Ireland Tax Haven for American Corporations

[Howth and Ireland's Eye. County Dublin, Irela...
[Howth and Ireland’s Eye. County Dublin, Ireland] (LOC) (Photo credit: The Library of Congress)

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

Foxconn Cheaps Out

Foxconn says underage workers used in China plant | Reuters

Foxconn, the trading name of Taiwan’s Hon Hai Precision Industry, said it had found some interns at a plant in Yantai, in northeastern Shandong province, were under the legal working age of 16. It did not say how many were underage.

“Our investigation has shown that the interns in question, who ranged in age from 14 to 16, had worked in that campus for approximately three weeks,” it said in a statement on Tuesday.

“This is not only a violation of China’s labor law, it is also a violation of Foxconn policy and immediate steps have been taken to return the interns in question to their educational institutions.”

China’s official Xinhua news agency, citing an unnamed Yantai government official, said that 56 underage interns would be brought back to their schools.

The students had been employed after Foxconn asked the development zone in which the factory is located to help solve a labor shortage last month, when they were needed to make up a shortfall of 19,000 workers, Xinhua added.

Foxconn is Apple Inc’s largest manufacturing partner, and also makes products for Dell Inc, Sony Corp and Hewlett-Packard Co among its other clients. It said the Yantai plant does not make Apple products.

Foxconn says underage workers used in China plant | Reuters

 

Underage workers in the corporate heaven of Foxconn

There is the funny thing in economics called supply and demand. It would seem to dictate that you raise pay or benefits to attract new workers. But Foxconn doesn’t believe in the free market. They appealed to the government (that would be the development zone) for a little help in the form of permission to use 56 underage “interns.” They took them out of school, an undoubted benefit. I mean, who needs school when they could work long hours at tedious jobs for little pay. There is certainly a kind of education there, right?

I could talk about the business ethics of this situation. But how much analysis can you do? Underage workers, children used to evade having to raise salaries, manipulating the government for private gain – what part of this requires an extended analysis?

James Pilant

Enhanced by Zemanta

The Work of Luke H. Lee

Example of supply chain

Image via Wikipedia

Keeping a web site and maintaining it can be a real pain but one of the great pleasures of it, is that you get to provide support to your friends to get the word out about their ideas. Here is a piece from my blogging friend, Luke H. Lee.

The article is significantly longer than this small excerpt and you probably need to see the diagrams for full understanding. So please read the whole thing.

James Pilant

Realizing a better world

If a public information-based supply chain infrastructure system is developed and fully implemented in the real market, the existing efficiency-oriented market process would be changed to a more effectiveness-oriented market process, which is more suitable for the modern information market. This would significantly contribute to the improvement of employment on the whole. The self-generation capability of the market would improve as well.

Luke Ho-Hyung Lee

With the influence of this new, more effectiveness-oriented supply chain process, the existing competition by size would change into competition by quality and service. The existing efficiency-oriented mass production process and mass-market consumption model would also be altered into a more effectiveness-oriented, diversified, or individualized production and consumption system. Owing to these changes, local employment conditions would improve considerably, and the business environment for middle- and small-sized companies and for the general service industry would improve significantly. Moreover, companies that off-shored and outsourced to lower labor cost countries would come back to the domestic arena

Realizing a better world

Enhanced by Zemanta