So the Europeans came after Apple today for not paying its fair share of the social contract and hit the iPhone maker with a $14.5B tax bill.
And so begins the clone wars.
Naturally all parties from the Irish government, which wants to keep Apple operating in the country, to the Cupertino, CA-company will appeal. But the appeal is heard by the same bureaucrats that issued the ruling in Brussels.
Now let’s put the fine in perspective. If Apple took revenue beginning on a Monday morning, but Friday’s lunch time it will have made enough to cover the $14.5B tax bill. If you took a week in September as the example week, it would probably take only two days to pay it off, since the new iPhone will be on sale.
So it’s a rather symbolic poke in the eye to US firms, which the European Commission sees as bringing much of the economic pain to their shores. Can’t go after the banks, so let’s ding the companies making money of here.
Does it touch off a tax war?
Well Treasury chief Jack Lew put his muscle behind trying to stem this ruling earlier this month in Europe, but as with most things the Obama Administration attempts, it fell flat on its face. See health-care reform.
Do we go after Mercedes or BMW? Probably not. Not under this administration.
The solution is to simplify our tax code to allow US multinationals to bring overseas profits back home without being too punitive. Why would the US need to take a massive chunk of profits from devices made overseas and sold overseas, where taxes have been paid?
Let’s put this into a further perspective. British Petroleum destroyed the Gulf of Mexico and paid $5.5B in fines. Apple cut sweetheart deals with the Irish government and is charged $14.5B.
Does not make sense to me.