
US tech firms make eleventh-hour attempt to halt tax avoidance reforms - tomgallard
http://www.theguardian.com/business/2014/jan/19/tech-firms-attempt-halt-tax-avoidance-reforms
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netcan
Since this became such a public debate issue in Europe, I've actually more or
less landed on the idea that maybe corporate taxes (taxing profits) are a lost
battle. The only way to really combat it is for different countries to collude
and perhaps sanction tax havens. Even then, I doubt they will be able to raise
much tax.

Modern tax systems are diverse by design: sales tax/VAT. Excise/sin taxes,
income taxes, CGT, employer taxes, etc. The mix is designed to reduce
volatility. It's also designed to max out tax revenue while avoid damaging the
economy by discouraging things like labour, savings, or other important
activities too much. The effective maximum revenue for a country to collect in
taxes appears to be somewhere in the 35%-45% of GDP range. After that
diminishing returns on taxes kick in. Most euro countries are taxing (or
rather spending) near that max. So, they can't afford to let corporate taxes.

Problem is that corporate tax is unavoidably problematic. Large multinationals
can arrange their activities (not just their paperwork) depending on taxes. I
doubt an single country want to create a tax the ensures large companies avoid
setting up local subsidiaries within their borders. The end result is a
different set of rules for the large and/or sophisticated that is more lenient
than the rules on small companies.

Personally, I would rather see corporate tax abolished than see it applied in
such a way that it discriminates against small companies.

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vinceguidry
Except if you don't tax profits, you're forced to tax consumption instead,
forcing consumers to bear a larger than fair share of the tax burden.

It's really hard to properly tax corporations because they have the resources
and the motivation to really fight back. But we shouldn't stop trying.

~~~
netcan
Sure, but this is more rhetoric than practicality. Whether you tax profits,
salaries or consumption, you are taking it away from people. Often the same
people.

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benpbenp
Wealth is meant for people. All of a company's wealth is ultimately destined
for somebody's pocket. Why can't we just tax it when it gets there, and
abolish corporate taxes?

Naturally I'd assume in that case that dividends would be taxed at the same
rate as earned income, and that both would have to rise somewhat at the higher
brackets to cover the lost income. But given that is the case, I honestly
don't see any downside. Can anyone help?

~~~
Retric
I would assume you would also like to tax foreign investors. Corporate taxes
allow for this thus lowering your and every other US citizens taxes. Which is
why there a 'good idea' and not just a meaningless exercise.

~~~
davidw
That's a good point. On the other hand, 0 corporate taxes would lead to more
investment by foreigners, and some of that investment would make its way into
the local economy.

As to which effect is stronger, I have no idea!

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mercurial
> Suggesting that any leakage of tax revenues flowing from the complex
> corporate structures of digital groups is merely coincidental, the Digital
> Economy Group says: "Enterprises that employ digital communications models
> do not organise their business operations differently as a legal or tax
> matter."

Hell of a coincidence, mate. They're incorporated in Ireland purely by
accident, they would never threaten to leave at the slightest mention of
"corporate tax increase", and what they really wanted to do all along was to
move to the Scandinavian countries. They should all band together and get a
stand-up comedy act going.

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adaml_623
Society has decided that companies should pay a corporate tax rates of 20%
(UK), 35% (US), etc on profits.

Finally governments have noticed that these companies are shuffling money
around (between countries normally) and are not paying anywhere close to those
rates.

It's very sad that these companies do have a slim chance of fighting this kind
of reform. Ideally they should just pull their heads in and concentrate on
building wealth under a new slightly more sensible tax regime.

~~~
FireBeyond
A slim chance? More than likely, unfortunately, they have an exceptional
chance of fighting this kind of reform. I don't get a particular sentiment of
anti-corporate perspective from either major party in either the US or UK.

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Claudus
Personally, I'd rather that Google keep as much of their money as possible and
continue to spend it as they see fit.

I believe that society benefits far more from a company like Google having and
spending the money than any federal government.

~~~
gaius
Google is here in the UK, but why? Well there is the educated workforce to
hire, there is a stable business environment, there is infrastructure that
works most of the time etc. Now they could go and set up somewhere there
really is no tax to be paid, Somalia maybe, but how long would those "global
business geniuses" last there? Not long. What would happen to a Google Bus in
downtown Mogadishu?

Google and companies like it can _only_ exist in the benign environment
created by strong-ish national governments. Pretending otherwise is just
foolish.

~~~
amirmc
> _" Now they could go and set up somewhere there really is no tax to be paid
> ..."_

This is pretty much what they do, with legal entities in different
jurisdictions. Then they can move money around such that the 'profit' is
always made in a low-tax environment. For example, I always found it amusing
that the invoices for my Amazon purchases had anything to do with Luxembourg
(a country with <600k people), until I learned more about how tax havens work.
Especially, about the process of 'capturing the state'.

If anyone would like to read more about Tax Havens (aka Secrecy Jurisdictions)
I thoroughly recommend the book Treasure Islands by Nicholas Shaxson [1].
(Disclosure: that's an affiliate link for my college's library).

[1] [http://www.amazon.co.uk/Treasure-Islands-Havens-Stole-
World/...](http://www.amazon.co.uk/Treasure-Islands-Havens-Stole-
World/dp/0099541726/ref=sr_1_1?ie=UTF8&qid=1390230332&sr=8-1&keywords=treasure+islands)

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SilkRoadie
> In the UK many leading retail groups have called for reform, highlighting
> what they see as unfair tax advantages afforded to multinationals such as
> Amazon by outdated tax treaties.

Currently Amazon pay very little corporation tax in many of the countries they
operate in which gives them an unfair tax advange against local competition.
This allows them to set lower prices and trade more efficently..

In Amazon's case it would seem like closing some tax loop holes to get them to
pay their share would help level the playing field and potentially increase
competition between Amazon and regional stores. This can only be a good thing.

The one worry though would be how changing the tax system would affect smaller
tech companies. Companies which serve multiple countries with low staff could
be caught out by increased tax or just technical / accounting costs if you
suddenly need to track and file taxes for every country you have customers in.

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doctorwho
Just waiting for the founding of "Techlandia" where a big corporation (or
several) form their own country and abolish all tax laws. Maybe they buy up
some land, maybe they sponsor a country in trouble and take it over. As their
own country they would make all the rules. All their employees live in
Techlandia and pay no income tax. No more annual filings. No more tax audits.
No more whiny politicians coming with their hands out. All infrastructure
costs: roads, power, water, sewage and possibly even housing are borne by the
corporations for their employees (who live there). They have their own
national bank and keep ALL of their profits. Workers retire with huge cash
hoards and live wherever the hell they please, like kings.

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dmk23
Let's call these "reforms" for what they are - a shameless and unjustified
money grab by the government.

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nodata
Can you explain your comment a little bit?

From the way I understand it, this is a way to get large companies to pay the
same amount of tax as smaller companies.

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alan_cx
To me it reads like the usual right wing rhetoric, and that any tax collection
is some form of evil socialism. Not quite sure how these people expect their
flag waving military, for example, to be funded without the big corporation
paying their fair share, but there you go.

Never understood why many Americans don't see paying tax as the ultimate act
of patriotism, paying for the country they claim to love. They love the
country, but resent paying for it. How does that work? Are they the ultimate
freetards?

~~~
alexbilbie
I'm confused by your statement - a right-leaning Government is attempting to
collect more taxes from multinationals who have huge sales in a country and
pay little tax and yet you're claiming that they also consider tax collection
some form of evil socialism?

~~~
anon1385
The Conservatives are right leaning from a European perspective and compared
to most of the UK governments since the war.

From an American perspective they are more akin to the Democrats: they support
gay marriage, support legal abortion, don't support reintroducing the death
penalty, support public health care (to some extent), generally support public
education, do at least claim to accept that environmental issues are a concern
(although we do have an environment secretary who denies climate changes
science…). They support giving benefits to at least certain groups in society
(pensioners, land owners) and accept the need to provide some level of support
for the disabled, unemployed, single parents and so on. They made commitments
to maintaining the level of foreign aid. For all their talk of pulling out of
the European Convention on Human Rights they have not actually done so. So
they have a lot of policies that your typical Republican would be fairly
disgusted by.

I wouldn't vote for them myself of course…

~~~
timje1
This is because the US Democratic party could be considered center-right by
European standards, with the Republicans heading into extreme-right.

If a party in the UK hinted at dismantling public health care (the NHS) out
loud, they'd be lynched (either in the polls or the streets, whichever was
more convenient).

