for-profit corporation, but also the world’s largest tax-exempt one.

New York Times op-ed: What Apple Teaches Us About Taxes, by Elizabeth Warren (D-MA):

[T]he commission’s announcement was the latest sign that multinational corporations are running out of places to hide from paying taxes. The door is now open for Congress to fix our own corporate tax code, which has allowed the biggest multinationals to shirk their obligations for decades. The Apple ruling is big, but it is only the latest international effort to end the deals that American multinationals have used to pay near-zero tax rates. ...

[I]nstead of bailing out the tax dodgers under the guise of tax reform, Congress should seize this moment to take three crucial steps to repair our broken corporate tax code.

First, Congress should increase the share of government revenue generated from taxes on big corporations — permanently. ... Second, Congress should encourage investment in jobs here in the United States. ... Third, Congress should level the playing field for small businesses. ...

For years, corporate tax dodgers have taken full advantage of all the benefits of being American companies, while searching out every possible way to avoid paying American taxes. Now that other leading countries are starting to get tough on tax enforcement, these tax dodgers suddenly want to move their money back to the United States. When they do, they should pay their fair share, just as working families and small businesses have been all along.

Prior TaxProf Blog coverage:

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