Economist James Henry explains why he thinks Apple’s position on the European Commission’s ruling is indefensible

Story Transcript

JAISAL NOOR, TRNN: Welcome to the Real News Network. I’m Jaisal Noor in Baltimore. “Total political crap.” That’s what Apple CEO Tim Cook called the EU ruling that slapped his company with a $14.5 billion bill for back taxes. Cook made these remarks Thursday to the daily, Irish Independent. In a separate radio interview, he charged that Apple was targeted by EU regulators. European Competition Commissioner Margrethe Vestager dismissed Cook’s criticism, saying the tax bill was calculated based on facts. Cook said he expects Ireland’s government will join Apple in appealing the ruling. Now joining us to discuss this from Sag Harbor, New York is James Henry. James is a leading economist, attorney and investigative journalist who has written extensively about global issues. Thanks so much for joining us again James.  JAMES HENRY: Good to be with you. NOOR: So we had you on recently about this news around when it broke. Talk to us about these latest developments. “Total political crap”. That’s what Tim Cook is calling this massive bill for Apple. HENRY: Tim is being a little bit temperamental and if I were a CEO of a major company with lots of sales in the EU I would be worried about my brand image. In fact, Ireland’s Prime Minister today failed to get the support of his own cabinet to help Apple appeal this ruling against the European Commission. And it’s just really the more you know about it the more indefensible Apple’s position is. I mean basically they weren’t satisfied with paying just the 12.5% corporate income tax that Ireland offers to everybody. Which is already half the scale of most European countries and just a third of the US rate. He wanted better deals so he got one. He negotiated a sweetheart deal just for Apple. Custom baked to give virtually, well last year it was .005% tax rate. So the EU took a look at this deal and I mean it takes time to audit corporations. It’s not unusual for corporate audits to go back at least 5 years. And so finally the European Commission caught up with what Ireland’s sort of right wing bureaucrats in this case have been doing privately with Apple. Cutting this secret one off deal. They said no you can’t do this and so it’s no more than any other corporate tax audit really. In this case a ruling that says you can’t give special tax benefits to just one company that are not available to everybody. So you know it’s really–I don’t like to use the kind of language Tim Cook uses but I would say if there’s [shinola] here it’s basically on the Apple brand. And the US Treasury oddly enough, well perhaps understandably, followed along with the Apple line here. It is the case that there’s quite a few US multinationals like Apple. Like Amazon for example. McDonald’s, Starbucks, Google, Facebook. You know that are under the scrutiny of the European Commission right now for their unusual private letter deals. Deals were negotiated secretly, were not public knowledge, we only learned about them because investigations like this or because of whistleblowers in the case of [Lux Gate]. This is not sort of the way to make a tax policy. The European Commission was entitled, entirely entitled to say to Ireland yea this particular deal for this giant American company is really off the rails. And we have to claw some revenue back. It also left it open by the way. Apple wasn’t paying any US taxes on this offshore stash of 200 billion dollars that they had. They only paid 4% tax on average in Ireland. So it wasn’t paying any taxes to the US Treasury and we weren’t giving it back. The only reason this comes out of US Treasury’s pocket is that now US Treasury will have to give tax credits for anything that Apple and other multinationals do pay in Europe. But this is stuff they should always have been paying. They should always have been paying fair taxes in Europe. So it’s really a cleanup situation. NOOR: So Tim Cook seems pretty confident, at least when he’s in public what he’s saying to the media that this is going to get overturned. And he has said just today in the same interview that I referenced that he is going to repatriate billions of dollars back to the US to be subject to taxes. Do you see this as some type of concession and what accounts for his confidence that the ruling’s going to get overturned? HENRY: I think that’s what he has to say. He doesn’t look very good here. Ireland had–Apple had set up this arrangement with two companies based in Ireland that were basically by agreement with this private ruling paying basically citizens of nowhere for tax purposes. They were channeling billions of dollars of their intellectual property, rights to that to a Bermuda company and then receiving royalties from the Irish companies’ tax free essentially. So this is really kind of indefensible if you look at the details. But I would expect the European Court of Justice which is going to rule on this to rule like it has ruled in other cases. This is a perfectly legal case of anti-competitive behavior being cracked down upon by the European Commission. Big business basically singling out one company for a special deal that saves them billions of revenue is not something the European Commission wants to encourage. NOOR: And finally, with the G20 around the corner do you expect this issue to be raised there? HENRY: I think China is going to have good conversation with the other players and India as well. They’re going to be looking. Nigeria, Facebook is one of the largest players in Africa based in their sales in Nigeria. So it’s a real opportunity for players like China and India and Nigeria and South Africa, all of which are G20 members, Brazil. To ask some tough questions to the multinationals about where they’re parking their tax revenue. We have a tax system that’s basically like the United States here used to have in the 1950’s when General Motors would park all of its sales across the United States in a low income Shell company in Delaware and not pay state income taxes anywhere but Delaware which didn’t have a corporate income tax. That’s the system we have on the international level. So these havens have to go. NOOR: Alright James Henry, thanks so much for joining us. HENRY: Thank you. NOOR: Thank you for joining us at the Real News Network.

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