John Engler, the president of the group of corporate overlords who comprise the Business Roundtable, wrote last week to the heads of all 28 European Union countries, declaring that the “rule of law” demands that they overturn the European Commission’s recent decision that Apple owes Ireland $14.5 billion in back taxes.
“In the interest of all countries that respect the rule of law, this decision must not be allowed to stand,” Engler wrote. He also added that “Business Roundtable’s interest in this matter is for respect of the rule of law” and that it needed to know that EU countries “are committed to honoring their laws.”
The Business Roundtable’s main complaint is that the European Commission overruled an Irish government policy that allowed Apple to funnel tens of billions in profits to a “head office” with no employees that paid taxes at a rate of 0.005 percent in 2014.
The depth of the Business Roundtable’s concern for the rule of law can be measured by the fact that all five of the companies whose CEOs appear on its letterhead have faced large, repeated sanctions from the U.S. government:
• Doug Oberhelman, the CEO of Caterpillar, is the Business Roundtable’s chairperson. Caterpillar has paid over $3 million in fines since 2010, including $2.55 million for a large scale violation of the Clear Air Act.
• Ursula Burns, the CEO of Xerox, is a Business Roundtable vice chair. Among various other misdeeds, Xerox engaged in a four-year scheme to defraud investors by overstating its pre-tax earnings by $1.5 billion.
• David M. Cote, the CEO of Honeywell, is a Business Roundtable vice chair. Honeywell has been fined by the federal government over 100 times since 2010, including an $11.8 million criminal fine for knowingly storing hazardous radioactive waste without a permit. In 2007 Honeywell pled guilty to negligently causing the release of hazardous chemicals that killed an employee, and paid an $8 million criminal fine plus $4 million in restitution to the employee’s children and community.
• Marillyn Hewson, CEO of Lockheed Martin, is a Business Roundtable vice chair. Lockheed has an extensive rap sheet, and paid $27.5 million in 2014 and $15.85 million in 2012 to the U.S. government for overcharging it for tools for use on military aircraft. In 2007 Lockheed agreed to repay the government $265 million for “accidental” overcharges on the Joint Strike Fighter program.
• Andrew N. Liveris, CEO of Dow Chemical, is a Business Roundtable vice chair. In addition to paying numerous government fines, Dow recently paid $835 million to settle a price fixing case. (Dow denied any wrongdoing.)
The Business Roundtable, an association of over 100 CEOs, was founded in 1972 to advance the political interests of large corporations. It is some ways a microcosm of the U.S. political system, with a politician (Engler is the former governor of Michigan) acting as the front man for the corporations that control it.
Apple, which has stashed over $181 billion in profits overseas to avoid U.S. taxes, is not a member of the Business Roundtable. However, Business Roundtable’s concern on the issue is understandable, given that the Fortune 500 companies all told have over $2.4 trillion sitting in other countries.
The Business Roundtable’s letter goes on to warn ominously that if the EU fails to rescind the EC’s decision, it will “promote tax uncertainty” with “the most direct consequences to be borne directly by EU countries and their citizens.” The Business Roundtable has previously identified numerous causes of “uncertainty” that it felt were damaging the U.S. economy, such as Obamacare and budget deficits, as well as “uncertainty in general.”
Top photo: Business Roundtable President and former Michigan Gov. John Engler participates in a news conference as part of a “Day of Action for Immigration Reform” at the U.S. Chamber of Commerce on July 9, 2014, in Washington, D.C.
Business Roundtable would be better named ‘Corporate criminals. Just how do they avoid jail? Yes, I know political and judicial friends. Disgusting.
This letter is nothing.
You should check out the one they wrote about uncertainty due to the Wall Street fraud in 2008, or the ones about the illegal wars in Iraq, Libya and Syria, or the truly scathing letter condemning the violations of the rule of law in the US policy of torture.
I was going to post a link to those letters, but I seem to be having some trouble finding them for some reason.
Rule of law? How about the ‘laws’ that allow many of these same companies to sequester taxes stolen from the American people off-shore to the tune of over $800 billion. These people are slimy thieves whose only goal is to steal all they can to inflate their personal wealth. We need a reckoning now, we want this thievery to be addressed before the presidential election. I personally will not vote for any candidate that doesn’t tell us his/her plan for repatriating all these stolen taxes.
NO FAIR we only deal with you to evade taxes & tariffs. Off shore is free no taxes apply – get your act together or we will leave…… ie…
Mayor Michael Bloomberg while mayor of New York City said you can’t tax them because they would leave…..re-stated by Governor Chris Christie – tax the little people and leave the big people alone to steal all they want
Mega corporations buy corrupt politicians to write dubious laws favoring their companies thereby corrupting the laws and political process, and then call for rule of law?
I think the EU is alright on this. I mean, none of us would object if the tax man said to us: “Um, look, we’ve had a rethink about the amount of tax we have been charging you for the past 10 years and have decided to raise it: Please send us a check for 9 times the amount you paid in each of the last 10 years.”
I have a crazy dream. One day all the world’s nations are going to send a big, fat FU to all of these criminal corporations, and charge them all the same d*mn tax rate that most of the rest of us pay.
Apple’s Irish Tax Problem
The EU didn’t invalidate the Double-Irish tax structure that has been generally demonized. It did find that Apple mis-allocated profits according to that tax structure. See Below
“the Commission concluded that the tax rulings issued by Ireland endorsed an artificial allocation of Apple Sales International and Apple Operations Europe’s sales profits to their “head offices”, where they were not taxed.”
http://europa.eu/rapid/press-release_IP-16-2923_en.htm
It wasn’t Irish Government Taxation Scheme that was the issue. It was the Irish Government’s favorable ruling in allowing Apple to mis-allocate profits and turning a blind eye to those allocations.
This is a great example of why it’s so important to have an outside, independent 3rd party look at transactions.
(h/t Doug Salzman)
sorry Doug for mis-spelling your last name……
s/b Salzmann
Not a problem. Think of all the other names I’ve been called around here. ;^)
Meanwhile, actual US citizens have to put up with FATCA, asset forfeiture and other nonsense.
Ex post facto laws are bad, even if they’re only tax laws.
Apple moved their HQ to Ireland because its tax rates were low; otherwise Ireland would only be getting to collect taxes on the couple of Apple stores and million or so iPhones in Ireland and the salaries of the developers in Cork, and Apple would have set up their HQ in Man or Jersey or the Caymans or Estonia or somewhere else that had low tax rates, and wouldn’t have funnelled all their EU revenue through Ireland.
If the EU wants Ireland to change its tax rates, that’s fine; Apple may be out the cost of a fancy office building or two and have to rent some new digs elsewhere.
You’ve misunderstood the issue. The EC wants Ireland to comply with the EU law that prohibits making special tax (or other state aid) deals with particular entities.
Here, read the rather detailed press release: State aid: Ireland gave illegal tax benefits to Apple worth up to €13 billion
Thanks for the link to the story. It gave some more details. Not only is Apple engaging in the Double-Irish tax structure by moving G&A costs, but they are also moving their IP over to Ireland as well. They have an R&D cost sharing arrangement as well.
I believe this would allow them one day to claim all sales through Ireland regardless of where they are sold.
The issue isn’t tax rate or even the tax scheme Ireland has. The issue is that Apple willfully and purposely mis-allocated profits to an offshore Irish entity.
The Irish government “Okay’d” these mis-allocations but the EC over-ruled the Irish government saying that their decision (Irish Gov’t) was tantamount to special tax treatment.
The culprit here is Apple’s finance team manipulating their books to produce lower taxable income that was justifiable and the EC objecting to it.
Sorry, correction….should read as follows:
lower taxable income that wasn’t justifiable……
The Roundtable forgot to mention that the EC’s finding is that Ireland’s special arrangement with Apple is a violation of the relevant EU regulations.
Emphasis added.
I guess it depends upon what your definition of “rule of law” is.
To sumarise Englers comments: “We need to know that once we have dictated the rules to you, you are going to follow them!”
Good one. Exactly.
Having lived many years in the land of the honey-bucket, it comes as no surprise to me that David M. Cote, CEO of the Well, is a real stinker.
Xerox also delayed a middle class-empowering internet by about 100 years when they forced the unnecesary “copy” function onto digital networks, and eliminated our ability to maintain ownership of, and thus monetize, our individual intellectual properties. So, yeah. Fuck Xerox!
Xerox also delayed a middle class-empowering internet by about 100 years when they forced the unnecesary “copy” function onto digital networks, and eliminated our ability to maintain ownership of, and thus monetize, our individual intellectual properties. So, yeah. Fuck Xerox!
lol That was very fun to come back and find. You got me.
Ha Ha Ha.
Do the overlords who comprise the Business Roundtable KNOW the meaning of “Rule of Law”? They are forgetting that their “Rule of Law” is laws written by them, for them via our politicians’ pockets….and works ONLY in the USA.. sadly, it is not working for them with EU commission….
Thankfully, for a change, they are NOT going to be able to get rid of any of the members…. .. like they can, USA politicians, by threatening to withhold their “largesse”!
Why not?
The US is not unique here. They own the politicians in other countries too. Where do you think the favourable tax laws in Ireland came from?
Agreed… but that is ONLY Ireland… to change “Rule of Law” with European Commission, that may be a bigger bite than they can chew!!… or willing to!
“promote tax uncertainty”
Although I can’t be certain what they meant by this, this language is specific to accounting language used in assessing tax consequences when booking a company’s tax expense.
Generally speaking, tax specialists look at company’s tax positions and determine if its more likely than not they will prevail if challenged on their tax position as is the case with Apple and the Double-Irish tax structure it engaged. It’s called Provision for Uncertain Tax Positions.
Basically, they are now complaining that they will have to book additional tax expense charges against earnings that may or may not happen. ie…they feel they are being penalized and will not be able to properly calculate tax expense if countries begin to dishonor on their own tax laws.
So, what tax expense should a company book if countries dishonor their tax structures and laws? What is the right amount to book? How do they estimate these tax consequences and record them into their financial statements?
Whatever amounts they do calculate and book, one this is certain. It will lead to lower EPS and thus negatively affect their stock price, which is ultimately their concern as so much of their compensation is tied to it.
“consequences to be borne directly by EU countries and their citizens”
This is a not-so veiled threat. Again, I believe companies are pitting different governments against each other in doling out what few jobs they offer. They will simply compel, persuade or bribe their way into another country to create a favorable tax structure and simply move their operations there.