Washington is looking to trip up Silicon Valley multinationals in their double-Dutch tax-avoidance scheme with Ireland.
The chairman of the Senate Permanent Subcommittee on Investigations, Carl Levin (D-Mich.), and Sen. John McCain (R-Ariz.) have both accused Ireland of being a tax haven and are now encouraging Dublin to get its house in order — again.
This comes after the committee got no movement from the Senate hearings held this summer, where Apple CEO Tim Cook and his executives were paraded in front of the cameras to testify on their tax scheme.
Curtailing the “Double Irish and Dutch Sandwich” tax-avoidance scheme (in which American-owned companies use Irish and Dutch subsidiaries to shift profits into low- or no-tax jurisdictions) is seen by some as the only way to level the field.
“The US government is losing tens of billions of dollars at a time when we are revenue-constrained, worrying about the deficit, cutting spending — you know, we need all the money we can get,” economist Bruce Bartlett, a former domestic policy adviser to Ronald Reagan, told The Post.
The policy change being pushed would move Ireland a step closer to fully charging companies its official 12.5 percent corporate tax rate. Loopholes often lower that rate to about 3 percent.
“Ireland wouldn’t be doing this if it wasn’t being pressured politically to do so,” Bartlett told The Post.
Ireland’s official rate is among the world’s lowest.
“Companies may well end up paying somewhat more taxes globally than they currently do — and I stress the word ‘may,’ ” Patrick Howlin, New York-based director for Ireland’s Industrial Development Authority, told The Post. “Everybody recognizes that change is coming in the international tax environment, and Ireland will obviously be part of that change.”
Apple, Google, Yahoo! and Facebook are among the US companies that together employ 100,000 of the more than 250,000 workers at foreign companies in Ireland that are currently under pressure.
Governments and global critics want them to pony up more in taxes. But that won’t mean an end to the Double Irish and the Dutch Sandwich, tax experts say.
The Double Irish uses loopholes in US and Irish tax laws to funnel profits of US multinationals from Ireland to sunny Bermuda and other jurisdictions with zero corporate-tax rates.
The Dutch sandwich is so called because profits in Ireland are moved through the Netherlands en route to Bermuda.
The sums are staggering. Audit Analytics notes that major US companies juiced up their offshore earnings by 15 percent last year to a record $1.9 trillion by posting profits outside the US, thus avoiding
a big tax bill.
Ireland accounts for a huge proportion of these offshore earnings. Earlier this year, the Senate’s investigation showed how Apple saved taxes on $44 billion of offshore income over several years. That was via an Irish-registered subsidiary.
Google also employs the Double Irish, which has resulted in the majority of the company’s worldwide profits avoiding income tax anywhere. Google’s worldwide income tax bill was slashed by $2.2 billion last year.