Low taxes bring CA high tech to Luxembourg

Luxembourg is a small, low-tax duchy that’s attracting European centers for high-tech firms from California and elsewhere.  FT reported:

In short order Apple’s iTunes division set up its European home in Luxembourg and was then joined by Microsoft, Cisco and eBay, a veritable tech surge….

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In 2000 American companies excluding banks reported $3.4bn in profits from their Luxembourg-based operations, according to US Commerce Department data. A decade later, that number had hit $94.1bn. Hundreds of leaked Luxembourg tax rulings, or comfort letters, have revealed the complex structures that enabled multinationals to avoid tax. While many countries provide such comfort letters, few offered them as liberally as Luxembourg or demanded as little evidence from companies.

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Once the potential became clear, Luxembourg hit the road. While Mr Juncker met the likes of Amazon’s Jeff Bezos at home, his ministers were busy prospecting up and down the US west coast, visiting Apple, Yahoo, eBay and Microsoft, among others. In 2003-2006 their trade missions were annual or twice-yearly affairs, sometimes with royalty in tow.

Note that this is one way these high-tech companies can stay in high-tax California and enjoy the sybaritic Silicon Valley lifestyle. They figure out how to shift their tax burden to Luxembourg and other low-tax locales.

Predictably, this sensible low-tax policy has enraged the European (Soviet) Union and the high-tax countries among its members:

The EU is now investigating whether sweetheart tax deals Luxembourg granted to two foreign companies — Amazon and Fiat — were too sweet. Thousands of pages of leaked Luxembourg tax rulings have revealed how hundreds of others that moved to the Grand Duchy also managed to pay negligible taxes.

Fortunately, Luxembourg is fighting back.

When I was in the U.S. Army in West Germany, 1979-82, I took a USO tour from Frankfurt, where I was stationed, to Luxembourg. It’s a beautiful little country. We also visited the Luxembourg Military Cemetery and Memorial, where so many brave Americans are buried. The best known is Gen. George S. Patton Jr., a native Californian.

I’m sure Old Blood and Guts would be proud that a country he liberated from the tyranny of National Socialist Germany still was fighting for freedom against today’s high-tax socialists.