France Plans 5% Digital Tax as Governments Chase Internet Giants • Hacker News Board

Re: France Plans 5% Digital Tax as Governments Chase Internet Giants

#131

Post by tonyedgecombe » Sun, Mar 03, 2019, 5:40 PM UTC

bobl wrote: post #59

yann63 wrote: post #2

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?

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.

The Eastern European countries have been growing consistently for years. If you only look at economics countries like Poland have been doing very well.

You have to remember Western Europe has developed economies. They aren't likely to grow at the rate Asian countries are as those economies have a lot of catching up to do.

Also European countries don't necessarily have the same priorities as the US for example. Most of us prefer decent workers rights and consumer protections over 1/2% on GDP.

Re: France Plans 5% Digital Tax as Governments Chase Internet Giants

#132

Post by ttoinou » Sun, Mar 03, 2019, 5:41 PM UTC

tonyedgecombe wrote: post #127

ip26 wrote: post #119

Earlier quoted context omitted.

Suddenly it strikes me that one fix might be eliminating international subsidiaries. It's possible it would be hard to enforce in practice, but the crux of the problem is the absence of a competitive relationship & autonomy between these supposedly independent companies.

The obvious solution is to eliminate corporation tax and shift it to areas that are harder to avoid such as dividends, capital gains and land value.

Or stop taxing "profits" but tax every transaction on its total amount, that would also end a lot of "tax niches"

Re: France Plans 5% Digital Tax as Governments Chase Internet Giants

#133

Post by tonyedgecombe » Sun, Mar 03, 2019, 5:43 PM UTC

throwaway_9168 wrote: post #76

This reminds me of a horrible tax I came to know of recently - something called the EU VAT MOSS on digital goods. Apparently, it is supposed to target giants like Amazon who route money via multiple countries to evade taxes. Not surprisingly, this ends up affecting the smallest players most drastically. Worst, the glib language used to describe who should pay the tax is utterly confusing. As always, this means the ac…

Those VAT rules were brought in because companies like Amazon were abusing the system to save paying VAT.

Re: France Plans 5% Digital Tax as Governments Chase Internet Giants

#134

Post by tonyedgecombe » Sun, Mar 03, 2019, 5:44 PM UTC

kgwgk wrote: post #25

sharpneli wrote: post #20

Earlier quoted context omitted.

VAT is generally not paid from b2b transactions which are the vast majority of ad sales. To be precise you do pay VAT in some cases but then it is refunded. So no money to government.

VAT would be only partially refunded. Unless you’re selling your product/service for less than it costs you, not a good business model.

It works its way down the supply chain until it reaches the consumer.

Re: France Plans 5% Digital Tax as Governments Chase Internet Giants

#135

Post by burlesona » Sun, Mar 03, 2019, 5:45 PM UTC

yann63 wrote: post #120

yann63 wrote: post #2

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?

Thanks a lot to all your answers. My question was badly formulated. I meant to ask: why are we tolerating this situation? Regardless of tax evasion / tax optimization or whatever is the wording, most people agree that these companies are not paying the amount of taxes they should. I get the why and how these companies are doing this. I just don't understand why we, as a society, accept that. Our society has never bee…

That is a great philosophical question. My banal answer: entertainment is also better than it ever has been, and the messes of people are this more numb and manipulable than they ever have been.

Re: France Plans 5% Digital Tax as Governments Chase Internet Giants

#136

Post by iguy » Sun, Mar 03, 2019, 5:46 PM UTC

yann63 wrote: post #120

yann63 wrote: post #2

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?

Thanks a lot to all your answers. My question was badly formulated. I meant to ask: why are we tolerating this situation? Regardless of tax evasion / tax optimization or whatever is the wording, most people agree that these companies are not paying the amount of taxes they should. I get the why and how these companies are doing this. I just don't understand why we, as a society, accept that. Our society has never bee…

> most people agree that these companies are not paying the amount of taxes they should

They will say this because the news tells them this is true. But it seems far from obvious to me.

If a multinational sets up shop in France, then a whole pile of taxes do get paid: VAT is 20% of all sales. Then there is income tax / social security / etc. I don't know any French details, but I'm quite sure it's above 30% in total... all of which you should think of as being collected on the transaction that A pays Mr. B. If the company spends most of their revenue on salaries, then this already sounds like order of 50% of throughput goes to tax.

In addition to this, they may make some profit. And it seems pretty hard to know where the profit was made. How much is iOS worth? Or the Starbucks logo... quite a bit, your groggy airport customers know what they're getting, but there's no really obvious way to put a unique number on this. And thus it's honestly difficult to say where the profit was made.

Yet this is often the whole violent argument! Over maybe 20% of say 5% profit, 1% of sales... 1/50th of the taxes already collected above. If they wished to collect more, they could easily tweak those numbers. I'd go so far as to suggest that we should just give up, set the tax on corporate profits to zero globally... but at least they are generally moving down.

> Our society has never been so rich, yet we see decline in education, health, etc

But we collect more tax than ever. It it buys us worse healthcare, or education, than it did in the past, then the problem may lie elsewhere.

Re: France Plans 5% Digital Tax as Governments Chase Internet Giants

#137

Post by kartan » Sun, Mar 03, 2019, 5:48 PM UTC

xondono wrote: post #48

kartan wrote: post #34

Earlier quoted context omitted.

Doing business with tax havens should be illegal. A tax Haven creates an agreement between companies and a country to steal another country tax reveneu. Tax havens produce close to nothing, so they have very small exports. It's just a legal arrangement that has nothing to do with production.

You are assuming that somehow that tax revenue is theirs in the first place. What if that tax rate makes a business non-profitable in France but a money-making machine in Ireland? Also, too much focus is centered around taxes when spurious regulations are generally more damning for a lot of companies. For example some friends of mine have attempted to start escape rooms, they have all abandoned their pursuits because…

> You are assuming that somehow that tax revenue is theirs in the first place. The big corporations that evade taxes are using the economic power, infrastructure and legal systems of countries without contributing to any of them. That is money that the corporations owe to the citizens of those countries.

> What if that tax rate makes a business non-profitable in France but a money-making machine in Ireland? I see your point, they are centred about maximizing profit. But, there are other goals as well. The goal of improving the taxation system is related to broad social issues like wealth redistribution. It has nothing to do with the only goal is to maximize short term profits for companies.

> Also, too much focus is centered around taxes when spurious regulations are generally more damning for a lot of companies. For example some friends of mine have attempted to start escape rooms, they have all abandoned their pursuits because here in Spain the legal framework is unclear. All escape rooms in this country are in a legal greyish area.

This is one of the many reasons regulations take a long time to be in place for new kinds of business: https://www.news.com.au/world/europe/five-girls-locked-in-ho...

I hope that your friends find a good way to start escape rooms in the end. If it is their passion they will succeed. Regulations may be slow, but regulations get set and then people can do business safely for everyone involved.

Re: France Plans 5% Digital Tax as Governments Chase Internet Giants

#138

Post by morpheuskafka » Sun, Mar 03, 2019, 5:50 PM UTC

tonyedgecombe wrote: post #129

Proven wrote: post #108

Earlier quoted context omitted.

> Is it because of bad laws? No, it's because of the good laws. Taxation is theft. And it's not called tax evasion but tax planning. No one is obliged to pay more than the minimum.

> Taxation is theft. No it isn't. Property rights are determined by the state, hence taxation by the state cannot be considered theft.

I agree that taxation isn't necessarily theft, as part of the social contract, but aren't property rights at least in some cases fundamental?

Re: France Plans 5% Digital Tax as Governments Chase Internet Giants

#139

Post by alkonaut » Sun, Mar 03, 2019, 5:55 PM UTC

wbl wrote: post #130

alkonaut wrote: post #93

Earlier quoted context omitted.

> The things you say should "simply be outlawed" -- how? How are you going to determine which internal loan is "expensive" versus "very expensive"? How are you going to differentiate between legitimate payments and the "royalties" you put in quotes that you call a construct? Example for interest rates: Credit risk and intrabank/central bank rates are considered by courts when judging whether a rate is “too high”. Swe…

We already have rules requiring that! So what's the content of your proposal?

My parent post was a description of how we already have “arbitrary judgement” - so my previous suggestions to e.g tax income based on share of revenue in a jurisdiction would be arbitrary but no more arbitrary than what we already have.

Re: France Plans 5% Digital Tax as Governments Chase Internet Giants

#140

Post by fauigerzigerk » Sun, Mar 03, 2019, 5:55 PM UTC

cpursley wrote: post #60

yann63 wrote: post #2

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.

I see a couple of issues with this solution:

1) Companies would not pay most of their taxes where they put the greatest strain in public infrastructure.

2) Moderate differences in VAT rates would create enormous price differnces, which would invite smuggling.

3) The incentive for rich people to move to low tax destinations would be even greater than it already is.

I won't deny that the solution has upsides as well though.