Victor Hugo most famously said, “There is nothing more powerful than an idea whose time has come.” And the time for a major overhaul, sorry, a revolution, is needed in the tax policies imposed around the world in favor of major multinational corporations that are channeling in billions in revenue and relatively not paying a dime in taxes. Despite the fact that many necessary changes are somewhat kilometers away, the approach vis-à-vis large, country-like corporations and their long lines of advisers are obviously facing a major transition heading in the right direction of more serious transparency, meaningful accountability and of course, a corporate tax framework that meets the ethical standards of our day and time.
One should not be surprised that the strongest outrage came from Apple CEO Tim Cook in response to the European Union demanding $14.5 billion in taxes. Cook described the notion as “political crap,” and this is exactly what is expected from the CEO of a company on the verge of losing such money. Wouldn’t it be quite interesting if the EU had the will to file a court order against foreign CEOs and demand jail time in response to their unprecedented tax fraud cases? Why isn’t it this way? Such a crime has long standing implications for the entire society and many believe even the most powerful figures, like CEOs, should face time behind bars.
Most important of all is the perspective adopted by figures in powerful places being completely in contrast to the values we cherish today in our advanced societies. This sheds important light on the not-so-surprising attitude of senior officials in major corporations, and of course, the super-rich that feel immune to the law. If we are actually living in a true democracy, the super-rich and so-called leaders of major corporations should not enjoy any higher entitlement under the law than even a homeless person that is only thinking about how to get something to eat.
Unfortunately, the scene before us portrays senior corporation officials and the super-rich enjoying exactly the greater entitlement over the laws of a country they don’t deserve, and no one has the will to rise against them and ask why. If we succumb to such lows, we have to accept that we are acting against the very nature of democracy in its entirety. Should our government be “hired” by those who can? Is our government here to ratify laws and provide services to the rich and powerful? If the answers to these questions are yes, should we not ask ourselves are we truly living in a democracy, or are we merely mocking such a lifestyle. People working in such large corporations are known to only seek power and evermore wealth, and could care less about equality under the law. Be certain they will take advantage over society at any window of opportunity.
Our governments, however, are obliged to prevent this very threat. Transparency is a fundamental pillar of a democratic country, especially when it involves measures taken by major corporations. The elite should not be provided exclusive access to information, as seen in various countries these days.
Moreover, why should big businesses enjoy a proposed drop in corporate tax rates? The truth is that tax competitiveness never translates into increasing competitiveness in the commercial industry. The World Economic Forum has confirmed through the span of many years that tax never even appears in the top 12 factors taken into consideration by such a field. Any decrease in corporate tax rates will render losses for welfare programs, at a time when such benefits will pass on to company shareholders (with many stationed offshore).
The Luxleaks and PanamaPapers tax scandals raised immense worldwide outrage, making it a definite fact that a demand for major shifts in tax policies is on the rise. This movement is gaining momentum and pressure is escalating against governments on a daily basis. The importance of the Apple EU row lies in the timely and robust characteristics of this decision, and such a measure taken against a member state.
Very significant conclusions can be drawn from this faceoff. The EU has placed its foot down and is transmitting a very obvious message to all member states to begin rounding up their approach regarding tax avoidance that has become a major international trend. Putting an end to favorable tax rulings issued for specific companies in the EU block will most likely come to an end. As a result, the U.S. and UK will come under immense pressure to follow suit with similar measures against tax havens on their own soil, such as the British Virgin Islands and the state of Delaware in mainland United States. Responsible governing should adopt a similar position: to bring an end to irresponsible decision-making seen too many times in modern day politics. Governments should be more concerned about the interests of their own constituents, and not those of large corporations. If a competition law is actually ratified, this will open a door to the power of legal arsenal available against those dodging such duties. Most definitely, as we gain further experience down the road in this regard, the laws will most likely strengthen as we trek down this difficult path.
The action taken by the EU is a good reminder to all governments to sit down, take a moment and use creative thinking in addressing the international tax avoidance scourge. The EU perspective is quite impressive, indeed. We live in the 21st century and it cannot be expected from us to allow the super-rich and their companies slip through the cracks of tax policies and dodge their obligations. A government can be considered incompetent if it allows corporate tax rates be cut under unproven assumptions.
The time is now for a major overhaul of tax policies. A revolution is in the making as we speak.