1. Apple Owes $14.5 Billion in Back Taxes to Ireland, E.U. Says
The New York Times AUG. 30, 2016
The European Union on
Tuesday ordered Ireland to collect $14.5 billion in unpaid taxes from Apple, a record penalty
that worsened tensions with the United States over the bloc’s crackdown on
sweetheart deals with global multinationals.
Europe’s
competition enforcer said that Apple’s illegal deals with the Irish government
allowed the technology giant to pay virtually nothing on its European business
in some years. The arrangements enabled Apple to funnel profit from two Irish
subsidiaries to a “head office” with “no employees, no premises, no real
activities,” the commission said.
By
doing so, Apple paid only 50 euros in taxes for every million euros in profit
during 2014. As part of its ruling, Europe demanded that Ireland recoup 10
years’ worth of back taxes, some 13 billion euros, or about $14.5 billion, plus
interest.
The
amount is a drop in the bucket for Apple, which has a total cash pile of more
than $230 billion. Even so, the company described the order as a “devastating
blow” to the rule of law. The United States Treasury Department said it
jeopardized “the important spirit of economic partnership between the U.S. and
the E.U.”
Since
taking over as competition commissioner, Margrethe
Vestager, has made tax avoidance a central focus, a campaign that has also
ensnaredStarbucks
in the Netherlands, Amazon
in Luxembourg and Anheuser-Busch
InBev in Belgium. The United States Treasury, one of the most vocal critics
of these moves, has said that Europe is overstepping its power, unfairly
targeting American companies and hurting global efforts to curtail tax
avoidance.
The
United States government is an unlikely advocate. Politicians have berated
Apple for paying too little by setting up complex and opaque tax structures.
Officials have hit back against corporate mergers that allowed companies to
move their headquarters to places like Ireland to take advantage of lower tax
rates.
But
the positioning in the Apple case reflects a political tug of war over big
profitable companies, their potential tax bounty and the rights to regulate
them.
“U.S.
companies are the grandmasters of tax avoidance,” said Edward D. Kleinbard,
professor at the Gould School of Law at the University of Southern California
and a former chief of staff to the congressional Joint Committee on Taxation.
“Nevertheless, because of the nature of U.S.
politics,” he said, the Apple case “will be framed by the U.S. as Europe
overreaching and discriminating against ‘our team.’”
Since
early this year, Ms. Vestager and Jacob J. Lew, the United States Treasury
secretary, and their teams have met regularly to discuss Europe’s state-aid tax
investigations. Mr. Lew visited Brussels in July to put forward the American
perspective.
Last
week, the Treasury Department released
a report criticizing any moves to recoup back taxes from American
companies. Politicians also chimed in after the Apple decision.
Senator
Chuck Schumer, Democrat of New York, called it a “cheap money grab” by the European Commission,
“targeting U.S. businesses and the U.S. tax base.” The Senate Finance Committee
chairman, Orrin G. Hatch, said that the decision “encroaches on U.S. tax
jurisdiction.”
Apple
and Ireland had similar defenses.
Timothy
D. Cook, the chief executive of the technology company, said that Europe’s
ruling had “no basis in fact or in law,” and called it an effort to “rewrite
Apple’s history in Europe, ignore Ireland’s tax laws and upend the
international tax system in the process.” The company called the effective tax
rate “a completely made-up number.”
2. Donald
Trump and Mexican Leader Clash in Accounts of Meeting
The New York Times AUG. 31, 2016
Donald
J. Trump and President Enrique Peña Nieto held a joint press conference in
Mexico City on Wednesday. CreditRodrigo Cruz for The New York Times
Donald J. Trump swept
into Mexico City on Wednesday on a politically perilous mission to prove his
mettle as a negotiator by facing a nation that he has repeatedly denigrated and
has promised to compel to pay for a border wall.
But
Mr. Trump’s efforts at diplomacy in a meeting with Mexico’s leader,Enrique Peña Nieto, quickly
backfired: Mr. Trump said that the two men did not discuss financing for the
wall, one of his signature immigration issues, while Mr. Peña Nieto said later
on Twitter that at the start of their meeting, “I made it clear that Mexico
will not pay for the wall.”
Mr.
Trump had accepted an invitation from Mr. Peña Nieto, and met with him at the
presidential palace to discuss economic and border concerns while sidestepping
combustible issues and ignoring raging hostility from average Mexicans. Mr.
Trump has called them rapists and drug dealers, and he did not apologize for
those remarks during a joint news conference when a reporter pressed him for any
regrets.
Instead,
as an impassive Mr. Peña Nieto looked on, Mr. Trump sounded conciliatory themes
about working together to improve border security and said that he did not
challenge the Mexican president over paying for his proposed wall. Gone, at
least for this foreign trip, were the threats about American interests and
superiority that have defined Mr. Trump’s candidacy and electrified his
supporters.
“We
did discuss the wall, we didn’t discuss payment of the wall — that will be for
a later date,” Mr. Trump said. “This was a very preliminary meeting. I think it
was an excellent meeting.”
Mr.
Peña Nieto did not dispute Mr. Trump’s words about the wall during their news
conference. Instead, the president, who pointedly emphasized goals like “mutual
respect” and “constructive” relations several times in his remarks, did Mr.
Trump some favors with his respectful treatment: The Mexican president
acknowledged that every country had a “right” to protect its own border, and
suggested that Mr. Trump wanted to move on from his antagonistic remarks of the
past.
“The
Mexican people felt aggrieved by those comments,” Mr. Peña Nieto said. “But I
am certain that he has a genuine interest in building a relationship that would
lead us to provide better conditions to our people”
Mr.
Trump’s unexpected trip to Mexico was also timed to steer attention from his
significant shifts on immigration policy, particularly his all-but-official
disavowal of past promises to deploy a “deportation force” to swiftly remove
all 11 million undocumented immigrants in the United States. He flew to Mexico
just hours before he was scheduled to deliver a major speech on immigration on
Wednesday night in Phoenix after more than a week of mixed signals about his
immigration views, which he said were “softening” and then “hardening” in the
space of two days last week.
But
he also took a gamble with his visit: that he would remain coolheaded with a
potential adversary and come across as both strong and humble, and that Mr.
Peña Nieto would not surprise him with a rebuke. While he was diplomatic with
Mr. Peña Nieto by all accounts, Mr. Trump also ran the risk that his supporters
would see him as overly accommodating and friendly with Mexico, which some
blame for destabilizing the United States as a main pipeline for illegal
immigration
On
a more personal level, Mr. Trump wanted to show undecided voters that he had
the temperament and self-control of a statesman — qualities that many doubt he
has — and also demonstrate that Americans did not need to worry every time he
opened his mouth in a foreign country. He also hoped to show that he could
acquit himself well on the world stage, something that is a clear strength of
his Democratic opponent, Hillary Clinton, a former secretary of state, senator
and first lady.
Mrs.
Clinton, during a speech on Wednesday in Cincinnati on the importance of
American diplomacy, took a clear jab at Mr. Trump by saying that forging
international relationships required hard work and personal trust.
“It
certainly takes more than trying to make up for a year of insults and
insinuations by dropping in on our neighbors for a few hours and then flying
home again,” Mrs. Clinton said. “That is not how it works.”
3. Brazil’s Ousted President
By The New York Times THE EDITORIAL BOARD AUG. 31, 2016
CreditAndressa
Anholete/Agence France-Presse — Getty Images
Brazil has had four
elected presidents since democracy was restored in 1985. Two served out their
terms. On
Wednesday, Dilma Rousseff was the
second to be ousted while in office amid political upheaval and allegations of
wrongdoing.
Senators
voted overwhelmingly to impeach Ms. Rousseff for using state bank funds to
shore up the government’s budget before her 2014 re-election, which they called
a crime; some of her predecessors used similar budget tricks. Ms. Rousseff’s
departure marks the end of a transformative 13-year rule by the leftist
Workers’ Party, which used state revenues generated by a commodities boom to
lift millions out of poverty but lost support as the economy went into
recession in recent years.
Ms.
Rousseff decried the process as a coup by political opponents who saw her as a
threat because she had not stopped a corruption inquiry that ensnared dozens of
members of the country’s ruling class. She compared the case against her to the
period of military rule when she was one of hundreds of people detained and
tortured.
“Today, the Senate made a decision that will
go down as one of the great injustices in history,” she said
in a
defiant speech after lawmakers voted 61 to 20 to impeach her.
“Sixty-one senators subverted the will expressed through 54.5 million votes.”
Ms.
Rousseff vowed to fight what she described as an attempt by a coalition of
right-wing male politicians, themselves tainted by corruption allegations, to
hijack the political process. “The progressive, inclusive and democratic
national project that I represent is being halted by a powerful conservative
and reactionary force,” she said.
It
will be a shame if history proves her right. But Ms. Rousseff’s legacy, and the
events that led to her downfall, are more complex than she acknowledges. She
became deeply unpopular when recession hit and she failed to create the
coalition needed to govern effectively. When corruption investigators zoomed in
on her predecessor as president, Luiz Inácio Lula da Silva, she abused
her authority by giving him a cabinet post, to shield him from
prosecution.
There
are concrete steps the government can take to start restoring Brazilians’ faith
in their scandal-plagued political elite. Michel Temer, who became interim president
in May when Ms. Rousseff was suspended, should allow the corruption
investigations to continue and reject legislative initiatives meant to defang
prosecutors.
