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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

#151

Post by scythe »

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…

Usually when you want to find a "loophole" or "mistake" in the predictions of conventional economic theories -- like the idea that free trade is good -- it makes sense to start looking at the sorts of things we already know that neoclassical economics has trouble with: asymmetric information, externalities, and human irrationality. Asymmetric information isn't generally a major issue when it comes to imports (and if it is, you use inspections, not taxes), and with a few exceptions (like the reputational status of Cuban cigars or French wine) human irrationality isn't either, but externalities can be a big one. When you look at, say, steel tariffs, there are relatively few positive externalities, and plenty of negative ones, associated with steel production, but for another industry like IT, the externalities may be positive, such as promoting technical know-how among citizens.

So in the specific case where having a local industry brings positive externalities, I think there may be a case for some limited forms of protectionism, but even these can be misapplied. In the specific case where countries want to promote "white-collar" industries, such tariffs should only apply to end-consumer products, never to products which are sold to businesses, because usually the farther along you are in the supply chain, the more "educated" your profession is, with a few exceptions. The most compelling positive example comes from China's development of its own Internet services like WeChat, Baidu etc, which stemmed directly from China's exclusion of Western competitors like Google, Facebook, and historically Visa/MasterCard, and which may have promoted the growth of an IT industry in China. For a negative example, Brazil's tariffs on video game consoles are devastating for Brazilian video game developers, because their potential market is eliminated. Even in this latter case targeting a consumer product hurts domestic businesses. Another case is when positive domestic externalities are replaced with negative foreign externalities, such as when considering carbon taxes on imports.

This is all just speculation, of course, except the part about border carbon adjustments, which has been the subject of serious analysis:

http://www.rff.org/files/document/file/RFF-DP-16-09.pdf

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

#152

Post by barry-cotter »

lovich wrote: post #121
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…

That’s not true and if you can believe that after taking several economics courses it speaks poorly of your teachers.

The main benefits of free trade are in specialisation. People specialise in what they’re good in and trade for other goods and services. Specialisation leads to greater efficiency, meaning you can do the same with less, or more with the same amount. Notice the complete lack of the words domestic production or intellectual property.

The case for free trade is that in the long run specialisation makes us richer. Units have nothing to do with it. Metric or imperial, services and goods are what they are.

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

#153

Post by Proven »

The EU cretins...

The EU more and more looks like a cattle farming operation. Captive populace has no choice but to pay tax (because it’s ultimately always paid by the customer) simply because they use the Internet.

Can’t wait for that hellhole to fall apart.

FB/Google/Apple/MS need just 1 dissenter. That could be the Irish, although they’ve acquired the slave mentality since joining the EU...

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

#154

Post by cgag »

barry-cotter wrote: post #152
lovich wrote: post #121

Earlier quoted context omitted.

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…

That’s not true and if you can believe that after taking several economics courses it speaks poorly of your teachers. The main benefits of free trade are in specialisation. People specialise in what they’re good in and trade for other goods and services. Specialisation leads to greater efficiency, meaning you can do the same with less, or more with the same amount. Notice the complete lack of the words domestic produ…

I notice that domestic production seems to be implicitly valued at zero which seems likely to be wrong to me.

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

#155

Post by patall »

zhyder wrote: post #150

The EU's proposal isn't the best, but it'll hopefully spur more debate and shake us out of our current local optima, where corporate taxes for multi-national corporations are just odd. How about this proposal: tax company on a fraction of global profits, where the fraction is the fraction of revenue that was attributable [1] to the EU? [1] - Different ways of determining attribution, but simplest is based on billing…

But it goes even further. In Germany, due to the former divide of the country, lots of big companies like Siemens or Osram have left the state where they were founded and moved to somewhere else. Because corporate tax is paid on a federal state level this means to now many more of companies pay their taxes for example in Bavaria and less so in for example Berlin. So in theory you would also need to have companies pay money on a federal state level (or be distributed somehow "equally" by a central government). In Germany we have whats called a "Länderfinanzausgleich" that redistributes some of the money between states even though that is highly controversial.

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

#156

Post by asdfaoeu »

barry-cotter wrote: post #152
lovich wrote: post #121

Earlier quoted context omitted.

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…

That’s not true and if you can believe that after taking several economics courses it speaks poorly of your teachers. The main benefits of free trade are in specialisation. People specialise in what they’re good in and trade for other goods and services. Specialisation leads to greater efficiency, meaning you can do the same with less, or more with the same amount. Notice the complete lack of the words domestic produ…

He is admitting those benefits. His point is that with different tax rates and regulations the market is distorted and if anything imposing tariffs / revenue taxes is just equalising the market.

I don't think he's talking literally about units.

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

#157

Post by throwaway77384 »

This is fantastic and I am all for it. Even if this gets passed on to the customer, it ends up in infrastructure and the kind of things the EU does well. I'd love to see more of this. If the international conglomerates had wanted to avoid this, maybe they wouldn't have dodged taxes like they did in the first place. Brilliant and long overdue. My main worry is that countries which capitalise on enabling the tax dodgers (cough, Ireland, cough) will vote against this.

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

#159

Post by barry-cotter »

cgag wrote: post #154
barry-cotter wrote: post #152

Earlier quoted context omitted.

That’s not true and if you can believe that after taking several economics courses it speaks poorly of your teachers. The main benefits of free trade are in specialisation. People specialise in what they’re good in and trade for other goods and services. Specialisation leads to greater efficiency, meaning you can do the same with less, or more with the same amount. Notice the complete lack of the words domestic produ…

I notice that domestic production seems to be implicitly valued at zero which seems likely to be wrong to me.

The case for free trade does not care about borders. It cares about consumption, which there will be more of if things can be produced most efficiently. Things can be produced most efficiently with maximum specialisation, which is likeliest with free trade. Domestic production can be consumed more easily than foreign production so it is more valued because transport costs are lower.

The border between San Francisco is as relevant as that between California and Nevada, or the US and Mexico.

There are certainly things where it’s good to have domestic production, vaccines for one. But the argument is grossly overused. The wool of angora goats is protected in the US as of military value.

Trading for what you need has worked out well for plenty of countries. Switzerland, Luxembourg, Costa Rica, Bahrain, Singapore, Hong Kong, my native Ireland.

Domestic production is overrated.

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

#160

Post by pdelgallego »

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…

I am ok with free trade, as long as it also apply to freedom of movement of capital, goods, and people, and we have a common set of rules, and a common court that applies them.
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