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.

Reply Score: 5

PhilPotter Member since:

Interesting read, thanks for posting this.

Reply Parent Score: 1

Thom_Holwerda Member since:
2005-06-29 uh, we agree?

Tony, wtf is happening. I'm scared. Hold me.

Reply Parent Score: 6

Tony Swash Member since:
2009-08-22 uh, we agree?

Tony, wtf is happening. I'm scared. Hold me.

Don't spoil the moment - just feel the love ;)

Reply Parent Score: 3

zima Member since:
2005-07-06 uh, we agree?

Tony, wtf is happening. I'm scared. Hold me.

Don't worry, he possibly meant to sneak in some Apple defense, for example something like ~"it's not Apple's fault, it's the system!" ;P

Reply Parent Score: 3

Troels Member since:

Wow, best comment on any site i have seen in quite a while.

The sad part is indeed that there is absolutely no solution in sight currently. Maybe we are seeing the limit of democracies?

EU seems totally incapable of making any major decisions because there are so many different interests represented, and most governments are so terrified of their voters that everything gets muddled and no one has a master plan, except trying to get reelected. Some of the geeks in the EU Commission might think they have a plan, but they will probably never present anything that is understandable by non-bureaucrats. Probably we need simpler rules, not more bureaucracy. But they cant even decide where the parliament should reside ffs.

This is fueled by todays media who are also desperate to stay in business in this social media age, and are throwing themselves like hungry piranhas over all kind of news that can somehow be twisted to resemble a scandal of some sort, and then we can all spend time reading about non important shite instead of getting in depth information allowing us to figure out who to vote for.

The mainstream politician today is so afraid to say or do something wrong that they spend a lot of time and words saying and doing nothing, while no one are really trying to identify, much less fix, the real problems we face. The fact alone that most of our laws these days are so complicated that the politicians don't understand the stuff they vote for i see as a huge problem.

The ironic part is, that all our problems are social of nature, and not technical, even something like CO2 emissions could be solved in a relatively short time if everyone decided to do so. Of course it wont happen, because everyone thinks of themselves first and are waiting for everyone else to blink.

No wonder the extremist parties are winning everywhere, they have clear understandable messages that a lot of people can at least partly identify themselves with.

Reply Parent Score: 4

Tony Swash Member since:

The real tragedy of the EU is that hubris and misjudgment has meant it has strayed a very long way from what many of us once hoped it would become. After I emerged from post 1968 mad delusions of imminent revolution I spent a long time working inside the system trying to make things better. I spent the last twenty years of my working life working full time on EU projects. I was a tremendous enthusiast for the EU project precisely because I thought a strong united Europe was exactly the sort of entity that could stand up to the power of international capital.

I didn’t want to overthrow capitalism anymore I just wanted to tame it and thought the EU a good instrument for that. Unfortunately I began to feel that the entire project had gone horribly wrong, basically after the Maastricht Treaty when so much economic power was ceded to essentially non-democratic entities whilst making no progress on a political or social union. Then when the crash came and I watched the enormous and pointless cruelty inflicted on the Greek people I realised that the EU had morphed into something I found it hard to defend (I still voted Remain though). The weakening of democracy in Europe - and the EU is a significant factor in that - is truly scary.

Now I agree with Wolfgang Streeck that the coming era will be a strange and difficult one as capital can now operate globally almost free of restraint by democratic governments - as it did in the first half of the 20th century (and look what happened back then).

I wrote a long two part account of how and why my views on the EU changed, with a fairly detailed account of its main design flaws, and would happy to post links if it was appropriate/acceptable.

Reply Parent Score: 1

cade Member since:

Some very enlightening comments.
Some very familar themes.

I'll also add that ...
- many politicians are different from private sector business owners in that the former have not gained the experience to be qualified to manage the citizenry's financial/infrastructure issues while the latter are left to their own financials/devices to make a venture possible
- When is the last time a "poor" person paid you a wage ?
It is the "rich" person that pays you a wage. The term "rich" is a metaphor not for the less common "silver spoon" entity but for the more common self-made entity that gauged/approached risk and was able to make a venture flourish. Sympathetic versions of these "self-made" entities are the one's that should be managing democratic governments but instead democratic elections often result in selection of the popular poor-choice candidate instead of the "right" candidate.
- It is strange to have BIG givernment managed by politicians that have no (or very little) experience in running a major entity (like a major corporation). Thus, we have politicians who have little experience in risk but are in a risky situation in that they affect the action of government.
The solution should be SMALL government to promote conditions for a better management of government.

- a small government does not imply a potential for a lack-lustre welfare system.

Reply Parent Score: -1

Luminair Member since:

Did you just make all that up or did someone tell you it?

The problem is politicians letting companies evade taxes. Read the story again.

Politicians. Let. Companies. Evade. Taxes.

Reply Parent Score: 1

Treza Member since:

Besides corruption... there is also the fear of retaliation.

If Europe wanted to really make Apple, Amazon, Google pay what they owe, they fear that the few large companies that export in Europe, for example German car manufacturers or Airbus, would suffer from similar retaliation by the US goverment, and become uncompetitive.

This blackmail help allowing all large companies to evade taxes.

Reply Parent Score: 3