Why Governments (Us!) Pay Taxes to Global Corporations
By Shlomo Maital
Once, people and companies paid taxes to governments, to support worthy social investment.
Today? Governments pay taxes to corporations. The US government pays taxes, billions of dollars, to Apple. How? By allowing Apple to shelter its income in low-tax countries like Ireland, rather than pay taxes on its earnings, as it should, in America. Senator Carl Levin said: in 2012, Apple had exploited tax loopholes allowing it to avoid $9bn in US taxes, or $25m per day, and said such practices did “real harm” to the US economy. “You shifted the golden goose to Ireland.”
This has been going on for a very very long time. Why have governments just now woke up to it? Why is Apple’s CEO being called to testify in Congress now? Because governments are strapped for cash and realize they are losing billions to the corporations.
What is going on? Simple. Governments compete with one another to attract businesses. Ireland did this superbly well and built a strong economy on attracting US companies. To do this Ireland had to offer super low corporate taxes. So, today, governments pay taxes to global corporations, rather than vice versa, because global corporations are able to play one government against another.
Add to that creative accounting. Starbucks makes huge profits in Britain, but pays almost no tax there, because the revenues are sheltered in low-tax countries.
Note: This is all legal! It’s perfectly legal according to the law. This is what Apple CEO Tim Cook shouted in Congress.
The question you and I are asking is, WHY is it legal? Because it sure isn’t just that ordinary people pay stiff taxes but wealthy companies (and their wealthy shareholders) pay little or none.
Time for a change.