Back in 2016, the EU Commission decided that Ireland had given an unfair advantage to Apple through the provision of tax loopholes. Before Irish people could plan a tunnel to Wales or a 100-metre-tall golden statue of Michael Flatley, the Irish government launched an appeal, costing millions, arguing that they should not be forced to collect this tax.
This week, the courts made a final and binding decision, supporting the original judgement of the EU Commission. Now we’re planning to send everyone in Longford to space.
Granting that there are arguments that the Irish government is right to make a principled case about taxation being a nation-based competency, that has not been the consistent communication from the State. We exist, instead, in a political culture where the decision appears to have been made to spend money to avoid receiving money, which failed, and now we’ll receive the money we spent money trying not to receive. Clarity on why this course of action was followed would be deeply useful.
Now the bosses in Apple are like you and me. Why don’t they want to pay tax? The reason is the same reason you don’t want to pay tax. Why would you want to! That money is better in your pocket than in the taxman’s, right? The only certainties in life are death, taxes, and the irrefutably straightforward decision to avoid tax you don’t have to pay. If they bring their colossal profits back to California, where arguably they originate, the American tax-man will take 21% (35% at the time of the ruling). The Apple bosses are concerned with their shareholders’ value. In fact, as the law is currently interpreted, that concern outweighs practically all the other concerns.
A tax haven is a tricky thing to define. One man’s tax haven is another man’s Singapore, miracle of capitalism and shining beacon of entrepreneurship. Sure, the New York Times referred to Dublin as the “wild west of finance” because the size and the scale of its tax loopholes are large enough to fit Steve Jobs’ ego and €200,000,000,000 with space to spare, but someone else might say it’s the reality of doing business in a competitive global economy.
Nicholas Shaxson, in his book Treasure Islands writes:
Nobody agrees exactly what a tax haven is, but I will offer a loose description here: It is a place that seeks to attract money by offering politically stable facilities to help people or entities get around the rules, laws, and regulations of jurisdictions elsewhere.
Let’s stick with that for the moment.
It’s not that the bosses in Apple are bad people. They are just doing what you would want them to do if you owned shares in Apple. They are maximising the return on investment. They are ensuring profitability. They are returning value. They are being good stewards. They are hoarding gold like a dragon in its untouchable lair while children are homeless on the streets of Cork, but you shouldn’t complain because they give jobs to people. And you can be sure those people pay tax.
Common Good or Personal Gain?
Apple, Amazon, Starbucks, and the rest of them, could be called Schrodinger’s Corporations. When the market opportunity arises, they are alive and well and on hand to do business. But go looking for them when it comes time for tax and suddenly, they are gone.
This serves the dividend pay-outs of the shareholders, and for all I know, that’s you and your parents. It could also serve the value of your pension fund. So, the executives will keep searching for the next loophole and the politicians will keep spouting noise about Ireland being open for business and none of them will pay their taxes because taxes get paid by people who aren’t smart enough to get the absurd joke. The rich are secure and get more secure the more at risk they make the poor.
Only the rich get to use tax havens. That’s actually a pretty good rule of thumb to figure out if you are rich: do you know the difference between tax avoidance and tax evasion? The things we pay for with taxes are the things we need that we can’t guarantee provision for if every man was left for himself. Fire trucks, hospitals, libraries, maternity cover, old-age pensions, street-lights, deaf interpreters in the court service; these are the sorts of things that get de-funded when you ask your accountant to find a way to be more tax efficient. Sure, you spend that extra money on a new flat screen tv and that helps keep a fella in a job in Currys, but that’s not quite the same thing as emergency relief for victims of flooding.
And that’s the great tragedy in the tax evasion conversation. The bosses in Apple are probably morally virtuous in ways you don’t imagine. They might give a lot to charity and care about the progressive causes their firm supports and they may even wake at night in a cold sweat about the conditions in the Foxconn factories. They are doing the best they can when they avoid that tax, for you, the shareholder, whose pension is invested in Apple.
Apple does pay tax, in America or here or elsewhere if a better deal exists – but at a much lower rate than you or me. The thing we need to think about is why they are incentivised to minimise that bill and delay its paying. Because when they do actually pay the tax they owe, they are adding shareholder value, even if the share price doesn’t reflect that. It is in the shareholder’s interest to make society equitable, fair and just. The innovation that Tech Bros get so aroused by comes about most effectively when people don’t have to scrabble around in precarious jobs just to make ends meet. Taken to its logical conclusion, a culture of tax evasion is an existential threat to society because the poor will only tolerate being mocked by the rich for so long before they rise up and decide to mock the order that the rich rely on.
Apple has been trading in Ireland longer than I’ve been alive and I’m officially middle-aged. They employ 6,000 people. They make glossy products that people love. They were not to blame for Ireland’s economic catastrophe and neither are they the solution. But the impossibility of us imagining that straightforward justice would be done – that Apple and their ilk would post profits where they make them and pay tax on them there too, at the same time – reveals the fragility at the heart of our democratic order.
Why do people vote against their interest? Why have we endured Brexit and the rise of authoritarian populists? Surely that mystery is in part resolved when we consider this absurdist farce – a State begging for the right to avoid doing what it exists to do. The people who have been entrusted with the collective good can no longer even discern it. We can all make jokes about how many Dáil bike sheds we can buy if the 13 billion shows up, but there is actually a fracture evident here that requires treatment. Thomas Aquinas taught that justly appointed rulers are entitled to extract – even coercively – “that which is due to them for the safe-guarding of the common good” (ST IIa-IIæ, Q. 66, Art. 8, ad. 3). It should be a cause of pride for Irish people that Revenue are so consistently excellent to deal with. It is a good thing that so much effort is put into ensuring our tax policies are not regressive. It is not too much to ask that our State could balance the policy of competitive corporate tax regimes with the basic responsibility to collect what is due
