There was never much doubt that large multinational companies enjoy a great deal of leverage over governments at all levels — local, state, even national — but on Tuesday, European regulators actually quantified it.
European Commission officials allege that Ireland’s government secured 5,500 jobs from Apple by striking a tax agreement that allowed the company to underpay its taxes by $14.5 billion between 2003 and 2014. The arrangement made the company’s effective Irish tax rate no higher than 1 percent over that time.
If it stands, the European ruling would force Apple to pay that $14.5 billion to Ireland. But Irish leaders don’t want the money; they say they will appeal the ruling, as will the company.
You can read that desire to appeal a lot of ways, but here’s the easiest one: A tax-friendly relationship with Apple, and its 5,500 jobs, is worth more to Ireland than $14.5 billion. That’s the minimum value of Apple’s leverage over the country for the period 2003-2014. As a straight calculation, it works out to $220,000 per job, per year.
That seems like a heavy subsidy for any government to pay a corporation, let alone the most profitable corporation in the history of the world, which Apple happens to be. The City of Boston and State of Massachusetts, by contrast, recently made a controversial deal with General Electric to lure its headquarters away from Connecticut. The state grants and local tax breaks of the deal amount to $145 million over 20 years, and the company …read more