Hacker News Reader

Comment by zigzigzag | Hacker News Reader

I disagree that any such distinction exists though. Governments routinely set taxes and tariffs such that they apply to one industry and not another, or put another way, one set of companies pays lower taxes than others do. The oil industry is famously heavily taxed, that does not imply that hydropower companies are receiving illegal state aid.

If a country can't charge different tax rates to different companies based on their own arbitrary policies, then they have lost a significant component of their own sovereignty. If the EU wants its members to give up tax policy to Brussels then they should propose a treaty change and make corporation tax a competency of Brussels, then it can be the EU that decides which companies pay more or less tax according to their own political priorities. But they haven't done that and I bet they won't, because they know that they'd lose any such argument. Hence, the back door approach.

View on HN

EU governments, including the Irish one, are free to set different tax rates for different industries. (They are not free to set tariffs but that is because tariffs are a core EU competency as defined in the treaties.)

Member states are not free to set different tax rates for different companies. This is part of the deal of joining the EU and has been part of the treaties since the beginning. The only surprising thing here is that it took so long for the EC to stop this.

Ireland did NOT set a different tax rate for Apple or for a specific industry that was basically just Apple. Apple simply structured itself to minimize taxes taking into account the laws at the time. Any company was free to do the same and many did. The structure is so common that there are even two terms that are in standard use to describe this structure, the Double Irish and the Double Dutch.

The EU did not suddenly discover what Irish tax laws were. They were legislated in an open process and were public records and were trumpeted loudly by the Irish government to attract investment. This state of affairs existed for decades. The EU simply wants to get its grubby little hands on Apple's money so they can use it for more dole-outs to friends of the bureaucrats and also use this as a precedent so they can expand their powers into areas where their power has been explicitly curtailed by treaty.

Apple made a business decision to invest in the EU based in part on the tax rates at the time which went into it's calculations of expected rate of return. Of course they probably did much better than what they expected, but many who made similar decisions lost money too. If tax laws are subject to change retroactively, investors have to start taking uncertainty about the tax rate and the expected rate of return into account and will demand a (potentially much) higher rate of return to invest. This is why it's so hard to attract investment in countries without stable governments and a strong rule of law even though the purported rate of return is much higher. If this continues it will lead to further slowdown in the EU economy. The current slowdown is not apparent to EU citizens only because the market is not charging the EU a credit risk premium on EU bonds and so EU governments are still able to fund public benefits by borrowing. This is something that will change quickly and lead to a Greece like situation if the EU starts acting in this manner.

As an outside observer, I did not think Brexit was a great idea but this event frankly is a very good argument for why more countries should consider EUExit and/or the national governments need to figure out how to defang the EU. The EU was supposed to be about free movement, no "TARIFFS" as in impediments to TRADE within the block and a single currency. What it seems to have turned into is unelected bureaucrats in Europe dictating to elected national governments what their tax policy must be.

> is a very good argument for why more countries should consider EUExit and/or the national governments need to figure out how to defang the EU.

What exactly is the argument against whistling back governments colluding with foreign corporations at the expense of domestic businesses?

> The EU was supposed to be about free movement, no "TARIFFS" as in impediments to TRADE within the block and a single currency.

The EU is about working together instead of each country racing each other to the bottom at the behest of non-EU interests and power blocks.

> unelected bureaucrats in Europe dictating to elected national governments

or you could read up on how it actually functions.

This is exactly the sort of job I would expect a EU competition commissioner to do. It's now up to the courts to verify if the findings are correct.

Regardless of the outcome, I'm very happy to see this part of the system works.

The honest answer! Thank you.

>The EU simply wants to get its grubby little hands on Apple's money so they can use it for more dole-outs to friends of the bureaucrats...

I'm not sure why so many people think this was a move about fairness.

It's just a grab of money and power from politicians, as expected. I wish this money/power grab were not so widely defended by so many people.

> Ireland did NOT set a different tax rate for Apple

It allowed Apple to pay an effective rate of tax much lower than that typically required of companies in the sector. De jure, no, they did not set a different tax rate. De facto, yes, Apple paid a significantly lower tax rate.

Eurobond prices are low (negative) because the ECB prints money to buy them. It's a classic case of money printing to fund government spending and it ends with inflation.

Unfortunately inflation stats cannot be relied upon because they ignore large and important sectors of the economy. For example, they often don't include house prices, or stock prices, or bond prices. The real inflationary pain is being felt by pension funds but consumer price indices don't reflect that.

Reply on news.ycombinator.com