Cantillon: Lew intervention hints at Apple tax case endgame
Treasury secretary’s move in line with recent US efforts to apply political pressure
US treasury secretary Jack Lew. Photograph: Zach Gibson/The New York Times
The intervention in the Apple tax case by US treasury secretary Jack Lew suggests some kind of an endgame may be afoot.
Lew has complained to Jean-Claude Juncker of the European Commission that Brussels seems to targeting US firms disproportionately as it investigates Apple’s affairs in Ireland and the European arrangements of other American firms.
The escalation of transatlantic tension follows private talks last month between Apple chief Tim Cook and Margrethe Vestager, the EU competition commissioner. Although Dublin and Apple strongly assert that the firm never received preferential tax rulings, the meeting fanned anticipation of a settlement.
Dublin remains determined to appeal any adverse ruling. But whispers in the corporate world suggest a deal in the order of hundreds of millions of euro might be sufficient to give Brussels a victory and to appease Apple investors that there is no threat to its vast cash pile.
Whatever ultimately happens, there’s no expectation of white smoke before the election on Friday week.
Apple is not the only US firm in the sights of the commission, which has also looked at McDonald’s, Amazon and Starbucks. This prompts anxiety in Washington about more and more companies being drawn into the affair. Warnings have been issued about international tax precedents being set via backdated rulings on old arrangements grounded in new state-aid concerns.
Lew’s manoeuvre is in keeping with recent moves by Washington to deploy political pressure. The original blast against Brussels was at official level in the treasury. Then came an offensive from the Senate finance committee. Now the secretary himself interjects.
This marks a pivot. It’s not so long ago that all the corporate tax noise in US politics was directed against Ireland’s regime. True, there is still considerable disquiet in Washington at big corporate inversions seeing companies relocate to Ireland. But the unleashing of big American boots in the direction of Brussels is a departure. When Lew “respectfully” urges Juncker to “reconsider”, he means “stop now” and he is not saying “pretty please”.