Social Europe

  • EU Forward Project
  • YouTube
  • Podcast
  • Books
  • Newsletter
  • Membership

On Apple Tax, State Must Side With Its Citizens

Paul Sweeney 7th September 2016

Paul Sweeney

Paul Sweeney

It is widely agreed that globalisation has brought immense benefits. But it is also recognised that these benefits are not equally distributed. Last week’s Apple decision demonstrates the complexity of the issue of distributing the benefits of globalisation. The Irish Government, faced with a windfall of some €13 billion, appears to have sided with the world’s largest and most profitable company against the welfare of its citizens.

It was believed once that countries initially became more unequal as they became more prosperous, but that all would then benefit from globalisation. This theory, which was correct at the time for the US, is wrong. The fact is that globalisation brings increasing inequality. Soaring inequality can only be addressed by governments, and increasingly only by governments co­operating internationally.

The dilemma of the Irish Government is whether it acts to increase or reduce inequality by siding with its citizens or with corporations. The issue is far more complex than this, but the Apple case brings to a head the unequal struggle between unchallenged, powerful corporations and sovereign governments trying to represent their citizens.

Taking a side

It is unequal because, to date, governments have sided with corporations and, in Ireland, we appeared to gain from that tax strategy. But growing inequality and corporate tax avoidance on such a scale has brought the issue to a head. Apple has staggering cash reserves, but it still borrowed a huge amount in order to offset the interest against taxation. It and most multinationals no longer believe in paying tax. For them, tax is a business cost, not a payment for public services.

Apple’s iPhone, in particular, has several key features that were invented in publicly funded labs – which were supported by taxes. With globalisation, transfer pricing has allowed companies to easily avoid taxation with the assistance of their “professional” advisers – the Big Four accounting firms.
Until multinationals begin to see tax as a legitimate, lawful and morally responsible payment for public services, then international tax avoidance on an industrial scale will continue. Up until now, the EU’s directorate ­general for taxation negotiated with the Big Four and multinationals on taxation issues. But it took a wildcard – commissioner Margrethe Vestager – to seriously disrupt these cosy chats when she made the Apple ruling.

The EU now looks as if it may be finally working for its citizens! Tax avoidance cheats us out of funds that could be used for the public benefit. It is out of control. And wherever you find tax
avoidance, you are likely to find the big accounting firms. These firms have had a major influence on policy making in taxation. The partners and their professional organisations, which they dominate, have pursued an anti­-tax and particularly an anti-­progressive tax policy at every opportunity. Thus another issue raised by the Apple case is whether there is a revolving door between the Irish Revenue Commissioners and the Big Four?

The Government has a real moral dilemma. It must act in the interests of its citizens. The Irish State has demonstrated that it is not powerless in the global economy. It was able to rescue all of its six banks and most of its developers, and it put the economy back on course, albeit with some external help.

No tolerance

The EU has now shown multinationals that such levels of tax avoidance, while legal, will no longer be tolerated. The Government should do what is morally correct: take the money and invest it in an ambitious capital programme, not on day­-to-­day spending. It should also develop a sustainable industrial policy that is no longer dependent on the uncertainty of the tax avoidance industry. Ireland has much more to offer.

Most multinationals, including Apple, invest here for many other good reasons and will continue to do so. If governments cease their “tax wars” and big companies begin to pay a fair tax on profits, inequality will also decline. We should warmly welcome the Apple ruling.

This opinion piece was originally published in The Irish Times.

Paul Sweeney
Paul Sweeney

Paul Sweeney was chief economist with the Irish Congress of Trade Unions for a decade.

Harvard University Press Advertisement

Social Europe Ad - Promoting European social policies

We need your help.

Support Social Europe for less than €5 per month and help keep our content freely accessible to everyone. Your support empowers independent publishing and drives the conversations that matter. Thank you very much!

Social Europe Membership

Click here to become a member

Most Recent Articles

u421983467f bb39 37d5862ca0d5 0 Ending Britain’s “Brief Encounter” with BrexitStefan Stern
u421983485 2 The Future of American Soft PowerJoseph S. Nye
u4219834676d582029 038f 486a 8c2b fe32db91c9b0 2 Trump Can’t Kill the Boom: Why the US Economy Will Roar Despite HimNouriel Roubini
u42198346fb0de2b847 0 How the Billionaire Boom Is Fueling Inequality—and Threatening DemocracyFernanda Balata and Sebastian Mang
u421983441e313714135 0 Why Europe Needs Its Own AI InfrastructureDiane Coyle

Most Popular Articles

startupsgovernment e1744799195663 Governments Are Not StartupsMariana Mazzucato
u421986cbef 2549 4e0c b6c4 b5bb01362b52 0 American SuicideJoschka Fischer
u42198346769d6584 1580 41fe 8c7d 3b9398aa5ec5 1 Why Trump Keeps Winning: The Truth No One AdmitsBo Rothstein
u421983467 a350a084 b098 4970 9834 739dc11b73a5 1 America Is About to Become the Next BrexitJ Bradford DeLong
u4219834676ba1b3a2 b4e1 4c79 960b 6770c60533fa 1 The End of the ‘West’ and Europe’s FutureGuillaume Duval
u421983462e c2ec 4dd2 90a4 b9cfb6856465 1 The Transatlantic Alliance Is Dying—What Comes Next for Europe?Frank Hoffer
u421983467 2a24 4c75 9482 03c99ea44770 3 Trump’s Trade War Tears North America Apart – Could Canada and Mexico Turn to Europe?Malcolm Fairbrother
u4219834676e2a479 85e9 435a bf3f 59c90bfe6225 3 Why Good Business Leaders Tune Out the Trump Noise and Stay FocusedStefan Stern
u42198346 4ba7 b898 27a9d72779f7 1 Confronting the Pandemic’s Toxic Political LegacyJan-Werner Müller
u4219834676574c9 df78 4d38 939b 929d7aea0c20 2 The End of Progess? The Dire Consequences of Trump’s ReturnJoseph Stiglitz

Hans Böckler Stiftung Advertisement

WSI Report

WSI Minimum Wage Report 2025

The trend towards significant nominal minimum wage increases is continuing this year. In view of falling inflation rates, this translates into a sizeable increase in purchasing power for minimum wage earners in most European countries. The background to this is the implementation of the European Minimum Wage Directive, which has led to a reorientation of minimum wage policy in many countries and is thus boosting the dynamics of minimum wages. Most EU countries are now following the reference values for adequate minimum wages enshrined in the directive, which are 60% of the median wage or 50 % of the average wage. However, for Germany, a structural increase is still necessary to make progress towards an adequate minimum wage.

DOWNLOAD HERE

KU Leuven advertisement

The Politics of Unpaid Work

This new book published by Oxford University Press presents the findings of the multiannual ERC research project “Researching Precariousness Across the Paid/Unpaid Work Continuum”,
led by Valeria Pulignano (KU Leuven), which are very important for the prospects of a more equal Europe.

Unpaid labour is no longer limited to the home or volunteer work. It infiltrates paid jobs, eroding rights and deepening inequality. From freelancers’ extra hours to care workers’ unpaid duties, it sustains precarity and fuels inequity. This book exposes the hidden forces behind unpaid labour and calls for systemic change to confront this pressing issue.

DOWNLOAD HERE FOR FREE

ETUI advertisement

HESA Magazine Cover

What kind of impact is artificial intelligence (AI) having, or likely to have, on the way we work and the conditions we work under? Discover the latest issue of HesaMag, the ETUI’s health and safety magazine, which considers this question from many angles.

DOWNLOAD HERE

Eurofound advertisement

Ageing workforce
How are minimum wage levels changing in Europe?

In a new Eurofound Talks podcast episode, host Mary McCaughey speaks with Eurofound expert Carlos Vacas Soriano about recent changes to minimum wages in Europe and their implications.

Listeners can delve into the intricacies of Europe's minimum wage dynamics and the driving factors behind these shifts. The conversation also highlights the broader effects of minimum wage changes on income inequality and gender equality.

Listen to the episode for free. Also make sure to subscribe to Eurofound Talks so you don’t miss an episode!

LISTEN NOW

Foundation for European Progressive Studies Advertisement

Spring Issues

The Spring issue of The Progressive Post is out!


Since President Trump’s inauguration, the US – hitherto the cornerstone of Western security – is destabilising the world order it helped to build. The US security umbrella is apparently closing on Europe, Ukraine finds itself less and less protected, and the traditional defender of free trade is now shutting the door to foreign goods, sending stock markets on a rollercoaster. How will the European Union respond to this dramatic landscape change? .


Among this issue’s highlights, we discuss European defence strategies, assess how the US president's recent announcements will impact international trade and explore the risks  and opportunities that algorithms pose for workers.


READ THE MAGAZINE

Social Europe

Our Mission

Team

Article Submission

Advertisements

Membership

Social Europe Archives

Themes Archive

Politics Archive

Economy Archive

Society Archive

Ecology Archive

Miscellaneous

RSS Feed

Legal Disclosure

Privacy Policy

Copyright

Social Europe ISSN 2628-7641