Tech Giants Set to Face 3% Tax on Revenue Under New EU Plan • Hacker News Board

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

#231

Post by danbruc » Sun, Mar 18, 2018, 2:44 PM UTC

barry-cotter wrote: post #206

danbruc wrote: post #196

Earlier quoted context omitted.

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 ri…

The free money is the subsidy that is the reason usually avowed for anti-dumping tariffs. Choosing to mothball a plant is a choice, not something that automatically happens if some other country chooses to subsidise one of their industries. Revenues and expenditures are both fungible. In the end one goes into the state’s coffers and the other goes out. In no sense worth mentioning would taxes from anti-dumping tariff…

The free money is the subsidy that is the reason usually avowed for anti-dumping tariffs. Choosing to mothball a plant is a choice, not something that automatically happens if some other country chooses to subsidise one of their industries.

Sure, in the general case, but I don't think we are debating the general case, at least I wasn't. If this other country just had a ton of useless money laying around and felt particular altruistic wanting to provide cheap steel to the entire world, nice of them. Also people would probably not be too worried about imposing tariffs.

But that is not really the case that people worry about, they worry about countries subsidizing goods to hurt or even destroy your industry and making you dependent on them even if prices rise above what you own industry was able to provide before. Unless you are willing to accept this or at least take the risk of this happening, you now have a link.

If the price difference is small enough, tariffs will equalize the difference and you might not actually collect that much money from them because buying from the local industry does not cost more. If the difference is large enough, you might decide to capture part of it with tariffs and use that to mothball your plants as protective measures and still profit from the additional difference.

Also note that I am assuming that production costs are comparable before any subsidies and that there are no other strategic interests for maintaining an industry locally which of course will change the equation again. Even if that other country can legitimately produce steel at a better price than you, say because it has a lot of easy to mine iron ore, you might still put a price sticker on becoming dependent on that country. If you consider the relation potentially unstable, then you might not want to put all your eggs in that basket.

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

#232

Post by Eridrus » Sun, Mar 18, 2018, 2:47 PM UTC

jfasi wrote: post #204

adventured wrote: post #197

Earlier quoted context omitted.

> 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 o…

You comment doesn't make sense to me. Face it: some form of taxation was going to appear no matter what. It's inevitable. You don't just roll into a country, make billions of dollars, and expect to pay no tax in perpetuity. As tax proposals go, this one is pretty reasonable. This isn't a punitive measure because it sets no one apart for any past behavior. It also isn't a "shield from competition" because all companie…

> Face it: some form of taxation was going to appear no matter what. It's inevitable. You don't just roll into a country, make billions of dollars, and expect to pay no tax in perpetuity.

This is basically how exports work, why should tech be different?

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

#233

Post by discoursism » Sun, Mar 18, 2018, 2:47 PM UTC

zdkl wrote: post #212

humanrebar wrote: post #207

Earlier quoted context omitted.

The companies and their employees pay taxes, though. On electricity, on data, on personal income, on gasoline, on property, etc. Whether an entity is paying its fair share is a legitimate question, but it's strange to me to blame companies for following the law as written.

It's not blame, it's complete lack of sympathy for tech corps' complaints about the tax.

Which tech corporations have complained about this tax?

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

#234

Post by adventured » Sun, Mar 18, 2018, 2:51 PM UTC

jfasi wrote: post #204

adventured wrote: post #197

Earlier quoted context omitted.

> 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 o…

You comment doesn't make sense to me. Face it: some form of taxation was going to appear no matter what. It's inevitable. You don't just roll into a country, make billions of dollars, and expect to pay no tax in perpetuity. As tax proposals go, this one is pretty reasonable. This isn't a punitive measure because it sets no one apart for any past behavior. It also isn't a "shield from competition" because all companie…

> You don't just roll into a country, make billions of dollars, and expect to pay no tax in perpetuity.

The reason this policy is being pushed, is because some nations have benefitted a lot from US tech companies, eg Ireland, while others eg France and Germany, are jealous that they're not getting their spoils (while simultaneously seeing no large domestic tech company creation). France and Germany have vast influence over the EU, they regard it as their little fiefdom of power. To watch Ireland become richer and richer and richer by the year, as their GDP per capita just keeps soaring ever higher, drives those sleepy giants crazy.

GDP per capita

Ireland: $68,000

Germany: $44,000

France: $39,000

It's pretty obvious what's going on.

Ireland's economy has tripled in size in 17 years.

France's economy hasn't net expanded since 2006.

Germany's economy hasn't net expanded since 2007.

I seriously doubt France and Germany - both high corporate income tax nations - want to see a bunch of Irelands further sprout up in the EU, pulling even more economic benefit away from the power duo in the EU.

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

#235

Post by ameister14 » Sun, Mar 18, 2018, 2:55 PM UTC

bobcostas55 wrote: post #183

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…

> 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…

It's happened multiple times. Companies attempting to reshore manufacturing have run into major problems with skilled labor and with modernizing lines and processes.

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

#236

Post by 3pt14159 » Sun, Mar 18, 2018, 2:57 PM UTC

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…

I have yet to talk to someone that can explain to me why a VAT wouldn't be better. We already know how VATs work, they're already fair, they already handle low-margin companies very well. Why bother with a revenue tax? It heavily stilts the game in favour of bigger players because it encourages vertical integration.

I agree that our largest tech companies are already too powerful and need to have a higher tax burden to compensate for the warping effect they have on the world, but that's more easily done via international tax harmonization / internationally agreed upon minimums to effective corporate income / wealth tax rates. A straight up revenue tax is bananas.

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

#237

Post by balfirevic » Sun, Mar 18, 2018, 2:59 PM UTC

ocdtrekkie wrote: post #93

adventured wrote: post #89

Earlier quoted context omitted.

The EU will block your service's access into the EU market. That's their only possible next recourse if you simply ignore them and stay out of their jurisdiction physically (in a scenario where you continue to sell to EU customers, but refuse to abide by their policies such as this tax). They'll also go after the payments side, they'll try to shut off your ability to get the payments from EU customers. Going down the…

The critical difference here is that China is trying to block their citizens from seeing data hostile to the government, whereas the EU is trying to protect its citizens from companies hostile to its citizens. I wish all our countries were so enlightened as to stand up to protect us from multinational corporations exploiting loopholes in the law.

Citizen of EU here. Can I opt out of that protection?

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

#238

Post by 3pt14159 » Sun, Mar 18, 2018, 3:00 PM UTC

DenisM wrote: post #221

The state of Washington has a very similar concept: Business and Occupation tax. If you have nexus you pay taxes on local revenue. That’s in addition to the sales tax. The tax rates vary by industry, mostly a fraction of a percent. I don’t know how successful the giants are in dodging taxes though. Perhaps they are trying to setup “independent” out of state entities that handle all of the sales. There is also a trend…

What is "nexus" in this context? The frequent traveler program?

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

#239

Post by felipeko » Sun, Mar 18, 2018, 3:07 PM UTC

adventured wrote: post #234

jfasi wrote: post #204

Earlier quoted context omitted.

You comment doesn't make sense to me. Face it: some form of taxation was going to appear no matter what. It's inevitable. You don't just roll into a country, make billions of dollars, and expect to pay no tax in perpetuity. As tax proposals go, this one is pretty reasonable. This isn't a punitive measure because it sets no one apart for any past behavior. It also isn't a "shield from competition" because all companie…

> You don't just roll into a country, make billions of dollars, and expect to pay no tax in perpetuity. The reason this policy is being pushed, is because some nations have benefitted a lot from US tech companies, eg Ireland, while others eg France and Germany, are jealous that they're not getting their spoils (while simultaneously seeing no large domestic tech company creation). France and Germany have vast influenc…

Why don't Germany and France offer the same as Ireland?

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

#240

Post by conanbatt » Sun, Mar 18, 2018, 3:09 PM UTC

discodave wrote: post #112

conanbatt wrote: post #104

Earlier quoted context omitted.

> 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,…

This is nonsense. Unless Google opens thousands of "walk-in-distribution centers" close to consumers, or 100% of commerce moves online, then there will still be demand for what Walmart sells. Walmart sells essentials like food, clothes, and medicine. In what world does a consumer need an Android, or the internet, but not food.

Some abstract thought here: the OP mentioned only 2 companies and I responded within that limitations, but in reality walmart competes with amazon. So if amazon has higher margins than Walmart because of the business model then walmart is disproportionately hit by the tax.