Washington, DC -- (ReleaseWire) -- 09/20/2016 --DAWN BENNETT: John Browne is a former distinguished member of Britain's Parliament who served on the Treasury Select Committee, as well as the Chairman of the Conservative Small Business Committee. He was also a close associate of then-Prime Minister Margaret Thatcher. Today, he is a Senior Economic Consultant for Euro Pacific Capital. On September 15th, he published an article called 'Apple Tax Grab by EU Invades IRS Airspace', which drilled down on the details of how the EU has judged that the Irish government granted Apple undue tax benefits and that the European Commission announced that the size of the penalty to Apple will be approximately $14.5 billion plus interest, which I believe is the largest tax penalty ever. John, welcome to Financial Myth Busting!

JOHN BROWNE: Thank you very much, Dawn. It's a great pleasure to be with you.

BENNETT: John, why do you believe that the European Commission is moving to withdraw the boundaries Ireland set up to attract the world's biggest corporations?

BROWNE: Well, the issue is a very convoluted one, really. Perhaps with an eye on the vast amounts of U.S. corporate cash that's sitting in Ireland which doesn't want to come to the United States and pay 35% tax, the European Union may have decided that Ireland was in effect offering Apple a sweetheart deal that amounted to state aid which is actually illegal under the EU rules. The unelected European Commission dreamt up a theoretical, additional retroactive tax that Ireland must charge Apple, but the Irish government and Apple—the largest tax payer in Ireland—both state categorically that there was no sweetheart deal and are appealing the case to the European Court which will probably take three or four years, but the European Court is notoriously subject to political pressure, so the eyes of the corporate and individual taxpayers of the whole world will be focused on this Court's decision because it's to oppose a retroactive new tax. It will be revolutionary for taxpayers throughout the world.

BENNETT: Clearly, the EU's ruling makes a setback for the Irish government, so I'm curious, how long do you think before we hear that Ireland wants to leave the EU?

BROWNE: Of course, the ruling is threatening first of all the reputation of Ireland as a low tax nation. Secondly, the ability of these companies that have come there for the low tax to generate very high paying jobs, most of them in high-tech industry, and therefore contributing very much to Ireland's economic growth and prosperity. And thirdly, challenging the freedom of a nation to set its own tax rates. So, I don't know. It's going to be interesting to see. We've all got to wait for this Court's decision to even have a view on that, but if the Court decides in favor of the unelected European Commission, I think it will be awfully tempting for Ireland to join Great Britain in exiting the European Union and coming back much closer to Britain, outside the EU.

BENNETT: There are literally thousands of companies doing the same thing Apple's doing by using Ireland as a home base. Are they likewise at risk for the same kind of EU-led retribution?

BROWNE: Oh, yes. I mean, if the Court finds in favor of the Commission, then companies like Google or Amazon or Starbucks or Microsoft will all be in the line. A lot of these companies that have gone to Ireland to benefit from not only the low tax rates of Ireland, but three other things that Ireland offers that the rest of Europe is not so easy to offer: one is they speak English; the second is they use English law, which is the same as American law because it was developed from English law, rather than the Napoleonic Code; and thirdly, they have close relationships with the United States and all the former UK Commonwealth and colonial countries like Canada, Australia, South Africa, and most importantly perhaps, India, which is a rising economic superpower.

BENNETT: How will this style of heavy-handed intervention into Ireland's affairs affect the larger view of the EU project? Won't this scare away other countries who might want to play up their own competitive advantages to win foreign investments? I can't help thinking that the EU must have anticipated that Ireland once again discussing leaving would be the next step, since we've already experienced Brexit.

BROWNE: I totally agree with you, but as I said, we've all got to wait for this Court decision. If the Court decides in favor of the Commission, it's going to stir up a lot of anti-EU feelings, not just in the world outside but within the European Union because all these countries are jealous of their own tax rates. They all have the sovereignty to set their own levels of tax and governments like that. Of course, I agree with you. I'm absolutely staggered at the arrogance of the European Commission at the time of Brexit, just when they should be restructuring everything and trying to curry favor with those that lean in favor of leaving, to do such an antagonistic thing. It's amazing arrogance and you see, none of the European Union elite expected Brexit to pass and so they were taken completely by surprise. They were assured by Prime Minister David Cameron they wouldn't pass, and all these experts and bookies were saying that Brexit would fail, so they were surprised by the results and now they're thrashing around. Some of them are so arrogant they still think they can power their way back, and they're going to try it. You can see it already in the news headlines: they're trying to put pressure on the United Kingdom to destroy Brexit even now. They're threatening grave and horrible things that we won't be allowed to trade with any country within European Union at all. But of course, that again is against the world trade organizations. Free trade rules: it's all up for grabs.

BENNETT: In this arrogance, EU insists Apple is exploiting Ireland, but the CEO of Apple is Tim Cook, and as you wrote in your column, it points out that they're employing thousands of locals in high-paying jobs and is the largest taxpayer in the country. Isn't this exactly the benefit of creating a friendly business climate? Shouldn't the EU try to copy Ireland rather than punish them?

BROWNE: Oh, absolutely! As the old saying goes, capital flows to where it is well-treated. And Ireland in the seventies was a poor agricultural economy with lots of rainfall, very sparse turf, and very limited and poor growing climate really, compared to some of the areas in Europe and even in England with a slightly richer soil, and it's transformed itself into a high-tech economy. I mean, it's leapt through the industrial revolution straight to high-tech, and most jobs in high-tech are very high-paying, and Ireland was one of the tigers in growth. It rather overdid it at one time and got too leveraged up. They had a problem, but basically it's transformed this economy into something really 21st century and with high-paying jobs and it's done a great deal, and you're absolutely right that this is where Europe should be going, not trying to stop anyone in Europe that tries to go in this direction.

BENNETT: John, as you stated in your article, Ireland's got a 12.5% corporate tax rate – that's beautiful. The U.S. unfortunately has a corporate tax rate of 35%. Do you think all this wrangling might spur Washington, DC to clean up its tax code so that capital stops fleeing to friendlier shores like Ireland? It just seems like an easier fix than waiting for the EU to radically rethink its approach to tax competition since I think they just know that they're broke. I think this is the reason why they're penalizing people.

BROWNE: Well, I think you're absolutely right, and of course now there's a time pressure on America. These taxes that Apple and other American companies may have to pay will of course be tax-deductible in the United States, so not only will the United States not have got $214 billion of Apple's money that's sitting offshore, but if the Europeans add this penalty, that tax becomes deductible for what Apple pays in the US, and the same with all the other companies. So, the American Congress may at long last say to themselves: "Good God, we're not competitive worldwide on tax and what's more, the European Union's taking money off our companies which we should get, so we're going to go ahead and reform our taxes which grossly need reformation within America. It's far too complicated: a 75,000 page tax code for individuals and taxes. We're going to do this before the Court decides, so not only would it do what you said—push America towards reforming its taxes—but there's a time pressure: Let's get done before this European Court decides, so that we've got the tax and take it away from the European Union.

BENNETT: You know, Apple isn't the only American company being targeted by the EU. Google is being targeted in three separate antitrust cases and EU's attempting to fine the search giant almost more than $3 billion, I understand. Do you think American tech companies may one day simply say "We don't need Europe! They've got too many problems of their own and they're trying to milk us," and just assume that enough Europeans will complain that the regulators may think their strong-arming tactics aren't going to work?

BROWNE: Well, Europe is separate from the European Union. I mean, they're partly overlapping, but they're two distinct entities when you come to tax. Europe has almost over 600 million people of relatively high developed nations and therefore it's bound to be attractive to American companies on a worldwide basis. I think they could well say, if the European Court rules in favor of European Commission, "We're not going to go into the European Union but we will still take part in Europe and we will do that in low tax regimes like Great Britain which has a tax rate of 20% and we'll move out of Ireland and go to Britain which is very close, English speaking, English law, great contacts around the world and within Europe under the World Trade Organization, and we'll do it out of Britain," and that may persuade Ireland to say "Well, we're not going to let that happen. We'll quickly leave the European Union." So, I think they could well reduce their location, their footprint of corporate location within Europe and concentrate on Britain and maybe Ireland as well but it's a great opportunity for Britain, and still trade with Europe which is 600 million people over relatively high income on a worldwide basis with Britain's ties to the whole of the old Commonwealth and colonial empire. Still very close ties, for example, with India which is a booming, huge economy of over a billion people approaching and overtaking China. So, these things are very important and I don't think American companies will ignore Europe, but they may want to get out of the European Union.

BENNETT: To that point, you're active in the UK Independence Party which is surging in popularity and now can take credit for pushing Britain to liberate themselves from EU. Since the vote, many predicted Britain might want to reconsider. Do you think there is that skepticism or do you think that's just media talking?

BROWNE: Oh, no. The elite powers in Britain, particularly in the financial community and the political communities are very, very powerful. They are just so out of touch and I dare say it's similar to Washington being out of touch with grassroots America. It's exactly the same. I think they completely misread the feeling of people and the more they started David Cameron's project 'Fear', and particularly when President Obama came on and insulted the British voters that wanted Brexit – that was counterproductive and I think that there's a similar feeling in the United States against Washington and hence the great attractions for Bernie and also for Donald Trump, because regardless of their policies people are absolutely sick and tired of being raped by Washington and overruled and their nanny-government trying to tell us everything about how we live. And that's a similar thing in Britain. The United Kingdom Party – we've been working for over 30 years on this and when I was a Member of Parliament I voted always against. Although I voted to go into European Union, which was a tariff-free trade area, when I saw it morphing surreptitiously into a super-state was when I thought it was wrong and voted always against the European legislation. Once I was the only conservative and I then joined UKIP, United Kingdom Independence Party, under Nigel Farage, and fought in three elections for them and became a Vice-President of that thing, and I'm absolutely convinced that under Nigel Farage's brilliant leadership and an absolutely world class oratory it inspired the Brexit vote and it took everybody by surprise.

BENNETT: John, we've got about a minute left. Do you think there are other countries in Europe now plotting their own escape?

BROWNE: I don't know if there are governments or not, but I think the people might be, just like it happened in Brexit. The elites are very powerful and this time they may be forewarned. I think in Spain, in Greece, in Poland, maybe in Denmark which was forced to vote again to go back into the European Union, and even in Italy the people want to get free but the governments won't and these elites are so powerful. The lucky thing with Brexit is it took the government by surprise. But there are still elites, and to get back to your last question, they're going to rigidly try to ruin Brexit, and the great thing is, has the Prime Minister Theresa May got the courage, the fortitude and the conviction to stick it out and make sure that the Brexit goes through?

BENNETT: Let's hope so. Thank you, John Browne.

For over a quarter century, Dawn Bennett has been successfully guiding clients through the complexities of wealth management. Her unique vision and insight into market trends makes Bennett a much sought after expert resource with regular appearances on Fox News Channel, CNBC, Bloomberg TV, and MSNBC as well as being featured in Business Week, Fortune, The NY Times, The NY Sun, Washington Business Journal in addition to her highly regarded weekly talk radio program - Financial Mythbusting. Through prudent and thoughtful advice, Dawn Bennett has strived to consistently provide the highest quality of guidance.

About Dawn Bennett
Dawn Bennett is CEO and Founder of Bennett Group Financial Services. She hosts a national radio program called Financial Myth Busting http://www.financialmythbusting.com.

She discusses educational topics and events in the financial news, along with her thoughts on the economy, financial markets, investments, and more with her live guests, who have included rock legend Ted Nugent, as well as Steve Forbes and Grover Norquist. Listeners can call 855-884-DAWN a as well as take podcasts on the road and forums for interaction.

She can be reached on Twitter @DawnBennettFMB or on Facebook Financial Myth Busting with Dawn Bennett.