No Truce With Kings

Here’s Dan Mitchell at International Liberty commenting on the European Commission’s decision to assess Apple billions for alleged unpaid taxes. As the WSJ editorial (linked below) points out, this is a good example of the reasons for Brexit.

But more to the point, the E.C.’s action is a pretty good illustration of the idea that taxation is theft. This attempt is pretty brazen.

European Commission Launches Shakedown of Apple, Asserts Low Taxes Are “State Aid”

[…] But I’ll soon have white hair based on having to deal with the new claim from European bureaucrats that countries are guilty of providing subsidies if they have low taxes for companies.

I’m not joking. This is basically what’s behind the big tax fight between Apple, Ireland, and the European Commission.

Here’s what I said about this issue yesterday. (YouTube video)

There are three things about this interview are worth highlighting.

• First, the European Commission is motivated by a desire for more tax revenue. Disappointing, but hardly surprising.
• Second, Ireland has benefited immensely from low-tax policies and that’s something that should be emulated rather than punished.
• Third, I hope Ireland will respond with a big corporate tax cut, just as they did when their low-tax policies were first attacked many years ago.

I also chatted with the folks from the BBC. (YouTube video)

I’ll add a few comments on this interview as well.

• First, to the extent that the European Commission wants to interfere with fiscal policy in member states, it should urge spending caps for profligate welfare states.
• Second, since it’s been in bed with the Europeans on schemes to boost business taxation, the US government can’t throw stones since it lives in a glass house.
• Third, our friends on the left are terrified of a “race to the bottom” but their real motive seems to be a desire for more money to prop up big welfare states.

Here’s an interview from the morning, which was conducted by phone since I didn’t want to interrupt my much-needed beauty sleep by getting to the studio at the crack of dawn. (YouTube video)

Once again, here are a few follow-up observations.

• First, I realize I’m being repetitive, but it’s truly bizarre that the European Commission thinks that low taxes are a subsidy. This is the left-wing ideology that the government has first claim on all income.
• Second, it’s a wonky point, but Europe’s high-tax nations can use transfer pricing rules if they think that Apple (or other companies) are trying to artificially shift income to low-tax countries like Ireland.
• Third, the U.S. obviously needs to reform its wretched corporate tax system, but that won’t solve this problem since it’s about an effort to impose more tax on Apple’s foreign-source income.

The Wall Street Journal opined wisely on this issue, starting with the European Commission’s galling decision to use anti-trust laws to justify the bizarre assertion that low taxes are akin to a business subsidy.

Even by the usual Brussels standards of economic malpractice, Tuesday’s €13 billion ($14.5 billion) tax assault on Apple is something to behold. Apple paid all the taxes it owed under existing tax laws around the world, which is why it hasn’t been subject to enforcement proceedings by revenue authorities. […]

This is amazing. […]

Update: 9/2/16

Here’s a report from CNN Money about the Irish response to the E.C.’s demand.

Ireland is turning its back on a massive tax windfall from Apple.

The Irish government confirmed Friday it would appeal a European Union order to collect 13 billion euros ($14.5 billion) in back taxes from the tech giant.

The European Commission ruled Wednesday that Ireland had helped Apple artificially lower its tax bill for more than 20 years, assistance that it said constituted illegal state aid for the company.

Apple (AAPL, Tech30) has already said it will appeal. CEO Tim Cook has described the Commission’s claim that Apple paid Irish tax of just 0.005% on much of its international profits in 2014 as “total political crap.”

Irish politicians were divided earlier in the week over whether to pursue an appeal. And it’s easy to see why.

As recently as 2010, the country was bailed out by the EU and International Monetary Fund. The extra tax billions would go a long way at a time when Irish officials are worried about the impact of Brexit on their economy.