Three European Countries Block Tax on Tech Giants • Hacker News Board

Re: Three European Countries Block Tax on Tech Giants

#41

Post by antidesitter » Tue, Nov 06, 2018, 3:34 PM UTC

gaius wrote: post #32

antidesitter wrote: post #22

Earlier quoted context omitted.

> whatever jobs these companies bring, they are still a net loss to the country as a whole, the country would literally be better off if those people were unemployed! That’s quite the claim. Got anything to back it up?

That’s quite the claim. Got anything to back it up? Pretty easy really. Multiply the cost of unemployment benefits * number of company employees in that country. Then look at the tax evaded by the company. "You do the math". JSA in the UK is £73/week, or £3796/year. Let's say a company dodges £1Bn/year in taxes. How many people would they need to employ before the country breaks even?

Uh, what? Stop being vague and describe exactly what you mean.

Response to edit: Please describe the full calculation (with factual numbers) of "national wealth", and then we'll talk.

Re: Three European Countries Block Tax on Tech Giants

#42

Post by ionised » Tue, Nov 06, 2018, 3:34 PM UTC

7000skeletons wrote: post #11

Lio wrote: post #5

Earlier quoted context omitted.

Yes they're an obvious one. I was surprised though that Luxembourg wasn't listed whist Sweden and Denmark are. I'd be interested to here their objects if anyone can point at a fuller article or discussion of the issues.

This is from earlier this year, so the debate may have progressed since then, but Sweden and Denmarks' concerns seem to stem from the way in which the EU aims to apply the tax. >“A digital services tax deviates from fundamental principles of income taxation by applying the tax on gross income, i.e. without regard to whether the taxpayer is making a profit or not,” Swedish Finance Minister Magdalena Andersson, and her…

Why should we care whether they are making a profit or not?

There are so many ways a company can legally and artificially lower its profit numbers.

Re: Three European Countries Block Tax on Tech Giants

#43

Post by pjc50 » Tue, Nov 06, 2018, 3:35 PM UTC

friedman23 wrote: post #25

7000skeletons wrote: post #11

Earlier quoted context omitted.

This is from earlier this year, so the debate may have progressed since then, but Sweden and Denmarks' concerns seem to stem from the way in which the EU aims to apply the tax. >“A digital services tax deviates from fundamental principles of income taxation by applying the tax on gross income, i.e. without regard to whether the taxpayer is making a profit or not,” Swedish Finance Minister Magdalena Andersson, and her…

I'm so happy the people of Sweden are sane, my biggest problem with these taxes is that they are on revenue which essentially makes all low margin internet businesses unprofitable. How does that benefit consumers?

The margins of businesses like Amazon are largely a matter of fiction, since the subsidiaries can make arbitary charges among themselves: https://www.theguardian.com/technology/2012/apr/04/amazon-fu...

Re: Three European Countries Block Tax on Tech Giants

#44

Post by jopsen » Tue, Nov 06, 2018, 3:35 PM UTC

mabbo wrote: post #26

7000skeletons wrote: post #11

Earlier quoted context omitted.

This is from earlier this year, so the debate may have progressed since then, but Sweden and Denmarks' concerns seem to stem from the way in which the EU aims to apply the tax. >“A digital services tax deviates from fundamental principles of income taxation by applying the tax on gross income, i.e. without regard to whether the taxpayer is making a profit or not,” Swedish Finance Minister Magdalena Andersson, and her…

It's an intriguing concept. What effect would a tax purely on size (income rather than profit) have on the world economy, if everyone were to adopt such policies? It would discourage large companies and encourage small ones. It seems like employees do better when there is a bigger and more diverse marketplace for work, ie, many smaller companies. So they would win out, hopefully. Customers may or may not do better. I…

It seems more like companies would have stronger incentives to keep the profit margin high..

I would be concerned if low profit margins is a problem.. companies with a low profit margin is the reason we can afford so much stuff.

Re: Three European Countries Block Tax on Tech Giants

#45

Post by digianarchist » Tue, Nov 06, 2018, 3:39 PM UTC

tyu1000 wrote: post #21

7000skeletons wrote: post #2

I didn't even need to click the link to know that Ireland was gonna be one of the three. It's like they have a vested interest, or something.

Good for them. France and Germany take endless steps to protect their domestic economic interests regardless of what any EU legislation or sense of fairness says, Ireland is well within their rights to do the same.

Ireland have already been given some lucky charms by the EU. For example, they were given permission to set their corporate taxes to a ridiculously low 12.5%.

Re: Three European Countries Block Tax on Tech Giants

#46

Post by 0xffff2 » Tue, Nov 06, 2018, 3:40 PM UTC

klez wrote: post #28

friedman23 wrote: post #25

Earlier quoted context omitted.

I'm so happy the people of Sweden are sane, my biggest problem with these taxes is that they are on revenue which essentially makes all low margin internet businesses unprofitable. How does that benefit consumers?

Honest question: why should I as a person be taxed on income (the closest I guess I can get to the concept of revenue) but a business should be taxed on profit? Can anyone explain to me the basis for such a distinction?

(The following based on US income taxes)

You as a person don't have a clear "profit" to tax. I would argue that the system of deductions is the nearest equivalent to taxing your individual income on your profits.

Re: Three European Countries Block Tax on Tech Giants

#47

Post by friedman23 » Tue, Nov 06, 2018, 3:40 PM UTC

pjc50 wrote: post #43

friedman23 wrote: post #25

Earlier quoted context omitted.

I'm so happy the people of Sweden are sane, my biggest problem with these taxes is that they are on revenue which essentially makes all low margin internet businesses unprofitable. How does that benefit consumers?

The margins of businesses like Amazon are largely a matter of fiction, since the subsidiaries can make arbitary charges among themselves: https://www.theguardian.com/technology/2012/apr/04/amazon-fu...

A better solution would be to implement stricter accounting standards across the EU so that such tax dodges wouldn't be possible. This would solve the actual problem.

Re: Three European Countries Block Tax on Tech Giants

#48

Post by [deleted] » Tue, Nov 06, 2018, 3:42 PM UTC

0xfaded wrote: post #29

Apple and Facebook are currently building massive datacentres in Denmark, and Google has bought two plots for future datacentres. They have definitely been wooed to denmark, labour and consumer electricity prices are some of the highest in the world. https://facebook.com/OdenseDataCenter/ https://www.reuters.com/article/us-apple-denmark/apple-to-bu... https://stateofgreen.com/en/partners/state-of-green/news/goo...

[deleted]

Re: Three European Countries Block Tax on Tech Giants

#49

Post by CompelTechnic » Tue, Nov 06, 2018, 3:42 PM UTC

klez wrote: post #28

friedman23 wrote: post #25

Earlier quoted context omitted.

I'm so happy the people of Sweden are sane, my biggest problem with these taxes is that they are on revenue which essentially makes all low margin internet businesses unprofitable. How does that benefit consumers?

Honest question: why should I as a person be taxed on income (the closest I guess I can get to the concept of revenue) but a business should be taxed on profit? Can anyone explain to me the basis for such a distinction?

Let's say you operate a low margin business, such as a gas station. All numbers are before tax.

For the year, you spend $1,000,000 paying for fuel, convenience store supplies, electricity, wages, etc. You get $1,050,000 in revenue from your customers, for a fairly realistic margin of 5%.

Now let's say you run a software business. You pay $500,000 in electric bills, computers, wages, etc, and collect $1,000,000 in revenue for a margin of 50%.

Would you rather live in a society where the gas station pays MORE tax than the software business? This would be the case if you taxed revenue instead of profit. If the revenue-tax rate were 4%, the owner of the gas station would be left with $10,000 at the end of the year, and the owner of the software business would be left with $460,000. Bringing these numbers back into normal, profit-based terms, the gas station owner would be paying an effective tax rate of 80%, with the software business owner paying an effective tax rate of 8%.

If businesses were taxed on revenue instead of profit, low margin businesses and capital intensive businesses would be punished disproportionately. Businesses often face unplanned expenses or loss of revenue. This would have the effect of forcing businesses to raise prices to compensate for the increased risk, and would force lots out of business. This reduced economic activity would be bad for consumers, producers, the government, and society as a whole.

Individual people's income taxes cannot be treated this way, because the closest analogy to "business expenses" for a person's lifestyle is their cost of living. If cost of living were deductible it would be highly gameable and ripe for abuse by numerous parties.

Re: Three European Countries Block Tax on Tech Giants

#50

Post by EpicEng » Tue, Nov 06, 2018, 3:44 PM UTC

ionised wrote: post #42

7000skeletons wrote: post #11

Earlier quoted context omitted.

This is from earlier this year, so the debate may have progressed since then, but Sweden and Denmarks' concerns seem to stem from the way in which the EU aims to apply the tax. >“A digital services tax deviates from fundamental principles of income taxation by applying the tax on gross income, i.e. without regard to whether the taxpayer is making a profit or not,” Swedish Finance Minister Magdalena Andersson, and her…

Why should we care whether they are making a profit or not? There are so many ways a company can legally and artificially lower its profit numbers.

>Why should we care whether they are making a profit or not?

Because it is generally in everyone's best interest for companies to invest in themselves rather than increase margin at all costs. Growth is good. Many companies would simply go under if you tax them on revenue.

>There are so many ways a company can legally and artificially lower its profit numbers

Then you try to cut those off as much as possible. Like most things in the real world, there's no perfect solution, but we weigh the pros and cons and make a decision.