There are other models of tax systems. Some are even not production and consumption based (you want to maximize production and consumption for growth, not stifle it with taxes). For example land taxation proposed by single-tax movement or monopoly based taxation in general. Ie. for providing a company the privilege to be a monopoly on a market, it needs to pay a fee to those guaranteeing such privileges, which is the state.
For example big pharma lobbied for its monopoly and now it is super hard for competitors to enter the market. Let these companies pay a monopoly tax for such privileges.
Other example. Somebody appropriates for himself a valuable piece of land with oil deposits. He prevents others from utilizing that land. Let him pay for having that exclusive rights of use, since clearly the government is providing private property related services (police, courts and army to guarantee his property) for him that others (non-owners) are not getting.
The same basic structure should work for other monopolies like Pharma and internet infrastructure monopolies.
Meanwhile, that person you don't like? Make a ridiculous offer on their property to either force them to move or suddenly have to pay absurd taxes.
This gives the person you don't like the option to take your ridiculous offer and stick you with the absurd taxes. Sure they have to move, but they now have the resources to do it.
The state would benefit from share price rises by existing capital gains tax paid by the individual shareholders when they realize the equity gain. This would prevent avoidance of dividends in favor of share price appreciation through buybacks.
It leaves the problem of cross-border flows, such as fradulent notional payments for intangible assets, such as licensing, which would still be able to move profits and dividends to other countries.
> Somebody appropriates for himself a valuable piece of land with oil deposits. He prevents others from utilizing that land. Let him pay for having that exclusive rights of use, since clearly the government is providing private property related services (police, courts and army to guarantee his property) for him that others (non-owners) are not getting.
If by "appropriates for himself" you actually mean "buy", then your position basically boils down to an "all property is theft" manifesto.
Similarly a state could say, you license (not buy) land for construction/agriculture etc. use. This license does not include extracting oil, which requires a separate license. The land remains property of the state, but for specific uses (e.g. housing) you have a guarantee that you can keep the license for 100 years and/or can renew it under similar conditions. This is for example what China does: https://en.wikipedia.org/wiki/Chinese_property_law
Difficulty: without murdering millions of people to make it happen.
'Buying' land, ie. transfer of rights from previous owner to new owner is a transaction which excludes the actual provider of the service of land rights, which is other people who will respect the new 'ownership'.
Current system is equivalent to giving infinite land leases, or very long like 100 years.
The way to fix this is to either have a yearly 'land tax' system to collect percentage of the land value or simply provide the land leases for like 7 years for commercial and/or longer for residential.
Each 7 years you'd have a land lease auction. Similarly to having a electromagnetic spectrum auctions or how DNS should be organized - periodic auction to prevent domain squatters to hold premium domain name 'real estate' near valuable domains (using levenshtein distance).
"For example land taxation proposed by single-tax movement"
Land is an input to production, so this would be a production tax.
The EU's courts seem so abusive and vague that there is virtually no way to avoid running afoul of them if you do any profitable business, even completely within a reasonable interpretation of the rules.
I mean to say that you can be fully aware of a law, interpret it broadly, and comply with that broad interpretation to the fullest extent, and you still have a reasonably high chance of being liable for damages in a suit related to that law.
We also shouldn't pretend that the EU justification for fines is purely about citizen protection, they see this as a "tax" as well (though that is of course not their primary motivation). Otherwise, they would work harder on non-punitive approaches towards combating the ills of Google and the like. One would hope education and encouragement of alternatives and other positive-leaning approaches might be prioritized over a gavel.
The fine exists to remove the profit gained from the illegal behavior, otherwise performing the illegal actions would have a positive expected value. The company is also required to provide a list of remedies to ensure that the behavior is not repeated.
As for "non-punitive" approaches, the encouragement of alternatives would have to be non-financial since state aid is barred under EU rules . I suppose they could recommend alternatives, but if it were really that simple to avoid a consolidation of power in the tech industry we wouldn't have such monopoly/duopoly issues.
My comment is more of a general comment about lifting society up rather than what has been made illegal or what is barred. Regulations have their place sometimes as do more open competition environments coupled with an educated populace, and it's often a case-by-case situation which to favor more and work towards harder. In this case (big-tech bogeyman), I think the latter should be favored but both can be employed of course.
I have many issues with Google's business practices, but punishing them is not worth throwing out the rule of law.
This is just your preferred interpretation. Fines also exist to reduce or disincentivize unwanted behavior.
But aside from that, and in this case, I feel the barriers to making it illegal are far higher than fining companies in other ways.
Presumably, this would involve the CEO travelling to Europe accidentally while a European arrest warrant was out on them (which would be negligent on someone's part). Since we have yet to see huge fines under the GDPR, let alone arrest warrants for not complying, this seems to be far off though.
But even without the international extradition type problems, there are still a lot of problems, as we consider most of the wrongdoings these corporations are committing to be civil violations, and no matter how many people they harm, as long as they aren't treated as criminal, we can't put someone in jail for them.
I do feel this is a major problem though, as CEOs aren't realistically punished for corporate misdeeds that can cause massive, wide-ranging harm. Even if the CEO screws up badly enough to lose his job, he'll get a job being a CEO somewhere else.
The fiscal value of fines is not great. The commission can’t budget how may fines it plans on collecting and from whom. It’s completely different agencies that issue fines and do the budgets.
Fines imposed by the EU go straight to the EU commission itself. Tax doesn't.
Taxes mean the member countries the taxes are paid in have more money.
When I think at EU fines I think At MS, Intel and Google, in all this cases this companies abused the markets. Can you provide a citation of a company getting a big fine but that did everything legally?
Not using tax strategies when you are major corporation with millions of shareholders would not be in the interests of the company and it is silly to expect them to voluntarily pay more, especially for some subjective belief on what the "right" amount is.
If you would like them to pay more then change the law to make them do so.
I don't support the legal tax loopholes but don't think there should be much relation between legal taxes and fines for bad practices (unless ofcourse the bad practice is illegal tax evasion).
Note that I am fully in support of the EU's fines for both Google's antitrust violations and their privacy abuses, and agree that they should have no bearing on taxation.
I doubt there would be no fines; but if Google were paying a "fair" amount of taxes then there would be less of an adversarial relationship with governments: huge fines would be like harming the goose that lays golden eggs.
With Google's current tax avoidance/evasion they're just a regular, tasty-looking goose.
- "So I get what the EU is trying to do with these regulations, but this basically just means Google is paying to break the law at this point."
- "Any law punishable only by fine is legal for the rich."
- "At least it can deduct the fines off its taxable income."
Even running at a loss may be worth them continuing to run in the EU to stop the rise of competitors and to keep the better service that having more users grants them.
If you actually sum up the fines levied by the EU, aggregated by continent, you will find they almost perfectly each region's respective revenue in the EU.
The only exception is that Asia is fined somewhat more than to be expected, and the US less.
This is probably due to the US' strong enforcement catching and/or discouraging behaviour before it gets to the level where the EU would intervene. Conversely, it shows a somewhat less developed corporate culture in some Asian countries.
What EU really wants is double/triple taxation where:
1. They tax your transactions as VAT
2. Income post these taxes are counted as revenues, and costs (excluding VAT) are deducted to calculate profits.
3. Profits from #2 are further subject to corp. income taxes.
This article would be half genuine if they listed the VAT dollar amounts Google has raised for the EU
Second, almost all customers of Google Ads are businesses, with the resultant right get refunds for any VAT paid.
Third, because of [second], most customers likely take a shortcut: if you add your VAT registration number to your account, Google does not even charge VAT.
VAT is collected by the government. Just because VAT appears as a line item on a bill, doesn't mean the vendor gets to book that as revenues.
> Second, almost all customers of Google Ads are businesses, with the resultant right get refunds for any VAT paid.
You mean, the business itself might charge a VAT from it's customer, and deduct the VAT it pays to vendors as "cost" during taxation. There are NO REFUNDS of VAT from the government!!
> if you add your VAT registration number to your account, Google does not even charge VAT.
Doesn't mean the transaction has 0% VAT fee, the EU/government GETS it's VAT on valid transactions, one way or another. If you somehow avoid VAT reaching the government, you're violating the law! AND, Google is NOT the beneficiary of VAT, regulation typically requires a seller to charge VAT and pass it on to the government.
Let's talk VAT numbers the EU gets from Google (as both a seller, buyer), and income taxes paid by GOOG employees before demonizing them
The case for income taxes paid by Google employees is better, but then most of them would also be paying high income tax if working for businesses that didn't use elaborate schemes to repatriate their profits.
On (ii), ANY and all costs incurred in operating a company, including paying VAT, can be deducted from revenues while calculating profit. That in NO WAY takes away from the actual VAT being paid to the government!!! HOW exactly does that "generally net to zero."? It certainly reduces profits, but unlike other "costs" that reduce profit calculation, VAT cannot be viewed as tax avoidance, if anything, the resultant profits post VAT are still subject to corp income tax, constituting double taxation. No CPA will advise a company to pay more VAT as a tax avoidance strategy, so I'm still trying to understand why booking VAT payments under "costs" net to 0, and for whom?
The entire premise of VAT is to guarantee a certain income for the government, as a % on EVERY transaction that happens in the economy. Hence, the mere existence and operations of Google in the EU resulting in transactions, is a source of VAT income for the government. Google can always move ALL incorporation out of the EU, and buyers can make "American" transactions to an American company that completely circumvent EU VAT. By choosing to have an EU entity subject to EU VAT, Google is contributing to EU coffers.
Unless there is an agenda to malign Google, ignoring government income from Google's operations seem convenient, and click-bait-ey.
It's a bit rich to accuse others of having an agenda to malign an organization when you started off with claims about what the EU wanted based entirely on your own ignorance of how VAT on business expenses actually works. (It's actually a rare example of a tax designed to avoid "double taxation")
Google recorder $40B in EU revenues in 2017. About 20%, or $8B was the VAT related revenues that EU received. Let's move all that away from the EU, since it's all one big non-tax.
Also, let's abolish VAT, as my "ignorance of how VAT on business expenses actually works" is being exploited by big-evil Google for tax avoidance. Everyone knows that paying VAT is the #1 way to reduce tax liabilities, translated, "let's all pay taxes on transactions, as a way to avoid taxes on income! Hurrahs all around for the genius CPAs".
VAT is an evil tax on revenues (transactions), that sellers conveniently pass on to the buyer. Whether you agree or not, every seller is also a buyer, and VAT merely increases the cost of doing business, while also effectively acting as a double-taxation ploy, as profits are subject to income taxes. Who ends up footing the VAT bill is immaterial, as VAT goes under "costs" that were previously $0, unless you're a company that buys nothing to sell something. And whether it's booked as "costs" or not, it's a tax that the government receives on transactions under it's jurisdiction. Buying ads from a US company as a US transaction doesn't incur a VAT cost on an EU company, hence, Google's EU presence is a net positive for EU coffers!
Please do yourself a favour and educate yourself on what VAT is before you Dunning-Krugersplain what the EU wants from it, how much you think it is worth to the economy and what you think an accountant would recommend a business does (I can recommend a good search engine as a starting point!). The entire point of VAT that it's a tax on the consumer of the final product only, and that businesses get to deduct all the VAT levied on intermediate goods they've purchased to make and market the final product. That's literally the most basic, definitional aspect of VAT that sets it apart from traditional sales taxes. Since Google Ads are bought almost exclusively by businesses, EU member states (the EU doesn't actually levy VAT itself) receive a net tax benefit from VAT paid on Google Ads only on ads bought for personal enjoyment or by VAT exempt organizations, which must be a tiny proportion of their sales. Now there's an argument that Google's customers' customers would buy fewer taxed goods and services if they didn't see the ads, but that's a very different argument and certainly not something you could object to journalists not counting as "government income from Google's operations"