SUBSCRIBE TO OUR FREE NEWSLETTER
Daily news & progressive opinion—funded by the people, not the corporations—delivered straight to your inbox.
5
#000000
#FFFFFF
5
#000000
#FFFFFF
tax justice
‘Long-Overdue Justice’: EU Court Rules Ireland Let Apple Avoid $14.4 Billion in Taxes
"This ruling exposes E.U. tax havens' love affair with multinationals."
Sep 10, 2024
The European Union's highest court on Tuesday ruled that Apple must pay €13 billion in back taxes to Ireland, determining that the country gave the company illegal tax benefits in the past, in what campaigners called a victory for tax justice.
The E.U. Court of Justice ruling brought to a close a landmark case that began in 2016 when the European Commission ordered Apple to pay the €13 billion ($14.4 billion) based on an unfair tax arrangement the company had with Ireland from 1991 until 2014. A lower court overturned the commission's order in 2020, but Tuesday's ruling, which is final, restores it.
Observers viewed the case as among the most important brought by E.U. Competition Commissioner Margrethe Vestager, an antitrust official who's been in office since 2014.
"It's important to show European taxpayers that once in a while, tax justice can be done," Vestager, who leaves office in two weeks, said following Tuesday's ruling.
Chiara Putaturo, a tax policy adviser at Oxfam EU, said in a statement that "this ruling exposes E.U. tax havens' love affair with multinationals. It delivers long-overdue justice after over a decade of Ireland standing by and allowing Apple to dodge taxes."
Today is a huge win for European citizens and tax justice.
👉In its final judgment, @EUCourtPress confirms @EU_Commission 2016 decision: Ireland granted illegal aid to @Apple.
Ireland now has to release up to 13 billion euros of unpaid taxes.
— Margrethe Vestager (@vestager) September 10, 2024
The European Commission argued that the selective tax benefits that Ireland had offered to two Apple subsidiaries amounted to illegal state aid that hindered competition. The company's tax burden in Ireland, where its European operations have been based since 1980, was as low as 0.005% of its profits in 2014.
In November of last year, Giovanni Pitruzzella, the advocate general of the E.U. Court of Justice, issued an opinion in favor of the commission's position and against the lower court ruling, in a setback for the tech giant. The high court, which is based in Luxembourg, generally agrees with its advocate general following such recommendations, as it ultimately did on Tuesday.
The €13 billion, plus interest, has been held in an escrow account since 2018 and will be released to Ireland, even though the country fought against the commission's order. Ireland said it would respect the court ruling.
Ireland is often characterized a tax haven within the E.U. and hosts the European headquarters for many multinational firms, with critics charging that its tax system drives up inequality.
Tax justice campaigners said Tuesday's ruling should just be a start and that more fundamental reforms are needed at the international and E.U. level.
"Our tax problem is more than just one rotten apple," Tove Maria Ryding, a policy manager at the European Network on Debt and Development, said in a statement.
"The international system for taxing multinational corporations continues to be deeply complex, unpredictable and unfair," she added, arguing that a company's economic activity across many countries, including in the Global South, shouldn't mean tax revenues only for one country such as Ireland.
Ryding praised the United Nations' efforts to establish a global tax convention, calling the proposal a "beacon of hope for a fairer future."
Putaturo of Oxfam likewise called for a fairer tax system in Europe.
"While this ruling will force the tech giant to pay its debt, the root of the issue is far from solved," she said. "E.U. tax havens can still make sweetheart tax deals with big multinationals. The duty to stop this rests on the shoulders of E.U. policymakers. Yet, they have turned a blind eye to tax havens within their borders and the harmful race to the bottom that countries like Ireland are instigating."
Oxfam EU also called for the closing of tax loopholes and the establishment of a wealth tax.
The Apple case was not the only victory for Vestager, the antitrust chief, on Tuesday: The E.U. Court of Justice also ruled that Google had illegally used its search engine dominance to favor its own shopping service, fining the company €2.4 billion ($2.65 billion).
Bloomberg on Tuesday called it a "double boost to the European Union’s crackdown on Big Tech," and said that Vestager's past work had "paved the way" for the U.S. and the U.K. to take action against Google.
Keep ReadingShow Less
Massachusetts Proves It Is Possible to Make the Wealthy Pay Their Fair Share
With three months still left in the state fiscal year, the new Massachusetts millionaires tax has already generated $1.8 billion in added new revenue, some $800 million more than state officials had projected.
May 26, 2024
This spring has been an exceedingly good one for Flightline Aviation Limited, a London-based enterprise that specializes in helping the world’s deepest pockets find the private jet of their dreams.
“We have closed six sales in the past five weeks,” Flightline’s Anna Campbell gushed at London’s most celebrated luxury trade fair earlier this month. “Everyone seems to want to get a plane for summer.”
Polly Toynbee, a veteran British political columnist, happened to be at that same trade fair. She watched one gentleman talking with a salesman about a showcased private plane and then approached that potential buyer with a question. With so many families struggling to put food on the table, Toynbee asked, shouldn’t the U.K.’s richest be paying “a bit more” in taxes?
“Why would I?” the private-jet aficionado replied.
“Look,” he added, waving at the aircraft on sale all around him, “take any more in tax and the wealthy would be off—away out of here in one of these!”
Before the Fair Share Amendment’s passage, wealthy Massachusetts taxpayers averaging $2.4 million in annual income were only paying 6.8% of that income in state and local taxes.
Off to a place, that gentleman of means was implying, smart enough not to inconvenience its richest residents with any sort of robust tax on income or wealth.
The rich who call the U.K. home have, at the moment, little reason to start looking for one of those tax-getaway locales. Britain’s Labour Party, the likely winner in the nation’s next parliamentary elections, is showing no interest whatsoever in subjecting the U.K.’s richest to any significant tax hike.
“We have no plans for a wealth tax,” Rachel Reeves, the Labour Party’s likely choice for finance minister, announced last summer—and no plans either to put in place a mansion tax or a higher levy on either capital gains or top tax-bracket income.
“I don’t see the way to prosperity as being through taxation,” Reeves went on. “I want to grow the economy.”
The British economy is already growing quite nicely—for the U.K.’s wealthiest. Since 1989, the University of Greenwich economist Ben Tipper points out, the nation’s 200 richest residents have seen their wealth—after taking inflation into account—grow on average by 15% per year.
Throughout human history, adds the U.K. High Pay Center’s Luke Hildyard, living standards for average households have only improved when societies have in place mechanisms “to ensure that wealth doesn’t overwhelmingly flow to the people with all the economic and political power.”
Given that reality, Hildyard posits in his just-published Enough: Why it’s Time to Abolish the Super Rich, modern societies need to both tax the top 1% “more effectively” and get those wealthy to pay more “to the workers at the companies they run and invest in.”
How best to accomplish all that? Progressives in the United States—the only U.K. peer nation with less of a tax burden on its richest—have plenty of ideas on that score. This past week we learned that one of those ideas is generating some encouraging results.
The back story: In 2022, after seven years of dedicated volunteer labor, the Raise Up Massachusetts coalition of over 150 community organizations, faith-based groups, and labor unions had worked onto the November statewide ballot a constitutional amendment to add what amounted to a special tax on millionaires to the state constitution.
This “Fair Share Amendment” called for adding a 4% state tax on annual income over $1 million to the state’s existing 5% flat-rate income tax. That $1 million threshold, the amendment also spelled out, would adjust annually to reflect cost-of-living increases.
The proceeds from this special new levy on wealthy taxpayers would all go for public education and maintaining and improving the state’s public transit, roads, and bridges.
Voters turned out to like that notion. The Fair Share Amendment passed comfortably, with over 52% of the vote, and went into effect last year.
“The message sailed past billionaire money to victory,” as Jacobin contributing editor Paul Prescod has noted, “because it was clear, compelling, and broad-based: Make the rich pay so we have more revenue to improve the lives of working people.”
How much of a difference has the new Massachusetts levy on millionaires so far made? The Boston Globe earlier this week headlined the surprising answer: “‘Millionaires tax’ has already generated $1.8 billion this year for Massachusetts, blowing past projections.”
Way past projections. With three months still left in the state fiscal year, the new Massachusetts millionaires tax has already generated $1.8 billion in added new revenue, some $800 million more than state officials had projected the tax would raise in their budget for the entire fiscal year.
“Opponents of the Fair Share Amendment,” exulted Raise Up Massachusetts spokesperson Andrew Farnitano, “claimed that multi-millionaires would flee Massachusetts rather than pay the new tax, and they are being proven wrong every day.”
That doesn’t surprise Omar Ocampo, a Massachusetts-based analyst with the Institute for Policy Studies. Research from other states, he notes, demonstrates that instances of “millionaires fleeing increased taxes” turn out to be “extremely rare.”
Before the Fair Share Amendment’s passage, wealthy Massachusetts taxpayers averaging $2.4 million in annual income were only paying 6.8% of that income in state and local taxes, a rate less than the 8.9% of their incomes that taxpayers in the state’s bottom 99% were paying.
The new Fair Share Amendment, estimates the Institute on Taxation and Economic Policy’s Marco Guzman, will raise the combined Massachusetts state and local tax rate on the state’s richest, but only to 8.7%.
In other words, advocates for tax justice in Massachusetts—like advocates for greater equality across the United States and all around the world—still have plenty of victories that need winning. But let’s make sure that we celebrate each victory along the way!
Keep ReadingShow Less
The World Must Fix Tax Disparity or Suffer Catastrophic Consequences
If the world doesn’t continue moving boldly forward on confronting corporate and billionaire tax evasion, it would mean more than inadequate revenue for confronting global inequalities, pandemics, and climate change.
Oct 28, 2023
How can we comprehend—truly comprehend—how concentrated the wealth of our world has become? We have some choices.
We can choose to see the world of concentrated wealth through the eyes of those who directly serve the richest among us, people like the veteran Australian sea captain Brendan O’Shannassy, the author of Superyacht Captain: Life and Leadership in the World’s Most Incredible Industry.
Floating palaces like the $500-million superyacht of mega-billionaire Jeff Bezos can routinely run their deep-pocketed owners over $130,000—per day—for basic upkeep. But these same superyachts, O’Shannassy believes, still constitute the finest investment individuals of immense wealth can make. They offer their deep-pocketed owners both security and relaxation, with no whiff of paparazzi.
Our world’s richest now enjoy “effective tax rates” that annually cost them no more than a mere 0.5% of their personal wealth.
Or we could choose to go in a starkly different direction to better comprehend the wealth of our wealthiest. We could look at these wealthy through the eyes of those who measure just how concentrated our world’s wealth has become. Two just-released reports help us do exactly that.
The first comes from researchers at the Federal Reserve. Every three years, these analysts release a deep dive into the distribution of America’s income and wealth, a copiously detailed snapshot of American household “balance sheets, pensions, income, and demographic characteristics.”
The latest Fed Survey of Consumer Finances—released last week—covers the changes in American family finances between 2019 and 2022.
Over this three-year span, after taking inflation into account, typical American family incomes inched up what the Fed describes as “a relatively modest 3%.” But the incomes of high-income households, the Fed points out, rose at a much more rapid rate, registering “one of the largest three-year changes” that Fed researchers have ever encountered.
On the net-worth front, ordinary households taken as a whole did register gains, the Fed notes, that “far outpaced inflation” between 2019 and 2022, gains that mostly reflect sizeable jumps in the value of owner-occupied houses. But these same sizeable jumps also put home ownership increasingly out of the reach of families seeking to become—for the first time—homeowners.
By 2022, the value of America’s most typical homes was running 4.6 times our nation’s most typical family incomes, an all-time record gap. Financial advisors usually recommend that families should spend no more than three times their annual income for a home of their own.
Other analysts outside the Fed orbit have crunched the new Survey of Consumer Finances raw data to paint a plainer picture of how much wider the wealth gap in the United States has grown since the Federal Reserve began publishing Survey of Consumer Finance reports over three decades ago.
Over those decades, a DQYDJ analysis points out, the inflation-adjusted net worth of the typical American household has gone from $108,501 in 1989 to $192,084 in 2022.
The net worth of the nation’s richest 1% over that same span? That wealth has gone, again after adjusting for inflation, from $5,351,332 in 1989 to $13,666,778 some 33 years later.
Another analysis, from Matt Bruenig at the People’s Policy Project, has used the new Fed data to calculate the share of America’s wealth held by each decile—each 10%—of the nation’s households.
“Overall,” Bruenig concludes, America’s “wealth inequality remains quite high,” with the top 10% of households owning a whopping 73% of the nation’s wealth and the bottom half of U.S. households holding “just 2% of the nation’s wealth.”
The Fed data, analyses like Bruenig’s show, can help us gain a much-needed sense of just how unequal the United States has become. But the Fed’s Survey of Consumer Finances can only take us so far. The Survey’s data shine no spotlight on the richest of our rich and cover only pre-tax income.
For how the super rich make out after taxes, we have to look elsewhere—and we now have an exceedingly revealing place to look. The E.U. Tax Observatory, a research effort begun in 2021 with backing from the European Union and a variety of academic institutions, has just released a blockbuster new study entitled Global Tax Evasion Report 2024, “an unprecedented international research collaboration building on the work of more than 100 researchers globally.”
Our world’s richest, this new study details, now enjoy “effective tax rates” that annually cost them no more than a mere 0.5% of their personal wealth.
Over the last decade, the E.U. Tax Observatory study notes, a number of individual governments have agreed on major initiatives to counter international tax evasion. Since 2017, for instance, banks have been “automatically” exchanging information helpful in identifying tax evaders. And over 140 nations agreed in 2021 to set an annual 15% “global minimum tax” on multinational corporations.
But assorted loopholes and “carve-outs” have undermined these two reforms. Multinationals last year shifted some $1 trillion of their treasure into tax havens, the equivalent of more than a third of the profits multinationals booked in 2022 outside their headquarters country. And many offshore financial institutions, the new E.U. Tax Observatory report adds, are dragging their feet on deposit disclosure.
Even so, new exchanges of banking data have offshore tax evasion down by a factor of three, and only 25% of financial wealth held “offshore” is currently evading taxes. And the fledgling corporate minimum tax put in place two years ago has generated considerable useful data of its own.
The boldest proposal of all: a call for a new “global minimum tax” on the world’s billionaires equal to 2% of their net worth.
How can the nations of the world go beyond these two initial reform efforts? The Global Tax Evasion Report 2024 identifies a half-dozen specific steps the global community can take “to reconcile globalization with tax justice.”
Three of these recommendations highlight common-sense proposals that ought to be able to gain broad international support. One recommendation, for instance, calls for “the creation of a Global Asset Registry to better fight tax evasion.”
The other three recommendations on the E.U. Tax Observatory’s reform agenda seem certain to face some serious political pushback—from the fans of grand fortune.
One of these three bold proposals calls for new mechanisms that would enable the taxing of wealthy people “who have been long-term residents in a country and choose to move to a low-tax country.” Another would “reform the international agreement on minimum corporate taxation to implement a rate of 25% and remove the loopholes in it.”
The boldest proposal of all: a call for a new “global minimum tax” on the world’s billionaires equal to 2% of their net worth.
Moving forward on proposals like these, the E.U. Tax Observatory report stresses, wouldn’t immediately require thumbs-up from large numbers of nations. Unilateral action by small groups of nations “can pave the way” eventually for more “nearly global agreements.”
The reforms the E.U. Tax Observatory is advancing, the Nobel Prize-winning economist Joseph Stiglitz adds in his introduction to the Global Tax Evasion Report 2024, “may seem impossible to attain, but so was undermining bank secrecy and introducing a minimum tax on corporations just a few years ago.”
And if the world doesn’t continue moving boldly forward on confronting corporate and billionaire tax evasion, what then? Failure on that front, Stiglitz argues, would mean more than inadequate revenue for confronting global inequalities, pandemics, and climate change.
“If citizens don’t believe that everyone is paying their fair share of taxes—and especially if they see the rich and rich corporations not paying their fair share—then they will begin to reject taxation,” Stiglitz projects. “Why should they hand over their hard-earned money when the wealthy don’t?”
In effect, Stiglitz concludes, the “glaring tax disparity” that our richest now enjoy “undermines the proper functioning of our democracy.”
We either fix that disparity or suffer the catastrophic consequences.
Keep ReadingShow Less
Most Popular