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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

#191

Post by esarbe »

sintaxi wrote: post #73
cryptoz wrote: post #3

We are all in this world together. It is insane that corporations have been able to reap untold profits while hardly being taxed at all. These companies could not exist without the societies of the people who buy their products. They should pay taxes wherever they do business, even if fiat currency isn't changing hands (i.e., Facebook and Twitter free users) as specified here. Good move EU. Higher taxes on megacorps…

Corporations pay +20% tax on profits, then provide jobs to people which are then taxed 30-50%. Corporations are providing loads of value to society. How on earth is this not enough? Honestly, if this is not enough money for the government to operate there are serious spending and accountability problems. A governments primary purpose is to protect rights of individuals. Its job is not to run the world. If we really w…

There's a problem when these companies use international treaties and agreements to pay less tax than your local carpenter or grocery store or their own cleaning staff.

It's a government's primary purpose to protect the rights of individuals. What these multinationals are doing is theft on all the other players.

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

#192

Post by barry-cotter »

danbruc wrote: post #182
barry-cotter wrote: post #162

Earlier quoted context omitted.

If other people do stupid things you don’t have to do stupid things too. Market distortions, different tax rates and regulations do not change how returns to specialisation and gains from trade work. Anti-dumping tariffs are stupid because it not notnto your benefit to punish people for giving you cheap stuff that should be expensive. Being able to have different tax rates is part of the power to tax, which is part o…

Anti-dumping tariffs are stupid because it not notnto your benefit to punish people for giving you cheap stuff that should be expensive. That is only true in a very simplistic model. If a country sells for example cheap subsidized steel you may lose your steel production capability because you are not able to compete with that price. But once you lost that capability it may become prohibitively expensive to regain it…

If you’re not able to compete with a price that’s the market saying you’d be better off doing something else with those resources. If you suspect that the price is due to subsidy, great, free money. If you want to maintain domestic production capacity subsidise it. If you want to reduce startup costs pay to mothball a plant. If you want to maintain expertise subsidise the salaries of citizens who go abroad to learn about or work in those industries.

As far as externalities go you certainly have a point but if you feel you have a right to tell other people and countries what to do, go ahead. I don’t think there’s any reason to stop anywhere between sovereignty and colonialism. Those positions are coherent, the ones in between aren’t.

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

#193

Post by esarbe »

mankash666 wrote: post #85

Incorporate your business outside the EU. It will protect you from unreasonable taxes and regulations. The internet has no boundaries or residency or citizenship. Especially if you are a software-as-a-service business, ignore everything about the EU and domicile outside it.

Good luck with ignoring the biggest consumer market on earth.

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

#194

Post by barry-cotter »

andosa wrote: post #190
bobcostas55 wrote: post #183

Earlier quoted context omitted.

> But once you lost that capability it may become prohibitively expensive to regain it because the initial costs to rebuild the knowledge and infrastructure is going to be much higher than the marginal costs for an established industry and you would have to accept, at least to some extend, which ever price they ask for. This has literally never happened. People keep bringing up this objection, but nobody can point to…

How has it not ever happened? China, who essentially blocked Google, Amazon et al, now have Baidu, Alibaba, Tencent and other massively successful tech companies, while EU is stuck with aforementioned monopolies with near-zero chance of a local competitor competing with them.

Google, Amazon, Microsoft etc. are still there. The US can still produce steel and computer chips. Other countries subsidising domestic production of software, steel and computer chips did not lead to the US being unable to do so.

And amazon is pretty big in China, taobao and jingdong are just bigger and better.

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

#195

Post by jfasi »

Personally, I like this proposal. I like that it's simple: any overly complex system will almost inevitably result in distortion and loopholes. A few points of my favorite points:

* It's done on revenues and not profits. This avoids the impossible question of where profits are realized: if you make money in one country but displace that earning by costs somewhere else, it's practically impossible to determine where the tax should go.

* It's uniform across the EU and so it doesn't incentivize companies to base themselves in any member over another. This avoids the distortion we have now with Ireland's permissive tax system siphoning up all the company headquarters and with it the (scanty) tax revenue.

* Each member receives money based on the number of users they have in their own country, meaning they have a strong incentive to increase usage of digital services and a disincentive to put in place regulatory measures that would decrease adoption and harm growth.

One of the problems of the current situation is that it sets tech companies up as these parasitic monsters that creep into a country, make huge profits, alter the society as they see fit, and give nothing in return. The best thing about this proposal is that it sets up a harmonious relationship: governments get to make money while companies get to have their access to citizens legitimized. With that legitimacy comes better PR and a seat at the table as legal systems everywhere catch up to the world tech companies have created.

Plus it might finally put that ridiculous "tech companies are tax evaders" meme to rest.

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

#196

Post by danbruc »

barry-cotter wrote: post #192
danbruc wrote: post #182

Earlier quoted context omitted.

Anti-dumping tariffs are stupid because it not notnto your benefit to punish people for giving you cheap stuff that should be expensive. That is only true in a very simplistic model. If a country sells for example cheap subsidized steel you may lose your steel production capability because you are not able to compete with that price. But once you lost that capability it may become prohibitively expensive to regain it…

If you’re not able to compete with a price that’s the market saying you’d be better off doing something else with those resources. If you suspect that the price is due to subsidy, great, free money. If you want to maintain domestic production capacity subsidise it. If you want to reduce startup costs pay to mothball a plant. If you want to maintain expertise subsidise the salaries of citizens who go abroad to learn a…

Well, it is not free money if I have to spend money to protect me against potential future negative outcomes of that free money. And where would the money come from to mothball a plant? Naturally that would be from anti-dumping taxes on the subsidized goods causing the issue, wouldn't it?

And I would almost never suggest to tell any other country what to do - even though I would consider that legitimate within the right framework because sovereignty is not an absolute right - but I certainly have no objections against and am actually for putting taxes on foreign goods if those were produced according to standards I do not agree with.

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

#197

Post by adventured »

jfasi wrote: post #195

Personally, I like this proposal. I like that it's simple: any overly complex system will almost inevitably result in distortion and loopholes. A few points of my favorite points: * It's done on revenues and not profits. This avoids the impossible question of where profits are realized: if you make money in one country but displace that earning by costs somewhere else, it's practically impossible to determine where t…

> The best thing about this proposal is that it sets up a harmonious relationship

It does the exact opposite. It spurs a further acrimonious relationship between the major economies of the EU and the US. Particularly France and Germany, which are a combined outsized share of the EU economy and represent ~80% of the trade deficit that the US has with the EU.

This new tariff exists solely because the EU can't compete on technology and needs to raise barriers. It's the same reason any country chooses to implement lopsided tariffs, as a shield from competition.

It encourages the US to figure out how to retaliate for a new tariff that was designed to almost exclusively target US tech companies. The US will have no choice but to respond with something equally punitive on EU imports. That'll just make relations between the EU and US worse.

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

#199

Post by andosa »

barry-cotter wrote: post #194
andosa wrote: post #190

Earlier quoted context omitted.

How has it not ever happened? China, who essentially blocked Google, Amazon et al, now have Baidu, Alibaba, Tencent and other massively successful tech companies, while EU is stuck with aforementioned monopolies with near-zero chance of a local competitor competing with them.

Google, Amazon, Microsoft etc. are still there. The US can still produce steel and computer chips. Other countries subsidising domestic production of software, steel and computer chips did not lead to the US being unable to do so. And amazon is pretty big in China, taobao and jingdong are just bigger and better.

Yes, they are still there, but the protectionism is what allowed the local companies (Baidu, Tencent, Alibaba etc) to compete initially and be better in the end. Whereas in EU, local competition has been crushed and it is now stuck with the monopolies.

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

#200

Post by throwaway77384 »

shady-lady wrote: post #187
throwaway77384 wrote: post #157

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 dodger…

What was the point of the European Single Market then? Or was that just meant to benefit the larger industrial nations(cough, Germany, cough)? It would seem to be sour grapes on the parts of France & Germany that they weren't chosen to the main entrypoint to the EU for some US companies.

Well, I think you are making a very valid point. Germany and France sure like throwing their weight around and have earned plenty of appropriate criticism for their actions. They will most likely continue to do so. Just like with the US on a global level, large, influential economies will often bully smaller ones into situations favourable to their own goals.

I do not know what the point of the European Single Market was. In fact, I'd be interested to hear someone with the know-how tell me. Was it to create a trading zone where the same rules applied to everyone? Or was it just supposed to ease trade across borders by creating some kind of customs framework and abolishing tariffs, etc.?

Now the point I was making wasn't specifically about Ireland. I could have said Italy as well. I just wanted to point out that paying taxes is a huge deal. Not just for filling the coffers of the European Union, but as a symbol of everyone paying into the social contract.

If people see nothing but giant corporations exploiting the legal systems of countries to dodge taxes, people think they could do so, too. It disenfranchises the populace and just ends up giving more rise to populism, which is possibly the biggest scourge on society at this moment in time. Populism leads to fascism. The whole tax malarkey plays into this. It's not the root cause of populism (not sure there is one) and it's certainly not Ireland's fault that they managed to attract business through favourable business tax rates, but something needs to be done about the blatant tax avoidance by these international players and I think this is a good first step, which will surely see some refinement down the line.

So, again, I think you make a valid point, but I also believe that my original point stands also.

By the way, there's one country that was afraid enough of tax regulation that they fooled a sufficiently large proportion of their populace into voting for one of the most insane political decisions of the last decades. In a non-binding referendum, which is somehow, miraculously, being implemented with a kind of fervour and passion not seen since the Apollo program. (While actually important societal issues would never be put up to a referendum and even then, if people voted the wrong way (aka, against short term financial gain, or archaic doctrine), would simply go ignored. Hmmmm....)

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