Did the EU Just Commit a ‘Cheap’ and ‘Naked’ Tax Grab?
Official Washington erupted in bipartisan indignation over a European Commission ruling Tuesday that forces Ireland to recoup $14.5 billion in back taxes from Apple Inc. Lawmakers from both parties and officials at the White House characterized the mandate as an unfair and unilateral targeting of an American company.
On Tuesday morning, the European Union’s top antitrust regulator accused Ireland and Apple of reaching an agreement allowing the tech firm to pay a less than 1 percent tax on its European profits between 2003 and 2014. Determining that such an agreement was in violation of EU law, the commission ordered Ireland to recover what it said was $14.5 billion in unpaid taxes.
Several senators had already expressed concern over EU investigations into the tax practices of U.S. firms. A bipartisan group wrote a letter in May calling on Treasury Secretary Jack Lew to aggressively engage with the European Commission to ensure U.S. companies were not unfairly targeted.
It’s no surprise, then, that Senate reaction to the EU’s Apple ruling was swift.
“Any ruling that is inconsistent with international tax standards and harms American business abroad ‎with retroactive measures is inherently unfair and encroaches on U.S. tax jurisdiction,” said Sen. Orrin Hatch (R-Utah), chairman of the Senate Finance Committee, in a statement provided to Morning Consult.
Hatch said it “appears the European Commission has issued an extraordinary decision that targets U.S. business,” although he noted that further investigation is warranted.
Resolving the inconsistencies between the U.S. and other countries’ corporate tax codes is a top priority for tax writers in both parties, although there are still disagreements about how to do it and what other tax-related proposals would be included in such a package.
Brady pushed his committee’s tax plan, part of House Speaker Paul Ryan’s “Better Way,” as one solution. The current tax code “strands American profits overseas” and “allow[s] other countries to deliver multibillion-dollar tax bills to American companies,” Brady said.
The speaker himself also weighed in on the ruling. “This decision is awful,” Ryan said in a statement posted to the speaker’s website. The Wisconsin Republican accused the EU of “slamming” Apple with a jobs-killing tax bill “years after the fact,” and said the ruling was in violation of treaties signed by many European countries. Like Brady, Ryan also plugged his “Better Way” tax plan as a possible solution to future disputes with EU regulators.
“The Obama administration is not going to hesitate to speak out when we perceive that U.S. taxpayers or U.S. businesses are being treated unfairly,” he added.
According to a report by CNBC, Irish finance minister Michael Noonan said he disagreed “profoundly” with the EU’s ruling, and that Ireland would contest the decision.
In an open letter to customers posted on Apple’s website, Apple CEO Tim Cook said his company would also file an appeal. “We are confident that the Commission’s order will be reversed,” Cook wrote.