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France, Germany, Italy, Spain seek to base taxes on digital giants' revenues

reuters.com

141–150 of 195 posts

Re: France, Germany, Italy, Spain seek to base taxes on digital giants' revenues

#141

Earlier quoted context omitted.

I think you've vastly confused cause and effect. Rich economies can afford high tax rates because they are rich, and poor economies have to compete for what businesses they can get. Another obvious confounder is that richer states tend to be more urban, and urban places tend to be more liberal. Which vote for higher tax rates and social programs. Rural states are more conservative which favor smaller governments. Thi…

Many rich economies started poor. Systematic investment to education and infrastructure have provided the tools to become a rich economy. Becoming rich country with low level taxation is possible only for countries with lots of natural resources, like oil.

Systematic investment to education provides new enrollees for MIT and Stanford and, subsequently, workforce for Apple and Google. Brain drain is a real problem for developing countries.

Re: France, Germany, Italy, Spain seek to base taxes on digital giants' revenues

#142

Earlier quoted context omitted.

Not really, but it's better to have official residency somewhere, though. Some countries are quite flexible on residency, however. Cyprus offers residency after spending 60 days per year in the country, and exempts foreign income from tax. In Malta you can get residency by paying €20k a year (no requirement to spend any time in the country), and foreign income is also exempt from tax, etc. > That being said, there ar…

No countries tax foreign income but the USA and Eritrea.

Not true at all. Canada, for example, taxes your worldwide income.

USA and Eritrea are unique in that they will tax your worldwide income even if you no longer live in those countries (are non-resident.) No other countries in the world have the brass balls to do that.

Re: France, Germany, Italy, Spain seek to base taxes on digital giants' revenues

#143
post #116
post #93

Earlier quoted context omitted.

This is one of the main criticism about how the EU was made: freedom for funds goods and (mostly) workers to move around in the EU zone, without tariffs or constraints but no fiscal harmonization has been done. Therefore countries with low taxes (Ireland but also Luxembourg) attract a disproportionate amount of big companies HQ. Ikea, for instance, is officially declared in Luxembourg. Why so many people in EU rejoic…

Being an economic liberal, I always thought that this was one of the main advantages of the EU. Setup shop in one country and sell to the whole single market while encouraging beneficial tax competition. I do oppose special deals for specific companies though. Ireland, please stand up to the Brussels cartel!

"Tax competition" is only beneficial to the rich and to smaller states that can steal taxes from bigger ones. But of course, if you oppose free schools, free healthcare, and you favor the rich getting richer and the poor getting poorer, I understand why you like it.

Re: France, Germany, Italy, Spain seek to base taxes on digital giants' revenues

#144
post #104
post #93

Earlier quoted context omitted.

This is one of the main criticism about how the EU was made: freedom for funds goods and (mostly) workers to move around in the EU zone, without tariffs or constraints but no fiscal harmonization has been done. Therefore countries with low taxes (Ireland but also Luxembourg) attract a disproportionate amount of big companies HQ. Ikea, for instance, is officially declared in Luxembourg. Why so many people in EU rejoic…

I don't know where you got that so many people in the EU rejoice at the defection of the UK. It is a sad state of affair that gets the rest if the EU sad and angry. I don't see what there is to rejoice about, although I'm sure that some will see it as a benefit in some narrow way.

From polls I read, except for France, most people in the EU absolutely don't rejoice Brexit. But many - me included - think that, even if Brexit is a very sad fact, at least it could help fixing this kind of problems.

Re: France, Germany, Italy, Spain seek to base taxes on digital giants' revenues

#145
post #16

This is not about taxing revenues instead of profits. This is about taxing EU-wide profits in EU countries proportional to the revenues generated in that country. At the moment, many big tech companies use bookkeeping tricks to make it look like all their profit is generated in, for example, Ireland, while the revenue is generated in other EU counties. Unfortunately, Ireland has special tax rates for these companies…

In all fairness, it's not just Ireland. Luxembourg and - partially - the Netherlands also participate and benefit from this.

Re: France, Germany, Italy, Spain seek to base taxes on digital giants' revenues

#146
post #104
post #93

Earlier quoted context omitted.

This is one of the main criticism about how the EU was made: freedom for funds goods and (mostly) workers to move around in the EU zone, without tariffs or constraints but no fiscal harmonization has been done. Therefore countries with low taxes (Ireland but also Luxembourg) attract a disproportionate amount of big companies HQ. Ikea, for instance, is officially declared in Luxembourg. Why so many people in EU rejoic…

I don't know where you got that so many people in the EU rejoice at the defection of the UK. It is a sad state of affair that gets the rest if the EU sad and angry. I don't see what there is to rejoice about, although I'm sure that some will see it as a benefit in some narrow way.

Actually, UK was never part of the EU ( fully). I'm glad that's over now, i don't think UK will benefit on the long term and I hope the responsable politicians will be punished.

But at least the will be no more exceptions for participating members of the EU.

The EU was a good concept, but exceptions to members states ( not only UK, but also for Belgium eg. To much debt), made it a lot less usefull

Damned politicians...

Ps. This is not a rant against UK, but against the 'broken' execution of the foundations throughout the years.

Also it's time to send a clear message, you can't get the benefits of you aren't a member

Re: France, Germany, Italy, Spain seek to base taxes on digital giants' revenues

#147
post #133
post #114

Earlier quoted context omitted.

It depends how you define profit, and to me this is absolutely about taxing revenues instead of profit. I see profit as the 'value added' by a particular activity. At least 90% of the value created by Google, Facebook and Apple was created in California. Therefore the vast majority of worldwide income generated by these companies should be subject to the tax rates that apply in California - not Ireland, not Germany,…

> At least 90% of the value created by Google, Facebook and Apple was created in California. I'm trying not to be snarky but I need to say wtf. FB & google don't make money from IP, they make money as service providers, connecting merchants on the advertisement hype train to our eyeballs. They take money from local and transnational businesses, and present ads, aggregation and search services to individual, local, us…

Seems like you are thinking the value is created by customers, while the GP thinks it is created by employees.

Re: France, Germany, Italy, Spain seek to base taxes on digital giants' revenues

#148
post #125
post #48

Earlier quoted context omitted.

For example schools, hospitals, roads. They are mostly public in maybe every single European state. Without them there are no literate healthy customers and no deliveries.

Got it, so if a French person is on vacation in the US the businesses they frequent should also pay French taxes since that person is apparently only able to exist by the grace of the French government.

What happens is that a French person on vacation in the USA pays US taxes, for example the state tax on what s/he buys. S/he starts paying French taxes again when going back home. It looks fair.

But if that US business goes to France and sells to French customers there, then it should pay French taxes in France on the profits made from French customers. All loopholes should be removed.

What happens is that corporate taxes ultimately come from the pockets of customers. Either those companies will raise prices or lower their profits. Either way this will help local companies that currently can't exploits loopholes to pay no taxes and are at an unfair disadvantage. Somebody could see it as protectionism, I think the existence of those loopholes is a bug that has to be fixed.

Re: France, Germany, Italy, Spain seek to base taxes on digital giants' revenues

#149
post #147
post #133

Earlier quoted context omitted.

> At least 90% of the value created by Google, Facebook and Apple was created in California. I'm trying not to be snarky but I need to say wtf. FB & google don't make money from IP, they make money as service providers, connecting merchants on the advertisement hype train to our eyeballs. They take money from local and transnational businesses, and present ads, aggregation and search services to individual, local, us…

Seems like you are thinking the value is created by customers, while the GP thinks it is created by employees.

What value do facebook developers create directly? They have crafted a network of complementary services for which I don't deny their craftsmanship, but would you argue the developers are the core business instead of the interaction between users and their product?

Re: France, Germany, Italy, Spain seek to base taxes on digital giants' revenues

#150
post #16

This is not about taxing revenues instead of profits. This is about taxing EU-wide profits in EU countries proportional to the revenues generated in that country. At the moment, many big tech companies use bookkeeping tricks to make it look like all their profit is generated in, for example, Ireland, while the revenue is generated in other EU counties. Unfortunately, Ireland has special tax rates for these companies…

If this system is enacted, will the benefits of staying in the EU out weigh just moving all the shell companies to the Caymans or wherever? I wish countries would give up on corporate taxes. They are either easily circumvented, or you need a massive regulatory body to analyze all corporate transactions and determine if they are "fair." All the same tax revenue can be gained through much better systems that are not tr…

I would argue that the benefits or difficulties of avoiding taxation are dependent on the rule of law in the states where business is actually done. If the USA or EU took a political decision not to permit such structures then they would disappear.

The USA and EU don't because the benefits to their political class have so far outweighed the problems caused by a lack of revenue, and these structures have developed and proliferated rather rapidly. Additionally the political structures required to create collaborative responses have been developed in response to different issues (the necessity of supporting development in Eastern Europe after the collapse of the wall), and the alignments necessary to operate a larger system in Europe are not yet in place.

I do believe that Brexit will facilitate this, but I think that the process will have to go further to include Macron's ideas on a single budget - a greatly expanded take and disperse for the EU. This will require a huge reform of the Commission. I invite everyone to try and engage with the commission in some process or other and then judge what kind of capability you are engaging with.

I hope that the EU will devolve the distribution of central budget items to locally accountable forums, possibly at the sub national level - perhaps six for a country like France, one for somewhere like Greece. Currently I fear that the favour networks that operate in the EU institutions would greatly distort and corrupt any large fiscal rebalancing.

The big issue is that it seems that several of the national level structures in the EU would creak in the face of this kind of new set-up. Spain and Belgium in particular, but even Italy could be pulled apart by the creation of subnational entities with revenue lines independent of the national entity. Also, what would the mechanism of accountability be ? I think that this should vary according to the tradition of the region, but what are the acceptable limits or bounds on this?

Without Brexit this is simply a non-starter, I think that the UK would have been much more compromised than any other EU state by the emergence of this kind of structure, and I think that the English part of the UK would have been a real problem in terms of subnational accountability - the sovereignty of the commons would have gone and I don't see that as politically possible in England (note the other nations are less touchy about that for some reason!)

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