good, google creates more value than the average government program.
The Tax Haven That's Saving Google Billions
31–40 of 62 posts
Re: The Tax Haven That's Saving Google Billions
#32Earlier quoted context omitted.
Capital gains taxes are not "double taxation." If you buy an asset for $1,000, you've paid for it with $1,000 after-tax dollars and acquire $1,000 in basis on the asset. If you then sell it for $2,000, you're taxed on the $1,000 accretion in value as a capital gain, but you are not taxed again on the $1,000 which forms your basis in the asset.
In the case of a business, that business had to grow to justify the increase in value, and that growth typically occurred via some taxable event, such as income. Then, that growth makes the business more valuable. If you sell your interest in the business, you pay taxes again on the increased value. So, yes, double taxation. Very similar to the double taxation experienced when taking in taxed business income and usin…
Same with dividends for non-Australian countries.
But let's look at how incentives change when these "double taxes" were removed:
1. No capital gain tax: Encourages speculation because speculation is "tax-free". Prices across commodities, properties, stocks and bonds will all rise, and may result in even more speculation.
2. No dividend tax: Encourages investment into companies who pay out high dividends because dividends are no longer taxed as much. Buying goods for the sake of capital gain would become less advantageous than buying goods because it pays out passive income that is tax free.
3. No corporate tax: Companies no longer store their money overseas as repatriating money from overseas no longer costs any taxes. Encourages investment by companies rather than hiring more workers, paying more wages, or paying out taxes, because further profit from investment is not taxed, but the other three activities are. Encourage creation of more companies (at least on paper).
4. No employee tax: Companies will be able to get more employee per dollar, and encourages companies to hire more employees because they can pay $100000 and the employee will now get $100000 instead of $60000. There will also be the effect of wage inflation; Every company wants to hire more employees.
Of all the double taxation that exists I advocate getting rid of (2) first.
Re: The Tax Haven That's Saving Google Billions
#33Earlier quoted context omitted.
Capital gains taxes are not "double taxation." If you buy an asset for $1,000, you've paid for it with $1,000 after-tax dollars and acquire $1,000 in basis on the asset. If you then sell it for $2,000, you're taxed on the $1,000 accretion in value as a capital gain, but you are not taxed again on the $1,000 which forms your basis in the asset.
In the case of a business, that business had to grow to justify the increase in value, and that growth typically occurred via some taxable event, such as income. Then, that growth makes the business more valuable. If you sell your interest in the business, you pay taxes again on the increased value. So, yes, double taxation. Very similar to the double taxation experienced when taking in taxed business income and usin…
So first of all, the concept of "double taxation" is something you have to be careful with. In general, a given dollar will be taxed more than once because it is spent more than once. However, that same dollar also counts towards the net income of the country more than once. Double taxation is when the same income is taxed more than once, which is a bit different.
Capital gains in general does not involve double taxation. Some examples:
If you buy property for $100,000, and sell it for $150,000, you'll pay capital gains taxes on the $50,000. Here, $200,000 of income is involved and $200,000 is taxed.
Say you invest $100k in a store, and build it up to $100k/year in revenue. You sell it for $1m. The business has no assets to speak of (you lease the space, etc). You're taxed on the $900k. Here $1.9m of income is involved and $1.9m of income is taxed.
Where you do run into double taxation is with corporations. $1m of corporate income is taxed once when it is earned and again when it is distributed as a dividend. But that's because the corporate income tax is double taxation, not because capital gains is double taxation.
Also, there is no double taxation when paying salaries. Say you have $1m in revenue and $400k in expenses (salaries and rent). You're taxed on the $600k of net income, not the $1m in total revenue.
Re: The Tax Haven That's Saving Google Billions
#34This is exactly why high taxes hurt startups. How can a startup/small business compete profit wise against Google or another large company when they are paying a much lower effective rate. Since their tax burden is so much lower they can charge a much lower price, effectively pricing any startup/competition out of the market. We just need a super low corporate tax with zero loopholes that make it less expensive to ju…
You can move to a country with a lower corporate tax rate. Like Canada. Yes Canada. And you can get special tech industry tax deductions. The US has one of the higher corporate tax rates out there.
Re: The Tax Haven That's Saving Google Billions
#35Earlier quoted context omitted.
In the case of a business, that business had to grow to justify the increase in value, and that growth typically occurred via some taxable event, such as income. Then, that growth makes the business more valuable. If you sell your interest in the business, you pay taxes again on the increased value. So, yes, double taxation. Very similar to the double taxation experienced when taking in taxed business income and usin…
Same with dividends for non-Australian countries. But let's look at how incentives change when these "double taxes" were removed: 1. No capital gain tax: Encourages speculation because speculation is "tax-free". Prices across commodities, properties, stocks and bonds will all rise, and may result in even more speculation. 2. No dividend tax: Encourages investment into companies who pay out high dividends because divi…
Only (3) is double taxation.
1) Capital gains is not double taxation. You're only taxed on the gain, not the total value of the sale. 2) Dividends are only double tax because of (3).
3) This is actually double taxation. The same income is taxed twice, once when it is earned as profit by the corporation, then again when it is distributed as dividends.
4) Salaries are not included in taxable income, so you're not taxed twice.
Re: The Tax Haven That's Saving Google Billions
#36Earlier quoted context omitted.
It's "futile"? Really? Is that just shorthand for saying that you oppose trying hard enough to do it successfully? I don't think it's futile at all. I think we lack the national will to do it, largely and obviously because of the folks who are in control of the relevant decisions. I'd be more sympathetic to your argument (and just fyi, I am not entirely unsympathetic as it is) if I had some confidence that adopting a…
With corporations, taxation is very complicated. The law is complicated because its tries to be sensitive to the question of who should be taxed where for what, and the facts are complicated because it's hard to find out exactly what revenues are being made and what they represent. You can always throw more enforcement at the problem, but that costs money, and your yield is uncertain because companies will just spend…
> Taxing individuals is a lot simpler. You live in the US, you pay US taxes on all your income.
Not quite as simple as that, actually. As a US citizen, you have to pay US taxes on your income even if you live and work in another country. Which sounds a lot like the problem that Google and other companies successfully avoid: a jurisdiction claiming tax on income taking place entirely outside of their jurisdiction. Individuals just have fewer options to help them avoid this problem; I suppose you could call that "simpler".
(Also, I'll carefully note that you said "simpler", not "simple". The latter rather obviously does not apply to the US tax code.)
Re: The Tax Haven That's Saving Google Billions
#37I'd like to know how much of the $60 billion tax shortfall the US government doesn't receive ends up in being spent by Google (at their discretion) on public works, education etc. I don't know enough to suggest this is (or isn't) the case, but perhaps this model would allow companies who genuinely want to look after their community to basically choose how money, that would otherwise be tax money, gets spent. I think…
That's called a charitable deduction, and it's already part of the tax code. Google isn't using the charitable deduction; it's simply using a loophole to avoid U.S taxation on income earned from non-US sources. Whether this is bad depends on your view on taxation.
Regardless of your view on taxation, it seems pretty reasonable to only have to pay taxes in one jurisdiction (the one in which the income occurred). Differing views on taxation could argue over whether one or zero jurisdictions should get to impose taxes, but it seems pretty reasonable that no more than one ought to.
Re: The Tax Haven That's Saving Google Billions
#38This is an article from 2010 that's already been submitted to HN in the past: http://news.ycombinator.com/item?id=1815457 Personally, I find the sub-headline misleading. The subhead reads "Google uses a complicated structure to send most of its overseas profits to tax havens, keeping its corporate rate at a super-low 2.4 percent." But I believe that number refers only to Google's overseas tax rate. This more recent a…
Note, Matt_Cutts works for Google.
Don't you think Google should be paying the UK tax on UK profits?
Re: The Tax Haven That's Saving Google Billions
#39Earlier quoted context omitted.
Same with dividends for non-Australian countries. But let's look at how incentives change when these "double taxes" were removed: 1. No capital gain tax: Encourages speculation because speculation is "tax-free". Prices across commodities, properties, stocks and bonds will all rise, and may result in even more speculation. 2. No dividend tax: Encourages investment into companies who pay out high dividends because divi…
Only (3) is double taxation. 1) Capital gains is not double taxation. You're only taxed on the gain, not the total value of the sale. 2) Dividends are only double tax because of (3). 3) This is actually double taxation. The same income is taxed twice, once when it is earned as profit by the corporation, then again when it is distributed as dividends. 4) Salaries are not included in taxable income, so you're not taxed…
You're right. Sorry, I shouldn't comment on these things with only 3 hours of sleep the night before because I'd get it wrong.
Re: The Tax Haven That's Saving Google Billions
#40This is an article from 2010 that's already been submitted to HN in the past: http://news.ycombinator.com/item?id=1815457 Personally, I find the sub-headline misleading. The subhead reads "Google uses a complicated structure to send most of its overseas profits to tax havens, keeping its corporate rate at a super-low 2.4 percent." But I believe that number refers only to Google's overseas tax rate. This more recent a…
Which is still ridiculously well below the stated 35% corporate tax rate in the USA (source--IRS http://www.irs.gov/pub/irs-pdf/i1120.pdf)