Nobel-Winning Economist Calls Apple's Irish Tax Arrangement 'Fraud'

[MacRumors]

Joseph Stiglitz, an economic professor at Columbia University and 2001 recipient of the Nobel Memorial Prize in Economic Sciences, has described Apple's tax arrangements in Ireland as "a fraud" in a recent interview with Bloomberg TV.

"Here we have the largest corporation in capitalization not only in America, but in the world, bigger than GM was at its peak, and claiming that most of its profits originate from about a few hundred people working in Ireland -- that's a fraud," Stiglitz said. "A tax law that encourages American firms to keep jobs abroad is wrong, and I think we can get a consensus in America to get that changed."

Under current U.S. laws, Apple is able to shift billions of dollars in profits to Ireland, where it operates multiple subsidiaries, sheltering those earnings from up to a 35 percent corporate tax rate in the United States. Ireland has a much lower corporate tax rate of 12.5 percent, but Apple is believed to have a sweetheart deal with Ireland that sees it pay less than 2 percent in exchange for creating jobs in the country.

Apple has been the subject of a European Commission probe related to its Irish tax arrangements since June 2014, with the executive body investigating whether the deal constitutes illegal state aid. Ireland's finance minister Michael Noonan recently said he expects a decision to be reached by September or October, and Apple could owe more than $8 billion in back taxes depending on the outcome.

Apple insists it is the largest taxpayer in the world and that it pays every cent of tax it owes under current laws. In a late 2015 interview with 60 Minutes correspondent Charlie Rose, Apple CEO Tim Cook described tax avoidance accusations against the company as "political crap," adding that the United States has a tax code that is "awful for America" and "made for the industrial age."

Apple provided the following statement during its March 2016 meeting with the European Parliament's tax committee:

"Apple is the largest taxpayer in the world. In 2015 we paid 13.2 billion dollars in taxes worldwide, which is an effective tax rate of 36.4%", its representatives said when asked about the company's tax structures in Europe and the state aid investigation launched by competition Commissioner Margrethe Vestager. However, they were not prepared to disclose its EU and Irish tax figures. "Those are confidential. When country-by-country reporting will become mandatory, we will of course follow". Apple, like Google, pays most of its taxes in the US, where most of its employees are based and its research is done.

Apple is only one of several multinational corporations that have been scrutinized for possible corporate tax avoidance in Europe over the past few years, with others including Amazon, Google, IKEA, and McDonald's. Last year, the European Commission ordered Starbucks and Fiat Chrysler Automobiles to each pay up to EUR30 million in back taxes, after ruling that the companies benefited from illegal tax deals.

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Article Link: Nobel-Winning Economist Calls Apple's Irish Tax Arrangement 'Fraud'

 

[applesith]

Either lower the corporate tax to encourage companies to keep their cash in the US, or just cut the crap and find a way to seize it or tax them to death like the gov really wants.

Has this guy left his desk to actually build something or does he decide to call fraud just from his ivory tower without ever getting his hands dirty?

 

[sbrhwkp3]

Time to lower the corporate tax rate in the US. The repatriation of funds would be massive, and we'd see a huge boom in economic growth as a result. I bet the change would even be revenue neutral.

 

[EricTheHalfBee]

Lowering your taxes through legal means and obeying the law is not fraud, no matter what this guy says.

 

[TigerWoodsIV]

Agree with the previous posts. The US needs to lower its corporate tax rate already. It's not a surprise companies do this, why would they want to give away money they don't have to? Apple isn't a charity, and if the law allows them to pay less, the shareholders would expect them to do it.

 

[bladerunner2000]

That's because it IS fraud. Apple doesn't want to pay it's share of taxes and never will because nobody cares to hold them accountable. Worse yet, this thread WILL have fanboys being apologetic about it and defending Apple....

Think about that; cheering on a corporation worth billions that evades taxes.

 

[barkomatic]

One of the wondrous effects of globalization. There's always a cheaper place to park your capital and workforce thanks to both Republicans and Democrats.

 

[Wiesenlooser]

Lowering your taxes through legal means and obeying the law is not fraud, no matter what this guy says.

It is not fraud in a legal sense but it certainly is not fitting with Apple's "we want to make the world a better place narrative".

Even if they think the taxes are too high - since when is it theirs to judge ? Shouldn't that be a matter of democracy? And there will always be a cheaper place in order to avoid taxes.

Either way: Being the most profitable company in the world and operating worldwide and then trying to evade taxes in order to pay two bucks fifty In taxes is -while not illegal- simply not right.

 

[verpeiler]

..in before hundreds of fanboys defending Apple's stance... ;-)

*grabs popcorn*

 

[usarioclave]

Even a Nobel Prize winner doesn't understand how the tax code works.

 

[v0lume4]

I don't think that it's right for Apple, or any company for that matter, to deliberately store money off shores to avoid taxes.

Now, on the other side of the coin, the reason that companies do this is to avoid seemingly unreasonable taxes imposed by our governments (the US, in this case). I don't blame Apple, as I know that if I owned a successful business that was getting taxed out the ying-yang, I'd be doing the same thing. I believe that if tax rates were fair for large corporations, we would see significantly less--if any--off shore cash hoarding. Maybe the problem is the system, and not Apple (or any other large corporation).

Disclaimer: I'm no economist and I might be entirely misinformed about what I just discussed.

 

[keysofanxiety]

Not fraud by the letter of the law. It's perfectly legal. Quite obviously fraud by the spirit of the law. But then who would willingly pay more than they legally have to?

Sort out the law so you don't have a reason to complain.

 

[nikhsub1]

In before hundreds of Apple Fanboys defending Apple's stance here...

True, very true. The old cliche of, "Don't hate the player, hate the game" applies here.

 

[applesith]

That's because it IS fraud. Apple doesn't want to pay it's share of taxes and never will because nobody cares to hold them accountable. Worse yet, this thread WILL have fanboys being apologetic about it and defending Apple....

Think about that; cheering on a corporation worth billions that evades taxes.

What laws are apple breaking?

 

[Tycho24]

Having a cash repatriation "holiday" in the USA perhaps once a year would be an incredible boon to our economy; why would we choose to punish our companies by double taxation, then complain that it discourages repatriation??

 

[JeffyTheQuik]

"Nobel Winning Economist"

Is that a compliment or an insult?

 

[DrewDaHilp1]

Obama won a Nobel, how many people has his administration killed? So maybe the Nobel isn't what it used to be? Apple's one and only objective is to produce results for it's share holders. Searching for and finding a place with lower taxes helps that objective.

 

[JeffyTheQuik]

I don't think that it's right for Apple, or any company for that matter, to deliberately store money off shores to avoid taxes.

Now, on the other side of the coin, the reason that companies do this is to avoid seemingly unreasonable taxes imposed by our governments (the US, in this case). I don't blame Apple, as I know that if I owned a successful business that was getting taxed out the ying-yang, I'd be doing the same thing. I believe that if tax rates were fair for large corporations, we would see significantly less--if any--off shore cash hoarding. Maybe the problem is the system, and not Apple (or any other large corporation).

Disclaimer: I'm no economist and I might be entirely misinformed about what I just discussed.

I don't think it's right for a country to demand that anyone pay more that 10% in taxes.

There, we have the basis for our argument.

 

[Wiesenlooser]

What laws are apple breaking?

None. But then again - not every fraud is illegal. What is with all that pseudo-medicine you can buy that is trying to convince you that it will make your fitter/slimmer/healthier.

It might not be illegal - but it certainly is mean spirited. Can't say I blame them - they do it because they CAN legally do it. But it is no behavior they should be proud of.

 

[mytdave]

Oh the big bad Apple! Waaaaah! Try every corporation in the free world has an office in Ireland. This is because of the stupidity of horrible tax law. End the progressive tax agenda, write and pass a responsible corporate tax bill (w/low rate) without loopholes, and countless problems will be solved. But there's no political will. There are too many people in power getting their palms greased to keep things the way they are. So, stop blaming corporations and point your fingers instead to the source of the problem: Government.

 

[Wiesenlooser]

I don't think it's right for a country to demand that anyone pay more that 10% in taxes.

There, we have the basis for our argument.

Not really. The law is the law and it is "right" that everyone pays the taxes according to it.

 

[applesith]

None. But then again - not every fraud is illegal. What is with all that pseudo-medicine you can buy that is trying to convince you that it will make your fitter/slimmer/healthier.

It might not be illegal - but it certainly is mean spirited. Can't say I blame them - they do it because they CAN legally do it. But it is no behavior they should be proud of.

This is about tax fraud- not selling pills on an infomercial. If there was true tax fraud going on, you bet the government would be after apple. No one wants to pay more taxes then they are legally obligated. No one.

 

[sportsfan]

Either lower the corporate tax to encourage companies to keep their cash in the US, or just cut the crap and find a way to seize it or tax them to death like the gov really wants.

Has this guy left his desk to actually build something or does he decide to call fraud just from his ivory tower without ever getting his hands dirty?

But what would be low enough? It's a race to the bottom. Apple uses a lot of the US infrastructure and Gov't protections for it's business. That is expensive for the US to maintain...something Ireland or other small countries do not have to fund.

If the US lowers their rate, then some other small country will just undercut the US again...because the small country does not have the infrastructure expense the US has....that Apple is using!

 

[Wiesenlooser]

This is about tax fraud- not selling pills on an infomercial. If there was true tax fraud going on, you bet the government would be after apple. No one wants to pay more taxes then they are legally obligated. No one.

He did not mean fraud in a legal sense. You can say it isn't fraud if it is legal. I can say not every behavior that is legal is a good behavior.

And I have to ask you: do you honestly believe that he US or other countries like Germany can undercut th taxes into countries which business model it is to be a tax haven?

 

[Jambalaya]

Either lower the corporate tax to encourage companies to keep their cash in the US, or just cut the crap and find a way to seize it or tax them to death like the gov really wants.

Has this guy left his desk to actually build something or does he decide to call fraud just from his ivory tower without ever getting his hands dirty?

Tax rates are 15% in Ireland and Apple don't even pay that. Apple's behaviour is a disgrace.