Apple versus Verstager: a Level Playing Field is Better
September 4, 2016
Verstager, the European Commission’s (EC) competition chief, ruled that Apple has to pay it’s reasonable share of profit tax, i.e., €13 billion plus interest, to the Irish government. Apple and the Irish government decided to appeal this EC decision. Likely, down the road some kind of compromise will be struck where Apple will pay something between it’s current 0.005% (50 eur per 1 million eur) profit tax and the standard Irish profit tax of only 12.5%.
Verstager’s ruling is applauded by proponents of a level playing field for all business, and no exceptions for the likes of Apple and Starbucks. A separate discussion should be who should benefit from the tax windfall: tax-haven Ireland or the countries where the profit was actually generated.
Opponent’s of Verstager’s Apple ruling, argue that the uncertainty that the ruling creates, is damaging the Irish and European economies, and that the jobs that Apple and other beneficiaries have created, are a better long-term contribution to the local economies where Apple is active.
Although retrospectively, Apple clearly has miscalculated it’s use of an Irish tax ruling, and it might have switched more of its profits to true tax havens with zero profit tax, I think Verstager’s ruling is a good signal to multinationals, and Apple in particular.
Apple is one of the most valuable and most admired companies in the world. And, now and then leapfrogged competition by innovating whole categories, like the pc, tablet, smartphone and smartwatch.
But, this is not a reason to create a special tax class for Apple, and another for the rest of us. In effect, Apple’s dominance has also smothered innovation. It’s profitability has allowed Apple to be even better in smothering competition than it already was.
Paying a fair share of profits, would have levelled the competitive playing field a bit. It would therefore have been far better if Apple’s fair share in profits was either used to lower tax for all to stimulate business in general, or reduce public debts, in stead of creating an unfair competitive advantage to an at times great but at other times overly dominant and arrogant tech giant.