Why would U.S. Government fight E.U. ruling on Apple’s Irish tax evasion scam? (VIDEO)

The European Union is bringing sanity to government supported tax evasion by companies like Apple.

The European Union clamps down on Apple’s Irish supported tax evasion

The European Union ruled that Apple owes $14 billion in back taxes because of the tax evading scam they orchestrated with Ireland is illegal. This ruling is a great thing in the long run.

So how was the company able to evade $14 billion worth of taxes? Reuters explains the scam, the ‘artificial arrangement’ as follows.

The EU’s ruling challenges the way that Ireland agreed to tax the profits of Irish registered Apple subsidiaries, through which most of its non-U.S. profits flowed. Apple Inc licenses the rights to technology designed in the United States to Irish subsidiaries. These then hire contract manufacturers to make devices which they sell to Apple retail subsidiaries around Europe and Asia.

Since the manufacturing cost is a small portion of device sales prices and retail subsidiaries are allocated a small operating margin, Apple Ireland is very profitable. In 2011, it earned $22 billion after paying $2 billion to its U.S. parent in relation to the rights to Apple intellectual property. However, the Irish tax authority agreed only 50 million euros of this was taxable in Ireland, the European Commission said. Under the terms of Apple’s tax deal, first agreed in 1991 and renewed in 2007, Apple could allocate most of the profits earned by its Irish operating units to a “head office” that did not have any employees or own any premises.

“This ‘head office’ had no operating capacity to handle and manage the distribution business, or any other substantive business for that matter,” the Commission said. The Commission said this agreement had no basis in tax law and was not available to others, and so represented state aid.

In other words, Apple got a hell of a deal many companies in Ireland are not getting given the Irish 12.5% corporate tax. Ireland chose to give the company a huge tax break for a few thousand jobs at the same time it deprived their coffers in order to enrich Apple’s shareholders further. This tax evasion is at the expense of the Irish budget, infrastructure, and anything else taxes pay for the benefit of the country. It is also an incentive for this U.S. company to deprive Americans of jobs and taxes to support our dilapidated infrastructure and other necessary programs Apple indirectly benefits from in the short and long term.

So it is with consternation that,

The U.S. Treasury Department published a white paper last week in which it said it was looking at possible responses to what it sees as unfair targeting of its firms, which could include extra taxes on the U.S. arms of European companies. The paper noted that the EU executive’s tax rulings could cost the U.S. exchequer money. Under U.S. tax law, Apple’s Irish profits are taxable if brought back to the United States – something the company would have to do if it wanted to use the money to pay dividends.

The claim is that any taxes paid to Ireland are deducted from taxes owed to America when the profits are repatriated. That is hogwash. Any idea why companies like Apple keep their profits offshore? They are only waiting for a paid government that will give them a ‘one-time’ opportunity to repatriate their profits with a minimal U.S. tax liability. If our government were serious about keeping jobs in the United States, they would not be fighting this ruling. Apple is not bringing that money back to the U.S. They will use financial instruments to use that money without bringing it to the U.S.

Apple’s greed is palpable. While $14 billion is huge to many governments, to Apple, it is a drop in the bucket.

For some context, Apple currently has a market value of about $571 billion. It booked $36.6 billion in profits during the nine months ending in June 2016. A DCF model considers all potential profits Apple will make into perpetuity. So, you begin to get a sense of how $14 billion would turn out to be a minor outflow in the big scheme of things.

Companies like Apple extract much more than they need to be a stable, viable corporation. At all cost they continue to pilfer the very people that purchase their products, screw them with high priced products while paying little to no taxes in the aggregate.

All governments must stop companies from these tax evading deals. They must stop working against the interest of their citizens. The intent is always to help shareholders and corporate executives. To them, if jobs are byproducts, it is just a marketing tool for them.  Tax havens never help the American worker.