2001 Nobel laureate in economics Joseph Stiglitz has a long history of being on the right side of history. For example: pricing the Iraq war at $3T; raising the alarm about sovereign wealth funds acquiring US debt; nailing the double-standard on bailouts for debt crises (and the way that this destabilizes poor countries); sounding the alarm about austerity in times of recesssion; coming out early and strong over wealth concentration; calling for the imprisonment of the top executives at Barclays bank; and damning the TPP as "the worst trade deal ever."
Now, the outspoken former Chief Economist of the World Bank has come out to criticize Apple — and, by extension, other tech giants — who claim that all their profits are made in Ireland, a notorious tax haven that's jockeying to take Luxembourg's crown as king of the European money-laundries.
Stiglitz didn't mince words, calling the ploy a "fraud" and the US tax law that permits it "obviously deficient."
Apple, Google and other tech giants have shown themselves to be capable of resisting government demands when it suits their interests — see, for example, Apple's brave and admirable stance on being forced to compromise its cryptography — but when it comes to things like paying its fair share of tax to compensate its host nations for the educations provided to its workforce, the roads they drive on, the courts and laws that defend their interests, and the health systems that keep the majority of their workforce dying from TB or yellow fever, the companies' stance is "We comply with all laws and pay as much tax as they require."
The fact that these laws are as "obviously deficient" as using the All Writs Act to force Apple to break its own crypto means that there is at least room for taking a principled stand on them and faulting companies that don't. Furthermore, these laws are only available to a privileged few multinationals with millions to pay offshore accountants and lawyers to exploit their loopholes, which means that all of us go on paying our tax, while the giants of the world dodge theirs.
"Here we have the largest corporation in capitalization not only in America, but in the world, bigger than GM was at its peak, and claiming that most of its profits originate from about a few hundred people working in Ireland — that's a fraud," Stiglitz said. "A tax law that encourages American firms to keep jobs abroad is wrong, and I think we can get a consensus in America to get that changed."
Apple has a corporate structure that allows it to transfer money to low-tax jurisdictions, and one of those is Ireland, where the corporate tax rate is 12.5 percent — far below the U.S. top statutory rate of 35 percent. The European Commission, the European Union's executive arm, is probing whether Ireland violated the bloc's state-aid rules by helping Apple lower its Irish tax liability.
Stiglitz Calls Apple's Profit Reporting in Ireland 'a Fraud'
[Jeanna Smialek and Alex Webb/Bloomberg]
