The U.S. Treasury thinks it's bad enough that companies such as Apple park piles of cash overseas to avoid paying tax. What's worse is when foreign authorities change the rules that attracted the money in the first place, and tax those holdings for themselves.

In effect, the European Commission is threatening to do just that. Apple and other U.S. companies could soon be hit with retrospective demands for tax running into the billions of dollars. This week the Barack Obama administration objected, accusing the commission of, among other things, exceeding its authority and violating the norms of international tax policy.

And:

With the U.S. tax code in its current state, the administration is hardly in a position to lecture other governments on the subject of clarity and certainty in tax policy. The charge that the commission is violating international tax norms is especially rich, considering that the U.S. is almost unique in taxing its companies on their worldwide income and its citizens regardless of where in the world they live and work.

By far the best remedy for the U.S. complaint would be to fix the U.S. tax system. For corporate taxes, that means two things: Apply a lower, internationally competitive rate to a simpler and broader base. And switch to a so-called territorial system -- as is used almost everywhere else -- which taxes profits according to where they're earned, not where the company resides. These reforms wouldn't eliminate international tax avoidance, but they would reduce it, both directly and by making it easier for governments to cooperate effectively to that end.

The alternative is to feud and strike postures -- a lot easier than comprehensive tax reform, admittedly, but much less productive.

David Fuller's view

Most of us think multinational corporations should pay regional taxes in countries where they are earning profits.  However, there is also a grey area, I believe, because the responsibility for assessing taxes lies with the countries in question.  I do not blame public corporations for using legal tax avoidance in the interests of their profits and shareholders.  I agree with Bloomberg that the US should switch to a territorial system and their tax programme needs to be modernised.  One can only hope. 

Meanwhile, too many governments and economic regions, from the EU to the USA, are in search of tax revenue to reduce budget deficits and perhaps improve their economies.  Against this background successful multinational corporate Autonomies are viewed as milch cows.

 Earlier this week a Bloomberg interviewer reported that five US tech companies each had a bigger market cap than any other individual shares in world markets, before asking an institutional tech analyst if that was evidence of a bubble.  The reply: “No”.

The shares mentioned were Apple, Alphabet (Google)*, Amazon, Facebook and Microsoft.  They are wonderful Autonomies but no less immune to shakeouts than any other growth shares, once price trends and valuations clearly become overextended.  They are also susceptible to fashion changes, plus the competition they inspire, management changes, and also adverse developments in some of their major markets.  This is a wonderful era for many technology companies but we should not rationalise bubble conditions.  We also need to remain alert to the risk of at least temporary obsolescence, which can occur more rapidly in tech than most other industries.   

It obviously helps to be genuinely knowledgeable about tech companies of interest, but not all of us can realistically achieve that.  Fortunately, price charts should keep our feet on the ground; relative strength is important, and overextensions relative to MAs are at least short-term endings. 

(*See also: The difference between Google and Alphabet, explained from The Washington Post.)