Summary: In 2016, The European Commission put both Apple Inc. one of the largest

Question

Summary:

            In 2016, The European Commission put both Apple Inc. one of the largest and most well known tech companies in the world and Ireland into hot water. They claimed that Ireland was illegally letting Apple avoid billions of dollars of taxes. They claimed this was unfair, only benefited the two parties and harmed everyone else’s economies. The European Commission demanded that Ireland fine $15.3 Billion dollars’ worth of euros from Apple to make up for the lost taxes they evaded.

            According to the article, Ireland has one of the lowest corporate tax rates in the European union as compared to Belgium’s tax rate of 33.9%. Even with the lowest tax rates in Europe they Apple was not satisfied and was given a lower tax rate in an agreement with Ireland. Their agreement was that Ireland would give them a lowered corporate tax rate and in return Apple brings their business headquarters to them. In comparison to these rates, the 2018 US corporate tax rate changed is 21% which Trump changed from the previous 2017 35% corporate tax rate.

Analysis:

            In my opinion, the European Commission did the right thing by fining Apple and Ireland. What they were doing was very selfish. Apple is one of the largest tech companies the world, they could afford to have their headquarters in even the highest taxed areas of Europe such as Belgium and still be very well off. If they were to bring their company to the US with the new lowered corporate tax rates which is highly unlikely, the United States economy would highly benefit. I agree that the tax cuts are unfair but unfortunately the US is doing the same exact thing with Amazon Inc. Recently many US cities were fighting to become the next Amazon warehouse location and even offered Amazon billions of dollars of taxes back in place of them bringing their business to them which is a very similar situation.  

QUESTION: DO YOU AGREE WITH THE ABOVE STATEMENTS? EXPLAIN

Explanation / Answer

No, I am not agreeing with the statement . Taxes are stabilizers which are used to bring economy out of recession. So same with the corporate taxes. In peroid of low income and low output enterprenur are not interested in investment because returns would be lower so if enterprenur won't undertake investment then output and income will fall further thus deepening the crisis. So to increase economic activity's and to boost economy government has to incentivize the enterprenur through tax cuts . Through tax cuts let it be corporate taxes government incentives the enterprenur to under take investment . Thus investment undertaken will increase employment, income thus booasting aggregate demand . Yes, there is problem of lost revenue in form of concessions but lost revenue can be regenerated through increased economic activities .

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