The European Commission’s recent decision that the Irish government must collect €13 billion ($14.6 billion) in illegal tax benefits from Apple has been greeted positively by many left-wing figures and political groups. The Irish left-wing political party, People Before Profit, has advocated spending this windfall on desperately needed social housing, also known as affordable housing in the U.S. However, imbuing the EC’s decision with any socialist motive dangerously belies reality.
The investigation into Apple’s tax benefits was not the pinnacle of the liberal crusade for economic justice. Confirmation of this fact is all but secured by looking at the EC’s history of regressive economic policy. Over the past six years, the EC in conjunction with the International Monetary Fund and European Central Bank spearheaded vicious austerity programs in Greece, Cyprus, Portugal, Ireland and Spain. The results of this economic violence are still felt today, with these countries experiencing wide scale unemployment, housing crises and political unrest.
The EC evidently does not care about creating a fair tax system in Ireland. It has been apathetic to calls for economic equality and to the suffering of millions of European workers. Instead, the lure of capitalist profiteering prevailed. While it is true that Ireland overstepped free trade regulations by aiding the company, it is also evident that the EU’s regressive rules disproportionately harms smaller, poorer countries. It is these abstract rules that the European Commission sought to uphold in its decision, while disregarding the interests of European workers.
With this ruling, the EC stated that in order to protect free trade, countries cannot provide preferential treatment to multinational firms to attract their business. What they missed is that this principle is at the heart of the global inequality perpetuated by free trade systems. When poorer countries cannot attract business through state aid, it incentivizes big businesses to stay within the borders of wealthy, advanced and industrialized countries. Arbitrary historic advantages have allowed some nations to develop resources and amenities faster than others, and because capital will always seek the most preferable conditions, this system fosters inequality.
Large rich countries such as Germany, the U.K. and France clearly derive benefit from these rules and would naturally want them to be kept in place. But if poorer European countries such as Romania, Bulgaria and Croatia cannot give state aid, they are unlikely to ever compete for foreign direct investment. The unfair, unequal status quo is thus maintained in perpetuity.
While it was despicable of Ireland to allow a company to pay almost no tax, we should not forget that the EC’s motives in deciding this case were equally appalling and underlie a system of egregious state-sanctioned inequality.
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