An End To Our New Gilded Age? Thanks to EU Tax Accountants?

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Photo credit: SergioGeorgini

In a brief and eloquent statement of refined economic logic that most Ph.D’s in the field would agree on, it can be said, without any doubt, that the European Union and its unified Eurozone currency has been a complete fucking catastrophe for millions of people not just on the continent but worldwide. Not since the Weimar Republic hosted a similar set of fiscal calamities have we seen social and political developments of this magnitude, up to and including the blossoming of international fascism.

Could two recent stories in Reuters about the EU prosecuting multinational tech companies for tax dodging be a light at the end of the tunnel for the continent and perhaps even across the Atlantic here in America?

In 1920, John Maynard Keynes published The Economic Consequences of the Peace, which predicted the Second World War more than a decade before Hitler became Chancellor in Germany. He wrote “In continental Europe the earth heaves and no one but is aware of the rumblings. There it is not just a matter of extravagance or ‘labor troubles’; but of life and death, of starvation and existence, and of the fearful convulsions of a dying civilization.” For a more in-depth explanation, consider reading this article by Roberto Savio about the recent German elections. (HINT: It ain’t looking pretty!)

The problem of the EU is fairly simple. Almost every country in Europe agreed to join the Union in the later half of the last century and they all began to convert their multiple currencies into a single European currency (now known as “The Euro”). That in and of itself is not an awful idea if it were to be properly implemented. Hell, the American dollar has functioned like that worldwide for decades.

But there’s one little hitch that either no one recognized or, alternatively, the heads of these respective member countries signed onto only because they were getting high on their own bullshit. I am referring to restrictions placed on what a member state could and could not do with their Euros.

See, the good Prof. Keynes said that when you have an economic downturn, the government can and should save the day with large amounts of deficit spending, meaning they intentionally go into the red to finance infrastructure and public works projects that get the unemployed working again, which in turn boosts the economy out of the slump.

Only problem is that Eurozone membership rules that everyone signed onto absolutely forbid these member states from deficit spending above 3 percent. So since 2008 the weak countries in the EU (Greece, Spain, Portugal, et al) have been getting pummeled by crippling debts stemming from budget line items, like pensions, and by vicious creditors on the other, personified by the dour visage of Angela Merkel, who is carrying on like one of her Visigoth forbearers in a pantsuit.

In order to pay these creditors, these weak countries, who are not as internationally renowned for their exports as is Germany, have been forced to privatize their infrastructure(s) and sell off their public land(s) to Wall Street. Pensions have been cut, education funding reduced, and in general Europe is starting to look more like Thunderdome every week.

As a result of such austerity, Golden Dawn in Greece, AfD in Germany, National Front in France and many other far-right parties have sprouted up across the Eurozone like mushrooms at a Grateful Dead concert. Meanwhile, the traditional center-left and even democratic socialist parties have been as limp as Bob Dole before he pops a Viagra.

And that’s not all! Remember, on top of all this — which itself is a man-made catastrophe teetering on the brink of the apocalypse — you have this little strip of land that we call the Middle East and war refugees from it coming into the EU. Why do I suspect a few million Muslims running into a country or two governed by fascists could be a problem?

Which brings us back to the two aforementioned tech sector stories that could end up being a beam of light in a pitch black night. Recently, the EU has loosed its tax officials on sleazy Jeff Bezos’s Amazon.com and Apple, both which have utilized tax shelter laws in Luxembourg and Ireland and funny accounting to reduce their fiscal loads.

The New York Times video immediately and prominently featured below explains what is going on with Apple.

This is actually pretty important for everyday Americans and here is why. Apple currently has $181+ billion stashed away in its Irish tax shelter that it refuses to pay to the IRS. It hides billions every year in these offshore tax shelters, one of the major reasons why federal and state infrastructure continues to deteriorate.

In a 2013 memo coauthored by Senators Carl Levin (since retired) and generally dipstick John McCain it was revealed that Apple paid a corporate income tax rate of 20.1%. The federal statutory minimum is 35%. Economics professors call that a yuuuge difference.

How many public schools, roads, bridges, highways and libraries could be refurbished or built with that money? How many stand-offs over the debt ceiling and other fiscal hari karis could have been avoided if these tech companies were paying their fair share?

This is certainly not a finished matter, particularly because the Caribbean has plenty of alternative tax shelters to offer. Tax lawyers are slippery bastards and could get these corporations off the hook, no problemo.

But Keynes wrote something about the future in 1919 that is worth considering:

The blackness of the prospect itself leads us to doubt its accuracy; our imagination is dulled rather than stimulated by too woeful a narration, and our minds rebound from what is felt ‘too bad to be true.’ But before the reader allows himself to be too much swayed by these natural reflections, and before I lead him…towards remedies and ameliorations and the discovery of happier tendencies, let him redress the balance of his thought by recalling two contrasts—England and Russia, of which the one may encourage his optimism too much, but the other should remind him that catastrophes can still happen, and that modern society is not immune from the very greatest evils.

Prescient, eh?