71–80 of 304 posts
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Europe is losing ~globalization and we are fighting over the scraps. Which European country do you think will be overall obviously better in ten years? And not in the sense that "everything gets better", but in the sense of having a high rate of success in converting progress to prosperity. I don't know of any.
What exactly are they losing?
Couldn't we just ban tax evasion? What makes it so hard? (honest question) A recent European study has shown that the more company win money, the less they pay in taxes (in percentage). Is it because of bad laws? Corrupt politicians? Something else?
Banning tax evasion is easy. Just get rid of corporate income taxes and replace it with a sales tax. It's not like corporations pay taxes anyways; their customers do as tax is built into the cost of products.
Although I'd also like everyone to stop using the term "income tax" for this. It's a tax on corporate profits, and has nothing at all to do with personal income tax, a tax on wages.
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> without any honest attempt at simplification, broad application or coordination with other jurisdictions. The problem with that is that the other jurisdictions have no interest in closing tax loopholes. The irish bend over backwards to let Apples unique sheme qualify as double irish (their tax office had to issue several private rulings) and they had no interest in getting rid of the double irish itself either. For…
The double Irish was gotten rid of in 2015 https://www.investopedia.com/terms/d/double-irish-with-a-dut...
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As others have said, it isn't evasion but avoidance. The issue is that there a lot of ways to put the money on the books wherever you want it. Let's say you want to sell mobile phones. You could create one company in France that builds, buys and sells phones. In this case it becomes pretty clear it is a French company and all the money will be taxed in France. But let's say you have that same company and split it up…
The difference between avoidance and evasion is only relevant if you have tax law interpreted to the letter only. Tax law should be interpreted by the lawmakers intention and companies should be ready to be fined or uptaxed if authorities find they pay less taxes than is reasonable given global profits and relative turnover within their jurisdiction. Constructs such as paying “royalties” to parent companies, or takin…
First, tax laws don't have clear intentions to begin with -- if a tax law passes with 51 out of 100 votes in the legislature, all 51 representatives could be supporting the "letter" of the law for 51 different actual intentions, many of which might not be noble in the first place (e.g. give a particular local factory a tax break to win more votes next election).
Second, because of this, "intention" would be left open to completely different interpretation by different judges and result in completely arbitrary, non-predictable outcomes in different cases, which would be a nightmare for companies to even attempt to comply with. There's a reason that laws are interpreted by their letter -- it's the only fair way to do it.
Third, the tax laws are passed by different countries and are not harmonized, so even if they had clear intentions, their intentions can completely conflict, and there's no reason why they should be harmonized -- different countries are allowed to have legitimately different philosophies on taxation, there's no "right" answer.
The things you say should "simply be outlawed" -- how? How are you going to determine which internal loan is merely "expensive" (OK) versus "very expensive" (not OK)? How are you going to differentiate between legitimate payments and the "royalties" you put in quotes that you call a construct?
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The difference between avoidance and evasion is only relevant if you have tax law interpreted to the letter only. Tax law should be interpreted by the lawmakers intention and companies should be ready to be fined or uptaxed if authorities find they pay less taxes than is reasonable given global profits and relative turnover within their jurisdiction. Constructs such as paying “royalties” to parent companies, or takin…
It's unreasonable to expect judges to divine lawmakers' intent on subtle issues of tax policy. If lawmakers want a tax to work a certain way then they need to just write that down so that it's clear to everyone.
Like, if you say "this tax break is intended solely for people who sell second hand cars" then you don't have to spend 100 pages exactly specifying every nuance to 100% prevent people not selling second hand cars from taking advantage of it.
Ots called principles based tax code and it works.
I was initially high sceptical of the idea but, based on outcomes, it is a vastly superior system to rules based tax codes. It makes it far simpler and clearer to everyone.
Here is what I have learnt about Eurocrats: a) they don't understand economics b) they definitely don't understand unintended consequences c) I am willing to bet not one of them has ever bootstrapped a successful venture and finally d) there is a good reason why no country in Europe is able to create its own Silicon Valley - they are just too busy creating more busywork for themselves.
And to the well-intentioned person who comes along and says "Well, if you are clearly not the target of this, then why do you even worry?" I have a question - if it turns out that you are wrong, are you going to pay the taxes on my behalf? Actually, this is literally what I asked a friend of mine from Europe who expressed that sentiment. Not surprisingly, he wasn't really willing to put his money where his mouth was.
I am frankly astonished by all the people from EU who come in and comment things like "Oh, you don't really know how European laws actually work. If you did, then you wouldn't be worried". Do you not have nothing better to do in life than trying to understand the nuances between the "letter of the law" and the "spirit of the law" in every country around the world?
Oh, and by the way - HN will be very interested to know this: right now, there is a company called Paddle which is a Stripe competitor - and this one law (EU VAT MOSS) seems to have single handedly revived this company. It was (and apparently still is) a painful software to use, and Stripe is faaar superior in terms of API and integrations [1], but Paddle has now become the defacto choice [2] for everyone who actually cares about the EU VAT MOSS because Paddle handles all the annoying crap on your behalf. My guess is, Stripe - which is too Silicon Valley focused - is going to be blindsided by EU VAT MOSS, hand over a lot of their next generation of customers to Paddle, and won't even know what hit them in a few years if they don't pay careful attention to what is going on here.
[1] https://www.indiehackers.com/forum/anyone-using-paddle-for-s... [2] https://www.indiehackers.com/forum/how-do-you-handle-vat-mos...
Couldn't we just ban tax evasion? What makes it so hard? (honest question) A recent European study has shown that the more company win money, the less they pay in taxes (in percentage). Is it because of bad laws? Corrupt politicians? Something else?
Banning tax evasion is easy. Just get rid of corporate income taxes and replace it with a sales tax. It's not like corporations pay taxes anyways; their customers do as tax is built into the cost of products.
In my (limited) understanding I thought this was not supposed to happen, and that most goods and services could automatically be sold EU-wide. France could not charge import duties on Guinness trucks, nor demand that beer good enough to be sold in Ireland is not good enough to be sold in France.
(This does not sound at all like the usual discussion of the tax on multination's profits, and whether declaring that your business unit in the Bahamas actually made the profit is avoidance or evasion. It seems to be a brand new tax on some kinds of business-to-business sales.)
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To complicate the situation, a French citizen, living in Spain, the sole owner of a company incorporated in Ireland, buys software from an American company to run for a customer in Brazil. Which country/countries should be able to tax the revenue?
The company would pay corporation tax in Ireland. The French citizen, if resident in Spain, would probably pay taxes in Spain (generally countries tax residents). The customer may need to pay sales tax on the purchase to Brazil, if Brazil has such a thing. But I agree with your point - it does get quite complicated and bureaucratic.