
US blocks crackdown on tax avoidance by net firms like Google and Amazon - iProject
http://www.guardian.co.uk/business/2013/jul/14/us-tax-avoidance-google-amazon
======
beedogs
So, let me see if I understand this: the US is going to bat for the big
software companies who don't want to pay taxes in other countries, and yet I,
an expat American, am expected to file an income tax return with the IRS every
single year for my foreign earnings, which may be subject to dual-taxation if
I make "too much."

What a crock of shit.

~~~
dantheman
Well I agree with you that the foreign earnings things completely crazy. Using
one bad policy to argue against a good one is just as bad. This is a good move
on the part of the US, what we also need is the ability to move corporate
profit from foreign subsidiaries back into the US without facing tax.

~~~
cmdkeen
You're missing a step though - which is that these corporations do everything
possible to avoid paying the due tax on those foreign profits. I'm all in
favour of getting to repatriate profits then - but taking the profits through
a tax haven needs to be stopped first.

Take Google in the UK for instance. They don't "sell" anything in the UK
according to their tax returns, so claim every deal is actually finalised
through Ireland and therefore subject to lower Irish taxes. So their UK tax is
minimal despite making large profits from there.

It provides a massive competitive advantage to companies large enough to full
off these kind of operations. Google have possibly been caught out actually
selling in the UK, but in most cases their conduct is legal - which is why the
law needs changing.

If you want to make money in France, the UK, Germany or wherever you should
pay local taxes to those countries. It would be grand if those situations
could be simplified and made accessible for digital goods (which are more
likely to be sold cross border).

~~~
nawitus
The problem with preventing the use of 'tax havens' is that there's no non-
arbitrary way to decide if a company is truly using another country as a tax
haven, or that they are actually using developers from another country. In the
Google example, Google UK is clearly benefiting from the developers that work
outside UK, therefore they should be able to pay 'brand fees' or whatnot to
the 'main Google'.

Of course in this case most of the development is not happening in Ireland,
but how can you decide if the fees are reasonable or not? You'll either end up
with a very complex tax code with loopholes (which is non-desirable), or
you'll give arbitrary power to tax bureaucrats to enforce arbitrary taxes to
certain companies (and this will in practise create non-just tax decisions and
corruption).

~~~
edoloughlin
_Of course in this case most of the development is not happening in Ireland_

I'd say that very little (probably zero) development is done in Ireland, but I
get the impression you think that development is the taxable activity (I don't
know if it is or not). However, there are 1,700 people doing something in
Ireland (from
[http://www.idaireland.com/google/index.xml](http://www.idaireland.com/google/index.xml),
1/2 way down):

 _A site reliability /engineering team supporting Google’s European hosting
and search activities; Multilingual customer support for Google’s AdWords
advertising product; On-line relevancy testing and Google product support;
Shared Services to support Google’s EMEA operations._

As an Irish person, I'm getting a little weary of the constant references on
HN implying that Ireland is little more than a tax haven. There is a
significant number of jobs attached to the US multinational presence here,
viz:

\- Apple: 4000 employees ([http://venturebeat.com/2013/05/22/ireland-were-no-
tax-haven-...](http://venturebeat.com/2013/05/22/ireland-were-no-tax-haven-
but-yes-apple-did-pay-2-tax/))

\- eBay: 3000 ([http://www.irishtimes.com/business/sectors/retail-and-
servic...](http://www.irishtimes.com/business/sectors/retail-and-
services/ebay-opens-european-headquarters-in-dundalk-1.1372373))

\- Google: 1700 (see above)

\- Facebook: 500
([http://www.irishtimes.com/business/sectors/technology/facebo...](http://www.irishtimes.com/business/sectors/technology/facebook-
to-hire-100-dublin-staff-1.1253407))

I could go on, but I have stuff to do, and I feel like I've already done more
research than most journalists commenting on this area. For those interested,
there's a list of foreign ICT companies operating in Ireland at
[http://www.idaireland.com/business-in-ireland/information-
co...](http://www.idaireland.com/business-in-ireland/information-
communication/)

 _Edit:_ Removed woe-is-me comment following a trigger-happy downvoter.

~~~
justincormack
Google does not pay tax in Ireland either, even at low Irish rates. So while
it is great that it employs people there and it might anyway, Ireland is
integral to its tax evasion strategy, as is the Netherlands.

~~~
edoloughlin
It doesn't pay very much (corporation tax), but it does pay:
[http://www.irishtimes.com/business/economy/ireland/google-
de...](http://www.irishtimes.com/business/economy/ireland/google-defends-low-
tax-payment-1.2003) \- it took me 3 seconds to find this.

~~~
justincormack
Sorry I didn't mean none but nowhere near what you would expect given this is
the entire revenue from Europe.

------
flexie
The US IT sector is heavily subsidized. Giving Apple, Google, Facebook etc.
billion dollar subsidies at home would spur trade wars. So instead the US uses
its never failing ability to play European countries against eachother and its
influence over smaller jurisdictions like Ireland, Netherlands, Switzerland,
Guernsey, Jersey, Bahamas, Isle of Man, British Virgin Islands etc to make
sure that large US corporations' foreign income - which wouldn't be taxed in
the US anyways - can be kept untaxed.

~~~
adventured
Other countries and foreign companies can't and don't take advantage of legal
global tax dodging jurisdictions and schemes?

I wasn't aware it was exclusive to the US. I also wasn't aware German / French
/ British etc. IT firms don't dodge global taxes at every opportunity.

------
forgottenpaswrd
It talks about France. France is a machine of expending money right now,
better said, of wasting money.

I am living in France this Summer, a very rich and beautiful country with a
hole in the pocket. French people love to life well, and someone else to pay
the bills, the Germans, the rich, whoever but not them.

Mr Hollande only want to do one thing, to raise taxes. But there is never
enough money when you don't expend wisely.

~~~
camus
You should go back to where ever you come from or wherever it is better for
you to live.

Sarkozy ruined France so yes now everbody needs to pay for it.

And the problem is not taxes,i'm happy to pay taxes. The problem is people
like French liberals ( liberals are "right-wing" in France ) that gives hand
outs to their friends or vote laws without financing their them , and then all
they have left is blaming the poor,the homeless,the public workers,the artists
or the muslims for France demise...

> French people love to life well, and someone else to pay the bills,

Whatever. Or maybe you prefer US way of life, where it is me/myself/I and
there is next to 0 solidarity.

~~~
patrickaljord
Sarkozy is not libertarian at all if that's what you mean by "libéral". He's
just as socialist as the left when it comes to the economy. To give you an
idea, Sarkozy created more than 50 taxes during his mandate [1] and didn't cut
on spending while creating more social aid programs (RSA). Only in France
would he be considered a libertarian or "néo-libéral" as they say just because
he limited the maximum amount of tax one could pay to 50% [2]. A 50% tax makes
you a libertarian, Ayn Rand disciple in France, isn't that insanity? You still
have to work until the 28th of July for the State in France.

1: [http://www.contrepoints.org/2012/03/07/72137-lahurissante-
ac...](http://www.contrepoints.org/2012/03/07/72137-lahurissante-accumulation-
dactes-manques-de-sarkozy)

2:
[http://tempsreel.nouvelobs.com//file/318975.pdf](http://tempsreel.nouvelobs.com//file/318975.pdf)

~~~
digitalengineer
Only France could make Brussel look like Galt's Gulch to the people who have a
lot of money.

[http://www.publicserviceeurope.com/article/1876/french-
elite...](http://www.publicserviceeurope.com/article/1876/french-elite-are-
fleeing-paris-to-live-in-brussels-tax-haven)

------
danmaz74
Let's see how this pans out. Maybe this time the UK will not play for the US
team, given the outrage there about this issue, but I'm afraid that without a
common EU position about this the US will be able to use their usual divide et
impera tactics.

~~~
patrickaljord
I hope the US wins. I'd rather this money stays with Google and Amazon than it
goes to the EU states. Why? Because the more profit Google and Amazon make,
the more value they produce for society as in more work, better technology,
better life etc. What does the state do with tax money? It spends it badly and
ends up creating more debt. So, it creates the opposite of value, negative
value or debt, and crony capitalism because everyone wants to influence the
way this money is redistributed. To give you an idea of how bad it is here,
people work until the 28th of July for the state here in France because of all
the taxes, if you have a company it can be even worse.

EU states are already the most taxed ones in the world and they have the
biggest national debts, it's clear here that the way to fix this is not "more
tax" but "less spending". For the last 60 years, spending has been
skyrocketing and taxes are at the highest and are killing jobs, innovations
and whole economies. Why keep spending even more by making taxes even higher
than they are, this is ludicrous. It's time to admit maybe we should start
spending less, not more taxes, this isn't working and hasn't worked for the
last 60 years.

~~~
weavejester
The idea that private industry is always more efficient than the public sector
is, at best, an over simplification. One need look no further than healthcare
to find an example where the public sector is vastly more efficient than a
market of competing, private sector companies.

The state also spends money on things that would not be funded any other way.
Pure-scientific research, such as CERN. Policing for people too poor to hire
private security services. The idea that these things are "the opposite of
value" is ludicrous.

Also, if you're not going to tax Google and Amazon, then that gives large
international companies who can dodge tax a huge advantage over smaller
national companies who cannot. That undermines the underlying principle of
capitalism: competition. Either you tax no companies, or all of them - any
halfway position is worse than either.

~~~
patrickaljord
Public health-care is a complete failure here in France. We actually pay more
than Switzerland where it's privatize and the French assurance maladie is
going completely bankrupt while being forced on us. Many pure scientific
research have been done by private entities, I don't see why only public
programs could do any pure scientific research. Plus, if the people were given
their money back , maybe they could use it to invest in stuff they actually
care about such as pure scientific research which only represent like 1 or 2%
of our national budget today.

As for policing, I don't think anyone disagrees that it should remain public.
Justice and Police and Military security are what the state exists for. Not
for subsidizing movie producers or a dying paper media industry like we do
here in France. I'm ok with a low flat tax that everyone would pay to sustain
the basic functions of the state. It would probably be cheaper for Google and
Amazon compared to whatever they're paying their accountants to design their
tax schemes and give them huge gain in time wasted for bureaucracy.

~~~
weavejester
WHO ranks the French health care system as the best in the world, and the
expenditure per capita is less than Switzerland (at least in 2007), so I'm not
sure where you're getting your numbers from.

I also suspect you'd have a hard time finding private companies willing to
spend $9 billion on a particle accelerator with no foreseeable profits.

I'm generally against subsidising any industry, but letting Google and Amazon
get away with dodging tax is effectively the same thing as a subsidy. Speaking
as someone who owns a small company, I'd rather the playing field be level.

~~~
patrickaljord
> WHO ranks the French health care system as the best in the world, and the
> expenditure per capita is less than Switzerland (at least in 2007), so I'm
> not sure where you're getting your numbers from.

[http://www.securite-sociale.info/](http://www.securite-sociale.info/)

[http://reachfinancialindependence.com/french-
healthcare/](http://reachfinancialindependence.com/french-healthcare/)

FYI: it's forbidden by law to leave social security in France and to encourage
others to do so. Best system ever indeed, once you get it you never leave it
unless you're ok with jail time.

~~~
weavejester
Those sources don't appear to quote any hard numbers, and don't seem to
dispute the WHO's methodology, but then again I can't read French :)

~~~
patrickaljord
Sarkozy was elected in 2008 and he significantly lowered what national
healthcare pays for you. You now need to pay for both a national healthcare
and a private insurance to complete the cost. Problem is national healthcare
is not a real insurance, what you pay is based on your salary, not your actual
risk. So people with no risk end up paying much more than they would with a
private insurance. My family in the Netherlands and Switzerland pay way less
than I do.

~~~
weavejester
The WHO report is back from 2000, so it's certainly possible the rankings have
changed since.

------
dspillett
I'm not sure why people are particularly surprised by this. Most of the large
international companies that make most out of tax avoidance have large US
bases. While the US economy does lose some to the schemes they use (like all
the cash Apple has sat outside the US, to give a commonly quoted example) it
loses less than the competing economies overall so agreeing to crack down on
tax avoidance could result in a net loss. Even if it didn't, those companies
can also afford to buy the best lobbyists in town who in turn can buy the
relevant number of votes to threaten politicians who don't toe the line.

~~~
hkmurakami
and when these US based companies eventually bring back those profits to the
US (whether it be at the full current rate - unlikely - or some negotiated one
time discount rate), the lower the foreign tax burden the greater the US
government gains.

------
mtgx
If you make a certain amount of money in a certain country, then you should
pay that country's taxes. Pretty simple concept, no?

This whole "let's reroute all our profits from all the countries into this
country where the taxes are close to zero" is utter BS. If you don't like its
taxes, don't do business in that country. Simple. If the government thinks
they're losing businesses with high taxes, then maybe they will lower them -
or maybe not. It's their and their citizens' prerogative.

~~~
patrickaljord
> It's their and their citizens' prerogative.

No it's not. Our states are not pure democracies. If a majority of people
decide by referendum that we should kill all Arabs, it would not be their
"prerogative". That's because we are constitutional republics before being
democracies. That is to say we all have to abide by what our constitutions say
no matter what the majority say. And last time I checked, our constitution
protects private and individual property. Therefor, a 75% tax or even 50% like
we have in France goes against the protection of private property in our
constitution and it was rejected by the supreme court here. Any taxation goes
against the very basis of our constitutions and therefor should not be treated
lightly or abused. Or do you think that if a majority decides it's ok to tax
people 100% then that's ok because it's "their prerogative"? How about if a
majority decide women shouldn't vote anymore either, would it be their
prerogative too? The answer is no. Google and Amazon already pay lots of taxes
in the US, if they had to pay in every single country, they'd have much less
money to invest in all those products we enjoy while the government would just
create more debt.

------
znowi
Actually, in the same manner the US initiated a massive FUD campaign against
the "evil" (non-US) forces at the ITU summit last year in Dubai. Behind the
facade of "save the Internet", the agenda was to save the Internet giants like
Google and keep the US control over the net. In light of NSA revelations, it
has even more sinister overtones.

------
cletus
I'm no fan of the overreach of the US government that includes, but is not
limited to:

\- requiring all citizens and non-citizens to declare all foreign bank
accounts (FBAR) including signatory authorities on trusts and companies;

\- unclear rules on the aforementioned. Do you have to declare retirement
accounts? Are they taxed? Nobody really knows. It's clear the only value in
FBAR is in non-compliance if the government decides to prosecute you;

\- requiring non-resident citizens and residents to file tax returns and pay
taxes if their income is sufficiently high and either the income is in a
country that has no double taxation treaty with the US or it does and its tax
rate is simply lower, even for those who haven't stepped foot in the US in 20+
years. I actually know many US citizens who don't do this and it could be a
real problem for them at some point.

All of this while allowing the systematic avoidance of tax by US companies on
a massive scale. US companies need to report their foreign income. An
individual would have to pay US taxes on foreign income. Why shouldn't a
company do the same? Why can't it pay the difference between US taxes and
whatever taxes they've already paid as is standard in all double taxation
treaty cases?

But the move here by the French is blatantly political and narrowly targeted
at US companies. You'll note the language is around the "digital economy".
Well, why should such reform be limited to only Internet companies, which--
surprise, surprise--are primarily US companies?

That's actually what the US (rightfully IMHO) is objecting to.

All of this is simply window dressing however. The real problem with the
system is complexity. Think of tax loopholes as bugs. The more complex
software, the more bugs there are and the harder it is to eradicate them. Tax
law is no different.

Unfortunately there is no political appetite for true reform as every
complicated exception is the result of shoring up some constituency or pork
barreling or other "corruption" so as much as we need to stop, say, poring
money into corn subsidies, it just won't happen for the foreseeable future.

Borders are disappearing. We already see the nonsensical effects of this such
as attempts to limit content distribution to geographical regions. At some
point we're simply going to have a global tax regime and, dare I say it, world
government, scary as that will probably be.

------
culshaw
So basically: "They pay taxes to us, fuck you and yours"

------
timbrooke
Wow. How low can you go? How corrupt can you get?

