White House fears U.S. taxpayers will pay for Apple tax bill

EU ruling not fair to U.S. taxpayers, says Obama administration

The White House today said it was worried that American taxpayers would pay for the European Union's decision to force Apple to pay more than $14 billion in back taxes.

"It's also possible that the kinds of payments that are contemplated by the EU decision today, at the end of the day, are merely a transfer of revenue from U.S. taxpayers to the EU," said White House spokesman Josh Earnest in a Tuesday press briefing. "That's the crux of our concerns about this [unilateral] approach."

If Apple was required to pay billions in back taxes to Ireland, it could then deduct those payments from what it owes to the Internal Revenue Service (IRS), either retroactively or in future returns. Those deductions, in turn, would reduce Apple's tax bill to the U.S. government, lowering the amount collected by the IRS.

Theoretically, that would mean U.S. taxpayers would have to make up the difference, or the government would simply have to go without those monies.

"The consequences for that transfer [are] that it could be treated in the U.S. tax system as a current tax payment that would allow, essentially, Apple to deduct that EU tax payment from their U.S. taxes," Earnest added as he answered a reporter's question. "That wouldn't be fair to U.S. taxpayers."

According to European Commissioner Margrethe Vestager, Ireland -- an EU member -- must recover $14.5 billion (€13 billion) in back taxes for the years 2003 to 2014. Ireland, however, has indicated it will appeal the ruling.

Apple has also said it plans to appeal. In the meantime, however, it will almost certainly be required to place a large amount -- Ireland was told by the EU to determine that amount -- in an escrow account.

Although Apple CEO Tim Cook didn't voice the same concerns as did the White House, he came close. "At its root, the Commission's case is not about how much Apple pays in taxes," Cook wrote in an open letter published on the firm's website. "It is about which government collects the money."

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Gregg Keizer

Computerworld (US)
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