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Amazon and Starbucks pay less tax than sausage stall, says Austria

bbc.co.uk

11–20 of 87 posts

Re: Amazon and Starbucks pay less tax than sausage stall, says Austria

#11
post #9
post #3

Part of this makes an intuitive sense, a sausage stall has one trivially accessible "throat to choke", whereas Austria's access to e.g. Jeff Bezos is much more difficult. Starbucks, though, I'm assuming they've got retail shops in Austria? That just means they can afford better tax lawyers.

Maybe it has changed recently, but an interesting factor is the Austrian Starbucks have been run by an Austrian master franchisor, not by the company.

The Austrian franchiser probably pays a lot for using the Starbucks brand and franchise concept to an offshore company (not in the US) owned by Starbucks, that pays a kickback to another offshore entity owned by the franchiser.

Now all the profit is offshore. Everybody happy, except the Austrian government (who don't get corporate tax because the franchise hardly makes any profit in Austria) and sausage stands (who wonder if they could make more money if they join the Starbucks franchise)

Re: Amazon and Starbucks pay less tax than sausage stall, says Austria

#12
post #4
post #3

Part of this makes an intuitive sense, a sausage stall has one trivially accessible "throat to choke", whereas Austria's access to e.g. Jeff Bezos is much more difficult. Starbucks, though, I'm assuming they've got retail shops in Austria? That just means they can afford better tax lawyers.

Being able to pay tax lawyers that are so great that you basically don't have to pay taxes kind of breaks the concept of taxation though.

ROI(tax lawyers) > taxes to pay without them.

Re: Amazon and Starbucks pay less tax than sausage stall, says Austria

#14
post #2

Does amazon even have a presence in austria? I thought it is handled from other countries.

Searching for Amazon Austria brings up Amazon Germany's website, that site also serves the Dutch it seems.

Correct. I'm in Amsterdam and bought from amazon.de last night. I'll usually compare with amazon.co.uk for price and occasionally pay more because the supplier won't ship internationally.

There are plenty of Dutch online retailers (e.g. bol.com and coolblue.nl) but their prices are significantly higher (even factoring the slight difference in VAT). Considering we're supposed to be in a "single market", I've never been able to figure out why that is.

Re: Amazon and Starbucks pay less tax than sausage stall, says Austria

#15
post #4
post #3

Part of this makes an intuitive sense, a sausage stall has one trivially accessible "throat to choke", whereas Austria's access to e.g. Jeff Bezos is much more difficult. Starbucks, though, I'm assuming they've got retail shops in Austria? That just means they can afford better tax lawyers.

Being able to pay tax lawyers that are so great that you basically don't have to pay taxes kind of breaks the concept of taxation though.

Or this is a establishment politician with a weak hold on power who has not necessarily got his facts right, or if he's talking about absolute numbers vs. rates is probably lying through his teeth, but knows bashing foreign companies is a crowd pleaser.

And maybe they overtax those sausage stalls, lots of/most every? country has tax regimes with lots of insanity. Apple wouldn't be playing the games it plays with the US if we didn't have the 2nd highest or so corporate tax rate in the world (e.g. see https://en.wikipedia.org/wiki/List_of_countries_by_tax_rates when you factor in state tax rates only Cameroon is perhaps higher).

While I was doing the search for that, I noted that as a region Europe has the lowest, but that's no doubt not accounting for VATs, which the US is allergic to, at least unless one of the big other categories of taxes is totally killed off (like, with a "this time we mean it" Constitutional amendment).

Anyway, my point is that all this results in all sorts of distortions. For example, when the Reagan individual tax rate cuts kicked in, I noticed my parent's business and investing strategies change as tax avoidance became much less important. In his working lifetime, the top rates went from 91% ("We Like Ike???") to 70% (which as I recall was split between 50% or more for "earned" and 70% or more for "unearned" (investment) income), to 38.5%, to 28%, before it started going up again (even the George W Bush tax rate cuts only dropped them 4.6% to 35%).

And going back to the distortions, the family exemptions allowed a normal family prior to JFK's 1964 supply side rate cuts to survive with the lowest bracket being 20%; those weren't adjusted for inflation until Reagan's reforms, which turned them into a pretty minor thing with how inflation savaged the dollar during that long period (the CPI peaked at like 13-14% around the time Reagan entered the Oval Office).

Re: Amazon and Starbucks pay less tax than sausage stall, says Austria

#16
post #13

Why do we even tax corporations instead of just the income that its owners receive from the corporation?

Never understood that either, it always seemed to be a double taxation scheme to me.

A corporation has effectively only a few things to do with their revenue which are or can be directly taxed more effectively.

It can hire more people, or pay it's employees more, which means that money is taxed as income.

It can invest the money directly which means that return on that investment can be taxed as capital gains.

It can pay out dividends to it's shareholders which means that this money can again be taxed directly as capital gains.

It can invest that money internally to expand which again can be taxed at various levels, sales tax, income tax, property tax etc.

Re: Amazon and Starbucks pay less tax than sausage stall, says Austria

#17
post #13

Why do we even tax corporations instead of just the income that its owners receive from the corporation?

That will mean that the money Facebook makes around the world is just taxed at whatever country Mark Zuckerberg lives. It doesn't look like it can work in such a globalized world.

Re: Amazon and Starbucks pay less tax than sausage stall, says Austria

#18
post #13

Why do we even tax corporations instead of just the income that its owners receive from the corporation?

Never understood that either, it always seemed to be a double taxation scheme to me. A corporation has effectively only a few things to do with their revenue which are or can be directly taxed more effectively. It can hire more people, or pay it's employees more, which means that money is taxed as income. It can invest the money directly which means that return on that investment can be taxed as capital gains. It can…

> Never understood that either, it always seemed to be a double taxation scheme to me.

Corporations are legal persons, and income accruing to distinct legal persons is subject to tax. E.g. I get paid by my employer, and then pay tax on that. Then I pay my nanny with post-tax dollars, and she pays tax on that. That's not "double taxation"--just the nature of an income tax.

Imagine that instead of forming a corporation, a bunch of investors nominated Bob to be the legal entity in charge of the whole business. Bob held all the bank accounts, directly employed everyone, and booked all revenue minus his expenses as his income. A series of contractual arrangements required Bob to pay out the profits to the investors. Under that circumstance, there would be no doubt that profits would be taxed when they initially accrued to Bob, then again when he paid the investors.

It should be noted that nothing precludes companies from organizing as something other than a corporation. Partnership income, for example, is only taxed when it is received by a partner.

Re: Amazon and Starbucks pay less tax than sausage stall, says Austria

#19
post #4

Earlier quoted context omitted.

Being able to pay tax lawyers that are so great that you basically don't have to pay taxes kind of breaks the concept of taxation though.

ROI(tax lawyers) > taxes to pay without them.

The int'l tax system summed up. It's that simple.

Re: Amazon and Starbucks pay less tax than sausage stall, says Austria

#20
post #3

Part of this makes an intuitive sense, a sausage stall has one trivially accessible "throat to choke", whereas Austria's access to e.g. Jeff Bezos is much more difficult. Starbucks, though, I'm assuming they've got retail shops in Austria? That just means they can afford better tax lawyers.

No need for tax lawyers. Money is just drawn out via franchise fees etc to be taxed elsewhere.
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