Category Archives: Apple

17/1/18: Apple’s Plans for Foreign Cash and the Need for Larger Reforms

There is a lot that can be criticized in the GOP/Trump tax reforms passed late last year, but some things do make sense. Back in November 2016, in my column for the Cayman Financial Review (see here:, I argued that a comprehensive tax reform of the U.S. corporate tax system, alongside a generous repatriation scheme for off-shored profits of the U.S. MNCs can provide a significant boost to the U.S. economy.

Today, we got some news confirming my assertion. Apple is planning to bring some USD350 billion back to the U.S. with a large scale investment portfolio aligned to this repatriation:

However, to really lock in the new investment, President Trump and the Congress need to significantly revamp the existent system of work permits, work and business visas, starting with the current H1B system. Returning financial capital back to the U.S. is but the first step on the road to increasing the U.S. economic potential.

The second step must be opening up U.S. labor and entrepreneurship markets to inflow of talent from abroad (these markets are currently extremely closed). This will require not only revising numerical quotas, but also the following:

  1. Shifting admissions away from contingent workforce employers (contractors) and in favor of direct employment and sustainable, skills-based self-employment;
  2. Increasing ability (and incentives) for integration into the American society for newcomers (including, but not limited to, improving bureaucratic barriers to access to permanent residency and naturalization, improving the culture and the climate of government bureaucracies vis-a-vis higher skilled newcomers, etc);
  3. Creating new, more open, programs for entry into the U.S. for highly skilled and entrepreneurial migrants; and
  4. Encouraging greater mobility across employers for foreign highly skilled workers.
The third step must involve regulatory reforms that remove markets, financial & contractual supports for incumbent monopolistic firms (the rent-seekers, like big telecoms, large banks, automakers, etc). Opening the sectors to genuine competition will be the only chance the U.S. has to compete with the likes of China, and increase its own potential GDP).

Finally, the fourth step (partially already targeted by the recent tax reforms) must involve reducing the burden of direct and indirect taxes on the American wage earners, especially those with higher skills levels. The key here is to focus on both, direct and indirect taxation, and the latter, in my opinion, includes the cost of healthcare and pensions. 

Apple's announcement is the good news. And President Trump does deserve credit on this.  But tax holiday alone won't fix the problem of economic sclerosis that has plagued the U.S. economy for a good part of two decades now.

21/9/16: Apple Tax Case: Not the Rate, the Loopholes

My column for the Village covering the Apple Tax fiasco:

As it says on the 'tin' - the problem with Apple Tax is not the rate of corporate taxation set in law in Ireland (the 12.5% 'red line' rate), and not tax competition, nor the benign nature of tax exemptions that Ireland bestows on all companies, including the MNCs. The problem is that these competitive aspects of the Irish regime are simply not enough for the likes of Apple, which pursued and obtained access to exemptions that any ordinary company operating in Ireland cannot avail of.

Hence, the red herring of the arguments that the EU Competition ruling is an attack on Irish tax rate. It is, instead, a challenge to the asymmetric preferences granted in the past (and still in use during the ongoing phase-out period) to a handful of MNCs over and above domestic companies. Lest we forget, for decades, Irish State had no qualms operating an openly discriminatory taxation regime that treated foreign investment-backed companies differently from domestic companies. Lest we omit considering the present, Irish State still has no qualms taxing human capital of its residents at rates far in excess of those applying to physical and financial capital. Lest we fail to think about it, Irish State has no qualms asymmetrically allocating the burden of the crisis to Irish people over and above our banks, foreign investors, foreign bondholders and vulture funds.

I am one of the most vocal advocates of low (benign) taxation, flat tax, competitive regulatory regimes (coupled with robust enforcement) and other means for improving the functioning of the private markets. Always been one and remain. I support real investment in the economy, both foreign and domestic and believe in a level playing field for entrepreneurs and enterprises, alike. But, folks, the debate around Apple Tax is not about 12.5% tax rate and Ireland's tax autonomy, but about asymmetric nature of privilege.

29/7/16: Tax Regime, Apple, Fraud?

We have finally arrived: a Nobel Prize winner, former Chief Economist and Senior Vice-President of the World Bank (1997-2000) on Bloomberg, calling Apple's use of the Irish Tax Regime 'a fraud':

This gotta be doing marvels to our reputation as a place for doing business and for trading into Europe and the U.S.

The same as Facebook's newest troubles:

But do remember, officially, Ireland is not a tax haven, nor is there, officially, anything questionable going on anywhere here. Just 26.3 percent growth in GDP per annum, and booming corporate tax revenues that the Minister for Finance can't explain.

13/4/15: That Utilitarian Logic of EU Tax Probes…

Yet another international publication, this time The Economist, is going off the Irish Government 'reservation' with an article on how Apple is being 'helped' to tax avoidance: The farce is, it is the very same State that enabled this practice which now stands to gain from the unwinding of the practice.

Ah, the logic of the European Union... it is, rather, err... relativist in nature...