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Three European Countries Block Tax on Tech Giants

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Re: Three European Countries Block Tax on Tech Giants

#261

Post by spacecity1971 »

lambdadmitry wrote: post #209
Shivetya wrote: post #172

Earlier quoted context omitted.

having a uniform tax code would pretty much doom the small economies to not having opportunity to grown unless it was "granted to them" as a favor by the same union government. the ability of member states to set their own taxes is about the only protection they have handling down turns and getting new industry. their currency was given up and without the ability to print money they need other means to mitigate adver…

I'm not sure that blaming Greece problems on the EU instead of unsustainable social policies and populist and/or corrupt politicians is fair. After all, a populist with more knobs to their country's economy is still a populist and, if anything, will bury the country's economy even faster.

Spoken like a true German. Read Varoufakis Adults in the Room, and then maybe you'll be less likely to parrot banking sector propaganda.

Re: Three European Countries Block Tax on Tech Giants

#262

Post by oliwarner »

logifail wrote: post #124
oliwarner wrote: post #94

Earlier quoted context omitted.

Because it's not just internal. The EU allows for free cross boarder trade and movement of assets within the EU. Having a lower corporate tax rate in one country means businesses operating in the EU put their revenue through there. It's an automatic incentive. There are rules here because otherwise it would be a race to the bottom. Each country wants Amazon, Google, etc for their employees' income tax. The whole EU l…

>> Having a lower corporate tax rate in one country means businesses operating in the EU put their revenue through there I'm not sure this is true any more, at least not everywhere "Amazon has become the first technology company to abandon controversial corporate structures that divert sales and profits away from UK in the face of a clampdown imposed by George Osborne. From the start of [May 2015] the online retailer…

I meant to also point out that they said this in 2015 but from my reading of my invoices, and their various Companies House filings, Amazon EU Sarl is still the entity trading in the UK.

Their UK businesses are tiny. Warehousing and marketing.

Re: Three European Countries Block Tax on Tech Giants

#263

Post by adventured »

lovich wrote: post #257
bsaul wrote: post #212

Earlier quoted context omitted.

People don’t produce goods to sell ( so profits and revenue are actually not really relevant concepts). They’re the endpoint of the economy so they’re a very special item. Same reason something called VAT only apply to them.

I have food, water, shelter, and healthcare inputs to maintain my body and keep producing services. Why would my income minus those costs not map to the ideas of revenue and profit?

Because those corporate profits are owned by people, shareholders. What remains after the corporate income tax usually winds up taxed just as your income is; ie generally those profits are not just taxed once. They also get taxed again after distribution. Or if the company later spends it to eg hire someone to try to expand, that also generates income taxation. Or if they buy something with it (new equipment) to bolster their business, somewhere in that chain it's generating further income taxation related to employees (the people that manufactured the equipment, whose salaries are being paid for by the equipment sale).

Consider Apple. They'll return hundreds of billions of dollars in profit to shareholders over time. Not only was the original profit taxed via a corporate income tax, the remaining profit that is distributed will then get taxed further as personal income. The owners of that profit ultimately see that profit taxed twice before it's freely in their bank account. They don't get to skip on the personal income taxes.

If you perceive that corporate profits are under taxed, it's because you're not following the taxation chain all the way to its conclusion. Ireland for example does not have low personal income taxes, that's in part how they've paid for the very low corporate income taxes.

Simplistically, fictional company Smithfield Inc produces $100m of taxable income, they pay a 20% rate on that. They have $80m remaining, after tax profit. That later gets distributed to the owners of the corporation. That $80m will now get taxed again.

The $100m in profit Smithfield generated will see a likely minimum of a total 40% tax rate - in pretty much all developed nations - before all the income taxation is performed on the profit and finally rests with the owners of the business free & clear.

Denmark has a 22% corporate tax rate. Their personal tax rate is high. That means the owners of the corporate profits will see that profit uber taxed, as much as 60% to 70% before the government is done with it.

The point is that the net taxation by the government on corporate profit is much larger than just the corporate income tax rate. That's merely the beginning.

Re: Three European Countries Block Tax on Tech Giants

#264

Post by woodpanel »

lultimouomo wrote: post #259
woodpanel wrote: post #256

Earlier quoted context omitted.

You see the error here? You write an amount in an invoice, the customer pays you. From that, the taxman demands his percentage later on from you . The only way to reduce the amount you have to pay is by buying stuff. Nowhere in the process is the customer paying two parties. It's just lexical. Would you say 'oh the company is just routing its income tax to the taxman' if companies had to put their income tax percanta…

Would you say employers pay income taxes for employees if they retain part of their wage and forward it to the state as a down payment for the employee income tax? I wouldn't say so; income tax is paid by the employee, even if the employer is forwarding the money to the state. It doesn't matter who puts the money in an envelope and goes to the tax office; it matters who is subject to the tax. Non-EU turists traveling…

Sorry, but I think you didn't read my comment.

No tax is paid by the customer. He always pays gross.

For example: you run a barber shop, mens haircut 10 €, womens 10€. You charge mens from your VAT-exempt company, women from your non-VAT-exempt company. Regardless of what you get in net, the customers hand you 10€ each. However the government takes 2€ from your womens hair cutting business, after you've filed your tax statement. The customer doesn't care whether you have to pay VAT or not.

If I may ask: Do you run a business where you have to deal with filing VAT on a regular basis? I'm asking because this misconception that businesses don't have to pay VAT is something that I've held myself, obviously because I didn't knew back then what I was talking about.

Re: Three European Countries Block Tax on Tech Giants

#265

Post by Rexxar »

woodpanel wrote: post #251
sofixa wrote: post #214

Earlier quoted context omitted.

> They pay VAT for sells in your country. It doesn't matter if it's consumer or a company paying the tax, the amount is added to the price. If you want them tax then increase that. VAT is tax for consumers, not corporations. > Why do you feel entitled to profits of the company that isn't based in your country? Because those profits are made from sales in that country, and every physical company selling in that countr…

> VAT is tax for consumers, not corporations Sorry, but where does this misconception come from that companies don't pay VAT? It's not true, I see it on my company's tax statement every month ;-)

The answer is that company is the tax collector, not the tax payer. IMHO it's mainly a semantic distinction, the result is practically the same.

Re: Three European Countries Block Tax on Tech Giants

#266

Post by lovich »

adventured wrote: post #263
lovich wrote: post #257

Earlier quoted context omitted.

I have food, water, shelter, and healthcare inputs to maintain my body and keep producing services. Why would my income minus those costs not map to the ideas of revenue and profit?

Because those corporate profits are owned by people, shareholders. What remains after the corporate income tax usually winds up taxed just as your income is; ie generally those profits are not just taxed once. They also get taxed again after distribution. Or if the company later spends it to eg hire someone to try to expand, that also generates income taxation. Or if they buy something with it (new equipment) to bols…

First off

>What remains after the corporate income tax usually winds up taxed just as your income is

In the US at least, capital gains are taxed at a different, and lower, rate than individual income.

Secondly, how do the rest of your points not apply to individuals as well. Yes the company makes money and it's taxed, and then it's paid out to shareholders and they are taxed. When I buy food at the grocery it's not some special type of dollar that can't be taxed because I'm not a corporation.

Everyone I pay out money to gets taxed as well, including banks who I pay out for loans I was given, the same way investors are taxed on a corporations income.

The only difference is that companies get to pay less because they get to write off all their expenses, while individuals have a much smaller subset of items they can expense

Re: Three European Countries Block Tax on Tech Giants

#267

Post by mmirate »

cabalamat wrote: post #230
bsaul wrote: post #173

Earlier quoted context omitted.

I’m pro europe, but let’s face it, if we can’t get any kind of cooperation between state members regarding taxes, then maybe it’s time to rethink the inside mechanicsm of the union ( which may include restart from scratch with fewer countries). This revenue tax won’t change anything. It’s just ransom, and i hate feeling like my representatives make me look like a lazy thief. I’d even prefer something like what china…

> if we can’t get any kind of cooperation between state members regarding taxes, then maybe it’s time to rethink the inside mechanicsm of the union ( which may include restart from scratch with fewer countries). The problem is when things require unanimity. It's very hard to get all 28 countries to agree to something.

28 cultures is quite a lot of diversity to suddenly and forcibly slam onto a single party-line. Have you considered that maybe this collection of cultures might have values and methods that are sufficiently mutually different, that there often isn't a single policy that will satisfy all of them?

Here in the USA we have an analogous situation, but it is maintained - for at least a century and a half - with enough top-down brute force to keep the resulting tensions simmered-down such that they are only expressed via things like the "culture wars" phenomenon.

Re: Three European Countries Block Tax on Tech Giants

#268

Post by daurnimator »

amelius wrote: post #174
bluecalm wrote: post #169

Earlier quoted context omitted.

This is because taxing profit is a very bad idea. It leads to situations where two companies doing exactly the same thing pay different taxes because one uses less efficient (and often more polluting) technology or just chooses to buy luxury cars for the employees instead of showing profits. The tax on profits is a tax on honesty in accounting and even if accountats are honest it's still impossible to determine fair…

> This is because taxing profit is a very bad idea. Wouldn't the same argument hold for income tax then? I mean, I can evade income tax to a certain extent by making my boss buy me a nice car, computer, bicycle etc.

> I mean, I can evade income tax to a certain extent by making my boss buy me a nice car, computer, bicycle etc.

Most systems tax these at a higher rate. See e.g. https://en.wikipedia.org/wiki/Fringe_benefits_tax_(Australia...

Re: Three European Countries Block Tax on Tech Giants

#269

Post by mmirate »

BalinKing wrote: post #237
ambicapter wrote: post #190

Earlier quoted context omitted.

So what you're saying is, we shouldn't use laws to fix things?

I don't think that's as unreasonable as you make it sound. Laws should not be the knee-jerk reaction to every problem; there are many who think they should be effectively be a last-resort measure (when there truly is no other alternative). Obviously, there is large political disagreement on this issue (viz: conservatives vs. liberals, to use American jargon).

> Obviously, there is large political disagreement on this issue (viz: conservatives vs. liberals, to use American jargon).

There is not as much disagreement as it can sometimes seem, between those particular groups, as ID'ed using that jargon.

The American Conservatives and the American Liberals both think that laws should be the knee-jerk reaction to certain sets of problems. Their differences lie in which problems those are: by and large, the Conservatives say that those are the social problems, and the Liberals say that those are the economic problems.

But you are right, there are many who think they should be a last-resort measure in all-but-every case: the American jargon calls them Libertarians, and the American first-past-the-post voting system calls them personae non gratae.

Re: Three European Countries Block Tax on Tech Giants

#270

Post by moorhosj »

pembrook wrote: post #151
moorhosj wrote: post #136

Earlier quoted context omitted.

The flip side of this argument is that the companies are ripping the countries off by using myriad tax loopholes, because they can. I find it interesting that the companies are often portrayed as smart for doing this, but politicians are jealous and incompetent. Almost like we worship businesses and malign government. I wonder whose interests that viewpoint supports.

>but politicians are jealous and incompetent ...well they did create these tax loopholes in the first place. That’s pretty much the definition of incompetence. So are you arguing that corporations should pay more tax than they are legally required as a gift of charity to countries? If so, how much? What if a competitor decides to pay less?

The politicians in the US, Germany and France didn’t create the loopholes tech companies use in Ireland. The globalization of business is what allows maneuvers like the “Dutch Sandwich”. Taxation hasn’t really adjusted to this type of international tax avoidance. It will likely be a prominent discussion over the next 20 years based on the Panama Papers.
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