It should become apparent soon enough whether or not Tuesday’s grilling of Apple’s Tim Cook by the US senate investigations committee represents some sort of tipping point. Will it lead towards some sort of global corporate tax shakeout or will the politicians move on to another target after having had their day in the sun?
We have been here before, with similar unwelcome scrutiny applied to Microsoft’s tax affairs a few years ago. On that occasion the will to bring about significant change did not materialise.
It may be different this time, in Europe at least. Five years of grinding austerity and no sign of any immediate let-up has hardened public attitudes towards corporate tax avoidance across Europe.
From the perspective of the electorate it is a simple enough relationship. The less tax that companies pay on their profits the more tax that workers must pay on their declining wages. This transfer of the tax burden from company owners to the people that work for them is a central tendency of capitalism, but has been turbo-charged by new technologies and in particular the advent of vast, massively profitable businesses such as Google, Apple and Microsoft with relatively few physical assets.
The colossal sums involved should make the issue impossible to ignore from any sort of ethical or moral perspective and the economic backdrop adds a political imperative for action.
Unless, that is, you are a devout adherent of the neo-liberal creed with its ability to overlook the fact that these companies can only prosper in stable and effectively governed societies underpinned by taxation. Many American politicians appear to be of this ilk and thus the chances of any concerted action may be lower than many hope.
The salient fact that has emerged from the last few days is that the key enabler – and incentive for – the tax manoeuvres that have gripped the public mind over the past few weeks is that the US does not tax US company profits held outside of the US. As long as that situation pertains the game will continue.
