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Apple May Owe $8 Billion To the EU After Tax Ruling (bloomberg.com)
Robotron23 writes: An investigation by the EU Commission may make Apple liable for up to $8 billion in back taxes. Bloomberg Intelligence estimates Apple has paid only 1.8% tax on profits between 2004 and 2012 — this ruling increases their liability to 12.5%. This decision comes hot on the heels of a tax avoidance settlement Apple reached with Italy last month for $347 million.
^This
The unfortunate side-effect of tax avoidance: lower wages means lower standard of living, which leads to lower health and education. Then, to compensate for that, the government has to create programs. If the government can't fund those programs (because low wages means low tax revenue), then they shut them down, which increases the lower standard of living, health, and education.
Tax evasion really screws things up for everyone, in the long run. A few hundred dollars a year from everyone is a lot, so it's not just the super rich, big corporations.
It may be politics, too; maybe the corporations know that, if the tax dollars can't be collected, they'll end the programs. It will hurt the other party's image, and thus, their friends get elected, thereby passing laws to help their greed a bit longer.
Tim Cook says Apple pays every tax dollar it owes. Maybe the key word is dollar here. He never said Apple pays every euro it owes!
We don't have "settlements" in EU like you do in the USA. When a case is presented to a legal court (consumer arbitral court is different) the matter can only get settled by the court itself, the parties cannot go around the court. The only thing they can do now it to appeal to an higher court.
...and so is Starbucks, and Amazon. and McDonalds, and Google, and Fiat-Chrysler ... et cetera ad nauseam. I hope they all get to pay billions in back taxes. Tim Cook, Eric Schmidt and the rest of those corporate demigods can regurgitate all the capitalist free market ideological diarrhea they want. As long as I'm paying something like half of what I earn in various taxes, they and their corporations can pay up too. According to Google's 2014 results statement their effective tax rate was 16%, that's a tax rate I can only dream of.
Apple has, what, $200 billion in the bank? Their quarterly income is what, $50 billion? I'm sure they're quaking in their boots.
Here's the absolute "worst" case scenario for the company: they pay the fine from change they find on the cafeteria floor, and then send out a press release with a mild complaint about it but saying they're happy as long as the money is put to good use. Ireland cuts them a side deal for the inconvenience, and Apple agrees to remain in Cork for the foreseeable future.
So basically zero change whatsoever.
Not just that. Complicated and expensive (in terms of an absolute euro value) tax evasion schemes benefit large corporation but remain largely unavailable for small companies and middle class individuals due to complexity and cost. This puts smaller companies as a competitive disadvantage. I'm still paying 20% tax on profits for my company, and in many other EU countries that amount is higher still. Meanwhile larger companies are paying bugger all.
This is a well known fact in political circles, of course. A few years ago an entrepreneur started a fiscal consultancy firm to advise smaller companies on how to avoid paying tax on profits, and to do the legal and bureaucratic legwork for them for a reasonable fee. It didn't take long for the tax office, the finance minister, and the public prosecutor to catch on, and they went after him with a vengeance. Can't have the little people have their break after all... In that sense it is only fair that they are going after the big boys now... as long as they stay within the law doing so, and only prosecute for actual wrongdoings, not just for "unethical behaviour"
If construction was anything like programming, an incorrectly fitted lock would bring down the entire building...