Saturday, September 10, 2016

Different laws for different folks.

After a 3 year investigation the European Union Competition Commissioner declared that Apple paid only 0.5% tax in 2014 and asked Ireland, where Apple is based, to collect $14.5 billion in back taxes. An article in the Mint goes on to say,"Together, they sum up the problems with the ruling - a blinkered view of a situation fraught with ambiguities and an approach that could prove counterproductive in tackling a legitimate problem." Ireland has the lowest corporate tax rate of 12.5% in Europe. It also allows companies to avoid even that by showing that they are tax resident elsewhere, a sleight of hand known as the 'double Irish'. This apparently was stopped last year but Ireland reduced corporate tax on R&D to 6.25%, to encourage employment educated people. Apple took advantage of Irish tax laws to reduce its tax bill to almost zero. After the ruling Apple CEO, Tim Cook described the ruling as "total political crap" and alleged anti-US sentiment. Such contempt for the EU. Americans are allowed to commit any crime and get away with it. The article is supportive of Apple. "But tax avoidance is not tax evasion. It may exist in an ethical grey zone, but it is also mandatory for corporations to maximize profits," says the article. "Corporations will take every inch the law grants them, and they will lobby to have favourable regulations. That is the nature of the beast." The writer should then be against the Corporate Social Responsibility Act, passed by the Congress Party, which forces companies to spend 2% of their profits on social schemes for the poor. No such rule exists for politicians or civil servants who are free to use taxpayer money for their own social welfare. In the US CSR means sustainable business practices, employee welfare and research. Chipotle is given as an example of providing healthy meat in fast food setting but has lately suffered problems with food hygiene. Multinationals have an army of accountants and lawyers to advise them how to use, or misuse, laws to avoid paying taxes and have the power to blackmail governments by threatening to take manufacturing elsewhere, which will lose jobs. Politicians are terrified of being blamed for losing jobs and so give in. Apple keeps $181.1 billion in foreign countries to avoid paying $60 billion in tax in the US. So, Tim Cook is a US citizen, living and managing Apple while living in the US but the company pays no tax in the country. No such luck for ordinary citizens. They have to pay tax in the US, under a new law called FATCA, despite living and earning abroad, forcing some Americans to renounce their citizenship. In India if you are selling a house you have to collect 1% tax from the buyer and submit to the government. Politicians force us to act as tax collectors without pay. One rule for us and another for them. 

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