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Apple Will Start Paying Back Taxes to Irish Government Next Month (macrumors.com)
70 points by artsandsci 9 months ago | hide | past | web | favorite | 75 comments



When the people complain about the European union taking too much autonomy, this seems like a pretty good example.

It seems crazy to me that Ireland is "not allowed" to set taxes as low as it would like to attract foreign investment. Even states in the US can freely do that!


I don't like some EU taxation rules, e.g. the minimum 15% VAT, which effectively sets an upper bound on government efficiency, but this has nothing to do with that.

Ireland is not being penalized for having taxes that are too low, but, in the words of the EC[1]:

    > Ireland granted undue tax benefits of up to
    > €13 billion to Apple. This is illegal under
    > EU state aid rules, because it allowed Apple
    > to pay substantially less tax than other
    > businesses. Ireland must now recover the
    > illegal aid.
You can elect to have low taxes in the EU, but it's anti-competitive behavior for a government in the EU to give preferential treatment to some companies over others.

Ireland is perfectly within their rights to have Apple pay the same taxes they've been paying already going forward. But to do so they need to adjust the general corporate tax rate, not just give Apple specifically those illegal benefits.

1. http://europa.eu/rapid/press-release_IP-16-2923_en.htm


It's interesting that this is true, because (at the state level, not federal) this is table stakes to lure large corporations to locate in one state over another. Just look at some of the pitches cities/states have been making to Amazon for their HQ2, or the Foxconn deal in Wisconsin.

https://www.jsonline.com/story/news/politics/2018/02/05/foxc...


This is very negative behaviour in sum, because it becomes a race to the bottom where you either forgo all tax revenue, or you dont attract large companies.

Its good the EU has rules in place to prevent this destructive behaviour.


> This is very negative behaviour in sum, because it becomes a race to the bottom where you either forgo all tax revenue, or you dont attract large companies.

It's not just that. The race to the bottom isn't really a thing because companies cost states money. They require the state to increase the resources they spend on transit capacity and emergency services etc. The only reason states want companies is because the amount of taxes they pay exceeds the amount of expenditures they require. So there is no race to have zero taxes, the competition is only to tax companies no more than the amount of government services they consume. Which isn't especially problematic.

The real problem is that if states make special rules for large companies, it gives them an advantage over smaller companies, which destroys local businesses in favor of international ones. Then next year some other place gives the huge company a better deal and the city is devastated because the company displaced a huge chunk of the local economy and now they're leaving and taking it with them.

If states want to compete by having low taxes, great. But nobody should be getting special treatment like that.


I don't see the negative outcome. Cities know the economic activity of 50,000 highly paid workers makes up for the loss of some property tax revenue. The alternative is no highly paid jobs and no property tax revenue (as the land is undeveloped).


Then give the same opportunities to all the companies not only to some


Ah, I didn't pick up on that distinction. Thank you.


They can, as long as all companies inside Ireland can enjoy the same low tax. The idea from the EU taxation rules is that all companies should be able to compete under same rules and that is not possible when a country give special taxation privileges for a single company.

The reason why Ireland do not do this is that they would go bankrupt. Their budget relies on the fact that all the other companies in Irland pay the normal tax.


States in the US cannot set the federal income tax rate. And there’s no real analogue of that in Europe. And if companies operating out of Ireland don’t pay their taxes, countries in the EU cannot selectively tax goods and services originating from Ireland; this runs counter to the ideals of free trade amongst the member nations of the EU.


Your scenario isn't exactly what's happening here. But still, regarding your idea: why not?

The Amazon HQ2 campaign is a pretty good example how companies are using tax competition to instigate a race-to-the-bottom. There's no doubt that Amazon would house these employees somewhere. So the payoff is essentially zero-sum. All that's changing is that Amazon is playing different populations against each other to save on tax.

Rules against such behaviour are just an effective method to avoid a prisoners' dilemma by the most obvious method known to anyone playing the game: communication, and binding agreement.

Now there is an argument that some locales may need to use tax policy if they are behind in every other feature, i. e. education, infrastructure etc.

But in fact the EU is a rather successful model of flexibility in that regard: Just look at the incredible economic success of eastern Europe and the Balkans after the end of the cold war, or Portugal, or even Ireland itself. Just compare Belarus to its EU neighbours to get a sense of what's possible.

How did this work? The EU does allow for tax incentives or subsidies where regions need to catch up. They also created an enormous system of direct transfers to allow investments into the factors that make regions competitive, such as infrastructure or rule-of-law.

As a matter of fact, Ireland simply agreed to the rules, and their scope isn't a matter of any "natural law". If countries agree to conduct themselves by certain rules than that's that. Of course every single rule may occasionally diverge from what any single country would otherwise do, or the rule wouldn't be necessary. But, just as with any intentional law, these rules taken as a whole have empirically been extremely beneficial to its signatories.


(You're right, I didn't take in the full subtlety of the Ireland EU situation. The specific EU rule seems much more defensible than my idea.)

But regarding that idea:

You make some interesting arguments in favor of states essentially forming a "cartel" in order to avoid driving taxes too low.

But then how do you decide what "too low" is? Who gets to decide what a reasonable tax rate is? If we're a bunch of people in lonely Isolated State and we vote to set our tax rates very low, does it seem reasonable that some central government strongly controlled by more populated states can say, "no, that's not fair"?

On an emotional level, I'm very sympathetic to the idea that the group of people deciding policy in a region should not be too far removed from that region.

(Of course, that it still might actually result in globally worse outcomes. But it might actually be worth it, just to avoid the unjust feeling of "policy dictated by people far away".)

Even then, I'm not convinced it actually results in worse outcomes. California has very high taxes, and is nevertheless a very popular destination. Some sort of centralized system that required all states to have CA levels of taxation seems like it would almost certainly be worse overall...

(I'm more thinking out loud than trying to make an argument.)


When you allow "competition" between countries regarding who gets to set the lowest taxes, you end up a in a situation where there is a race to the bottom resulting in outsized benefits for a few countries. If you enforce collective bargaining you prevent that situation, and everybody does better overall.


In a world where more and more power is concentrated into fewer and fewer large corporations, I'm not so sure this is crazy that they're not allowed to do this, nor that it would be a good thing if they were. The natural result would be that different states or nations race to the bottom chasing the corporations to locate there, depriving their citizens of substantial tax revenues that could have been used for the public good. Even if you're against social programs, there is still common infrastructure that everyone benefits from such as roads that need to be paid for.


The issue isn't that Ireland set taxes too low, but that it was allegedly secretly offering custom deals to certain companies.

Ireland allegedly used to do this quite a bit back in the day.


The problem here isn't Ireland being a tax haven, it's Ireland giving a preferential treatment to Apple, allowing them to pay less taxes than other companies in Ireland would pay in the same situation.


I believe tax competition between states reaches problematic levels in the States. While individual rights are preserved, a race-to-the-bottom between states reaches a negative outcome for individual states; and for United states as a whole.

Setting aggressive tax breaks to lure companies for a short period of time guides companies to jump state over state, with less revenue to each state. The aggressive tax breaks might better be revised in the States.

Furthermore, was it that the Irish tax break to Apple was below that permissible by Irish law itself?


Can they? I do not know the taxation law in the US but isn't there any federal tax on top of state ones? In EU there is no "European corporate tax".


Yeah, but when states do it in the US it ends up as a race to the bottom. The losers are all the states that participated and the winners are big corporations and their shareholders.


The Government is putting the money in an escrow account until they figure out what to do[0]. The money would cover Ireland’s social welfare bill for a year which is a major cost to the Irish tax payer.

[0] https://www.reuters.com/article/us-eu-apple-taxavoidance/ire...


>...The Government is putting the money in an escrow account until they figure out what to do.

No, it looks like they are putting the money in escrow while both Apple and Ireland appeal the charge. From the original article:

>..As expected, the report states that Apple and the Irish government have reached an agreement to set up an escrow account to hold the money while both sides appeal the August 2016 ruling in Europe's highest court.


Well I hope they will be sharing it prorata with the other eu members that lost :-)


I don't feel so guilty about this any more. We bailed out German, French and other bank bondholders for billions (that unlike TARP we will never see back) when we should have give them 50% haircuts. 18% of my countrymen now live abroad, far higher rates for young people - including way too many of my friends. Most of the reasons for our mistakes are entirely our own but the EU can bugger off if it thinks it should be able to set our tax rates - each citizen will be paying back debts because of their banks for decades - financially and at the human level.


I usually don't engage in this sort of trivial nationalism. But I just have to inject that your retelling of this story omits the fact that Irish banks were obviously first in line to go belly-up.

It is true that those banks had various lenders in Germany/France/wherever, and that the consequences of an all-out collapse of the Irish economy would have had negative effects in those countries as well.

But presenting it as some sort of altruistic sacrifice to allow them to rescue Ireland from a potato-based future is just adding moral bankruptcy to the other.

It's also frustrating to see such uninformed hatred, considering EU funding of 44.6 Billion Euros since 1976 was what essentially allowed an agrarian society to catch up with Western Europe in the first place.

Plus, obviously, a large fraction of those 18% of Irish living abroad are beneficiaries of the EU's open borders.

[0]: https://ec.europa.eu/ireland/about-us/impact-of-EU-membershi...


>The money would cover Ireland’s social welfare bill for a year which is a major cost to the Irish tax payer.

Seems like they are taking a long term perspective rather than a short term boost to their tax-base.


This is wonderful news. Let's hope they go after Google, MS, and all the other tax dodgers out there after this.


They are, it's just that Apple was by far the worst tax evader of the bunch.


Finally some good use for that foreign Apple cash hoard. :)


The Irish Supreme Court has previously held that ex post facto civil laws are illegal in the Republic of Ireland. Is this not ex post facto taxation?


I'm pretty sure the EU law underlying this was in force in Ireland before the taxable events, so no, it's just a retrospective determination of tax owed under law in force at the time of the act.


No, it isn't, it is not a problem with tax law, it is a problem of secrets deals with some companies


The Irish government along with Apple is filling an appeal against this. These Irish politicians sure have best interest of their countrymen in mind.


Hopefully they use this to build more housing.


I thought Ireland already had a huge glut of housing that nobody wanted?


Quite the contrary. There is a monumental housing shortage.

But this is not where this money will go. When all is said and done, if Apple still owes that much, it'll be divided with the rest of the EU according to Apple's sales. Thanks to its tech hubs (it seems every other person on the train is a software engineer), Ireland may end up with some part of it, but most certainly not all.


What happened to that huge number of empty estates built during the boom? Are they in the wrong place? Can people live there but work from home?


[flagged]


As other users have pointed out, this comment breaks the site guidelines. We've warned you about this before. Please (re-)read and follow them if you want to keep posting here: https://news.ycombinator.com/newsguidelines.html.

Perhaps billionaires, big corps, political enemies, etc., don't deserve better from you, but the community you're participating in does. And its survival depends on users not burning it down.


This kind of comment isn't in line with the guidelines, please instead use constructive language and refrain from name calling.


He and Apple was following the law. If Europe was so angry about Ireland's tax laws they should have stopped it from taking effect in the beginning.


> If Europe was so angry about Ireland's tax laws they should have stopped it from taking effect in the beginning.

So, poor behaviour is fine, as long as you weren't stopped before you started doing it?

Europe did do something about it, at the speed of international government agreements. You can't honestly be expecting that kind of organization to pre-empt every kind of misbehavior and favoritism inside its member countries.


[flagged]


There is a difference between the laws changing and affecting future behavior and a change being applied retroactively.

An earlier message indicated that the money was being put in escrow because apparently there is still a dispute about how the law should have been applied in the past.

I think it is reasonable to be upset about after-the-fact changes to the application of a law/regulation.


There is

Still legal

Nations built on laws, right?

Just because a particular entities economics position, which has no legal protections enshrined in any national constitutions or political or social theories I know of (economics are economics, not political science), are impacted by that. Welp; nations of laws and legal processes

Downvote with all your ad hominem might all you want. Facts are facts.


Hard to follow you, but the process of law making has its own meta rules that we can talk about and that shape the nature of the resulting legal system. Responding to attempts to discuss these meta rules with "it is the law" is basically a category error, you're avoiding the meta discussion.

For example:

  • laws shouldn't be drafted to apply to a single person (bill of attainder)
  • laws shouldn't be applied retroactively (ex post facto)
  • laws shouldn't infringe on individual rights
I don't know enough about the EU/Irish law to be definitive about what is going on with Apple, but my gut says that the law was probably targeted such that few corporations could take advantage of it but not so much that it was just Apple and that the EU enforcement action should not be applied retroactively.


> He and Apple was following the law. If Europe was so angry about Ireland's tax laws they should have stopped it from taking effect in the beginning.

Ireland and Apple weren't following the law, that's the whole point of this.


Don’t really get people who defend mega corporations. They played the game and they lost. They should’ve known that the rules can change, especially if someone is cheating or gaming the system.


Because it isn't about defending "mega corporations" it is about the general principle that the legal interpretations (or new legislation/regulations) shouldn't be applied retroactively.

It is one thing to change the interpretation and use that going forward. Completely different to change the interpretation and apply it retroactively.


Where is the evidence that they were cheating the system. Ireland created tax laws, to incentivize companies to come. The European commission comes in and decides that Ireland needs to revert laws that have been on the books for years and collect back taxes on it. This is absurd. How can a company plan for all the potential laws that Europe could reverse. Luckily in Apple's case, they have the funds to pay.


>Ireland created tax laws, to incentivize companies to come.

That makes it seem like the EU decided Ireland's corporate tax rates were too low but that's not what happened here. Ireland gave specific tax considerations to Apple that it didn't give other companies which is illegal in the EU. This is just forcing Apple to compete on a level (tax) playing field with other corporations.


> How can a company plan for all the potential laws that Europe could reverse. Luckily in Apple's case, they have the funds to pay.

They can't. The world is uncertain. Sovereign Nations legally have the power to do anything they fucking want in the regions they govern (they might be restricted by their own laws and constitution, but it is an internal one).

In this case, it appears that Apple abused certain Irish tax laws to an extreme degree. The EU is well within its rights to punish Apple for doing so.


No.

Corporation Tax in Ireland is 12.5%. Europe is insisting only that Ireland actually collects it. If, as alleged, someone in Fianna Fail made a deal with Apple thirty years ago to charge it, and it alone, a different rate? It's not on the statute book, the power to do that is not included in law, and therefore it's Not A Thing. Oh, and also someone committed a serious crime, but it's Ireland and they'll never be prosecuted.


Eeasy, given the politics and history of the region in question, anyone in the relevant positions knew Ireland tax break was a long term risk, but worth it short term. Chasing tax breaks is always a gamble.


appealing to/pleading ignorance doesn't sound like a good excuse for a mega multinational company that employs a legion of tax lawyers and accountants. As previous commenters noted, Apple tried to game the system, but lost. Now, it's time to pay up.


Exactly. Nothing against firms trying to optimize their fiscal plan but if you have to pay then shut up and pay it up.


I know it's unreasonable but I'd really love to be a fly on the wall and somehow be able to see, in an alternate reality, how / where / when / why that money they'd be paying would be spent. I'm just purely curious.


You have to hand it to the Irish. As a plan to collect more tax in the long term, offering (effectively) tax free status by not enforcing "Double Irish w/ Dutch Sandwich", to attract big players, letting them dig themselves into tax-debt holes for a few years while letting them feel they will get off scott-free, then enforcing it and securing a deal to get back-taxes paid, is pretty genius. Very stable genius to help rebuild their economy that was pretty crushed after 2008.


Ireland is not "enforcing" anything; the European Commission are the party that ruled that Apple received unfair tax treatment. Both Apple and the Irish government are appealing that ruling.

https://www.reuters.com/article/us-eu-apple-taxavoidance/ire...


Yeah, sure. That was a condition by IE of the EU bringing this ruling. "You have to make us look culpable as well, it's just better for business." You really don't think that's how it works? You're too naive!


It's not Ireland trying to make Apple pay back-taxes! The European Commission is forcing Ireland to charge Apple them.


Come on. IE is not double dealing to the EU for a bit of kick back somehow? Of course they are. That EU is "forcing" them is hilarious. IE loves to play a fake victim if they can, and in this case, all the better to be open for business. "Oh, EU, please stop getting me to get Apple to pay me taxes. Please stop making me collect revenue." Said no state ever. But believe their fake victim tale if you want. The Irish are clearly too clever for you!


Nationalistic flamewars, which this crosses into, are definitely not ok on HN. Please don't post like this again, and avoid unsubstantive comments on divisive topics generally. This is in the site guidelines: https://news.ycombinator.com/newsguidelines.html


I tried to ignore it but I cannot - this is a ugly comment. And for hackernews it's devoid of fact or even interesting opinion. It uses a familiar tactic commonly associated with bigots: don't agree that there's a global Zionist conspiracy to rule the world? - the Jews are clearly too clever for you. Don't believe that the Roma are immigrating en-mass with the plan to displace the natives? - the Gypsies are too clever for you. Rounded off with the suggestion that the Irish as a whole have obvious negative personality traits.

And your theory is as outlandish as any global Jewish conspiracy stuff. An entire nation of people from across the political and social spectrum have connived to defraud the rest of the world based on a sneaky tax-policy plan enacted over 3 decades ago which has survived 2 European treaties, 5 changes of government and requires the entirity of the "Irish" to be liars. It's an ugly comment with even uglier undertones.


Actually, the revenue won't end up in ireland. All member states will send a bill to ireland, and ireland will split up the money to them (based on Apple's relative sales around Europe).


Where's that in the ruling?


That is interesting. There has to be a way that IE gets a significant cut from the Apple money tho. I'd be very surprised if there wasn't. That or in future the recompensated EU members agree to invest more in IE.


The EU has rules. What govt would invest in ireland? How - what instrument of govt? That's not going to happen. The commission will issue a ruling on the destination of the revenue and that will be that.


EU members companies.

Come on about rules tho, man. History is messy. People are stupid and evil ( as well as good, obviously ). We live in an age where we have a great pretence of goodness, but really our nature is the same. I'm sure there a lot of double dealing happening behind the veneer of rules. And I think you're naive/uneducated in history if you think not.


I assume Apple sells a lot here - the tech community, at least in Dublin, is enormous and Apple seems to be extremely popular among geeks, which, it seems, are a sizeable part of the overall population.


This comment really demonstrates a lack of knowledge and understanding of the situation. Not to HN standards.


Probably. What do I know. Not an expert.


That's not at all what's happening here.


Of course it's not.


Then why say it?


No my 'of course its not' was sarcastic.


Higher taxes are always passed on to the consumer, businesses are greedy.


That's not true. Research shows that, while some of the increases are passed along, a large chunk is absorbed by the shareholders.




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