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Tech Giants Set to Face 3% Tax on Revenue Under New EU Plan

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Re: Tech Giants Set to Face 3% Tax on Revenue Under New EU Plan

#121

Post by lovich »

lovich wrote: post #101

Why are a large amount of people treaing access to other nations markets as a human right? I can see the argument behind saying you should have access to your local market be realtively free, you have to live somewhere, and you and your local societies interests are relatively aligned. However,when it comes to foreign markets many people here seems to want the best of both worlds. It's a paraphrase but it seems like…

As a response to several people stating that free trade is better for everyone.

I've taken economics courses, I understand how free trade is better overall. However, those calculations only work when both sides follow the same rules. Once you have different groups of people with different values, whether it's the EU valuing privacy, China valuing domestic production, or the US valuing intellectual property, absloute free trade seems to break down.

You can't freely trade if you're using different units

Re: Tech Giants Set to Face 3% Tax on Revenue Under New EU Plan

#122

Post by nielsole »

runeks wrote: post #118
lovich wrote: post #101

Why are a large amount of people treaing access to other nations markets as a human right? I can see the argument behind saying you should have access to your local market be realtively free, you have to live somewhere, and you and your local societies interests are relatively aligned. However,when it comes to foreign markets many people here seems to want the best of both worlds. It's a paraphrase but it seems like…

> Why are a large amount of people treaing access to other nations markets as a human right? Why would you want to restrict (economic) interaction between two parties just because they’re far away from each other? I’m sure some of the local companies in my area would love to prevent me from buying goods elsewhere, but why would I want to buy goods elsewhere unless they are either cheaper and/or of better quality? In…

This is not so much about the interaction between the two parties, but aboutjust taxes. if companies can go wherever taxes are the lowest, without impact on profits, there will be a race to the bottom in corporate tax laws.

In order to have an optimal amount of taxes for tech companies that can move at a whim, you need some sorts of capital controls that prevent that.

I find a sales tax to be a very lean approach.

Re: Tech Giants Set to Face 3% Tax on Revenue Under New EU Plan

#123

Post by riffraff »

cromwellian wrote: post #37
mtgx wrote: post #25

Earlier quoted context omitted.

Nothing is really changing in terms of taxation. Technically, the difference is relatively small - being taxed a small percentage of revenue instead of a larger percentage of profit (yes I know it's debatable which would be ideal). The really big difference is they can actually enforce revenue-based taxation, because revenue in a country is directly tied to the number of users/customers in that country. Meanwhile, pr…

People are up in arms about China as well, and IMHO, the US and EU should take them to the WTO over unfair trade practices. But stop focusing on Google for a moment, and consider poor Twitter. Can they really afford this tax? If you're already losing money, or breaking even, why should you have to pay taxes on $$$/user earned in the US or Japan?

They have, the EU has recently imposed WTO approved import tariffs on Chinese steel, for example

Re: Tech Giants Set to Face 3% Tax on Revenue Under New EU Plan

#124

Post by Buge »

Let's say a company has their headquarters in country A. A user from country B uploads a video filmed in country C. Someone from country D buys an ad to be placed on that video, and the purchase is processed in country E, while the sales agent is based in country F. A different user in country G watches the video and clicks on the ad. The video was served from a server in country H, and the ad from a server in country I.

Where does the company pay taxes?

Re: Tech Giants Set to Face 3% Tax on Revenue Under New EU Plan

#125

Post by chrischen »

runeks wrote: post #118
lovich wrote: post #101

Why are a large amount of people treaing access to other nations markets as a human right? I can see the argument behind saying you should have access to your local market be realtively free, you have to live somewhere, and you and your local societies interests are relatively aligned. However,when it comes to foreign markets many people here seems to want the best of both worlds. It's a paraphrase but it seems like…

> Why are a large amount of people treaing access to other nations markets as a human right? Why would you want to restrict (economic) interaction between two parties just because they’re far away from each other? I’m sure some of the local companies in my area would love to prevent me from buying goods elsewhere, but why would I want to buy goods elsewhere unless they are either cheaper and/or of better quality? In…

There are at least two reasons why a locality would want to impose taxes on a foreign company.

1) The foreign company is using loopholes to dodge taxes à la Amazon having dodged sales tax for decades at the expense of local retailers who have to charge sales tax.

2) Protectionism. A specific tax to give local competitors an edge in order to promote the development of local businesses. The rationale behind is this is to trade off the advantages of a "better" foreign offering in order to develop a local company that has more incentive to reinvest its earnings into the local economy. An example would be India heavily taxing Apple products to produce iPhones inside India so that a bulk of the money spent would go back into the Indian economy in the form of wages for factory workers, instead of going to the US and China.

Another example is US and Europe protecting the interests of Boeing and Airbus respectively due to the national security importance of the aerospace companies.

In some cases if another (single) country invents the wheel and thus controls the world's supply, your country would benefit from importing the wheel and selling the other country the axel. But as it turns out wheels are very useful and if the other country has a near monopoly on it due to scarcity, your country would opt to reinvent the wheel so they have the ability to produce the whole wheel and axel combo within the borders without being gouged for price.

Re: Tech Giants Set to Face 3% Tax on Revenue Under New EU Plan

#126

Post by oliwarner »

volgo wrote: post #115
lovich wrote: post #101

Why are a large amount of people treaing access to other nations markets as a human right? I can see the argument behind saying you should have access to your local market be realtively free, you have to live somewhere, and you and your local societies interests are relatively aligned. However,when it comes to foreign markets many people here seems to want the best of both worlds. It's a paraphrase but it seems like…

This is essentially Trump's argument against free trade. Your companies makes so much money in America and you don't have any rights here, why shouldn't we restrict you? Free trade isn't some right, it's just better for everyone involved

> Free trade [.. is] just better for everyone involved

How are zero-rate imports better for everyone?

The consumer saves money. The government loses sales tax revenue, loses income tax revenue from the people that could have made it locally, has lower employment rates.

Buying locally doesn't always make sense, but often you can make an economic argument that paying slightly more for something made and sold locally is better for the consumer too.

Re: Tech Giants Set to Face 3% Tax on Revenue Under New EU Plan

#127

Post by Buge »

conanbatt wrote: post #104
AnthonyMouse wrote: post #102

Earlier quoted context omitted.

> This is why we tax profit and not revenue. Different industries have radically different cost structures. That is completely irrelevant as long as the tax is only collected once at final sale and not every time the goods change hands within a supply chain. If Walmart has 97 cents of cost per dollar in revenue then the sum total profit within their supply chain is 97 cents. Somebody is getting every penny in the dol…

> If the government says that for every dollar in revenue you have to pay 20 cents in taxes then Walmart will either raise prices by ~20% or require their suppliers to lower prices by ~20%. In no event do they go out of business, because their customers still need what their suppliers produce. You are assuming there is no elasticity here. People would stop working for walmart and go work for google, in this example,…

How would walmart raising their prices by 20% cause their employees to go work for google? Why would google even give them job offers?

Re: Tech Giants Set to Face 3% Tax on Revenue Under New EU Plan

#128

Post by pimmen »

Buge wrote: post #124

Let's say a company has their headquarters in country A. A user from country B uploads a video filmed in country C. Someone from country D buys an ad to be placed on that video, and the purchase is processed in country E, while the sales agent is based in country F. A different user in country G watches the video and clicks on the ad. The video was served from a server in country H, and the ad from a server in countr…

Country D, I think. That's where the sale was made.

Re: Tech Giants Set to Face 3% Tax on Revenue Under New EU Plan

#129

Post by Mononokay »

oliwarner wrote: post #126
volgo wrote: post #115

Earlier quoted context omitted.

This is essentially Trump's argument against free trade. Your companies makes so much money in America and you don't have any rights here, why shouldn't we restrict you? Free trade isn't some right, it's just better for everyone involved

> Free trade [.. is] just better for everyone involved How are zero-rate imports better for everyone? The consumer saves money. The government loses sales tax revenue, loses income tax revenue from the people that could have made it locally, has lower employment rates. Buying locally doesn't always make sense, but often you can make an economic argument that paying slightly more for something made and sold locally is…

> Buying locally doesn't always make sense, but often you can make an economic argument that paying slightly more for something made and sold locally is better for the consumer too.

9/10 times this isn't correct. If you live in an urban capital, sure. If you live in somewhere more rural, oftentimes the only local makers in the area will be rather terrible, and a large company will have a better warranty almost all of the time.

> The consumer saves money. The government loses sales tax revenue, loses income tax revenue from the people that could have made it locally, has lower employment rates.

The consumer has a higher chance of the product they bought having support in three years.

> How are zero-rate imports better for everyone?

More opportunities for the consumer to buy things, more incentive for the company to entice customers with benefits, government isn't "everyone," and they still benefit by more net units sold because they can tax on-sale still.

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