“taxation is a philosophical exercise, it has nothing to do with mathematics”

The US Ambassador to Ireland Kevin O’Malley set aside his previously prepared remarks to instead “talk about the $13 billion elephant in the room”. He was addressing three hundred or more alumni of Boston College’s Irish Institute who had gathered in Dublin’s Mansion House to hear a keynote address by Senator George Mitchell. [You can listen back to and watch Mitchell’s speech about the relationship between Ireland, the US and the UK and his personal and political reflections.]

O’Malley challenged the use of the words “tax cheat” and “tax haven” in reporting and discussion around the European Commission ruling over the level of Apple’s tax payments/benefits in Ireland.

As a first year law student in the US he remembered realising that “taxation is a philosophical exercise, it has nothing to do with mathematics”.

“Deciding what to tax; deciding what not to tax; deciding when to tax it; deciding where to tax it; using the tax code to encourage behaviour; using the tax code to discourage behaviour … are all relevant questions for taxation. And they are all changing questions and they are all changing answers. This is a complex and ever changing world.”

He remarked that the rules being discussed – not just in the case of Apple but more generally – are often more than 25 years old. Yet technology has advanced beyond comprehension in that time.

“See if you can find any concept in 1991 of cloud computing.”

O’Malley added:

“Some of the rules that have been written are as relevant today as a discussion of the rules of grammar in Latin. The world has progressed and it is a complex world that we live in and I hope that some of these decisions, some of the controversies, some of the conversations that we are having now will spur us on to quickly analyse and have different and more substantive conversations about taxation throughout the world and not just in Ireland, the United States or the EU.”

He disputed that Ireland was a “tax haven” and protested against calling US tech companies “tax cheats”. He stated that the firms were “fully committed to compliance” with Ireland’s tax laws.

“Is it a corporations’ duty to minimise its taxes? Yes it is – they are not in business to pay unspecified taxes.”

While he agreed that the $13.5 billion claim by the EC creates “a big issue”, in particular for foreign and direct investment, the ambassador was “optimistic that we will find a way through this”.

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  • terence patrick hewett

    Tom Lehrer on mathematics:

    Must re-read Lancelot Hogben and Prof. C N Parkinson.

  • Kevin Breslin

    Here was me thinking taxation was impossible without some degree of mathematics.

  • terence patrick hewett

    Sarah Conolly holy moses!:

  • hgreen

    Another apologist for tax evasion peddling the usual half truth that “Is it a corporations’ duty to minimise its taxes?” It is also a CEO’s duty to act ethically, legally and to protect the reputation of his/her organization.

  • Kevin Breslin

    I think accountancy and actuary work would be dead if it were left to mere philosophers.

  • Abucs

    Taxation is organised theft. The question is who does the community think should organise it.