Austerity & Apple

Early this week, leaders of the eight greatest developed economies met in Lough Erne, Northern Ireland (UK), for the G-8 Summit. At the G-8, President Obama, British Prime Minister David Cameron, German Chancellor Angela Merkel, and others tackled a number of thorny issues, such as the ongoing civil war in Syria. Another major issue tackled this week was corporate tax evasion.

So what did everyone ultimately agree to?

Has the G8 made progress cracking down on multinationals playing off one regime against another to lower its tax bills?

The world leaders have called on the OECD, the body that draws up international guidelines on tax, to draft a template for multinationals to report the tax they pay to taxing authorities in each jurisdiction in which they operate. Cameron claims this will "identify where multinational companies are earning their profits and paying their taxes so we can track and expose those who aren't paying their fair share". Tax campaigners, however, suggest it does not go nearly far enough. There was no commitment for this information to be made public or for companies to provide greater disclosure on other economic activity on a country-by-country basis.

What about closing loopholes in international tax rules exploited by firms such as Google, Apple and Amazon?

Several issues around taxing multinationals are being worked on furiously by the OECD before a wider G20 meeting of finance ministers next month. The G8 promised to "take the necessary individual and collective action" to back up any recommendations from recasting the rules. As a broad statement of intent the G8 leaders said: "Countries should change rules that let companies shift their profits across borders to avoid taxes."

So G-8 leaders agreed to share more information. Otherwise, they mostly just agreed they and other countries "should do something" on corporate tax evasion. We'll see how far this goes.

But hey, at least they acted embarrassed over this. Here in Nevada, however, our state and local governments have rewarded Apple's "unbelievable chutzpah" by showering the multinational corporation with corporate welfare! Even as the rest of the world has become increasingly outraged over Apple stiffing public coffers by exploiting as maby tax loopholes as possible, Governor Brian Sandoval keeps heralding Apple's corporate welfare as "economic development".

But really, is that true? Does Nevada truly benefit from rewarding companies that come here just to avoid paying taxes elsewhere? When did crippling austerity become "economic development"?

Think about it. There's a reason why G-8 leaders were shamed into bringing up corporate tax evasion. While these powerful multinational, multi-billion dollar companies come to Nevada and go elsewhere to avoid paying their bills, real people are suffering the consequences of austerity. Since they don't pay their fair share, we're paying for their sins instead.

Can we afford any more of this?