Worming the Apple


Apple’s Irish offices. The sign should read ‘Experts in Tax Avoidance’

Here is more evidence of one law for the rich another for the rest of us.

The EU has told Apple Corporation to pay real taxes to Ireland, not pretend taxes. Apple claims it has, and that retrospective action is invalid and destructive of trust.

The time has gone when major companies saw their success as a moral duty to enrich the community that served them. If you were Josiah Wedgwood with a highly successful pottery company, for example, selling to UK, Europe, and America, you ensured all your workers were well looked after, got the best of working conditions available, provided  material support for the town or village where your factory was situated.

You got involved in local issues, set up charitable trusts, perhaps got elected to parliament to further your social conscience, and make life better for others. It wasn’t quite as generous and ideal as actually giving loyal workers a legal share in your company, but it was close enough. If you were truly liberal you welcomed union participation in your factory and the right of free bargaining.

We used to call it, ‘giving back’

The philanthropic process still exist in pockets here and there, the John Lewis Partnership a good example, though to what extent depends on whose boss at the time – a recent CEO removed cleaners from a  share of JL profits – but mostly the ethics of big business have altered out of all recognition in today’s globalisation.

This is the 21st century. Enrichment belong to 1% bosses of company bosses, and in their offshore accounts.

Companies are broken up into highly complicated units, their registration distributed internationally, making their accounts very hard to follow, or even trace. They are based in a village, town or city only because the tax laws of that area offer generous benefits and welfare grants first and foremost. Unions are not welcome.

If you can manage it, you set up a factory in China, South Korea, or Mexico where Labour is cheap. Your goods, however, are anything but.

Loads a-money

The conglomerate company Apple made $220 billion in revenue last year, and is valued on the stock market for $575 billion. It is appealing against a European ruling to pay Ireland $14.5 billion in back taxes. Or put another way, it made roughly three quarters of a billion pounds a day, but is refusing to release 20 days of revenue as tax.

The European Commission’s landmark report says that between 2003 and 2014 Apple paid a rock bottom Irish tax rate on most of its profits outside the US before sending it to a tax haven where it paid no tax at all. It has more than $187 billion ‘stashed’ in offshore accounts.

In large measure the $187bn it held outside the US in 2015 accounts for a lot of the $1.2 trillion US multinationals have parked offshore, in the hope that US tax reform will eventually cut the cost of repatriating the profits.

The commission argued the “sweetheart” tax arrangements Ireland made with Apple between 1991 and 2015 allowed the tech giant to avoid tax on almost all profits from sales of its products across the EU’s single market, booking the profits in Ireland rather than the country where the product was sold. [My emphasis] A nation’s government encouraged a company to avoid tax, and impoverished its voters materially and democratically in the result. That’s the gist of it.

Did Apple question that the deal was a unique one that might cause embarrassment all round? I can hear the cry from the right-wing. “But Apple were encouraged to follow a legal route that reduced their tax burden.” Well, it wasn’t legal.

And anyway, few will refuse the chance to have their worst qualities catered for – meanness. We are supposed to be creating a society that encourages the best in humans, not the worst. And governments are elected to protect citizens, not denude them of material investment.

Ignore EU ruling

First, not a single British newspaper depict the verdict as any sort of triumph for European democracy at work.

Instead, they presented the victory of tax fairness over corporate greed as evidence Ireland was doing what it thought correct, (since 1950 sucking up to USA companies) and anyhow, other nations offer tax avoidance. And not a single newspaper heralds the commission verdict as the way forward to get all global companies to pay up.

Second, Apple bosses are threatening Armageddon for Europeans if they are force to pay, thus confirming multi-national corporations are tyrannies, companies that assume they are above the law.

The company’s chief financial officer, Luca Maestri – shades of Mafia – claimed Apple paid $400 million US dollars in tax to Ireland in 2014. He claimed the EU commissioner’s calculation of only 50 million Euros after research and investigations, was baloney.

In the tradition of large companies threatening an entire nation state, Maestro said, “It is a completely made up number. We believe the impact of this devastating for Europe.”

High horses 

CEO Tim Cook also jumped onto his high horse, or perhaps leapt into his getaway car. “He posted a ‘da boss is angry’ note, a lengthy message on apple.com warning the world and all in it about the devastating ramifications, (good word, it has ram in it) for the sovereignty of European countries in light of the competition chief’s hard line.

He said, “In Ireland, and in every country where we operate, Apple follows the law and we pay taxes we owe.” He failed to say how little tax Apple pay.

That is another way of saying, “Those sons-of-bitches politicians we wined and dined with back pocket cash, free cars, goddamn pleasured with hookers, reneged on their promise to deliver the goods, and protect our ass from the Feds.”

Mr Cook of Apple added: “This has wide reaching implications. Beyond the obvious target of Apple, (note use of ‘target‘) the most profound and harmful effect of this ruling will be on investment and job creation in Europe.” Somehow Cook seems to think Apple employs everybody except subsistence farmers who live in fincas and travel by mule. Cook’s deal with Apple was £378 million in stock, back in 2011. He has a lot to protect.

Peter Vale, a Dublin-based corporate tax expert says the case will actually cost Apple $21 billion by the time they add interest and legal fees to fight the inevitable over this last decade. Vale says the order requires the Irish Tax Collection Agency to stop counting their pennies, get into a taxi, and go to the bank where Apple’s cash is held in escrow account pending the decision. They will need a very large carrier bag.

How much is recirculated in the community?

The only question remaining is how much of that dosh will actually make its way into public expenditure. We are used to see income channelled straight into banks to pay their debts. The Irish government are split about whether to take the windfall or appeal the EC verdict. As the Irish government tipped the wink at Apple with a way below minimum tax incentive, Irish politicians should not feel guilty about accepting the proper tax amount.

Apple’s general council describes the shock as “astounding, stunning, very troubling”.  Aye, it will be. For Apple, not for the population of Ireland that must feel as if they all won the Lottery.

Ireland’s finance minister, Michael Noonan, hates the decision, such is the stage we have reached where a corporate entity is considered greater than an elected government.

“We will fight the verdict to defend the integrity of our tax system…” Readers can guess the rest. The EC has become an enemy of the state. Governments  must be allowed to run roughshod over accepted regulations, stiff their own voters, and accept money ‘dispersal’.

True to his promise, the Irish government are to appeal the verdict. They colluded with Apple so have no option but to do what they were paid to do, protect big business from taxation. The deal was illegal, leaving the justified suspicion someone accepted bribes to put it in place, and is now forced to protect their ass.

And finally

Based on an obscure 1991 Irish tax ruling issued for Apple, back in the day a struggling computer maker, the Brussels competition decision has the potential to transform how corporate tax avoidance is policed in Europe. Other cases are waiting review, each amounting to illegal state aid against agreed rules. But there’s a problem for England.

England voted to dump European cooperation.

Phew! Our companies dodged a bullet – eh?

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7 Responses to Worming the Apple

  1. Neil MacKenzie says:

    “But there’s a problem for England.

    England voted to dump European cooperation. Phew! Our companies dodged a bullet – eh?”

    I was under the impression that England doesn’t have it’s own government? Ah, I see… England = UK

  2. Grouse Beater says:

    “English votes for English laws.”

  3. Great piece, Grouse Beater. An early word of caution, certainly.

    Come independence, every carpetbagger under the sun will be hot footing it to Scotchland. There are already a few in Edinburgh and Aberdeen as it is. It’s so close now, I can taste the metal in the air.

    Thanks for this.

  4. Smallaxe says:

    Hello my poetic friend,

    I was for a relatively short time the catering manager of ASDA stores. After a year of employment ASDA gives their managers discounted shares to buy into the company.However, the treatment given to part-time staff was appalling.

    Take for an instance the store in Maryhill Glasgow. This one store’s takings over Christmas week takes in on average in excess of 1.5 million pounds, and yet we have seen the local foodbank closed.

    Profit before People must no longer be tolerated. My heart is heavy with these thoughts.

    Peace and Power to your Pen.

  5. Grouse Beater says:

    Good to hear from you, Smallaxe.

  6. Smallaxe says:

    Always reading your excellent and informed epistles so I am. 🙂

  7. Grouse Beater says:

    Ha! You have an addition, but that’s just my opinion: http://wp.me/p4fd9j-9lS

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