PURPOSES, PROFITS AND TAXES May 29, 2013Posted by wmmbb in Democracy, Humankind/Planet Earth.
At The Guardian, Joesph Stiglitz makes the prescient observation that multinational corporations are not just about profits but about taxes as well.
Tim Cook testifying before the US Senate was frank. Dan Roberts and Dominic Roberts reported for The Guardian:
Apple has called for US corporate tax rates to be slashed after it admitted sheltering at least $30bn (£20bn) of international profits in Irish subsidiaries that pay no tax at all.
In a dramatic display of how threats from multinational corporations are driving down taxes across the world, chief executive Tim Cook warned Congress that he would refuse to repatriate a total of $100bn stashed offshore unless it acted to slash the 35% US rate.
Cook said the tax rate for repatriated money should be set “in single digits” to persuade companies to bring it back. Standard tax for US profits should be, he said, in the “mid 20s”.
He also revealed that Apple had struck a secret deal with the Irish government in 1980 to limit its domestic taxes there to 2%.
Three subsidiaries based in Ireland are also used to shelter profits made in the rest of Europe and Asia but are not classed as resident in any country for tax purposes – a tactic dubbed the “iCompany” by critics.
Cook’s testimony to a Senate sub-committee investigating multinational tax practices largely confirmed its findings that Apple had taken tax avoidance to a new extreme by structuring these companies so they did not incur tax liabilities anywhere.
Phillip Bullock, the California company’s head of tax, estimated that just one of these subsidiaries – Apple Operations International – had channelled $30bn in global profits over the last five years without filing a single income tax return.
The only taxes paid were on the interest earned by the cash pile and small sums in local markets. Senate investigators allege a total of $70bn has been sheltered this way in four years.
This raises a new image of the taxpayers revolt, especially from those tax is collected and who don’t have access to the fiddles on the balance sheet.
Joseph Stiglitz, from whom the link was taken, has more to say about this issue. For example he points out:
The world looked on agog as Tim Cook, the head of Apple, said his company had paid all the taxes owed – seeming to say that it paid all the taxes it should have paid. There is, of course, a big difference between the two. It’s no surprise that a company with the resources and ingenuity of Apple would do what it could to avoid paying as much tax as it could within the law. While the supreme court, in its Citizens United case seems to have said that corporations are people, with all the rights attendant thereto, this legal fiction didn’t endow corporations with a sense of moral responsibility; and they have the Plastic Man capacity to be everywhere and nowhere at the same time – to be everywhere when it comes to selling their products, and nowhere when it comes to reporting the profits derived from those sales.
Apple, like Google, has benefited enormously from what the US and other western governments provide: highly educated workers trained in universities that are supported both directly by government and indirectly (through generous charitable deductions). The basic research on which their products rest was paid for by taxpayer-supported developments – the internet, without which they couldn’t exist. Their prosperity depends in part on our legal system – including strong enforcement of intellectual property rights; they asked (and got) government to force countries around the world to adopt our standards, in some cases, at great costs to the lives and development of those in emerging markets and developing countries. Yes, they brought genius and organisational skills, for which they justly receive kudos. But while Newton was at least modest enough to note that he stood on the shoulders of giants, these titans of industry have no compunction about being free riders, taking generously from the benefits afforded by our system, but not willing to contribute commensurately. Without public support, the wellspring from which future innovation and growth will come will dry up – not to say what will happen to our increasingly divided society.
Perhaps, US Senators with some exceptions, are incapable, unlike the world are incapable of “agog-ness” as to the behavior of their paymasters. And let’s not be too cute and smug here to imagine that weeds in the political pond do not draw deep in other political systems including our own. The fate of mining tax might be taken as eloquent, albeit silent, testimony.
Joseph Stiglitz goes on to observe, in his very eloquent article:
It is time the international community faced the reality: we have an unmanageable, unfair, distortionary global tax regime. It is a tax system that is pivotal in creating the increasing inequality that marks most advanced countries today – with America standing out in the forefront and the UK not far behind. It is the starving of the public sector which has been pivotal in America no longer being the land of opportunity – with a child’s life prospects more dependent on the income and education of its parents than in other advanced countries.
Globalisation has made us increasingly interdependent. These international corporations are the big beneficiaries of globalisation – it is not, for instance, the average American worker and those in many other countries, who, partly under the pressure from globalisation, has seen his income fully adjusted for inflation, including the lowering of prices that globalisation has brought about, fall year after year, to the point where a fulltime male worker in the US has an income lower than four decades ago. Our multinationals have learned how to exploit globalisation in every sense of the term – including exploiting the tax loopholes that allow them to evade their global social responsibilities.
Who knows where this goes if it takes hold in the public imagination, or at least that part of human awareness not superficially controlled by the propaganda of the corporations and their needs, as distinct from the common good? Our evolutionary brains may struggle to identify the threat posed by the “terracide” of the ecosystem. Reality confounds us as ever and always. We have to humanize the experience of those might be more responsible, admitting that we too have the same faults. Rather than speak for Earth, perhaps the first step might be to listen to earth?
The myth of personal powerlessness can subvert our moral responsibility as we seek succour of system devoid in its fundamental operation of any human decency. So much for the bright promise of the young who are entrusted to those institutions and systems that evince contempt for humanity and democracy. Not least among those are the political realists who betray democracy in assuming to represent us, by not taking seriously the ticking clock of the ecosystem. The meter is running.There is no taxi in sight.
In 1980, Carl Sagan was confident that we could speak for Earth. That was before 2007, and the political realism that has followed in its wake. Despite the imagery, don’t ever imagine, that “the other”, is the only source of our human failings when under the sway of expert propaganda. We often imagine turning points that subsequently do not prove to be.
The fossil fuel companies, who profit by war, murder, terror, suffering and destruction know no obligations. Nor it seems do any of the others.
- Ireland goes on offensive to counter US tax haven claims (telegraph.co.uk)
- Apple’s Tax Dodge Should Prompt Rethink in Ireland (bloomberg.com)
- EU Tax Commissioner calls for end to tax havens following Senate hearing on Apple’s offshore tax practices (9to5mac.com)