Feds, lobbyists draw battle lines over Apple's EU $14.5B tax bill

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in AAPL Investors
Most U.S. officials are lining up to fight the $14.5 billion E.U. tax edict with support from assorted talking heads, but the battle appears to be more about which taxation agency the money belongs to, rather than actual support for Apple.




There has been no shortage of commentary about the $14.5 billion European Commission tax investigation ruling. Apple has weighed in, and so has Ireland, with both opposing the European Union's meddling in a business arrangement that has existed since 1980.

Since Tuesday's determination, Washington D.C. is gearing up for battle about the matter. Most are in support of Apple's cause, but not necessarily for Apple's reasons.
The U.S. Treasure Secretary is expecting "large and punitive retroactive recoveries" as a result of the ruling.
Strange bedfellows

Shortly after word of the ruling came down, Republican Speaker of the House Paul Ryan spoke out against the retroactive bill. He was joined by prominent Democrat leader Senator Chuck Schumer (D-N.Y.).

"The European Union is going to grab this money, instead of the U.S.," Schumer said. "It's a big signpost here for us."

Schumer also said that he and Ryan had begun discussions about corporate tax overhaul.

"This decision is awful," Ryan said in a statement about the ruling. "Slamming a company with a giant tax bill -- years after the fact -- sends exactly the wrong message to job creators on both sides of the Atlantic."

Dissenting voices

Not all U.S. governmental officials are on Apple's side, however. Democrat Carl Levin has led the charge against Apple's international tax strategies for many years, and blames the Internal Revenue Service as well.

"Royalties Apple collects for its overseas sales of products designed and developed in the U.S. should be taxed in the U.S.," said Levin, reiterating his long-held position on the matter. "But Apple has avoided the billions of dollars of taxes it owes the U.S. by transferring its intellectual property to itself in Ireland."

Levin added that "it is understandable that Europe would try to go after them."

Inside the D.C. Beltway, outside the government

Responses have also started emerging from lobbyist groups and Washington D.C. watchdogs about the ruling, which is already the largest of its kind, before interest is accrued. Comments are as expected, with little alteration from party lines about the matter, but groups watching for fraud and abuse are particularly riled up about Apple's earnings

"It's remarkable to think that the administration has been flying over to Brussels on taxpayers' dollars to lobby the European Union against collecting taxes owed in Europe when they're not collecting the taxes owed here," said the bipartisan Financial Accountability and Corporate Transparency Coalition's (FACT) Deputy Director Clark Gascoigne. "It's terribly ironic."

Educators and scholars are picking sides as well. While the government is seeking cash repatriation easements to draw large pools of cash back into the U.S., the matter is not so cut-and-dried economically.

"This is not taking 13 billion euros out of the U.S. Treasury's pocket and U.S. taxpayers' pocket and putting it into Europe," University of Washington School of Law lecturer Jeffery Kadet told the New York Times. "They wouldn't be bringing this money back to the U.S. anyway."

Apple will use its overseas cash reserves to fund repayments on its bond sales. The bond sales in turn give the company money to buy back its own stock.

Taxation with representation

U.S. Treasury Secretary Jack Lew commissioned a report in April about the issue, before meeting with the head of the European Commission Margrethe Vestager. The Treasury report said that a large ruling against Apple would create an environment where regulatory agencies and governments in the E.U. would pursue "large and punitive retroactive recoveries from both U.S. and E.U. companies."

Following the study, Congressional officials urged Lew to double taxes on E.U. companies in the US as a retaliatory move to the array of investigations underway against U.S. helmed international companies.

Lew believes that whoever ends up as the next U.S. President will spearhead corporate tax reform, which would make it more palatable for international companies to repatriate income to the U.S. The treasury secretary is expecting movement on the issue early in the next administration, given that it was a cornerstone of one failed presidential candidate, and a frequent speaking point for the remaining ones.




The European Commission's investigation on Apple's tax arrangement with Ireland concluded on Tuesday, with the comission demanding Apple pay 13 billion euro ($14.5 billion) to Ireland in back taxes, which could swell to over $21 billion if the appeal process fails. A FAQ lays out Apple's path to an appeal, and notes that the process will take several years to wrap up.

Irish governmental officials have commenced discussions on how to fight the ruling.
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Comments

  • Reply 1 of 21
    "It's remarkable to think that the administration has been flying over to Brussels on taxpayers' dollars to lobby the European Union against collecting taxes owed in Europe when they're not collecting the taxes owed here," said the bipartisan Financial Accountability and Corporate Transparency Coalition's (FACT) Deputy Director Clark Gascoigne. "It's terribly ironic."
    Actually Apple does pay taxes here in the US, just not on the money earned outside the US. I believe that's the way the law is written. The US gov is clearly supporting a US owned company which is the right thing to do.
    redraider11jbdragonlatifbpanantksundarammwhitepacificfilmjony0
  • Reply 2 of 21
    "This is not taking 13 billion euros out of the U.S. Treasury's pocket and U.S. taxpayers' pocket and putting it into Europe," University of Washington School of Law lecturer Jeffery Kadet told the New York Times. "They wouldn't be bringing this money back to the U.S. anyway." Jeffery Kadet doesn't know what he is talking about. They don't have to bring the money home to impact the US. U.S. Treasury Secretary Jack Lew said that that if Apple pays this tax money to Ireland, Apple gets to deduct it as taxes paid to reduce their tax bill to the US. So that money is directly reducing the taxes paid in the US. This is exactly why the US is fighting this. If Apple brings the money home or not is moot. Bringing it home and paying taxes to the US has the same effect on taxes due in Ireland. So if Apple gets to bring it home at a 10% rate, and the ruling stands in the EU then they would only own a rate of 2.5% to Ireland. I actually see that as a win win win. Ireland gets some additional tax revenue to appease the voters who think Ireland should take the windfall being sought by the EU, the US gets 10% of the funds to our coffers, and Apple gets to bring home a good chunk of that overseas cash at a reasonable rate. Heck even the EU gets some benefit of a partial win if Ireland gets 2.5% more than they have gotten to date. Of course this all hinges on the US fixing the repatriation tax amount.
    singularitypalomine
  • Reply 3 of 21
    spacekid said:
    "It's remarkable to think that the administration has been flying over to Brussels on taxpayers' dollars to lobby the European Union against collecting taxes owed in Europe when they're not collecting the taxes owed here," said the bipartisan Financial Accountability and Corporate Transparency Coalition's (FACT) Deputy Director Clark Gascoigne. "It's terribly ironic."
    Actually Apple does pay taxes here in the US, just not on the money earned outside the US. I believe that's the way the law is written. The US gov is clearly supporting a US owned company which is the right thing to do.
    They accrue the tax liability on the money in Ireland though. This has been stated. So their books show it as an outstanding liability. If they spend the money for R&D and other items they get to reduce that liability accordingly. But if they bring it home, they have to pay those taxes. So they have not dodged the taxes, they are pending determination of what Apple does with the money.
    EsquireCatsredraider11cwingravpacificfilm
  • Reply 4 of 21


    .
    I can identify the two people on the left side of the picture -- who are the two on the right?

    Funny, this US vs EU battle is not about whether Apple owes the taxes -- rather it is about who gets to collect them.

    I predict that the US Goverment's greed will win out over the EU Government's greed.

    latifbpgilly017
  • Reply 5 of 21
    The problem is a lack of standardized laws without loopholes. Assessing a large tax bill years later is wrong. Assuming a company is not going to avoid taxes if at all possible is wrong. A company, like a person, will avoid taxes as best it can. Tim is right to stand up for this. I can see how people would be angered with Tim, but I am not and I think that anger is misplaced. BOTH sides of the Atlantic (and world) need to work on clear and fair taxation so companies can operate efficiently; where the largest profits go to the best products and services, not the best accountants and lobbyists. I think this message is probably lost in all the discussion. Too much money is tied up in it all.
    edited September 2016 jbdragonlatifbpmwhitegilly017jony0
  • Reply 6 of 21
    spice-boyspice-boy Posts: 1,439member
    I pay my taxes why shouldn't Apple INC?
  • Reply 7 of 21
    spice-boy said:
    I pay my taxes why shouldn't Apple INC?
    Apple does.

    Please stop with your pointless, nonsensical assertions. Perhaps you should take the trouble to read some of the prior threads (there have been plenty) before spouting off in this random fashion. There are lots of good insights (on both sides) there.
    gilly017adamcjony0Capriguybadmonk
  • Reply 8 of 21
    Funny, we never heard about this arrangement being unfair when Apple almost belly up in the 90's, under the same Irish tax laws.
    SpamSandwichjony0Capriguy
  • Reply 9 of 21
    ajmasajmas Posts: 579member


    .
    I can identify the two people on the left side of the picture -- who are the two on the right?

    Funny, this US vs EU battle is not about whether Apple owes the taxes -- rather it is about who gets to collect them.

    I predict that the US Goverment's greed will win out over the EU Government's greed.

    Based on a search (see here): Steve Jobs, Mike Markkula, Alec Wrafter, Couldn't find the other person.

    When people see a cash mountain, they all want part of it. Whether or not they are entitled to it is another story.
    SpamSandwich
  • Reply 10 of 21
    No matter the reasons or excuses given, no corporation anywhere should EVER pay lower taxes than a sick, old pensioner.  In truth, no sick, old pensioner should pay ANY taxes. The tax code is not written for fairness, it is written for favoritism and cronyism, and for, you guessed it, increasing rich people's fortunes.

    Rich people take very good care of other rich people, and expect the very same in return, and those same rich people are making the laws to benefit rich people, not regular folks who must suffer the totally unfair tax burden placed upon them by, you guessed it right again, rich politicians taking very good care of their rich friends. Call it corruption or criminal or whatever, else, but the real word for it is immoral.
    singularityjony0cwingrav
  • Reply 11 of 21
    Taxes are for little people, come on now.
  • Reply 12 of 21
    gatorguygatorguy Posts: 23,171member
    "This is not taking 13 billion euros out of the U.S. Treasury's pocket and U.S. taxpayers' pocket and putting it into Europe," University of Washington School of Law lecturer Jeffery Kadet told the New York Times. "They wouldn't be bringing this money back to the U.S. anyway." Jeffery Kadet doesn't know what he is talking about. They don't have to bring the money home to impact the US. U.S. Treasury Secretary Jack Lew said that that if Apple pays this tax money to Ireland, Apple gets to deduct it as taxes paid to reduce their tax bill to the US. .
    I think that would only be accurate if Apple were to no longer treat those funds as undistributed foreign earnings, correct? Maybe Anant will chime in. 
  • Reply 13 of 21
    Effing politicians don't do a damn thing intellectually or creatively to help anyone but $14.5B is like 'chum' in the water for the 'Sharks' that they are. 
    SpamSandwich
  • Reply 14 of 21
    gatorguy said:
    "This is not taking 13 billion euros out of the U.S. Treasury's pocket and U.S. taxpayers' pocket and putting it into Europe," University of Washington School of Law lecturer Jeffery Kadet told the New York Times. "They wouldn't be bringing this money back to the U.S. anyway." Jeffery Kadet doesn't know what he is talking about. They don't have to bring the money home to impact the US. U.S. Treasury Secretary Jack Lew said that that if Apple pays this tax money to Ireland, Apple gets to deduct it as taxes paid to reduce their tax bill to the US. .
    I think that would only be accurate if Apple were to no longer treat those funds as undistributed foreign earnings, correct? Maybe Anant will chime in. 
    Correct. But that is really only a technicality, as I explained to you in detail in the previous thread -- they can do that with a stroke of a pen. It creates a spat between the US and the EU, but has nothing to do with the EU fingering Apple, and that too retroactively. At one level, Apple doesn't care to whom it owes the money or how it's split. It is important to recognize that Apple is caught in an intergovernmental spat (EU-Ireland, and now EU-US), and has played 100% by the rules.
    jony0
  • Reply 15 of 21
    No matter the reasons or excuses given, no corporation anywhere should EVER pay lower taxes than a sick, old pensioner.  In truth, no sick, old pensioner should pay ANY taxes. The tax code is not written for fairness, it is written for favoritism and cronyism, and for, you guessed it, increasing rich people's fortunes.

    Rich people take very good care of other rich people, and expect the very same in return, and those same rich people are making the laws to benefit rich people, not regular folks who must suffer the totally unfair tax burden placed upon them by, you guessed it right again, rich politicians taking very good care of their rich friends. Call it corruption or criminal or whatever, else, but the real word for it is immoral.
    Dude there are rich people that pay taxes up the wahzoo I personally know a few so don't spout us vs. them mantra without any fact finding.  The tax system on a whole is bias yes. It certainly rewards business owners and entrepreneurs with incentives employees don't get. But all wealthy people aren't cronies and selfish. The real deal is a lot of our politians are greedy and have a what's in it for me mentality. No real change will come about till folk with integrity and backbone take charge. 
  • Reply 16 of 21
    gilly017 said:
     The real deal is a lot of our politians are greedy and have a what's in it for me mentality. No real change will come about till folk with integrity and backbone take charge. 
    In à working democracy, the government is the people.
  • Reply 17 of 21
    propod said:
    gilly017 said:
     The real deal is a lot of our politians are greedy and have a what's in it for me mentality. No real change will come about till folk with integrity and backbone take charge. 
    In à working democracy, the government is the people.

    The US is a democratic republic -- quite different than a true democracy.

    SpamSandwich
  • Reply 18 of 21
    Very interesting article by the former European Commissioner in The Guardian, saying publicly that the EU tax ruling is "fundamentally unfair" and that "“EU member states have a sovereign right to determine their own tax laws, and state aid cannot be used to rewrite those rules. The current state-aid investigations into tax rulings appear to do exactly that.”  https://www.theguardian.com/technology/2016/sep/01/eu-state-aid-tax-avoidance-apple

    jony0
  • Reply 19 of 21
    propod said:
    gilly017 said:
     The real deal is a lot of our politians are greedy and have a what's in it for me mentality. No real change will come about till folk with integrity and backbone take charge. 
    In à working democracy, the government is the people.
    Emphasis on 'working'. In this great land of ours it seems the people come last. We reward the lazy and punish the hard working. I don't know much about these things so forgive my ignorance but I suspect in the ruling against Apple the EU aren't truly interested in the people of Ireland. I could be wrong. 
    edited September 2016
  • Reply 20 of 21
    propod said:
    gilly017 said:
     The real deal is a lot of our politians are greedy and have a what's in it for me mentality. No real change will come about till folk with integrity and backbone take charge. 
    In à working democracy, the government is the people.

    The US is a democratic republic -- quite different than a true democracy.

    It's unbelievable how many people still insist the US is a "democracy", but I place the blame on our generally terrible public schools.
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