US Exceptionalism: How Dare The EU Demand US Companies Pay More Tax!
Charles Schumer, described by the BBC as ‘a senior Democratic senator’, said: “This is a cheap money grab by the European Commission, targeting US businesses and the US tax base.”
Paul Ryan, Speaker of the House of Representatives thundered: “This decision is awful. Slamming a company with a giant tax bill — years after the fact — sends exactly the wrong message to job creators on both sides of the Atlantic.”
The US Treasury slammed the decision as “unfair”. The White House said it was “concerned” about what it described as a “unilateral approach”. Orrin Hatch, chair of the Senate Finance Committee, called the ruling “an extraordinary decision that targets US business by rewriting already existing tax policies.”
Boy – what a load of anger. How dare these Europeans expect US multinationals to pay corporation tax at the same rate as everyone else! Don’t they know that US multinationals are different!
What we’re seeing here is another aspect of US exceptionalism in the neoliberal/neocon era. The same exceptionalism which decrees the US has the right to bomb/invade countries at will, in blatant contravention of international law – also decrees that its right and proper giant US corporations should be given preferential treatment by foreign tax authorities.
It’s not just Apple which has been getting off very lightly in this regard. There’s a number of US corporate giants who haven’t been paying much, or indeed any tax, in European countries in which they operate. Almost all the big companies revealed to be paying only small levels of tax – despite enormous profits – have been American. In 2012, it was revealed Starbucks, Amazon, Facebook and Google UK had paid just £30 million tax in the previous four years despite generating sales of over £3.1 billion. Starbucks we learned had paid only £8.6 million on £3 billion sales since 1998.
We are of course expected to be grateful that these fantastic cutting edge companies from across the pond have come to little old Europe to provide jobs for the impoverished locals. And we’re not supposed to press them too hard about little things like paying their fair share of tax on profits they generate from European sales.
If you read the response of Apple CEO Tim Cook to the European Commission’s decision, entitled ‘A Message to the Apple Community in Europe’, you’d think that Ireland had no economy at all before the US computer giant condescended to locate there, and that the country would sink into the sea if Apple left.
“Don’t tell us to pay more taxes in Ireland – you should be happy that we’re here to help the country,” seems to be Apple’s message. But while it employs 6,000 people (out of a country of 4.7 million), it’s worth noting what the company’s €13 billion in back taxes is equal to. It’s the sum of Ireland’s total health budget and 66 percent of its social welfare bill.
The figures would be mind-boggling at the best of times, but what makes this whole affair even more scandalous is what’s been going on in the Irish Republic these last few years.
Think of the extreme austerity measures have been imposed on the Irish people – and then think of the revenues lost because of Apple is only paying corporation tax at one percent – and the company‘s estimated $215 billion cash mountain.
Shamefully, and rather obscenely, given the enormous sum involved, Ireland’s Fine Gael party- who lead the present government is in favor of appealing the EU Commission’s verdict. Yes – that’s right, the Irish government is to appeal against a judgment ordering a multinational with an estimated $215 billion cash mountain – to pay it €13 billion. Is that the sound of James Connolly I can hear, turning in his grave?
Thankfully, Fine Gael’s craven line is being challenged. In the Irish Times, Fintan O’Toole says the government should collect the €13 billion from Apple and ‘change Ireland’. “We should not be railroaded into lodging an appeal against the ruling that will define us, for the rest of the world, as the tax-avoider’s crazy little sidekick,” O’Toole argues.
It has been reported that independent ministers in the Irish coalition government do not support Fine Gael’s stance, meaning that there‘s a very real prospect of the Irish government falling on this issue.
It’s not just Ireland that has reached a watershed in regard to the relationship it has with US multinationals.
The Apple judgment comes as the Trans-Atlantic Trade and Investment Partnership (TTIP) negotiations between the EU and the US are once again in the news. Earlier this week French President Francois Hollande said that there would be no deal this year between the EU and US. French and German ministers have cited American unwillingness to compromise as the main stumbling block.
“The Americans give nothing or just crumbs… That is not how negotiations are done between allies…We need a clear and definitive halt to these negotiations in order to restart on a good foundation,” said France’s Foreign Trade Minister Matthias Fekl.
— RT (@RT_com) August 30, 2016
Fekl also tweeted that France “demands a halt to TAFTA [Transatlantic Free Trade Area] and TTIP [Transatlantic Trade and Investment Partnership].”
— Matthias Fekl (@MatthiasFekl) August 30, 2016
Overall three million people have signed a petition against TTIP. Although the European Commission has said that negotiations will continue – there must be a good chance now that TTIP will be ditched. If so, it would be a moment for real rejoicing.
TTIP- make no mistake- would mark the final step in the US corporate takeover of Europe. “TTIP threatened to bring to Europe one of the worst aspects of American life; a voracious legal industry,” wrote Ross Clark in this week’s Daily Express.
“It is rather easy to imagine US corporations steamrollering their way through courts in order to gain the right to run a hospital in Britain – it’s rather harder to imagine a British vehicle manufacturer using the courts to help win a contract to supply the US Army.”
TTIP would be a disaster for Europe, but even without it, the dominance of aggressively expanding US multinationals remains a major problem.
In Britain, the last twenty-five years or so has seen US corporations and the giants of US finance capital gain a foothold in areas of the economy that were previously a no-go zone for foreign capital. Privatization and outsourcing carried out by US-friendly politicians, has provided a rich bonanza for Wall Street.
In 2007, a group of investment funds led by JP Morgan bought Southern Water – a utility which has over four million customers in the south of England.
One of the UK’s leading refuse collection companies, Biffa, which has contracts with 36 local authorities- is owned by US investment firms Angelo Gordon, Avenue Capital and Sankaty Advisors.
Biffa saw its operating profits rise by 27 percent in the year to March 2016 – and is now heading for a potential £1 billion stock market flotation.
My wife and I rang the company recently to ask for a replacement food waste bin after they had missed a collection- and failed to collect the original for several hot days, leading it to become infested with maggots. But Biffa, the self-described ‘Can Do‘ company whose service is apparently, ‘streets ahead’ refused.
In 2013, the British government sold state-owned Plasma Resources UK, the company that supplies blood to the National Health Service, to Bain Capital, a private equity firm set up by the neocon Presidential candidate Mitt Romney. As I said at the time, this sell-off gave a whole new meaning to the phrase ‘vampire capitalism’.
Earlier in 2013, David Cameron’s ‘patriotic’ Conservative-led coalition awarded a £1.6 billion contract to US firm Bristow to run search and rescue services which had been carried out brilliantly, for over fifty years, by the RAF and Royal Navy.
Some of Britain’s most familiar High Street names and brands are now under American ownership. Boots the Chemist, founded in Nottingham in 1849, has been bought by the US pharmaceutical giant Walgreens – under the holding company ‘Walgreens Boots Alliance’. In 2014, the Guardian reported how Walgreens shareholders Goldman Sachs and a ‘group of hedge funds’ had urged the company to relocate to Switzerland to reduce its tax bill.
Back in the 1970s the idea of US companies owning our water supplies, collecting our rubbish – and supplying blood services to the NHS, would have seemed totally ludicrous. So too would be the idea that we’d allow US corporations to make enormous profits in our countries without ensuring that they’d pay tax at the same rates as everyone else.
Thankfully, Europe seems to be waking up to the problem of US economic exceptionalism and the attempted takeover by US corporations and Wall Street financial institutions of European economies.
Let’s just hope it’s not too late.
By Neil Clark