Linked by Thom Holwerda on Tue 7th Nov 2017 09:52 UTC
In the News

Five months after Mr. Cook's testimony, Irish officials began to crack down on the tax structure Apple had exploited. So the iPhone maker went hunting for another place to park its profits, newly leaked records show. With help from law firms that specialize in offshore tax shelters, the company canvassed multiple jurisdictions before settling on the small island of Jersey, which typically does not tax corporate income.

Apple has accumulated more than $128 billion in profits offshore, and probably much more, that is untaxed by the United States and hardly touched by any other country. Nearly all of that was made over the past decade.

Apple is the largest company in the world, so they're the big target - but tons of other companies engage in the same shady activities.

Every euro or dollar Apple, Google, and Facebook dodge in taxes is a euro or dollar regular folk like you and I have to pay instead. These companies make use of all the facilities and infrastructure paid for by our tax euros and dollars, but then turn around and stab society in the back by extracting vast sums of wealth from it without paying their fair share of taxes. It's exactly this reason why the divide between rich and poor is growing exponentially, which in turn is destabilising our communities because it becomes ever clearer that the Tim Cooks and Mark Zuckerbergs of this world get to live under a different set of rules than you and I.

I am lucky to live in an incredibly solid welfare state, where, while exceptions exist, we take care of each other (interestingly enough, The Netherlands is also one of the biggest shady tax havens in the world). A welfare state is built upon the concept of the strongest shoulders carrying the heaviest burdens, and the knowledge that Joe Billionaire is capable of paying more into the system than Jane Minimum Wage. When this system of trust breaks down - as it clearly is at risk of - our society breaks down. The fact that Tim Cook et al. have the gall to claim their 0.0002% tax rate is "fair" just rubs more salt in the wounds of any regular person who dutifully pays her or his 20-40% taxes every year.

Sadly, any meaningful change to the tax codes of the US and the EU will be blocked through the corruption and bribery Apple, Google, Facebook, and so on engage in on a daily basis. Unless we break these giants up into small companies that aren't 'too big to fail', our societies will grow ever more at their mercy.

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All part of a much bigger problem
by Tony Swash on Tue 7th Nov 2017 15:56 UTC
Tony Swash
Member since:

I think this is about a profound and very deep problem of the current era. After WW2 a system of social democracy was built across the western liberal democracies based on strong welfare states and proactive government management of the economies to prevent mass unemployment. The reasons this happened are very complex and mostly to do with the nature of total war and total national mobilisation in WW2 but what it amounted to was the taming of the excesses of capitalism via democratic political controls exercised via national democratic political systems.

Since the late 1970s the post war social democratic system has largely broken down and globally capitalism has lurched from one period of crisis to another (stagflation, mass unemployment, both public and private debt crises, the financial crash and now perpetual stagnation). This whole process is very complex but at its core is the fact that as the global economy has opened up, as trade has accelerated, as communist command economies collapsed or were transformed into capitalist economies, as capital flows were freed from control, so the large leading capitalist firms have essentially escaped democratic control. Large capitalist enterprises now operate at a planetary level and can move their operations, factories, labour sources and money around more or less freely to maximise profits. Meanwhile national political entities are forced to compete against each other and undercut each other to create favourable financial and tax system that will attract these large global companies. The scandal of tax avoidance is just an aspect of that dynamic.

The real problem for progressives is that the obvious solution - scale up government beyond the nation state to match the global reach of these companies - has one terrible and currently insurmountable flaw. The flaw is that the emergence and successful construction of real functional political democracy was built on the base of national identity - of the national demos - and nobody knows how to build a really functional and organic transnational democracy (up until now at least). The EU was partially meant to address this problem but the result is the woefully undemocratic EU system and even the limited system that has been built has triggered a series of national populist oppositional movements (of the left and right) seeking to repatriate political power to the nation.

The German political economist Wolfgang Streeck has written a great deal about this, particularly in his excellent book “How Will Capitalism End? Essays on a Failing System”. His view - and one a share - is that we are entering a very difficult time where capital has globally broken free from democratic oversight and control, and nobody knows how to build transnational democratic systems that might be able to assert popular sovereignty over it. We are in for a bumpy ride.

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