Subscribe to Newsletter

Enter your email and get newsletter from Greg Shapiro

While Sanders & Clinton Talk, EU Acts on Multinationals Tax – ‘United States of Europe’ 10 Nov. 2015

Date: Wednesday, November 11, 2015
Category: Blog, News

While Bernie & Hillary Talk about Making Multinationals Pay their Taxes, the EU Is Actually Doing It. ‘United States of Europe,’ 10 November, 2015

How to stop tax cuts for multinationals? Give them subsidies.

Multinational companies are very creative with their bookkeeping, and they end up paying very little tax. Apple (based in Ireland) pays about 1%. Amazon (based in Luxembourg) pays as low as 1%. Starbucks (based in the Netherlands) pays well under 1%.

It’s a popular topic at presidential debates.
Bernie Sanders says: ‘one out of four profitable companies pays nothing in corporate taxes.’ And of course if Bernie says it, then Hillary has to say it too: ‘I will rewrite the tax code… not for stashing profits overseas.’

Who will actually do something? In the EU they’re already doing it. The EU Competitiveness Commissioner has just targeted multinationals Fiat and Starbucks for ‘tax clawbacks.’ And Apple may be next – with an EU committee considering a penalty of €17 billion. (which for Apple is like 2 weeks of iPhone sales)

In fact, Apple is credited with inventing the tax plan known as the ‘Double Irish.’ And Ireland has proven all too eager to lower its corporate tax rates to lure multinationals. With normal corporate tax rates at appx. 25%, Ireland’s is 12.5%. Ireland has now said its tax rate is unsustainable – and lowered it to 6.25 (even lower than their blood alcohol content).

And as the companies point out, it’s all legal. As someone on The Sopranos might say, ’We just moved our taxable income here, we put some over there, moved it back over here… and some of it got lost along the way.’

In the US, there’s a lot of talk about subsidies and tax cuts. Americans define subsidies as ‘government handouts,’ hence bad. Americans define tax cuts as ‘I love tax cuts!’

But in the EU, they’re making the argument that ‘tax cuts’ and ‘subsidies’ are effectively the same thing. By giving, say, Boeing corporate tax cuts, it’s a lot like handing them cash.

In fact it’s one woman in particular is making this distinction: the EU Competitiveness Commissioner Margrethe Vestager. She’s from Denmark. According to Hillary Clinton: ‘We are not Denmark.’ Well, Hillary, If you want to be serious about corporate tax evasion, you might want to try being more like Denmark.

Vestager says the tax clawbacks at Fiat and Starbucks are just the beginning. She has now announced she has 300 potential clawbacks on her desk. The claws are out!

Anyone could be next! Look at her track record: She woke up and went to Starbucks. Next comes a Starbucks tax clawback. She played with her iPhone. Next comes an Apple tax clawback. And maybe she even got that unwanted download of the new U2 album. And where’s U2’s corporate HQ? Yup, it’s In tax haven Amsterdam. Next up, expect a U2 tax clawback.

And it all started with Starbucks. Poor guys. They’re already the target of this ‘War on Christmas’ campaign for not putting Christmas imagery on their holiday cups. And now they’re the target of a huge tax clawback. Now Starbucks will have no choice but to put the Christmas stuff back on their cups and claim to be a religious organization. That way they pay ZERO taxGSUSE TaxClawbackStarbucks