Double Irish / Dutch Sandwich

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pages: 363 words: 92,422

A Fine Mess by T. R. Reid

Affordable Care Act / Obamacare, Bernie Sanders, Capital in the Twenty-First Century by Thomas Piketty, carried interest, centre right, clean water, Donald Trump, Double Irish / Dutch Sandwich, game design, Gini coefficient, High speed trading, Home mortgage interest deduction, Honoré de Balzac, income inequality, industrial robot, land value tax, loss aversion, mortgage tax deduction, obamacare, Occupy movement, offshore financial centre, oil shock, Plutocrats, plutocrats, race to the bottom, Ronald Reagan, seigniorage, Silicon Valley, Skype, Snapchat, sovereign wealth fund, Tesla Model S, The Wealth of Nations by Adam Smith, Tim Cook: Apple, Tobin tax, We are the 99%, WikiLeaks

Corporations Pay 35%,” Wall Street Journal, Oct. 27, 2013, www.wsj.com/articles/SB10001424052702303902404579152271744452490. 6. Offshore Profit Shifting and the U.S. Tax Code—Part 2 (Apple Inc.), U.S. Senate Permanent Subcommittee on Investigations, May 21, 2013, 152–91. 7. Jesse Drucker, “‘Dutch Sandwich’ Saves Google Billions in Taxes,” Bloomberg Businessweek, Oct. 22, 2010. Another excellent explanation of Google’s “Double Irish” system can be found in Cyrus Farivar, “Silicon Valley Fights to Keep Its Dutch Sandwich and Double Irish Loopholes,” Ars Technica, Jan. 20, 2014. 8. Offshore Profit Shifting and the U.S. Tax Code—Part 1 (Microsoft and Hewlett-Packard), U.S. Senate Permanent Subcommittee on Investigations, Sept. 20, 2012, 180–81. 9. Shayndi Raice, “Behind the Surge in a Hot Trend: Skadden Arps’s M&A Lawyers,” Wall Street Journal, Aug. 6, 2014, B1. 10.

This maneuver, fully legal, meant that Apple could use the money it held overseas to provide cash at no cost in the United States—without a penny to the tax man. For all Senator McCain’s ire, Apple’s subsidiary-of-a-subsidiary-of-a-subsidiary structure—the scheme that placed $74 billion beyond the reach of the tax authorities—was actually not as convoluted as another tax-dodging contraption, the intricate mechanism known as a “Double Irish with a Dutch Sandwich.” This one works nicely to shield profits from the tax man for companies that have a good deal of intellectual property, like search engines, software, cancer drugs, or computer operating systems. The “Double Irish” has been used by the likes of Apple and Microsoft, but it’s generally agreed, among aficionados of tax avoidance, that the paradigm case of this particular apparatus is Google’s international tax shifting, which is complicated to the point of being difficult to pin down precisely

Congress, 5, 10 See also charitable contributions; mortgage interest deductions; tax breaks Delaware, 19, 160, 204 Democrats, 43, 60, 64–68, 117, 132, 148, 162, 188, 190, 245 Denmark, 38, 102, 105, 120 government spending in, 23, 126 high tax rates of, 17, 19 property taxes in, 175 simple tax returns of, 221 tax revenues of, 14, 16, 79, 126 VAT rates of, 239 Depardieu, Gérard, 133–34, 139, 151 depletion/depreciation allowances, 64–66, 69–70 derivatives, 181, 184 dividends, 6, 9, 23, 36, 55, 70, 111, 147, 168, 170, 173, 193, 233, 241, 254, 256 “Double Irish with a Dutch Sandwich,” 151–53, 161, 164 Douglas, Roger, 60–61 dynamic scoring theory, 101 earned income tax credit (EITC), 210, 217–18, 238, 250 East Asia, 21, 23, 228 eastern Europe, 93–95, 101–14 economic growth, 16, 36, 41–43, 50, 52, 55, 91, 101, 104–8, 114, 120, 124, 136, 238 economic impact of taxes, 16, 95, 100–101 Economic Recovery Tax Act of 1981 (ERTA), 64 Economist magazine, 58, 104, 126 education, 36, 44, 53, 63, 70, 79, 84, 105, 117–18, 123, 126–27, 168, 175, 180, 221 Egypt, 200, 239 Eisenhower, Dwight, 2 electronic trading, 181–84 emissions.


pages: 515 words: 132,295

Makers and Takers: The Rise of Finance and the Fall of American Business by Rana Foroohar

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3D printing, accounting loophole / creative accounting, activist fund / activist shareholder / activist investor, additive manufacturing, Airbnb, algorithmic trading, Alvin Roth, Asian financial crisis, asset allocation, bank run, Basel III, bonus culture, Bretton Woods, British Empire, call centre, Capital in the Twenty-First Century by Thomas Piketty, Carmen Reinhart, carried interest, centralized clearinghouse, clean water, collateralized debt obligation, commoditize, computerized trading, corporate governance, corporate raider, corporate social responsibility, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, crony capitalism, crowdsourcing, David Graeber, deskilling, Detroit bankruptcy, diversification, Double Irish / Dutch Sandwich, Emanuel Derman, Eugene Fama: efficient market hypothesis, financial deregulation, financial intermediation, Frederick Winslow Taylor, George Akerlof, gig economy, Goldman Sachs: Vampire Squid, Gordon Gekko, greed is good, High speed trading, Home mortgage interest deduction, housing crisis, Howard Rheingold, Hyman Minsky, income inequality, index fund, information asymmetry, interest rate derivative, interest rate swap, Internet of things, invisible hand, John Markoff, joint-stock company, joint-stock limited liability company, Kenneth Rogoff, knowledge economy, labor-force participation, labour mobility, London Whale, Long Term Capital Management, manufacturing employment, market design, Martin Wolf, money market fund, moral hazard, mortgage debt, mortgage tax deduction, new economy, non-tariff barriers, offshore financial centre, oil shock, passive investing, Paul Samuelson, pensions crisis, Ponzi scheme, principal–agent problem, quantitative easing, quantitative trading / quantitative finance, race to the bottom, Ralph Nader, Rana Plaza, RAND corporation, random walk, rent control, Robert Shiller, Robert Shiller, Ronald Reagan, Satyajit Das, Second Machine Age, shareholder value, sharing economy, Silicon Valley, Silicon Valley startup, Snapchat, sovereign wealth fund, Steve Jobs, technology bubble, The Chicago School, the new new thing, The Spirit Level, The Wealth of Nations by Adam Smith, Tim Cook: Apple, Tobin tax, too big to fail, trickle-down economics, Tyler Cowen: Great Stagnation, Vanguard fund, zero-sum game

Although Obama has proposed rules that could make it tougher for companies to relocate abroad specifically for tax reasons, politicians haven’t made a dent in the usual offshore financial wizardry practiced by many of the country’s largest firms. These tactics are particularly common in sectors like finance, technology, and pharmaceuticals—that is, intellectual-property-driven industries in which the virtual nature of assets (ideas, formulas, patents, algorithms, and the like) makes it especially easy to shift profits to the cheapest possible tax jurisdiction, regardless of where they really came from. Ever hear of a double Irish? How about a Dutch sandwich? These aren’t cocktails or bar snacks but rather complex financial strategies used by many American companies to transfer profits they earn abroad to countries with the lowest tax rates. Despite the goofy nicknames, these techniques have a serious and nefarious purpose: to keep money away from the United States whenever possible so as to avoid paying the higher corporate tax rates in effect at home.

According to a source who attended that meeting and spoke to me off the record, one of the radical ideas attendees bounced around envisioned companies writing checks to social media users, based on how much their data streams are monetized by these firms.8 But in terms of how to reward makers over takers, tax reform remains the largest and most immediate fight. The US code is ripe for an overhaul, in both the corporate and the consumer sphere. Tax inversions, Dutch sandwiches, and Cayman Islands wizardry that expatriate the gains of American corporations to enrich a tiny managerial caste suggest a whole new genre of selfish capitalism. As this book has attempted to illustrate, globalization and financialization, working hand in hand, allow firms to fly thirty-five thousand feet over the problems of both individual nations and people, who are all too familiar with the reality on the ground: an economy in which wages still aren’t rising fast enough, good middle-class jobs remain hard to come by, and public deficits remain large, since the private sector won’t spend on real-economy investments to fill the void.

The Irish system can be further exploited if a US firm sets up a second overseas subsidiary in Ireland to manage non-US sales on patents. American firms do a lot of this, redirecting to the most tax-advantageous country the intellectual property that may have been the work of many people in many countries. Basically, this strategy funnels the profits from the knowledge economy, where the innovation actually occurred, to a different economy that offers the cheapest cash haven. Firms can go further and add a “Dutch sandwich” onto this maneuver. Because there are European Union tax agreements in place that allow money to move freely between EU countries, American firms can set up Dutch subsidiaries and transfer more money from more countries into Irish subsidiaries. The whole thing creates a global race to the bottom, which underscores one of the key problems of tax avoidance: the so-called “tragedy of the commons” where, in the end, everyone loses.


pages: 443 words: 98,113

The Corruption of Capitalism: Why Rentiers Thrive and Work Does Not Pay by Guy Standing

3D printing, Airbnb, Albert Einstein, Amazon Mechanical Turk, Asian financial crisis, asset-backed security, bank run, banking crisis, basic income, Ben Bernanke: helicopter money, Bernie Sanders, Big bang: deregulation of the City of London, bilateral investment treaty, Bonfire of the Vanities, Bretton Woods, Capital in the Twenty-First Century by Thomas Piketty, carried interest, cashless society, central bank independence, centre right, Clayton Christensen, collapse of Lehman Brothers, collective bargaining, credit crunch, crony capitalism, crowdsourcing, debt deflation, declining real wages, deindustrialization, Doha Development Round, Donald Trump, Double Irish / Dutch Sandwich, ending welfare as we know it, eurozone crisis, falling living standards, financial deregulation, financial innovation, Firefox, first-past-the-post, future of work, gig economy, Goldman Sachs: Vampire Squid, Growth in a Time of Debt, housing crisis, income inequality, information retrieval, intangible asset, invention of the steam engine, investor state dispute settlement, James Watt: steam engine, job automation, John Maynard Keynes: technological unemployment, labour market flexibility, light touch regulation, Long Term Capital Management, lump of labour, Lyft, manufacturing employment, Mark Zuckerberg, market clearing, Martin Wolf, means of production, mini-job, Mont Pelerin Society, moral hazard, mortgage debt, mortgage tax deduction, Neil Kinnock, non-tariff barriers, North Sea oil, Northern Rock, nudge unit, Occupy movement, offshore financial centre, oil shale / tar sands, open economy, openstreetmap, patent troll, payday loans, peer-to-peer lending, Plutocrats, plutocrats, Ponzi scheme, precariat, quantitative easing, remote working, rent control, rent-seeking, ride hailing / ride sharing, Right to Buy, Robert Gordon, Ronald Coase, Ronald Reagan, savings glut, Second Machine Age, secular stagnation, sharing economy, Silicon Valley, Silicon Valley startup, Simon Kuznets, sovereign wealth fund, Stephen Hawking, Steve Ballmer, structural adjustment programs, TaskRabbit, The Chicago School, The Future of Employment, the payments system, Thomas Malthus, Thorstein Veblen, too big to fail, Uber and Lyft, Uber for X, Y Combinator, zero-sum game, Zipcar

Luxembourg’s arrangements with Amazon and McDonald’s are also under investigation, following revelations that it had made secret deals with hundreds of companies. Whatever their legality, these schemes are a means by which firms obtain substantial rental income. Even more egregiously, some multinationals have exploited anomalies in the tax rules of different jurisdictions, using devices such as Google’s famous ‘Double Irish with a Dutch sandwich’ to move profits to tax havens such as Bermuda where the corporate tax rate is zero. In 2011, nineteen subsidiaries registered in Ireland used the ‘Double Irish’ to avoid tax on €33 billion of profits, equivalent to a fifth of the country’s economic output that year. Perhaps the biggest source of corporate tax avoidance is the parking of profits offshore by US companies, induced by the US tax system. While most countries operate a territorial tax system, taxing only profits deemed to arise in their jurisdictions, the US taxes companies and individuals on their worldwide income.

After complaints from other EU countries, notably Germany, the rules were tightened to tie the concession more closely to patents linked to research and development in Britain. But companies can still claim a reduced rate on patents they have bought in or that arise from outsourced research. France, Luxembourg, Spain, Portugal, Italy and the Netherlands (which has a concessionary rate of just 5 per cent) are among countries that operate a patent box. Ireland, which under pressure closed a related tax-dodging loophole known as the ‘Double Irish’, is introducing a patent box with a concessionary rate of 6.25 per cent. The ostensible purposes of patent boxes are to encourage firms to do more research and to attract ‘knowledge-intensive’ multinationals. But they are in reality another beggar-my-neighbour subsidy that leaves no one better off except the corporations. The money to make up the loss must come from higher taxes on labour and consumption or from cuts in public spending.

W. 1, 2 buy-to-let mortgages 1, 2 Cadbury 1 Calmard, Pierre 1 Cameron, David 1, 2, 3, 4, 5, 6 Campaign for Better Transport 1 Cancer Fund of America 1 CAP (Common Agricultural Policy) 1, 2 Capita 1 Capital in the Twenty-First Century 1, 2 Care UK 1 Carlyle Group 1 Carlyle, Thomas 1 Carnegie Institute 1 Carney, Mark 1, 2 Cato Institute 1 Caxton Associates 1 Cerberus 1, 2 CERN (European Organization for Nuclear Research) 1 CETA (Comprehensive Economic and Trade Agreement) 1 charities/charitable donations 1, 2 Charter of Liberties (1215) 1, 2 Charter of the Forest (1217) 1, 2, 3, 4 Chen, Edward 1 Chernukhin, Vladimir 1 Cheshire, Sir Ian 1 Chicago school 1, 2 China Investment Corp. 1 Christensen, Clayton 1 churches 1 circuits of power 1 Citizens Advice 1 Citizens for Tax Justice 1, 2 Citizens UK 1 Citizens United 1 civil commons 1 Clare, John 1 Clickworker 1 climate change 1, 2, 3, 4 Clinton, Bill 1, 2, 3 Clinton, Hillary 1, 2, 3, 4 cloud labour 1 ‘cognitive capitalism’ 1 Coke, Edward 1 collective bargaining 1, 2, 3 Commissioning Support Industry Group 1 commodification 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12 Commodity Futures Trading Commission 1 commons 1 and allotments 1 civil commons 1 commodification of 1, 2, 3, 4, 5, 6, 7, 8, 9 and ‘contrived scarcity’ 1, 2, 3 cultural commons 1 and enclosure 1, 2, 3 and Hartwick’s Rule 1, 2, 3, 4 intellectual commons 1 and Lauderdale Paradox 1 and neo-liberalism 1, 2, 3, 4, 5, 6, 7 and precariat 1, 2, 3, 4, 5 revolt of 1, 2, 3, 4, 5 and privatisation 1, 2, 3, 4, 5, 6, 7, 8, 9 social commons 1 spatial commons 1, 2 and universal justice 1 Commons Act (1876) 1 Commons Preservation Society 1 comparative advantage 1, 2 Competition and Markets Authority 1 ‘competitiveness’ concept 1, 2, 3, 4, 5, 6, 7 ‘concierge’ economy 1 Congressional Budget Office (US) 1 Constitution (US) 1 ‘contrived scarcity’ 1, 2, 3, 4, 5 copyright 1, 2 Copyright Act (US, 1790) 1 Corbyn, Jeremy 1 Corporate Europe Observatory 1 corporate welfare 1 corporation tax 1, 2, 3, 4, 5, 6, 7, 8, 9, 10 Couchsurfing 1 Coulson, Andy 1 County Smallholdings Estate 1 ‘credentialism’ 1 ‘creditocracy’ 1 Crime and Disorder Act (1998) 1 ‘crony capitalism’ 1, 2, 3, 4, 5 Crosby, Lynton 1, 2 Crowdcube 1 CrowdFlower 1, 2, 3 crowdfunding 1, 2 crowd-sourcing 1 ‘crowdwork’ platforms 1 cultural commons 1 Cup Trust 1 Daily Mail 1, 2, 3 Daily Mirror 1 Daily Star 1 Daily Telegraph 1 Darling, Alistair 1 ‘data exclusivity’ 1 ‘deadweight effect’ 1 debt and austerity 1, 2, 3 and banking systems 1, 2, 3, 4, 5 cancellation of 1 as exploitation 1 household debt 1, 2, 3, 4 housing debt 1 and mental health 1 platform debt 1 and precariat 1, 2 and predatory creditors 1 public and private 1, 2 and rentier capitalism 1, 2, 3, 4, 5, 6, 7 and securitisation 1, 2 and social policy 1 student debt 1, 2 and tax breaks 1 ‘debt overhang’ 1 deindustrialisation 1, 2, 3 democracy and banking systems 1, 2, 3, 4, 5, 6, 7 circuits of power 1 commodification of 1, 2 and education 1 and Goldman Sachs 1 lobbying 1, 2 and media 1, 2 and Mont Pelerin Society 1, 2 and neo-liberalism 1, 2, 3 party politics 1 and plutocracy 1, 2, 3, 4, 5 political consultancy 1 and precariat 1, 2 and privatisation 1 and rentier capitalism 1, 2, 3, 4, 5, 6, 7 and revolt of precariat 1, 2 ‘thinning’ of 1 Desmond, Paul 1 Didi Kuaidi 1 digital platforms see rentier platforms direct subsidies 1 Discipline and Punish 1 Disney 1, 2 ‘distress’ debt 1 Doha Round 1, 2 ‘Double Irish’ 1, 2 Draghi, Mario 1, 2, 3 Drutman, Lee 1 Dudley, William 1 Duncan Smith, Iain 1 Dutch Disease 1 ‘earnings stripping’ 1 Easton, Jim 1 easyCar Club 1 eBay 1 EBRD (European Bank for Reconstruction and Development) 1, 2 Economist, The 1, 2, 3, 4, 5, 6, 7, 8, 9 Ecosystem Markets Task Force 1 education 1, 2, 3, 4, 5, 6, 7 Edward I, King 1 Einaudi, Luigi 1 Einstein, Albert 1 EITC (Earned Income Tax Credit) 1 Electoral Commission 1, 2 Elizabeth II, Queen 1 Elsevier 1 enclosure 1, 2, 3 Encore Capital 1 ‘entrepreneurial’ debt 1 Equity Lifestyle Properties 1 Erhard, Ludwig 1 EU membership referendum (2016) 1, 2 European Central Bank (ECB) 1, 2, 3, 4, 5, 6 European Patent Office 1 ‘euthanasia’ of rentiers 1, 2, 3, 4, 5, 6, 7 Evening Standard 1 ‘ever-greening’ 1 exchange value 1, 2, 3 Facebook 1, 2 Faraday, Michael 1 Farmer, Michael 1 ‘Faustian bargain’ 1, 2, 3 FDA (Food and Drug Administration) 1 Federal Reserve 1, 2, 3, 4, 5, 6 Feinberg, Stephen 1 Financial Services Authority 1 Financial Times 1, 2, 3, 4, 5, 6, 7 Fisher, Sir Antony 1 Fitzgerald, F.


pages: 504 words: 143,303

Why We Can't Afford the Rich by Andrew Sayer

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accounting loophole / creative accounting, Albert Einstein, asset-backed security, banking crisis, banks create money, basic income, Bretton Woods, British Empire, call centre, capital controls, carbon footprint, collective bargaining, corporate raider, corporate social responsibility, creative destruction, credit crunch, Credit Default Swap, crony capitalism, David Graeber, David Ricardo: comparative advantage, debt deflation, decarbonisation, declining real wages, deglobalization, deindustrialization, delayed gratification, demand response, don't be evil, Double Irish / Dutch Sandwich, en.wikipedia.org, Etonian, financial innovation, financial intermediation, Fractional reserve banking, full employment, G4S, Goldman Sachs: Vampire Squid, high net worth, income inequality, information asymmetry, Intergovernmental Panel on Climate Change (IPCC), investor state dispute settlement, Isaac Newton, James Dyson, job automation, Julian Assange, labour market flexibility, laissez-faire capitalism, land value tax, low skilled workers, Mark Zuckerberg, market fundamentalism, Martin Wolf, mass immigration, means of production, moral hazard, mortgage debt, negative equity, neoliberal agenda, new economy, New Urbanism, Northern Rock, Occupy movement, offshore financial centre, oil shale / tar sands, patent troll, payday loans, Philip Mirowski, Plutocrats, plutocrats, popular capitalism, predatory finance, price stability, pushing on a string, quantitative easing, race to the bottom, rent-seeking, Ronald Reagan, shareholder value, short selling, sovereign wealth fund, Steve Jobs, The Nature of the Firm, The Spirit Level, The Wealth of Nations by Adam Smith, Thorstein Veblen, too big to fail, transfer pricing, trickle-down economics, universal basic income, unpaid internship, upwardly mobile, Washington Consensus, wealth creators, Winter of Discontent, working poor, Yom Kippur War, zero-sum game

63 Like all companies and other organisations, these businesses depend on a workforce and a customer-base that is educated, a health system that keeps their workers healthy and a public infrastructure, including a legal system. While the little people pay their taxes for all these things and more, many incredibly wealthy companies free-ride on them. The double Irish and the Dutch sandwich Google’s sixth ‘core value’ is: ‘Do the right thing: don’t be evil. Honesty and Integrity in all we do. Our business practices are beyond reproach. We make money by doing good things.’64 Google cut its taxes by US$3.1 billion, using a technique that moves most of its foreign profits through Ireland and the Netherlands to Bermuda. These strategies, known to lawyers as the double Irish and the Dutch sandwich, helped Google to reduce its overseas tax rate to 2.4%.65 Margaret Hodge, who chairs the UK parliament’s Public Accounts Committee, took Google’s UK Vice-President, Matt Brittin, to task over this: ‘You are a company that says you “do no evil”.


pages: 503 words: 131,064

Liars and Outliers: How Security Holds Society Together by Bruce Schneier

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airport security, barriers to entry, Berlin Wall, Bernie Madoff, Bernie Sanders, Brian Krebs, Broken windows theory, carried interest, Cass Sunstein, Chelsea Manning, commoditize, corporate governance, crack epidemic, credit crunch, crowdsourcing, cuban missile crisis, Daniel Kahneman / Amos Tversky, David Graeber, desegregation, don't be evil, Double Irish / Dutch Sandwich, Douglas Hofstadter, experimental economics, Fall of the Berlin Wall, financial deregulation, George Akerlof, hydraulic fracturing, impulse control, income inequality, invention of agriculture, invention of gunpowder, iterative process, Jean Tirole, John Nash: game theory, joint-stock company, Julian Assange, mass incarceration, meta analysis, meta-analysis, microcredit, moral hazard, mutually assured destruction, Nate Silver, Network effects, Nick Leeson, offshore financial centre, patent troll, phenotype, pre–internet, principal–agent problem, prisoner's dilemma, profit maximization, profit motive, race to the bottom, Ralph Waldo Emerson, RAND corporation, rent-seeking, RFID, Richard Thaler, risk tolerance, Ronald Coase, security theater, shareholder value, slashdot, statistical model, Steven Pinker, Stuxnet, technological singularity, The Market for Lemons, The Nature of the Firm, The Spirit Level, The Wealth of Nations by Adam Smith, The Wisdom of Crowds, theory of mind, too big to fail, traffic fines, transaction costs, ultimatum game, UNCLOS, union organizing, Vernor Vinge, WikiLeaks, World Values Survey, Y2K, zero-sum game

In the state anti-trust suits against Microsoft, almost all states settled before trial. Laws can have loopholes. This can happen by accident, when laws are linguistically ambiguous, contain simple errors, or fail to anticipate some new technological development. It can also happen deliberately, when laws are miswritten to enable the skillful few to evade them. Examples of accidental loopholes are the “Double Irish” and “Dutch Sandwich” loopholes that allow multinational corporations to avoid U.S.—and other—taxes.14 It's how Google pays only 2.8% of profits in tax. One estimate claims the U.S. loses $60 billion per year in taxes this way. Another loophole allows large paper mills to claim $6 billion in tax credits per year for mixing diesel fuel in with a wood byproduct they already burn; the law with the loophole was intended to reduce the consumption of fossil fuels.15 A variety of loopholes make video games one of the most highly subsidized industries in the U.S.

And, as we've seen in Chapter 12, the person who is in charge of making this decision will do better personally if he ignores his own moral considerations and cooperates with his employer. Even worse, if the corporation doesn't maximize profits, it risks a shareholder lawsuit. Additionally, market competition encourages sellers to ignore moral pressure as much as they can. Imagine if you were in a corporate boardroom, discussing the Double Irish tax loophole and how it could save your company millions. After it has been explained how the maneuver is perfectly legal, and how other companies are doing it, how far do you think a “but it's immoral” argument is going to go? Even if you don't want to do it, if you don't and your competitors do, you'll be uncompetitive in the marketplace—reminiscent of the sports doping example from Chapter 10.

Gary Becker Gary Becker (1996), “The Economic Way of Looking at Human Behavior: The Nobel Lecture,” Journal of Political Economy, 101:385–409. increasing the probability Mark Kleinman (2009), When Brute Force Fails: How to Have Less Crime and Less Punishment, Princeton University Press. conflicting evidence Nina Mazar and Dan Ariely (2006), “Dishonesty in Everyday Life and Its Policy Implications,” Journal of Public Policy & Marketing, 25:117–26. two Irish subsidiaries Joseph B. Darby III and Kelsey Lemaster (15 May 2007), “Double Irish More than Doubles the Tax Savings,” Practical US/International Tax Strategies, 11:2,11–16. bigger one opened up Todd Neeley (28 Mar 2011), “Pulp, Paper Companies Amend Tax Returns Actions Could Cost Taxpayers Billions of Dollars,” DTN: The Progressive Farmer. Chapter 10 someone was sentenced Barbara de Lollis (15 Sep 2010), “Woman Faces Three Months in Jail for Stealing Hotel Towels,” USA Today.


pages: 598 words: 172,137

Who Stole the American Dream? by Hedrick Smith

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Affordable Care Act / Obamacare, Airbus A320, airline deregulation, anti-communist, asset allocation, banking crisis, Bonfire of the Vanities, British Empire, business process, clean water, cloud computing, collateralized debt obligation, collective bargaining, commoditize, corporate governance, Credit Default Swap, credit default swaps / collateralized debt obligations, currency manipulation / currency intervention, David Brooks, Deng Xiaoping, desegregation, Double Irish / Dutch Sandwich, family office, full employment, global supply chain, Gordon Gekko, guest worker program, hiring and firing, housing crisis, Howard Zinn, income inequality, index fund, industrial cluster, informal economy, invisible hand, Joseph Schumpeter, Kenneth Rogoff, Kitchen Debate, knowledge economy, knowledge worker, laissez-faire capitalism, late fees, Long Term Capital Management, low cost carrier, manufacturing employment, market fundamentalism, Maui Hawaii, mega-rich, mortgage debt, negative equity, new economy, Occupy movement, Own Your Own Home, Paul Samuelson, Peter Thiel, Plutonomy: Buying Luxury, Explaining Global Imbalances, Ponzi scheme, Powell Memorandum, Ralph Nader, RAND corporation, Renaissance Technologies, reshoring, rising living standards, Robert Bork, Robert Shiller, Robert Shiller, rolodex, Ronald Reagan, shareholder value, Shenzhen was a fishing village, Silicon Valley, Silicon Valley startup, Steve Jobs, The Chicago School, The Spirit Level, too big to fail, transaction costs, transcontinental railway, union organizing, Unsafe at Any Speed, Vanguard fund, We are the 99%, women in the workforce, working poor, Y2K

They can allocate their profits on lucrative patents on iPads and iPhones to their overseas operations or they can sell software applications from low-tax countries overseas, shifting around tens of billions in income from country to country with legal but cleverly devised bookkeeping to avoid taxes in the United States and in other countries, too. Earlier this year, The New York Times reported that Apple had pioneered an accounting technique known as the “Double Irish with a Dutch Sandwich,” which cut Apple’s taxes drastically by routing profits through Irish subsidiaries to the Netherlands and then to the Caribbean. Today, hundreds of other U.S. corporations have copied tactics invented by Apple, which, in 2011, paid only $3.3 billion in taxes on $34.2 billion in profits. Under current tax law, U.S. multinationals are allowed to write off all their overseas costs immediately, even though they don’t pay tax on those overseas profits until the money is repatriated.

., “Corporate Taxpayers & Corporate Tax Dodgers 2008–10,” Citizens for Tax Justice and Institute on Taxation and Economic Policy, November 2011, http://​www.​ctj.​org; John McKinnon, “Business Roundtable: We Pay Enough Taxes, Thank You,” The Wall Street Journal Washington Wire, April 14, 2011. 66 Others cashed in heavily on loopholes Aviva Aron-Dine, “Well-Designed, Fiscally Responsible Corporate Tax Reform Could Benefit the Economy,” Center on Budget and Policy Priorities, June 4, 2008, http://​www.​cbpp.​org. 67 The multinationals that have been most successful McIntyre, “Corporate Tax Dodgers.” 68 Companies that pay roughly 35 percent Catherine Rampell, “Winners and Losers Under the U.S. Corporate Tax Code,” The New York Times Online, January 27, 2011; Binyamin Appelbaum, “Corporate Taxes: More Winners and Losers,” The New York Times Online, January 27, 2011; “Analysis: 12 Corporations Pay Effective Tax Rate of Negative 1.5% on $171 Billion in Profits: Reap $62.4 Billion in Tax Subsidies,” Citizens for Tax Justice, June 1, 2011, http://​www.​ctj.​org. 69 “Double Irish with a Dutch sandwich” Charles Duhigg and David Kocienieski, “How Apple Sidesteps Billions in Taxes,” The New York Times, April 29, 2012. 70 Paid only $3.3 billion in taxes on $34.2 billion in profits Ibid. 71 “Check the Box” Vanessa Houlder, Megan Murphy, and Jeff Gerth, “Tax Wars: The Accidental Billion-Dollar Break,” FT.​Com Financial Times, September 27, 2011. 72 They lobby Congress for a “tax holiday” David Kocieniewski, “Companies Push for Tax Break on Foreign Cash,” The New York Times, June 19, 2011; Linnley Browning, “A One-Time Tax Break Saved 843 U.S.


pages: 772 words: 203,182

What Went Wrong: How the 1% Hijacked the American Middle Class . . . And What Other Countries Got Right by George R. Tyler

8-hour work day, active measures, activist fund / activist shareholder / activist investor, affirmative action, Affordable Care Act / Obamacare, bank run, banking crisis, Basel III, Black Swan, blood diamonds, blue-collar work, Bolshevik threat, bonus culture, British Empire, business process, capital controls, Carmen Reinhart, carried interest, cognitive dissonance, collateralized debt obligation, collective bargaining, commoditize, corporate governance, corporate personhood, corporate raider, corporate social responsibility, creative destruction, credit crunch, crony capitalism, crowdsourcing, currency manipulation / currency intervention, David Brooks, David Graeber, David Ricardo: comparative advantage, declining real wages, deindustrialization, Diane Coyle, Double Irish / Dutch Sandwich, eurozone crisis, financial deregulation, financial innovation, fixed income, Francis Fukuyama: the end of history, full employment, George Akerlof, George Gilder, Gini coefficient, Gordon Gekko, hiring and firing, income inequality, invisible hand, job satisfaction, John Markoff, joint-stock company, Joseph Schumpeter, Kenneth Rogoff, labor-force participation, labour market flexibility, laissez-faire capitalism, lake wobegon effect, light touch regulation, Long Term Capital Management, manufacturing employment, market clearing, market fundamentalism, Martin Wolf, minimum wage unemployment, mittelstand, moral hazard, Myron Scholes, Naomi Klein, Northern Rock, obamacare, offshore financial centre, Paul Samuelson, pension reform, performance metric, pirate software, Plutocrats, plutocrats, Ponzi scheme, precariat, price stability, profit maximization, profit motive, purchasing power parity, race to the bottom, Ralph Nader, rent-seeking, reshoring, Richard Thaler, rising living standards, road to serfdom, Robert Gordon, Robert Shiller, Robert Shiller, Ronald Reagan, Sand Hill Road, shareholder value, Silicon Valley, South Sea Bubble, sovereign wealth fund, Steve Ballmer, Steve Jobs, The Chicago School, The Spirit Level, The Wealth of Nations by Adam Smith, Thorstein Veblen, too big to fail, transcontinental railway, transfer pricing, trickle-down economics, tulip mania, Tyler Cowen: Great Stagnation, union organizing, Upton Sinclair, upwardly mobile, women in the workforce, working poor, zero-sum game

In 2010 and 2011, technology firms in the Standard & Poor’s 500 stock index reported an average global tax rate one-third less than the rest of the S&P according to a New York Times study.37 Apple had a tax rate of only 9.8 percent in 2011, saving some $2.4 billion in taxes, according to estimates by Martin Sullivan; it sloshed profits around the globe using tactics with names like the Double Irish with a Dutch Sandwich.38 A favorite haven is Luxembourg, where servicing tax dodgers accounts for up to one-half its national income.39 The profit on your Apple music or app downloads, for example, is recorded at a mail drop called iTunes S.àr.l. in Luxembourg. Oh, and that Apple product you bought in Berlin? You likely purchased it through a reluctant German commissionaire, a cutout for a firm in low-tax Singapore, where the profits of the German transaction are actually recorded.40 The example of Google is also instructive.