For non-EU readers, note that taxation is explicitly not a competency of the EU (i.e. Ireland can set its tax levels to whatever it wants). The only thing in question here is whether it was applying the same taxation rules to all companies, as granting special exceptions to certain companies could be viewed as state aid (which is not allowed). Ireland claimed it wasn't, the current (over-)ruling says otherwise. This case is also specific to tax rules from many years back. AFAIK the rules have subsequently been tightened and the exemption no longer exists.
I think you make it seem like EU doesn't care at all about what member states do in regards to taxation but there's many limitations to what can be done by any member state in order to harmonize and prevent corruption etc. This in practice makes the EU have a lot of say in regards to taxation. Moreover the EU has special rules to limit moving funds to jurisdictions that have taxes that are deemed too low (read tax havens) - this directly implies no member state has agency to lower their own taxes as much.
Specifically in Ireland, corporate taxes were being lowered from late 1980s until 2003, in a series of agreements with the EU regulators. It's not like Ireland lowered the taxes in a sneaky scheme, or grandfathered-in an abnormally low rate.
> I think you make it seem like EU doesn't care at all about what member states do in regards to taxation
Did GP change the original text? The closest match I can find to your assertion is where they said "or non-EU readers, note that taxation is explicitly not a competency of the EU"
The EU directly writes tax legislation for countries all over the world with the use of their black and grey lists, which restrict companies in those jurisdictions from trading with the EU, or trading with companies that trade with the EU, or from using any banking in the EU or banking that is especially connected to the EU.
What’s interesting is that it’s common for governments to give tax incentives to companies that will result in driving more economic value for their region.
Eg Ireland might give a tax incentive if a large Fortune 500 company hires X people in Ireland.
Question: does this ruling prohibit that common practice?
There is a general prohibition on EU member states granting state aid to companies, but there are exceptions to this where the aid is justified in order to promote economically underdeveloped regions. There are a lot of rules and court cases about when state aid will fall on one side or the other of that line. See eg https://competition-policy.ec.europa.eu/state-aid/legislatio...
Kind of. It's already prohibited, depending on what you mean. It would be legal to say all companies can have a tax break if they hire X people in Ireland. It's not legal to give the tax break to one company and deny it to another.
> Eg Ireland might give a tax incentive if a large Fortune 500 company hires X people in Ireland.
If Ireland is willing to give the same tax incentive to any company hiring X people in Ireland, it's fine.
If Ireland only grants the rebate to Fortune 500 companies in a bid to lure specific US investment, it's the state creating a competitive distortion i.e. state aid.
It’s a final ruling. Not a current (over-)ruling as you paint it. This is a decision from the European Court of Justice. No appeal possible. The 13B€ are already in an escrow account and will now be released.
Brilliant of Ireland. They get the Apple (and Google and Microsoft, etc.) business with low tax rates, thus bringing a lot of money into Ireland. Worst case scenario, a decade later some 3rd party they cannot be blamed for gets them billions more.
I agree with your recollection. AFAIK the rules were changed years ago.
Some important context that are in every European media, but apparently not the American ones [1].
Apple said in 2017 that it had an effective tax rate of 21 percent on foreign earnings. The Commission said its effective tax rate on European profits was 1 percent in 2003 and 0.005 percent in 2014.
[Edit] To be fair to CNBC they did cover the tax structure Apple set up some years ago [2].
> Apple, however, said in a statement: "The European Commission is trying to retroactively change the rules and ignore that, as required by international tax law, our income was already subject to taxes in the US."
My understanding is that the U.S.A. double-taxes both corporations operating abroad, as well as it's own expats. If this is true, then it's quite the remark to say _the country you're actually in_ is the one double-taxing you.
The fact that your "income was already subject to taxes in the US" isn't the fault of the hosting country.
Expats aren’t double taxed but you need to file tax returns to offset taxable income that’s already been taxed. There are specific agreements to avoid double taxation but it’s unclear/unlikely the IRS are just going to hand back money Apple already paid (it likely falls outside of what’s required in those international agreements).
Companies, and people, make decisions based on the tax laws of the day eg deciding to work in the UK, Ireland or the US. States shouldn’t be able to simply retroactively change the tax rules and take money already earned and already taxed.
If they can do it to Apple, why not to regular citizens?
> Expats aren’t double taxed but you need to file tax returns to offset taxable income that’s already been taxed.
This is not correct, it is only practically true in trivial cases. Excess taxation is a very real pain point for Americans living overseas, never mind the other indefensible things the US government does to its expats like FATCA.
Many types of income cannot be offset nor or they covered by tax treaties. Every time there is an impedance mismatch between US tax code and foreign tax code, including basic things like classification of income, deductions, and exemptions, you can end up with liabilities in both countries. It is not uncommon to pay more taxes in aggregate as an expat than you would pay in either country separately.
The way the US government, and some State governments, treat American expats is quite fucked.
> Expats aren’t double taxed but you need to file tax returns to offset taxable income that’s already been taxed. There are specific agreements to avoid double taxation
Glad to hear it, because what Americans told me (that they get taxed for the same money they paid tax on in their host country) is bonkers.
EDIT: Seems there's some disagreement ;) The other commentor echoes what I've heard from Americans living in Europe. Absolute madness. I also heard it's very costly to try and give up your American citizenship, exactly to protect that juicy free tax America gets from it's expats.
> If they can do it to Apple, why not to regular citizens?
They already do. Knowledge worker migrants were promised eight years of tax breaks by the Dutch government, who later changed their minds after those people already moved to the Netherlands.
This isn't even that though, this is the EU saying the agreement made by Ireland with Apple wasn't legal. It's like how they get people who avoid tax by finding loopholes to pay back-taxes once the tax office catches them (yes, this happens too).
It would just be really good if companies stopped avoiding tax. Most countries are already pretty much bankrupt - it's worth thinking about for every debt (US National Debt is $35.35 trillion!!) there is a rich person on the end of it with the loan as an asset earning interest.
If companies avoid tax and rich people avoid tax it means more tax for normal people who work for a living.
This is a very naive way of thinking about debt. Cash has a time value. Cash now is worth more than cash later.
I have a mortgage. This mortgage is worth more than the cash I own. That doesn't mean I'm bankrupt. The mortgage is paid on a fixed schedule over 30 years, and during those 30 years I'll have a home and be able to accrue other assets. If I didn't get a mortgage then I would still be saving for my home.
The same is true with the US balance sheet. It has accrued 35T in debt, but it's used that to fund it's operations. Those operations generate more for the US. As long as the US has enough to pay it's obligations over the next few decades there are no issues
That of course doesn't change the fact that tax loopholes can be problematic
I think it's rarely valid to compare countries' economics to your own personal finance, macroeconomics are a lot more complicated. Example: for employed people, going into (or avoiding) debt generally won't affect their yearly wages, but analogously it can for countries (e.g. well spent debt can stimulate economic growth).
This is accurate, regarding preferences for optionality, and how our economy currently works. But I think it's worth questioning the expectation that giving up that optionality deserves compensation, whether morally or practically (resulting in compounding "money-on-money returns", usually at low risk if sufficiently diversified).
The Italian economist Silvio Gesell noted, that no other good besides currency works this way. Every other good with a use value (food, houses) tends to lose value over time (entropy being fundamental to the universe), and/or, to carry risk (a share of stock which represents unpredictable ROI). There is course an exception in land, which doesn't intrinsically depreciate, but whose value trends upwards thanks to location value (and which can be addressed separately via Georgist land tax).
Gesell proposed a "demurrage currency" [0], which gradually loses value as it is held: the idea being, rather than being entitled to a return, retaining high long-term optionality is actually a privilege that one should have to pay for, since the real-world value it represents is depreciating. And the incentive to invest (whether at high or low risk) instead becomes to break even (with the rate of demurrage tracking what we currently call the discount rate).
I have no idea if such a concept is practical in a trans-national, growth-dependent global economy (with deflationary crypto-currencies as a BATNA!); if anything, I'm fairly confident it's not. But it's at least worth thinking about: that it's not at all axiomatic that holders of value should be entitled to compensation for "forgoing consumption" (not only because the wealthy don't necessarily need such an incentive, but also because increased consumption can mean an increase in the velocity of money, and more total value created, per the multiplier effect, and the "hotel riddle" [1]).
>The mortgage is paid on a fixed schedule over 30 years
But now imagine that you are never allowed to pay it off: you only pay the interest. And the debt will be passed to your children, and their children. This is the US Govt debt.
In feudal times, you worked for your lord and master. If you didn't pay, armed men would come and take your stuff. In modern times, you still work for your lords and masters, and if you don't pay, armed men will come and take your stuff. How they did this was to create an income tax, and then have their cronies in the house and senate spend more and more and never "pay off the mortgage".
> This is a very naive way of thinking about debt.
Well it’s how this economist and Citibank’s former number 1 trader describes our debt based money system. So maybe you’re the naive one here. Please watch this video and enlighten yourself: What is Money? https://youtu.be/_gcNMu40jqs
> As long as the US has enough to pay it's obligations over the next few decades there are no issues
This is rather my point, as more wealth is transferred from individuals and governments to the rich (who the tax system is largely optional for) there simply won’t be that tax take to support the debt.
> It would just be really good if companies stopped avoiding tax.
It would be great if everybody just stopped committing crimes, or being rude even when legal, altogether.
But what are our alternatives other than just waiting for everyone to just do this? Also, how will everyone know how to just contact me to just find out when using the law to avoid taxes when you can is just evil, when it's just the smart thing to do, or when avoiding a tax is just justice, hard-fought and well-deserved?
It would also be just great if it were autumn all year, and if alcohol and sugar were just good for you.
>there is a rich person on the end of it with the loan as an asset earning interest.
About half of treasuries are held by the Fed or foreign investors which largely means other governments and foreign companies. Most of the rest are owned by pension funds, banks, local government, insurance companies, etc.
>> there is a rich person on the end of it with the loan as an asset earning interest.
> About half of treasuries are held by the Fed or foreign investors which largely means other governments and foreign companies. Most of the rest are owned by pension funds, banks, local government, insurance companies, etc.
So what? That doesn't mean you shouldn't think about it in terms of a rich person, like the GP suggests.
The modern capitalist system is a very slippery thing to think about, and there are all kinds of traps to mislead people. For instance, facts like the one you point out can draw people away from understanding the truth behind scenarios where the rich are the group that greatly disproportionally benefits while not being the group that benefits the most in absolute terms.
On a related note: IMHO the 401k is one of the greatest propaganda coups in the history of democracy. You have vast swaths of the public owning tiny, insignificant slivers of the overall pie; while the rich own big, disproportionate slices. But then the public votes to increase those tiny, tangible slivers by trading much more valuable but less tangible things.
That's not even the same thing. The govt is bankrupt because it keeps printing money to get out of previous debt and other poor choices. The companies are following the rules and taking advantage of loopholes in the system.
That will never work because the powerful will lobby the politicians to add some new loophole.
The only solution is to NOT have taxes, NOT have a government and then the market is fair for everyone.
Unless you are into anarchy / voluntarism you won't like this solution, so keep enjoying your broken system with increasing inequality between the top 0.01% who colludes with the government and the rest - while the middle class gets their money stolen to pay for both rich and poor.
Companies and high net worth individuals will never stop avoiding taxes, and it’s naive to assume otherwise. If anything, tax laws need to account for this reality more aggressively.
While there is lots of tax fraud, I feel it’s probably a drop in the bucket. Countries will have to either cut back on spending or borrow until they collapse under the weight of their own inept budgeting.
Countries aren't bankrupt, they can't really go bankrupt if they use their own currency. Countries are not businesses they don't need to make money to be able to spend.
Tax shouldn't be seen as the countries income but as a tool for redistribution of wealth and to keep trust in the currency as a whole. If you don't have debt you don't have money, every printed dollar goes into the system and can be used in various things not only an asset earning interest
I think this is a cultural problem. Every accountant everywhere works under the implicit assumption that taxes are to be avoided. Imagine if having a large tax contribution was something to be proud of. Perhaps the government needs to advertise more what the money actually gets spent on. Government works on boring stuff like the culverts that are essential to stopping roads flooding. People have no idea of the work that goes into this and just assume roads don't flood. It's like that old thing where you think everyone's job is pointless/easy except your own.
A) These bankrupt countries are exactly why we should think twice about funding their spending habit, with reevaluation only when they address their spending habit
B) These companies are tax compliant, barring when the ECJ rules against them
C) if what you meant was equivalent taxation - no amount of taxation of profits or income would fill these bankrupt countries budget holes
D) the countries tell you exactly how not to pay tax, they incentivize certain transactions and tax the remainder of funds that weren't involved. (The ECJ overruled an entire country, with retroactive logic)
Taxes don't fund government programs. Taxes are a way to mitigate the buying power of private capital when it comes to bidding against government for things. Governments just create money supply for programs. It's not tax money. That's just an old cliche.
Maybe governments need to stop spending 40-50% of the entire GDP?
For example, the US federal government + state governments spend about $10 trillion a year. The US has a GDP of about $25 trillion. And the US isn't exactly known as a high tax country. France is estimated to be at 58%...
Those numbers are not directly comparable. GDP is a measure of added value, not spending. Public sector spending may be ~50% of the GDP, but private sector spending is something like ~200%, making public sector ~20% of the total.
I found some rather troubling aspects within the ruling itself:
1. Retroactive application of arm's length principle
The Court's reliance on the arm's length principle, despite acknowledging it's not required by EU law, is problematic. As stated in paragraph 124:
> "Article 107(1) TFEU gives the Commission the right to check whether the level of profit allocated to such branches... corresponds to the level of profit that would have been obtained if that activity had been carried on under market conditions."
This retroactive application of a principle not explicitly required by law at the time of the tax rulings is unfair and creates legal uncertainty for businesses.
2. Burden of proof
The Court's criticism of the General Court's approach to evidence, as noted in paragraph 245, lowers the burden of proof for the Commission in State aid cases:
> "As the Commission stated in recital 441 of the decision at issue, its approach is based on an infringement of Article 107(1) TFEU, which has been part of Ireland's legal order since its accession in 1973, and not on a failure to have regard to the framework defined at OECD level."
This shift unfairly advantages the Commission in future cases and will lead to increased challenges to legitimate tax arrangements.
But, overall, yes, I get the concerns about legal certainty and applying rules retroactively. They're valid points. But when I weigh everything, I still think this ruling does more good than harm. It's a big step towards fairer taxes and more transparency in how big companies operate.
Yes, it might ruffle some feathers in the short term. But in the long run, it's setting us up for a tax system where everyone plays by the same rules – whether you're a small local business or a tech giant.
There's not much uncertainty for business really. If you're pulling the moves that Apple and other companies pull to "optimize tax", then you are with 100% certainty trying to game the system and violating the spirit of the law.
I find it interesting how in american corpspeak "uncertanty" pretty much always means "our lawyers can't find a way to avoid this law without getting caught" ^^
Well yeah. The prime way they avoid the law is compliance. You would also be pretty pissed off if you couldn't avoid a law fining you for something you couldn't avoid.
That's exactly right. Corporations need the law to be as predictable as a computer program, so they can find exactly where the loopholes are and slip through them. I'd be surprised if American politicians didn't make laws this way on purpose.
A law that says "you aren't taxed on money you send to overseas subsidiaries" is trivially gameable. A law that says "don't evade tax" is not, so corporations hate not knowing which side of the blurry line they're on. An ethical corporation (as if that exists) would just stay clear of the blurry region and have no problem.
> Yes, it might ruffle some feathers in the short term. But in the long run, it's setting us up for a tax system where everyone plays by the same rules – whether you're a small local business or a tech giant.
I don't understand the ruling however, something doesn't make sense:
- Apple goes to a country and makes a deal with that country
- They pay the tax in the country and they comply with all the rules at that time in Ireland
- After a few years the EU government says "hey, Ireland that's not a correct deal"
- So they don't punish the Ireland government who didn't comply with EU regulation (as far as I understood) and retroactively charge the tax on Apple, who complied with all the regulation. Doesn't the burden of non-compliance be on the party that broke the EU rules and not the company who complied with all the rules?
Several questions arise:
- Was Apple breaking any rules in those years when they had the deal with the government?
- How can any company be sure that if they comply with current tax laws they won't be back charged in the future?
- Isn't that a bad precedent of "we change the rules now", but will punish you for you past behavior for non-complying with the new rules? (e.g. why don't charge back the increase in taxes for this year for the past 3 years)
These are not related to the ethical/moral or fairness evaluation of the situation. It's unfair to charge different taxes at all, flat taxes should be the norm, not charge more if you earn more. However the legal logic doesn't seem to be there.
>>Yes, it might ruffle some feathers in the short term. But in the long run, it's setting us up for a tax system where everyone plays by the same rules – whether you're a small local business or a tech giant.
Yeah, but that only ever ratchets in one direction. Putting everyone on the same rules won't reduce taxes for anyone.
> This retroactive application of a principle not explicitly required by law at the time of the tax rulings is unfair and creates legal uncertainty for businesses.
I don't see any problem with this. They knew they were gaming the system, and knew they could get in trouble for it. The law is NOT a computer program where all outputs can be fully predicted from the source code - it also takes common sense into account.
We should just pass a law that says gaming the system is illegal, then we won't need to find silly justifications against people who game the system, but silly justifications work too.
I expect to see very abusive definitions of 'gaming the system' under such a law such that anything which is the slightest inconvenience is viewed as gaming the system. Just like how common sense isn't common.
An important point that seems to have been missed by most of the comments: the reason Apple lost this case is not because of the profit shifting scheme itself, but rather than they did not set up the scheme correctly:
> ASI's 2014 structure was an adaptation of a Double Irish scheme, an Irish IP–based BEPS tool used by many US multinationals. Apple did not follow the traditional Double Irish structure of using two separate Irish companies. Instead, Apple used two separate "branches" inside one single company, namely ASI.[34] It is this "branch structure" the EU Commission alleged was illegal State aid, as it was not offered to other multinationals in Ireland, which had used the traditional "two separate companies" version of the Double Irish BEPS tool. Under the Double Irish structure, one Irish subsidiary (IRL1) is an Irish registered company selling products to non–US locations from Ireland. The other Irish subsidiary (IRL2) is "registered" in Ireland, but "managed and controlled" from a tax haven such as Bermuda. The Irish tax code considers IRL2 a Bermuda company (used the "managed and controlled" test), but the US tax code considers IRL2 an Irish company (uses the registration test). Neither taxes it. Apple's subsidiary, ASI, behaved like it was IRL2, it was "managed and controlled" via ASI Board meetings in Bermuda, so Irish Revenue did not tax it. But ASI also did all the functions of IRL1, making circa €110.8 billion[6] of profits from non–US sales. The EU Commission contest IRL1's actions made ASI Irish, and the functions of IRL1 over-rode the Bermuda Board meetings in deciding the "managed and controlled" test. The commission had not brought any cases against US multinationals using the standard double two separate companies Irish BEPS tool. (https://en.wikipedia.org/wiki/Apple%27s_EU_tax_dispute)
In other words if they had actually set up two separate Irish companies instead of just using two separate branches of a single Irish company, their tax scheme would have been fully legal and not considered state aid. (Since many other companies availed themselves of such a scheme.)
So if such an easily obtainable, and comparatively lucrative (but fully legal) option were available -- and if it's so obvious, one has to presume Apple's people would have been perfectly aware of it -- why didn't they just take that route from the beginning (or if not, at least much earlier in this saga)?
Something tells me there's more to the story here.
What a timeline we live in where the EU is basically telling Apple that they weren’t smart enough with their tax evasion - “see if you did it like other FAANG you could’ve gotten away with it!”
The Google judgment was also released by the CJEU today, but it was a separate judgment. I've found it by going to the CJEU website https://curia.europa.eu/jcms/jcms/j_6/en/ (or https://curia.europa.eu/ and then click on "en" for English), where official CJEU press releases about both the Apple and Google judgments were linked on the left under "News".
Readit News
Here's some example limitations: https://eur-lex.europa.eu/EN/legal-content/summary/tackling-...
I focused on direct taxation, but in indirect taxation I think there's even more examples.
So if you’re building hotels or factories in the haven that’s fine. If you’re hiding money we demand our pound of flesh.
Two words: Dutch Sandwitch
Because it’s one market, unless countries coordinate, you get massive tax loopholes with profits being shifted to tax heavens.
Practical implications override hypothetical concerns
https://en.wikipedia.org/wiki/Dutch_Sandwich
Did GP change the original text? The closest match I can find to your assertion is where they said "or non-EU readers, note that taxation is explicitly not a competency of the EU"
Eg Ireland might give a tax incentive if a large Fortune 500 company hires X people in Ireland.
Question: does this ruling prohibit that common practice?
If Ireland is willing to give the same tax incentive to any company hiring X people in Ireland, it's fine.
If Ireland only grants the rebate to Fortune 500 companies in a bid to lure specific US investment, it's the state creating a competitive distortion i.e. state aid.
You are allowed to make rules, but you can't offer deals.
I agree with your recollection. AFAIK the rules were changed years ago.
Apple said in 2017 that it had an effective tax rate of 21 percent on foreign earnings. The Commission said its effective tax rate on European profits was 1 percent in 2003 and 0.005 percent in 2014.
[Edit] To be fair to CNBC they did cover the tax structure Apple set up some years ago [2].
[1] https://www.politico.eu/article/commission-scores-surprise-w...
[2] https://www.cnbc.com/2016/08/30/how-apples-irish-subsidiarie...
My understanding is that the U.S.A. double-taxes both corporations operating abroad, as well as it's own expats. If this is true, then it's quite the remark to say _the country you're actually in_ is the one double-taxing you.
The fact that your "income was already subject to taxes in the US" isn't the fault of the hosting country.
Companies, and people, make decisions based on the tax laws of the day eg deciding to work in the UK, Ireland or the US. States shouldn’t be able to simply retroactively change the tax rules and take money already earned and already taxed.
If they can do it to Apple, why not to regular citizens?
This is not correct, it is only practically true in trivial cases. Excess taxation is a very real pain point for Americans living overseas, never mind the other indefensible things the US government does to its expats like FATCA.
Many types of income cannot be offset nor or they covered by tax treaties. Every time there is an impedance mismatch between US tax code and foreign tax code, including basic things like classification of income, deductions, and exemptions, you can end up with liabilities in both countries. It is not uncommon to pay more taxes in aggregate as an expat than you would pay in either country separately.
The way the US government, and some State governments, treat American expats is quite fucked.
Glad to hear it, because what Americans told me (that they get taxed for the same money they paid tax on in their host country) is bonkers.
EDIT: Seems there's some disagreement ;) The other commentor echoes what I've heard from Americans living in Europe. Absolute madness. I also heard it's very costly to try and give up your American citizenship, exactly to protect that juicy free tax America gets from it's expats.
> If they can do it to Apple, why not to regular citizens?
They already do. Knowledge worker migrants were promised eight years of tax breaks by the Dutch government, who later changed their minds after those people already moved to the Netherlands.
This isn't even that though, this is the EU saying the agreement made by Ireland with Apple wasn't legal. It's like how they get people who avoid tax by finding loopholes to pay back-taxes once the tax office catches them (yes, this happens too).
because Apple is literally made from tens of hundreds of "regular citizens"
or to keep it simple: Apple is a citizen made out of thousands of 'regular' citizens.
The regular citizen doesn't debate-ably owe billion in taxes.
Sure, maybe if you're a centi-billionaire the Winds of Winter might change.
If companies avoid tax and rich people avoid tax it means more tax for normal people who work for a living.
I have a mortgage. This mortgage is worth more than the cash I own. That doesn't mean I'm bankrupt. The mortgage is paid on a fixed schedule over 30 years, and during those 30 years I'll have a home and be able to accrue other assets. If I didn't get a mortgage then I would still be saving for my home.
The same is true with the US balance sheet. It has accrued 35T in debt, but it's used that to fund it's operations. Those operations generate more for the US. As long as the US has enough to pay it's obligations over the next few decades there are no issues
That of course doesn't change the fact that tax loopholes can be problematic
This is accurate, regarding preferences for optionality, and how our economy currently works. But I think it's worth questioning the expectation that giving up that optionality deserves compensation, whether morally or practically (resulting in compounding "money-on-money returns", usually at low risk if sufficiently diversified).
The Italian economist Silvio Gesell noted, that no other good besides currency works this way. Every other good with a use value (food, houses) tends to lose value over time (entropy being fundamental to the universe), and/or, to carry risk (a share of stock which represents unpredictable ROI). There is course an exception in land, which doesn't intrinsically depreciate, but whose value trends upwards thanks to location value (and which can be addressed separately via Georgist land tax).
Gesell proposed a "demurrage currency" [0], which gradually loses value as it is held: the idea being, rather than being entitled to a return, retaining high long-term optionality is actually a privilege that one should have to pay for, since the real-world value it represents is depreciating. And the incentive to invest (whether at high or low risk) instead becomes to break even (with the rate of demurrage tracking what we currently call the discount rate).
I have no idea if such a concept is practical in a trans-national, growth-dependent global economy (with deflationary crypto-currencies as a BATNA!); if anything, I'm fairly confident it's not. But it's at least worth thinking about: that it's not at all axiomatic that holders of value should be entitled to compensation for "forgoing consumption" (not only because the wealthy don't necessarily need such an incentive, but also because increased consumption can mean an increase in the velocity of money, and more total value created, per the multiplier effect, and the "hotel riddle" [1]).
[0] https://en.wikipedia.org/wiki/Silvio_Gesell#Economic_philoso...
[1] https://www.econlib.org/archives/2012/01/an_answer_to_a.html
But now imagine that you are never allowed to pay it off: you only pay the interest. And the debt will be passed to your children, and their children. This is the US Govt debt.
In feudal times, you worked for your lord and master. If you didn't pay, armed men would come and take your stuff. In modern times, you still work for your lords and masters, and if you don't pay, armed men will come and take your stuff. How they did this was to create an income tax, and then have their cronies in the house and senate spend more and more and never "pay off the mortgage".
Well it’s how this economist and Citibank’s former number 1 trader describes our debt based money system. So maybe you’re the naive one here. Please watch this video and enlighten yourself: What is Money? https://youtu.be/_gcNMu40jqs
> As long as the US has enough to pay it's obligations over the next few decades there are no issues
This is rather my point, as more wealth is transferred from individuals and governments to the rich (who the tax system is largely optional for) there simply won’t be that tax take to support the debt.
It would be great if everybody just stopped committing crimes, or being rude even when legal, altogether.
But what are our alternatives other than just waiting for everyone to just do this? Also, how will everyone know how to just contact me to just find out when using the law to avoid taxes when you can is just evil, when it's just the smart thing to do, or when avoiding a tax is just justice, hard-fought and well-deserved?
It would also be just great if it were autumn all year, and if alcohol and sugar were just good for you.
About half of treasuries are held by the Fed or foreign investors which largely means other governments and foreign companies. Most of the rest are owned by pension funds, banks, local government, insurance companies, etc.
> About half of treasuries are held by the Fed or foreign investors which largely means other governments and foreign companies. Most of the rest are owned by pension funds, banks, local government, insurance companies, etc.
So what? That doesn't mean you shouldn't think about it in terms of a rich person, like the GP suggests.
The modern capitalist system is a very slippery thing to think about, and there are all kinds of traps to mislead people. For instance, facts like the one you point out can draw people away from understanding the truth behind scenarios where the rich are the group that greatly disproportionally benefits while not being the group that benefits the most in absolute terms.
On a related note: IMHO the 401k is one of the greatest propaganda coups in the history of democracy. You have vast swaths of the public owning tiny, insignificant slivers of the overall pie; while the rich own big, disproportionate slices. But then the public votes to increase those tiny, tangible slivers by trading much more valuable but less tangible things.
If you don't your competition will.
We just need more spine in the country's legislation to close ANY loophole, because this wasn't illegal tax evasion, it was legal tax ellusion.
The point is that EU judged this unfair by Ireland and that effectively it stole revenue from other European counties to favor jobs in ireland.
Basically saying "you (country) can't have a lower tax rate than X" in our economic union.
Smaller countries with few industries would benefit disproportionately from bigger companies moving here the HQ.
The only solution is to NOT have taxes, NOT have a government and then the market is fair for everyone. Unless you are into anarchy / voluntarism you won't like this solution, so keep enjoying your broken system with increasing inequality between the top 0.01% who colludes with the government and the rest - while the middle class gets their money stolen to pay for both rich and poor.
Tax shouldn't be seen as the countries income but as a tool for redistribution of wealth and to keep trust in the currency as a whole. If you don't have debt you don't have money, every printed dollar goes into the system and can be used in various things not only an asset earning interest
Which is exactly what is happening, with the gap between rich and poor increasing in the western economies.
A) These bankrupt countries are exactly why we should think twice about funding their spending habit, with reevaluation only when they address their spending habit
B) These companies are tax compliant, barring when the ECJ rules against them
C) if what you meant was equivalent taxation - no amount of taxation of profits or income would fill these bankrupt countries budget holes
D) the countries tell you exactly how not to pay tax, they incentivize certain transactions and tax the remainder of funds that weren't involved. (The ECJ overruled an entire country, with retroactive logic)
You first :/
For example, the US federal government + state governments spend about $10 trillion a year. The US has a GDP of about $25 trillion. And the US isn't exactly known as a high tax country. France is estimated to be at 58%...
The expectation that government provides certain services...
The nature of fiat currencies and what actually makes the USD worth anything or even usable as a medium of exchange...
Basic economics. Government spending == business revenue; the money doesn't just vanish.
1. Retroactive application of arm's length principle
The Court's reliance on the arm's length principle, despite acknowledging it's not required by EU law, is problematic. As stated in paragraph 124:
This retroactive application of a principle not explicitly required by law at the time of the tax rulings is unfair and creates legal uncertainty for businesses.2. Burden of proof
The Court's criticism of the General Court's approach to evidence, as noted in paragraph 245, lowers the burden of proof for the Commission in State aid cases:
This shift unfairly advantages the Commission in future cases and will lead to increased challenges to legitimate tax arrangements.But, overall, yes, I get the concerns about legal certainty and applying rules retroactively. They're valid points. But when I weigh everything, I still think this ruling does more good than harm. It's a big step towards fairer taxes and more transparency in how big companies operate.
Yes, it might ruffle some feathers in the short term. But in the long run, it's setting us up for a tax system where everyone plays by the same rules – whether you're a small local business or a tech giant.
Dead Comment
A law that says "you aren't taxed on money you send to overseas subsidiaries" is trivially gameable. A law that says "don't evade tax" is not, so corporations hate not knowing which side of the blurry line they're on. An ethical corporation (as if that exists) would just stay clear of the blurry region and have no problem.
That would be a truly wonderful thing to behold.
- Apple goes to a country and makes a deal with that country
- They pay the tax in the country and they comply with all the rules at that time in Ireland
- After a few years the EU government says "hey, Ireland that's not a correct deal"
- So they don't punish the Ireland government who didn't comply with EU regulation (as far as I understood) and retroactively charge the tax on Apple, who complied with all the regulation. Doesn't the burden of non-compliance be on the party that broke the EU rules and not the company who complied with all the rules?
Several questions arise:
- Was Apple breaking any rules in those years when they had the deal with the government?
- How can any company be sure that if they comply with current tax laws they won't be back charged in the future?
- Isn't that a bad precedent of "we change the rules now", but will punish you for you past behavior for non-complying with the new rules? (e.g. why don't charge back the increase in taxes for this year for the past 3 years)
These are not related to the ethical/moral or fairness evaluation of the situation. It's unfair to charge different taxes at all, flat taxes should be the norm, not charge more if you earn more. However the legal logic doesn't seem to be there.
Can you help me understand the situation?
Yeah, but that only ever ratchets in one direction. Putting everyone on the same rules won't reduce taxes for anyone.
I don't see any problem with this. They knew they were gaming the system, and knew they could get in trouble for it. The law is NOT a computer program where all outputs can be fully predicted from the source code - it also takes common sense into account.
We should just pass a law that says gaming the system is illegal, then we won't need to find silly justifications against people who game the system, but silly justifications work too.
Docket: https://curia.europa.eu/juris/documents.jsf?num=C-48/22%20P
Ruling: https://curia.europa.eu/juris/document/document.jsf?text=&do...
And other news reports confirming the same:
https://www.reuters.com/technology/eu-court-upholds-googles-...
https://www.bbc.com/news/articles/cjw3e1pn741o
CNN also has links to both (summaries of the) rulings: https://www.cnn.com/2024/09/10/tech/europe-ruling-apple-tax-...
> ASI's 2014 structure was an adaptation of a Double Irish scheme, an Irish IP–based BEPS tool used by many US multinationals. Apple did not follow the traditional Double Irish structure of using two separate Irish companies. Instead, Apple used two separate "branches" inside one single company, namely ASI.[34] It is this "branch structure" the EU Commission alleged was illegal State aid, as it was not offered to other multinationals in Ireland, which had used the traditional "two separate companies" version of the Double Irish BEPS tool. Under the Double Irish structure, one Irish subsidiary (IRL1) is an Irish registered company selling products to non–US locations from Ireland. The other Irish subsidiary (IRL2) is "registered" in Ireland, but "managed and controlled" from a tax haven such as Bermuda. The Irish tax code considers IRL2 a Bermuda company (used the "managed and controlled" test), but the US tax code considers IRL2 an Irish company (uses the registration test). Neither taxes it. Apple's subsidiary, ASI, behaved like it was IRL2, it was "managed and controlled" via ASI Board meetings in Bermuda, so Irish Revenue did not tax it. But ASI also did all the functions of IRL1, making circa €110.8 billion[6] of profits from non–US sales. The EU Commission contest IRL1's actions made ASI Irish, and the functions of IRL1 over-rode the Bermuda Board meetings in deciding the "managed and controlled" test. The commission had not brought any cases against US multinationals using the standard double two separate companies Irish BEPS tool. (https://en.wikipedia.org/wiki/Apple%27s_EU_tax_dispute)
In other words if they had actually set up two separate Irish companies instead of just using two separate branches of a single Irish company, their tax scheme would have been fully legal and not considered state aid. (Since many other companies availed themselves of such a scheme.)
Something tells me there's more to the story here.
Here's the CJEU press release about the Google judgment: https://curia.europa.eu/jcms/upload/docs/application/pdf/202...
Inside that PDF press release, there is a link to to the case docket, including the final judgment and an abstract of the judgment: https://curia.europa.eu/juris/documents.jsf?num=C-48/22%20P
And here's the full judgment linked in the above docket: https://curia.europa.eu/juris/document/document.jsf?text=&do...
The full judgment is available in English and French; the abstract is available in French but not English.
I should also note that there were actually four CJEU judgments released today, not two. But the other two were unrelated to tech.