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Comment by jf- | Hacker News Reader

It’s criminal, but the tax system is designed to let them get away with it. Tax needs to be radically overhauled. If any US company complains that they can’t afford to pay their taxes and make a profit at the same time, fine. Let them leave, then indigenous corporations can take their place, with state support to get them going if necessary.

Edit: For our US readers, describing something as ‘criminal’ is a fairly common British turn of phrase to describe something grave, not a literal implication of criminality. I’m sure the players involved are literally playing by the rules. Those rules just happen to be broken.

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It’s not criminal, it’s complying with the law as written.

It also excludes the payroll tax which they must pay, which is monumental. These types of articles are just outrage-generating clickbait.

Oh gosh, they have to pay payroll? My heart bleeds for them. So does every other company out there. You know exactly what I mean.

The point is that they could be paying zero corporation tax, and yet Amazon would be responsible for a stupid amount of tax being paid in the UK. But of course the corporation tax seems very low in comparison to their earnings, so it's an easy target to complain about.

I’m kind of blown away by the comments this is getting. Do people actually not realise that every other company also pays their employees and also happen to pay corporation tax? Meaning that comparatively Amazon is paying massively less? How is that point not getting across?

People realise. People either 1) don't care, or 2) like more competition in a market, generally leading to lower prices. Not having to make profits means Amazon entering a market often lead to lower prices in the shorter term.

Also, wealthy people (or those moderately well off) can avoid tax with a decent understand of tax law. So they might not care. Plenty of people only care about optimising their own returns on capital and effort invested. If I can sell a business for £10m and somehow pay no tax legally, vs selling and paying 20% capital gains tax -- I would always prefer to pay absolutely nothing. Shocker.

Last, I have a good understanding of local and international tax law, and while the system is somewhat broken, it's not massively broken -- steps are being taken internationally to fix major issues.

Can you elaborate on these steps?

Amazon makes it so easy to buy stuff that I might buy some things that I would never have bought otherwise, but for the most part, money spent on Amazon is money that would have otherwise been spent in another retailer, who probably pays wages, rent and corporate tax as well.

If Amazon left the UK, people would still buy nearly as much as they do now.

And all the VAT they collect on the products they sell which is surely into the billions. I certainly spend a lot more money than I might otherwise thanks to Amazon, so their impact on the tax base is a lot more nuanced than corporation tax alone.

You would have spent just as much on amazon if it paid it’s fair share of tax. I fail to see how their shareholders taking less profit would decrease your desire to consume.

Out of curiosity, what motivates you to defend a multinational company enriching itself at the direct expense of you? Of it being able to funnel billions of pounds away from your social services, your schools, your hospitals, your roads, your education system?

I'm not really defending Amazon, but I'm certainly playing down the importance of corporation tax. I think CT is a timid and outdated tax (for many of the reasons leading to this thread) and should be replaced by something else that keeps the taxes closer to the point of consumption. Tax large corporations in ways they can't avoid, not on profits they can manipulate with cross-border transactions.

Reducing tax paid is the duty of every person who cares about efficiency. It is not at our expense.

>It’s criminal

Could you elaborate?

It’s a figure of speech you may not have encountered before, relatively common in British English.

But quite apart from that figure of speech, the CEOs and senior management of megacorps that don’t pay tax in such an outrageous way ought to be criminalised.

If Amazon pays its employees income, and those employees pay income tax, how is that different to Amazon paying tax? The government gets its money from Amazon either way.

That's not corporate tax though.

> If Amazon pays its employees income, and those employees pay income tax, how is that different to Amazon paying tax? The government gets its money from Amazon either way.

You mean, from consumers, who pay Amazon.

Or, maybe from those consumer’s employers, who pay them wages. Or...

Once you start posting posting that game, it never ends.

Because the tax system isn’t designed to be based solely around income tax. In order to make up the missing funds where corporation tax ought to be, personal taxation would have to be considerably higher, which would also mean that employee wages would have to be higher to compensate. The overall perctange of revenue paid into the tax system by the corporation would be the same via higher employee wages.

However, we do not live in a personal taxation only system. Corporations are therefore able to radically reduce their tax spend by avoiding corporation tax and not increasing spend on wages. The total amount of tax paid by the corporation goes down. This is obviously true, otherwise there would exist no motive for companies to pursue strategies of paying such low corporation tax.

If the CEO wants to buy a new Ferrari, they need to take money out of the company - either as income or dividends (both of which are taxed). If the company buys him his car then it's a taxable benefit too. If the company increases the value of the CEOs shares by doing share buybacks, then the CEO just pays more capital gains taxes. Avoiding corporation tax means the tax paid directly by the company goes down, but it's not at all obvious that the net amount the government receives goes down. Only direct taxes are reflected on their balance sheet, though, which is a good enough incentive.

So all the benefits are going to employees salaries ?

Of course they don’t, and that’s why there are corporate taxes.

And as stated before, if you don’t like the rules don’t play the game.

(And ok, Amazon follows actual rules. That’s the main point : changing the rules to avoid tax escape)

Fine, re-structure the tax system around income tax. But at the moment it means your local book shop pays corporation tax whereas Amazon doesn't.

In the UK it's double broken, because shops have high rates of business rates (which don't go away if you're not profitable), whereas giant warehouses attract very low business rates.

But you don't explain why? I'm outraged at all sorts of things but it behooves me to offer an explanation of my reasoning should I wish to convince others.

We’re into territory of ‘why should companies pay tax’ here. This is a longer conversation than I care to have, I believe it is self evident that they should, and that large ones shouldn’t be able to get away with paying none simply because they are so large.

It may not be strictly criminal, but the influence that these multinationals have to subvert and corrupt governments is monumental and that is highly unethical. Nobody should be defending multinationals in this situation, their profits are for them alone. E.g. a mining company moves in, sucks the land dry, doesnt pay any substantial tax and then leaves, often with the people of that country worse off than before. This sort of unethical behavior is cancerous and enables modern day economic slavery.

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