Ireland Tax Haven for American Corporations

Is it ethical to have a company in the U.S. base a subsidiary in a nation like Ireland to avoid paying taxes here? The company being discussed here is Apple. Do you suppose since they used this tax haven to pay an effective two percent tax on their profits, that perhaps they are not acting responsibly in regard to their duties? Are the roads, bridges and communications systems the company uses free or do they cost tax money? Are educated workers free or do schools have to be financed to educate them? Does the fire department, the police and the military defend Apple and all of its possessions on a charity basis?

It must enhance the profits of a company immensely to sit inside a highly developed nation with elaborate communication hubs, educational systems and complex legal protections and pay virtually nothing for any of it.

Well, if they don’t then who does? I’m sure you can make a guess, my average reader is probably paying a far higher proportion of their income in taxes than the two percent Apple wound up with.

Is that fair? Is it ethical to shirk your responsibilities to your country?

I’ve heard it said that all taxation is a form of theft. That’s an interesting theory. It conveys a certain sense of righteousness in not paying taxes because, after all, you are preventing a robbery. However, I am a great reader of history and i am unable to discover any successful civilization that did not use shared burdens to develop and maintain their nation.

James Pilant

Ireland To End ‘Stateless’ Tax Avoidance Gimmick, Leave Others Untouched

http://thinkprogress.org/economy/2013/10/16/2791501/ireland-corporate-tax-change/

The scheme Noonan wishes to stop became famous this spring when a Senate investigation found that Apple had paid nearly zero taxes on around $100 billion in sales revenue. Apple’s arrangement, which even critics say is a completely legal exploitation of a poorly designed global tax system, relied upon three subsidiaries incorporated in Ireland but not “resident” there for tax purposes. Noonan said Tuesday that his budget proposal would “ensure that Irish-registered companies cannot be ‘stateless’ in terms of their place of tax residency,” adding that “we don’t want to incur any reputational damage.”

While Noonan’s move would end this particular form of tax evasion, a more common form that uses shell companies registered in Ireland will go untouched. A company can still register in Ireland but avoid paying its 12.5 percent corporate tax rate by declaring tax residence in some other country with lower corporate rates, Bloomberg reports. While Apple-style tax statelessness is relatively rare, Irish subsidiaries registering to pay taxes in Bermuda, Luxembourg, and other tax haven countries is not. Google, Yahoo!, LinkedIn, eBay, and Microsoft all use such schemes to avoid taxes by moving global revenues from points of sale to Ireland, and then from Ireland to another tax haven. Ireland’s proposal is therefore “a very small step” and “relevant only to Apple,” former Joint Committee on Taxation chief of staff Edward Kleinbard told Reuters.

From around the web.

From the web site, Venture Beat.

http://venturebeat.com/2013/05/22/ireland-were-no-tax-haven-but-yes-apple-did-pay-2-tax/

This is a stumper.

The head of the Irish agency designed to promote foreign investment in the country strongly denied that Ireland is a tax haven. But when questioned by Ireland’s RTE News, he could not deny that Apple has paid an effective tax rate of just two percent, much as Senator Carl Levin (D-MI) said yesterday in hearings on Capitol Hill.

Which, frankly, sounds pretty tax haven-ish.

“There is global competition, and tax happens to be one of the areas [where] Ireland competes for global investment,” IDA Ireland Chief Executive Barry O’Leary told RTE this morning.

That also sounds suspiciously like a tax haven. That’s what Senator Levin believes, as well.

“You are able to shift profits to places where you, an American company, don’t pay taxes,” Levin said yesterday to Apple CEO Tim Cook. “That is not right … that a company could shift its value to a tax haven, which is what Ireland is.”

Read more at http://venturebeat.com/2013/05/22/ireland-were-no-tax-haven-but-yes-apple-did-pay-2-tax/#gXo2Y2xGqeHZji3x.99