It has fallen to the most successful company of modern times to show how powerless our political leaders are to control large corporations. With ruthless cunning, Apple boss Tim Cook flexed the technology firm’s bargaining muscles this week by telling US Senators in a special hearing that he would not repatriate $100 billion of profits held in offshore tax havens unless the government lowers corporation tax to a single-digit figure. Meanwhile, on the other side of the pond, Labour leader Ed Miliband sermonised to the equally tax-averse Google at its own “big tent” summit in London, arguing that it should embrace a “responsible capitalism … where companies pursue profit but we also have an equal society, power is in the hands of the many and where we recognise our responsibilities to each other”.

Miliband’s words would certainly have struck a chord with the great majority of the British public, particularly the part of his speech that addressed Google’s leader personally. “When Eric Schmidt says [Google’s] current approach to tax is just ‘capitalism’, I disagree,” Miliband said. “When Google goes to extraordinary lengths to avoid paying its taxes, I say it’s wrong.”

Sadly for Miliband, large multinational companies, especially those involved with the internet, are currently above the rules – as Schmidt himself proved when he stated that the debate should move forward with “everyone engaged constructively in developing a clearer, simpler system”, implicitly suggesting that Google should play a part in deciding any new rules. And Cook’s sheer arrogance in telling US Congress what the US rates of corporation tax should be demonstrates the power that Apple currently wields.

The way forward surely lies in politicians – not companies – setting the rules. Governments in both the UK and US have to find the strength to close loopholes and enforce corporate taxes properly. The likes of Goldman Sachs’ sweetheart deal have to become a thing of the past. Governments must also be prepared to run the risk of firms such as Apple and Google fleeing their countries: it is unacceptable, not to mention undemocratic, to allow the current situation to continue. The chances of either company exiting the market in retaliation are slim, yet they are currently holding both countries to ransom. This cannot continue

In addition, it may also help for consumers to vote with their wallets and make product boycotts a more regular occurrence. A weaker brand tends to reflect badly upon an incumbent CEO.

Image of Apple CEO Tim Cook courtesy of the Wikimedia Commons, via Wikipedia