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

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

#171

Post by bobl » Sun, Mar 03, 2019, 7:18 PM UTC

tonyedgecombe wrote: post #155

bobl wrote: post #150

Earlier quoted context omitted.

I am not so much concerned about growth as such, but about European countries inability to convert progress into prosperity. This might not be the best example, but take cars. A country like the US would build a interstate highway system, probably subsidize car manufacturing and go on to create a huge factor of progress for decades to come. You have successfully converted technological progress into a meaningful fact…

>Yet, in few to no European countries would you expect that the fundamentals of the information age like education, health care, housing, infrastructure and work environment will get better and more accessible in the next ten years. I do expect that. Of course there are some problems like an ageing population and the fiscal irresponsibility of some countries, but those problems aren't unique to Europe. To take your e…

The example of the highway system was more for its time. Europe did, and has, just as the US built a lot of infrastructure over the years. But it is still lackluster in many places.

Though the real lack of conversion isn't in one specific thing, it is that Europe (and probably much of the world for that matter) can't offer people good opportunities. I hope I am too gloomy. It is just a hard argument to make that in terms of life prospects it wasn't better to be young ten years ago than it is today in many places.

If people believe that someone else won't come and eat their lunch over that I think they are wrong. As I alluded to in another comment, Europe probably lost at least half of the tech industry it could have had if it wasn't for capital going into things like rents.

I people were expecting things to get better they wouldn't essentially hold back growth. We would see new rapid affordable development because not doing that would be losing out. But I don't see countries being concerned about that. They are perfectly happy taking decades building things and going over budget. They let mortgages double or triple, so everyone who came before win at the expense of those coming after. They sell companies with valuable technology are to foreign interests.

So I don't really understand how someone e.g. would end up working less when they have twice the mortgage than their parents and the companies they work for are owned foreign investors who wouldn't mind moving activities abroad at any point.

And to that point almost all major successful companies are vertically integrating today, because with information being accessible there isn't much reason not to control your own activities. Yet, most European countries are doing the opposite. Outsourcing their main activities to complex constellations.

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

#172

Post by AlexTWithBeard » Sun, Mar 03, 2019, 7:22 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.

Sounds very reasonable. I'm sure there's a catch, but I don't see where it is.

Taxing a business looks like a weird thing to do: a business can only spend money on business-related stuff pretty much by definition.

In order for money to be spent on non-busines things, it should be paid out as a salary, dividends or something like that which we know how to tax pretty well.

I'm certainly missing something, but what?

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

#173

Post by josefx » Sun, Mar 03, 2019, 7:29 PM UTC

BurningFrog wrote: post #145

josefx wrote: post #49

Earlier quoted context omitted.

> 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 problem with that is that the other jurisdictions have no interest in closing tax loopholes. A lot of people see that as a feature. "Competitive governance" may be the biggest reason the world works as well as it does.

I could live in a world with a little less tax avoidance by the rich. So in this case I don't see the upside to a country violating long standing trade deals to make a little more on the side.

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

#174

Post by techslave » Sun, Mar 03, 2019, 7:40 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.

not really. unlike people, corps pay taxes on profit, not revenue.

and the issue isn’t evasion. it’s avoidance. which allowance for is intentional by governments for good and bad reasons.

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

#175

Post by rb808 » Sun, Mar 03, 2019, 7:41 PM UTC

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?

You make it sound as if taxation is a good thing. In much of the world capitalism, retained profits and growing the economy is used to make people wealthier. The countries with fastest growth and highest employment, healthiest companies tend to have lower tax rates (China, USA).

Countries that treat companies as if they a problem that need more tax (much of Western Europe) tend to have high unemployment and poorly performing economies where young people leave. Europe has the advantage that it got rich through its empires (and low taxes) and is now stagnating into poverty. Companies and people already pay a lot of tax compared to the rest of the world, Europeans should be trying to reduce this burden instead of figuring out how to tax more.

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

#176

Post by iguy » Sun, Mar 03, 2019, 7:47 PM UTC

cheerlessbog wrote: post #80

johneth wrote: post #58

Earlier quoted context omitted.

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.

In the example above the American company presumably has most of its employees in the US and ought to pay significant tax there somehow.

It will: the process of paying employees is heavily taxed. Who writes the check and what the nominal salary is doesn't matter too much... between the cost to the company, and the employee getting to spend the money, the government gets what 30-40%? That's a lot. And it's hard to avoid, you can't move a hundred engineers to the Bahamas at the stroke of a pen.

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

#177

Post by briandear » Sun, Mar 03, 2019, 7:57 PM UTC

BartBoch wrote: post #141

sbacic wrote: post #118

Earlier quoted context omitted.

If the imbalance is that an Irish company is more competitive than a French one, then no, not really.

In this case, this will be the race to the bottom and smallest countries will be able to charge 0% tax just for the sake of office space rented since their domestic market is small enough to not bring much of income tax (Luxembourg for example). The issue here is with omitting responsibilities. If a company makes hundreds of millions of income in a country, it should pay some taxes there. There is a huge push in Pola…

If a small country can afford a 0% tax, why shouldn’t they avail themselves to that competitive advantage? Unified tax rates amount to a tariff on more fiscally competitive countries.

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

#178

Post by tomatocracy » Sun, Mar 03, 2019, 8:01 PM UTC

rayiner wrote: post #154

fauigerzigerk wrote: post #140

Earlier quoted context omitted.

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 th…

Companies don’t put strain in public infrastructure. They’re legal abstractions. People and their activities (employees, shipping, factories) put strain on the public infrastructure, and they can be taxed (income, real estate, and pollution taxes) at that point. The issue is that when Google shows ads to someone in the UK to monetize a search service used by the UK person, Google uses almost no UK resources.

Exactly. What a lot of governments seem to want is some form of tax on foreign companies for the privilege of gaining access to their local population/market. For physical goods we call that an import duty.

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

#179

Post by fauigerzigerk » Sun, Mar 03, 2019, 8:07 PM UTC

rayiner wrote: post #154

fauigerzigerk wrote: post #140

Earlier quoted context omitted.

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 th…

Companies don’t put strain in public infrastructure. They’re legal abstractions. People and their activities (employees, shipping, factories) put strain on the public infrastructure, and they can be taxed (income, real estate, and pollution taxes) at that point. The issue is that when Google shows ads to someone in the UK to monetize a search service used by the UK person, Google uses almost no UK resources.

>The issue is that when Google shows ads to someone in the UK to monetize a search service used by the UK person, Google uses almost no UK resources.

Why is that an argument against moving from corporation tax to VAT though? I don't think it would change much in terms of the UK's (in)ability to tax Google.

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

#180

Post by tomatocracy » Sun, Mar 03, 2019, 8:09 PM UTC

techslave wrote: post #174

cpursley wrote: post #60

Earlier quoted context omitted.

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.

not really. unlike people, corps pay taxes on profit, not revenue. and the issue isn’t evasion. it’s avoidance. which allowance for is intentional by governments for good and bad reasons.

Not really, people also pay tax on profit not revenue. Expenses related to business activity can generally be deducted in most places no matter whether you are incorporated or not. It's the basis on which business expenses you claim back from your employer are not taxed and the way unincorporated sole traders and bare partnerships are usually taxed. The rules on what types of expenses are tax deductible are pretty similar. If you incur business expenses which are not repaid by your employer you can usually reclaim tax on them.