The European Union and the U.S. Both Want to Tax Apple

Anatomy of a multi-government shakedown

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Apple
Jordan Stern / Dreamstime

I'm slow to defend corporations these days because so many of them have built their business models around government-granted privileges and are free markets' worst enemies. However, for all the perks they get from governments, they also fall victim to their own government. And sometimes the shakedown is done by multiple governing authorities.

A few weeks ago, the European Union's antitrust regulator demanded that Ireland get back $14.5 billion in taxes from Apple Inc. At the heart of the issue are legal tax arrangements between Ireland and Apple passed in 1991 and 2007, which allow the company to pay an annual tax rate of roughly 1 percent on its European profits channeled to Ireland.

According to the European commission, if a country doesn't tax a company as much as the bureaucrats in Brussels want it to be taxed, somehow that's equivalent to giving the company a subsidy or a handout. So even though Apple followed the rules in Ireland and what it did is legal in both Ireland and the United States, the EU retroactively changed the rules and is now demanding lavish sums of cash from the company, writes Veronique de Rugy.

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