Bringing Back Manufacturing Jobs to the U.S.A.: Confronting Tough Realities

Meeting with American corporate CEOs at the White House on the first “working day” of his presidency, Donald Trump warned, “A company that wants to fire all of its people in the United States and build some factory somewhere else, then thinks that product is going to just flow across the border into the United States . . . that’s just not going to happen.”[1] The new president was up against “tectonic forces” in trying to bring back “blue collar” manufacturing jobs to his base using tax policy. Yet the business calculus goes immediately on the basis of financial advantage, and the contours of the “game board” include the various tax and trade policies of countries.

The full essay is at "Bringing Back the Jobs."

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[1] Nelson D. Schwartz and Alan Rappeport, “Call to Create Jobs, or Else, Tests Trump’s Sway,” The New York Times, January 24, 2017.

Apple Owes Back-Taxes in the E.U.: Blame Ireland or Apple?

The European Commission issued a formal decision on August 30, 2016 that the state of Ireland “recoup roughly €13 billion ($14.5 billion) of unpaid taxes accumulated over more than a decade by Apple, Inc.”[1] The decision “shows companies could be on the hook for past behavior and potentially be handed big bills for allegedly unpaid back taxes.”[2] E.U. law “forbid companies from gaining advantages over competitors because of government help.”[3] This applies both the federal government and the state governments, so the law could be better stated as, “No state government shall help companies gain advantages over their competitors.” Presumably Ireland’s government made the offer of help, rather than Apple getting that government to comply with the company’s wishes. If so, the state government rather than the company should be held responsible. Put another way, if Apple’s board and management considered the Irish offer to be legitimate at the time, Apple should not be held to pay the back taxes; rather, the state government should pay a penalty to the Commission.

The full essay is at "Ireland or Apple?"

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[1] Natalia Drozdiak and Sam Schechner, “$14.5 Billion Irish Tax Bill,” The Wall Street Journal, August 31, 2016.

[2] Ibid.

[3] Ibid.

Going Off-Shore, Dodging Sanctions, and Laundering Money: The World of the Richest of the Rich

On April 3, 2016, 2.6 terabytes of data—more than 11.5 million documents—leaked from Panama’s law firm, Mossack Fonseca. The documents show that the firm “helped heads of state, oligarchs and celebrities launder money, dodge sanctions and avoid taxes.”[1] Over 40 years, 214,000 offshore shell companies in 200 countries implicate individuals including the family of Syrian President Bashar Assad, and that of British Prime Minister David Cameron, several friends of Russian President Vladimir Putin, and Icelandic Prime Minister Sigmunder Gunnlaugsson; financial institutions implicated include UBS, HSBC, and Société Générale.[2] I contend that the markets themselves had been tilted in the interest of the greater power (i.e., the rich), so systemic rather than incremental or piecemeal efforts would be necessary to solve the problem.

The full essay is at "Going Off-Shore."

Reforming U.S. Corporate Taxation: On the Virtue of Simplification

As the Republican Party assumed control of the U.S. Senate, and thus of Congress itself, since they would continue in the majority in the U.S. House, Republican Congressional  leaders and President Obama all emphasized policy areas where common ground could be found. Suddenly, the day after the midterm election of 2014, talk of bipartisanship was in the air. In this essay, I discuss the domain of corporate taxation in order to suggest that the common ground can be deeper than typically thought.

The full essay is at "Reforming U.S. Corporate Taxation"

Federalism on Different Levels: Switzerland Capitulates to the E.U.

In 1960, Switzerland was one of the two founders of the European Free Trade Association. All of the countries participating in that free-trade agreement except Switzerland went on to ratify the EEA (European Economic Area) free-trade treaty, an agreement akin to NAFTA in America. In a referendum in December 1992, the Swiss turned down the proposed treaty. Rather than gain access to the E.U.’s domestic market through EEA, the Swiss opted to do so through bilateral treaties with the E.U. by which the independent state agreed to E.U. laws relevant to the single market. Switzerland also signed on to the  Schengen arrangement, which became an E.U. law in 1999, and provisions concerning security and asylum. Even so, changes to the relevant E.U. federal law are binding on Switzerland via the bilateral treaties only if a bilateral commission approves. Admittedly, “Bilateral” is somewhat misleading here, as a basic equivalence is erroneously assumed between the E.U. and Switzerland.


The complete essay is at Essays on Two Federal Empires.

 Switzerland, shown in orange, would not even be a large state in the E.U.    Source:  battlecat.net