Page 53 - Monocle Quarterly Journal Vol 1 Issue 1 Q4

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based on an actual ‘unpaid tax’ amount – based on the Irish tax rate itself. Irrespective of whether one agrees with Apple’s tax attorneys or not, and irrespective of whether one agrees with the ethics of tax structuring, it is di cult to argue with the position occupied by the European Union in which a hypothetical Apple entity earning USD 1 million pays USD 50 in tax. Should a rm earning more than USD 50 billion in pro t per year pay almost no tax? Certainly, in the world of politics, the European Parliament threw the rst punch, but the United States has returned the favour by throwing bricks through windows.
All of this leads one naturally to the following question: in a world in which banks are far more restricted in terms of how they are able to make money and far more prone to government intervention – think here of increased capital requirements, depressed yield curves, reams and reams of regulations, restrictions on bonuses, criminal charges for misconduct, and tax collection legislation such as FATCA (Foreign Account Tax Compliance Act) – is there any real incentive left for investors to take value-based investment positions in this industry?
On top of these structural impediments to the industry, it would seem that the nes levied against banks are now orders of magnitude larger and more stringent than ever before. In fact, with Deutsche Bank as an example, should the Department of Justice’s position prevail, the USD 14 billion ne would wipe the bank out, plain and simple. Either the German taxpayer would have to pay up – possibly ending Angela Merkel’s tenuous position as Chancellor – or Deutsche Bank would have to go into the equivalent of receivership.
ink of the e ect that Lehman’s failure had on the market – a far smaller, far less connected institution – and the e ect that a Deutsche Bank failure could have become almost unconscionable.
e Origins of the Monocle Fines Database
If, then, this latest ne is of a political nature – at least to some extent – and if it is as dangerous as it seems, then why would the Department of Justice be unconscious to the broader geopolitical and economic risks? e answer to some degree lies in the phrase the Financial Times Lex columnist uses in respect of Deutsche Bank’s latest earnings report – “it is the new normal”. As data will elicit, it has become reasonably commonplace to ne banks in the order of billions of dollars.
“As data will elicit, it has become reasonably commonplace to ne banks in the order of billions of dollars.”
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