Thomas Donlan‘s latest Barron’s editorial commentary explains why the dispute over Apple and its Irish tax deal opens up opportunities for other nations.
The European Union’s persecution of Apple’s Irish tax dodge presents an enormous opportunity for the U.S. But it’s not the opportunity imagined by Sen. Charles Schumer, the New York Democrat, who said last week that the EU was just pulling a “cheap money grab…targeting U.S. businesses and the U.S. tax base.”
Schumer’s idea of an economic opportunity is to set up a cheap money grab of his own. …
… EU Competition Commissioner Margrethe Vestager, however, has concocted a handy theory that corporations that skillfully arrange their affairs to pay low tax rates are receiving unfair subsidies from their low-tax host countries, such as Ireland. Subsidies are illegal, though common as dirt, in the EU.
Meanwhile, the U.S.—or any other country outside the European Union that wants to play a smart game—now has the opportunity to do away with corporate income taxes once and for all. If the Irish tax laws that the EU says enabled Apple to pay as little as 1% on global profits are going to disappear like Cormac gone to Faery, then some stronger, more aggressively pro-business nation must build new laws.
The first big country to go for abolition will make itself the greatest corporate tax haven in the world. That would make it the greatest magnet for investment, the greatest producer of private profit, and the greatest protector of business freedom since the United Kingdom gave up free trade in 1932.
Abolition would destroy all the complex manipulation of international tax codes that employs hundreds of thousands of tax lawyers and accountants on both sides of every controversy. A country that forces them into useful work—or even into unemployment—will experience a giant leap in productivity.
