Wednesday, May 22, 2013

IT companies and tax evasion - what can be said?

A stunning story about the Information Technology industry. Those of us who have followed the industry, indeed been a part of it, are right to feel cheated and sullied by knowing that the corporations we have assisted and in some cases developed from the ground up, are not paying their way. Apple has $100billion USD stored outside the US with no plans to repatriate it for taxation purposes. This article Apple is non-tax indicates that this non-taxed revenue kept by Apple in Irish tax havens will not be going anywhere near the US or countries that apply standard economic policy settings.

This is a major challenge to civil society. It may also prove to be a major consideration to all those holier than-thou people using Apple in the belief that it was a virtuous enterprise. Clearly it is not.

One fascinating complication is the suggestion in the article by Rand Paul, the libertarian Republican, that the US Senators opposing the Apple strategy were somehow unreasonable in their challenges to Apple's tax avoidance scheme.As more  is understood about the political theory driving libertarianism, it is possible to gain insights into the ideals of freedom that informs this philosophy. In particular, the belief that the state should not have a role in financial transactions, indeed the strong view that the state should not tax profits or revenue, suggests a world turned upside down.

Information Technology has been an engine for advanced economies and the global economy for a couple of generations now. That it has generated the parallel universe of non-statism as a default position is its business problem. Much more work is required to hold the light of democratic interests on the IT industry, as the US Senate has done this week.

That David Cameron the Tory Prime Minister of Great Britain has also spoken out about the impoverishment of national accounts because of non-tax paying corporations says something about the impact of avoidance.  At Davos in January 2013, Cameron said tax avoidance is "not appropriate." Cameron video He has a way to go, but raising what he calls "moral questions," was not a bad start for a Tory.

The IT industry was never pristine. Now it is known as sleezy for not contributing to the public good. An appropriate public response is difficult to imagine.