Three European Countries Block Tax on Tech Giants
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That will solve absolutely NOT A SINGLE ISSUE , but it’s just another income to feed the bureaucracy.
Thanks to the three countries that stopped this madness.
PS : i also find it outrageous that gafa don’t pay taxes, but let’s fix the tax heavens in Europe then. Don’t start making special taxes on revenue ffs.
EDIT : changed "income" to revenue.
So while it is a problem, its not a new one - nor an unsolvable one.
I can’t believe there aren’t ways to detect when a subsidiary buys services from HQ at abnormal prices.
Taxing on revenue means a corporation that actually loose money because its expenses (salaries, investmenst, etc) are larger than its sales would still have to pay taxes, making it loose even more money. It doesn't make any kind of sense unless you're targeting a very particular set of companies that you know are making money. In which case you're taxing those companies, but you're also creating a law that makes it almost impossible for new companies to start competing.
EDIT: replying to child (not possible to reply directly): your argument about high cost industries is bogus. A system without tax on profits would just make those services more expensive as they should be (they are mostly high cost because they are very environmently unfriendly). It would also make higher margin services cheaper (cause they can afford it and there is less spending power). Once you actually think about it and analyze various scenarios you will realize that taxin profits from the very beginning was based on intellectual laziness and lack of ability to predict outcomes of such policies.
Also, some companies like industries have huge revenues but make few profits because of the enormous cost to produce what they sell.
Try thinking about the various cases and you’ll soon realize there’s actually a very good reason why corporates taxes have always been on profits, since the very beginning.
Maybe it would be a good thing if "grow fast...conquer market" were less of a goal for new companies than building one of a number of stable and sustainable businesses serving a market?
Perhaps we'd get markets where a variety of products and services compete on their features and merits, each having an appropriate place within the overall market, instead of an unhealthy winner-takes-all situation where the startup that gets the most money thrown at it can spend its way to world domination.
But undoubtedly a start-up during that phase also benefits from public education and roads, from state-subsidized internet and transport, from security provided by the police force etc and hence should also pay its fair share towards those costs?
The problem (beside the fact that corporate tax on revenues is just one tax corporations are paying among others) is :
1/ every single developed country has roads and hospitals and schools. Look at how much they ask for tax and the service they offer (and no, don't believe what people in france tell you. We don't have the best hospitals by far, and we don't have the best schools).
2/ at which point do you think we should stop adding taxes ? Is there a limit, or will you always be able to say "but then, what about the schools and the roads" ?
It is also almost impossible for new companies to start competing if existing big players can easily avoid paying taxes while you cannot. And no, we cannot simply allow everyone to not pay taxes.
Folks that work low-wage or volunteer jobs would suddenly have negative income. The only viable jobs left would be bankers and software developers.
Corporations, for some reason, only get taxed on revenue - expenses.
[1] Whoop-dee-doo, I can claim a $3,800/year deduction. As if anyone in the United States can live on $3,800/year.
I'd love to only be taxed on 'profit' - the money that goes into my savings account, after deducting living and transportation expenses. [1]
[1] Actually, if everyone were taxed on profit, my tax burden would proportionately go up. It would be a fairer system of taxation, though.
Also, why is it wrong to tax the income of corporations?
I get in the USA:
1. Mortgage interest deduction (controversial)
2. Property tax deduction (now limited with trump)
3. Transit & parking deduction
4. Retirement account 'deduction'
5. Medical plan deductions (controversial vs single payer)
6. Tax free company snacks, cafeteria food, t-shirts / swag and morale events. I think on site electric car charging is tax free too?
7. Reduced sales tax rates on essentials such as food, clothing depending on the state.
Consider Apple. They'll return hundreds of billions of dollars in profit to shareholders over time. Not only was the original profit taxed via a corporate income tax, the remaining profit that is distributed will then get taxed further as personal income. The owners of that profit ultimately see that profit taxed twice before it's freely in their bank account. They don't get to skip on the personal income taxes.
If you perceive that corporate profits are under taxed, it's because you're not following the taxation chain all the way to its conclusion. Ireland for example does not have low personal income taxes, that's in part how they've paid for the very low corporate income taxes.
Simplistically, fictional company Smithfield Inc produces $100m of taxable income, they pay a 20% rate on that. They have $80m remaining, after tax profit. That later gets distributed to the owners of the corporation. That $80m will now get taxed again.
The $100m in profit Smithfield generated will see a likely minimum of a total 40% tax rate - in pretty much all developed nations - before all the income taxation is performed on the profit and finally rests with the owners of the business free & clear.
Denmark has a 22% corporate tax rate. Their personal tax rate is high. That means the owners of the corporate profits will see that profit uber taxed, as much as 60% to 70% before the government is done with it.
The point is that the net taxation by the government on corporate profit is much larger than just the corporate income tax rate. That's merely the beginning.
>What remains after the corporate income tax usually winds up taxed just as your income is
In the US at least, capital gains are taxed at a different, and lower, rate than individual income.
Secondly, how do the rest of your points not apply to individuals as well. Yes the company makes money and it's taxed, and then it's paid out to shareholders and they are taxed. When I buy food at the grocery it's not some special type of dollar that can't be taxed because I'm not a corporation.
Everyone I pay out money to gets taxed as well, including banks who I pay out for loans I was given, the same way investors are taxed on a corporations income.
The only difference is that companies get to pay less because they get to write off all their expenses, while individuals have a much smaller subset of items they can expense
It's like thinking the company should pay 5m in tax in Ireland based on sells in France while being ok with them deducting expenses from unrelated business in Ireland which you shouldn't care at all. If they paid that rate you should be happy even not even one dollar more made it to your country.
The whole idea doesn't make any sense at all. You want companies to pay more in your country? Tax exactly that - consumption of their goods in your country. It's not your business to decide how other countries choose to organize their tax code. Seriously fuck you for trying to force them. Ideas like that make EU much less popular idea that it was in the past.
That's just partly true. Depending on the taxing agreements between two countries involved you can apply reverse charge, yes. But within one company's country, the VAT is not something that you can "just refund" from the government. Instead you can set off the VAT you've paid against the VAT your customers paid.
In other words: The only way for you pay zero VAT is if your earnings (income minus expenditures) are zero too (something that despite the tax-evasion clichés is something that companies usually try to avoid).
- buy something nationally (you pay VAT to the company) - export it to another EU company (reverse charge, so no VAT received or paid) - get the VAT refunded from your local tax agency.
Even nationally, you get VAT refunded if you've paid more to others than you've collected. At least for NL, but I'm pretty sure these rules should be the same in all EU countries.
There are exceptions (e.g. in Italy you only get refunded for 50% of the VAT you pay when buying phones, or 40% the VAT you pay when buying cars), but they are pretty much that, exceptions.
If operating domestically you will usually get more VAT money from customers than you will give to suppliers, so you will pay the difference to the state. If for any reason you pay more to suppliers than you get from customers, the difference becomes a tax credit that you can carry to the following accounting period or deduce from some other tax.
In Poland it is even possible to get that difference in cash - Tax office wire transfers it to your bank account. This gave birth to a countless scams, where the shell companies forge invoices, ask for VAT tax refund and then disappear with the money.
> Even nationally, you get VAT refunded if you've paid more to others than you've collected.
You do realize that this implies you're operating at a loss? Thus my statement about companies usually being run to make profits.
It's just lexical. Would you say 'oh the company is just routing its income tax to the taxman' if companies had to put their income tax percantages on invoices too?
The client however pays you 10 bucks in gross regardless whether the VAT you have to pay afterwards is 7, 15 or 25%
It doesn't matter who puts the money in an envelope and goes to the tax office; it matters who is subject to the tax.
Non-EU turists traveling in Europe will pay VAT on souvenirs that they're bringing back to their countries, and upon exiting from EU they will actually will get the VAT back, since they paid for it, but they were not supposed to since the goods are in the end going to be used outside EU.
This would just not make sense if VAT was paid by the seller.
No tax is paid by the customer. He always pays gross.
For example: you run a barber shop, mens haircut 10 €, womens 10€. You charge mens from your VAT-exempt company, women from your non-VAT-exempt company. Regardless of what you get in net, the customers hand you 10€ each. However the government takes 2€ from your womens hair cutting business, after you've filed your tax statement. The customer doesn't care whether you have to pay VAT or not.
If I may ask: Do you run a business where you have to deal with filing VAT on a regular basis? I'm asking because this misconception that businesses don't have to pay VAT is something that I've held myself, obviously because I didn't knew back then what I was talking about.
I very much do, I file quarterly and deal both domestically, intra-EU with reverse charge and extra-EU which is VAT exempt.
You're conflating the fact that you're filing VAT reports and forwarding VAT money to the state with the fact that you're paying VAT. These are two different things.
Again, do you pay employees? Do you retain some money from their wages and forward that to the state as a down payment on their income taxes[0]? Would you say that personal income tax is a tax on companies?
[0] I think this is usual in Europe; it surely is how it works in Italy
> "it’s absolutely not the same. If the VAT goes up 10%, your benefits after taxes won’t change one bit. VAT is indeed not paid by corporations."
but if you insist that somehow the customer is paying VAT to the government, then fine with me. I'm not here to be other people's tax-attorney.
It's not a cost when transacting with other companies but it's obviously a cost when selling to end customers. If people are willing to buy a car for 20 000 Euro you will be forced to sell for 16 666 Euro + 20% VAT, you can't magically sell for 20 000 + 20% VAT because "consumers pay VAT". If materials + labor cost of a car is 10 000 Euro you make 6 666 Euro per car if there is 20% VAT and 10 000 Euro per car if there is no VAT.
VAT is tax for consumers, not corporations.
> Why do you feel entitled to profits of the company that isn't based in your country?
Because those profits are made from sales in that country, and every physical company selling in that country pays their taxes, just because Internet-based companies can avoid having a physical presence to perform their sales (Amazon still has warehouses), doesn't make them exempt from the same logic.
Sorry, but where does this misconception come from that companies don't pay VAT? It's not true, I see it on my company's tax statement every month ;-)
VAT is indeed not paid by corporations.
at the end of the day does it really matter? It's totally a tax on the corporations ability to do business. If we taxed the companies causing them to increase prices by 10%, the consumer still ends up having to pay 10% more on the products. Or if we taxed the companies at the point of sale for 10%, it's the same outcome for consumers.
It doesn't matter. It gets added to the price. All the money paid in taxes comes from consumers - be it VAT, sales tax, tax on profit, tarrifs - you name it. It doesn't matter which side you tax, it matters what kind of activity taxing is focused on.
>>Because those profits are made from sales in that country
Sales in that country is one element. Another is being efficient and well organized which another country allows. If you want to tax sells in your country - do it, I think it's great idea.
>>just because Internet-based companies can avoid having a physical presence to perform their sales (Amazon still has warehouses), doesn't make them exempt from the same logic.
Physical goods companies can avoid presence as well. A lot of them ship products to other countries but don't have offices there. They pay VAT.
It's easy to see why taxing profits is a very bad idea by considering situations where that tax differs from consumption tax. Here are few showing ridiculousness of taxing corporate profits:
1)Company A makes and sells tires, Company B makes and sells electronic chips. Company C does both. They don't differ much in efficiency or quality and C does the same volume as A and B in their respective industries. Now let's say 2020 is a bad year for tires due to increasing prices of materials and a very good year for chips due to AI advancement (everyone wants new AI equipped vacuum cleaner or w/e). Company A losses money, company B makes money. Company C makes as much money as company B on chips but losses same as company A on tires. Company C pays less tax than A and B combined. I hope it's obvious why this is bad. This alone makes tax on profits ridiculous idea. We just need something different.
2)Company A and B do the same thing. The difference is that management of company A likes buying high level employees exotic super cars and expensive trips. In 2020 companies A and B have the same product, same sells. The difference is that company's B employees drive 5 years old Volskwagens to clients and organize most of its meetings online while company's B employees drive and service super cars and go to Maldives 2 times a year. Company B pays more taxes.
3)In a small country there are only 2 companies and all the taxes come from them and their employees. They do the same thing - produce cars because that's what the citizens are good at. company A breaks even, company B has better management and produce same cars but more efficiently thus showing profits. Company A is happy with functioning as it is. Only company B pays taxes and funds schools, roads, hospitals. Socialists come to power and they want increase corporate taxes (as they are economically ignorant). Now Company B pays even higher taxes while Company's A tax burden doesn't change. Company's B employees lose motivation to work smarter because they see new taxes just tax their ingenuity and there is little incentive to make processes efficient. Maybe it's better to buy super cars and expensive exotic trips.
4)Two companies A and B in country X do software business. A buys licenses for components from a company in Switzerland (high labor costs thus higher prices), B develops them domestically for 50% of cost. Both companies have 10M in sells. B pays 9M for software, A pays 4.5M for development. Corporate tax rate is 20%. Citizens of the country V get 5.5M * 0.2 = 1.1M for roads and schools from company B and only 0.2M from company A, the difference goes to Swiss people. Even if tax rate in Switzerland is 30% it doesn't make any sense for country X to adopt this policy. No amount of forcing Switzerland to extract "fair share" is going to change that, their rate is already higher (of course Switzerland doesn't have 30% rate as that would be idiotic, I am just making a hypothetical).
There are more of this. It's easy to see. Focusing on taxing corporate profits is a sign of being short-sighted and petty thinking. It's not what you want even if equality is your major goal. Taxing profits defends lazy incumbents and makes things we don't want tax advantaged strategy this includes combining various activities under one umbrella, buying pointless shit because of tax deductions and temporary price gauging to kill upcoming companies.
That's a good thing, not a bad thing. It means your regulators are paying attention to events elsewhere and are trying to proactively prepare for them, rather than flailing about in reaction to complaints and problems. When the scooters come, your jurisdiction will be ready for them, rather than having to ban them just so they can catch up.
http://www.sfexaminer.com/companies-pull-scooters-off-sf-str...
> but over here we tend prefer for the government not to swing its weight around until there is clear evidence of a problem.
There is clear evidence of a problem: SF banned scooters to give itself time to figure out how to regulate them: http://www.sfexaminer.com/companies-pull-scooters-off-sf-str.... There is no reason to think SF is particularly unique and that other municipalities won't have similar experience.
And even before SF banned scooters, there was clear evidence of problems with dockless rentals in China: sidewalks became bike parking lots with little room left for actual walking.
This idea that governments should only regulate if there's a manifested problem in their particular jurisdiction is pretty stupid, frankly. It's like saying you shouldn't make up your mind about crack cocaine before you've actually tried it and experience the problems it causes.
The prevailing issue being, politicians - under the false pretense that they paid to be "leaders" (read: look at me! look at what I can do!!) instead of problem solvers - grab their hammer and do what they already do...pound away.
How's that working out for us?
Note: I'm not suggesting a solution per se. Simply acknowledging that we have a problem, and the general nature of that problem.
There is not as much disagreement as it can sometimes seem, between those particular groups, as ID'ed using that jargon.
The American Conservatives and the American Liberals both think that laws should be the knee-jerk reaction to certain sets of problems. Their differences lie in which problems those are: by and large, the Conservatives say that those are the social problems, and the Liberals say that those are the economic problems.
But you are right, there are many who think they should be a last-resort measure in all-but-every case: the American jargon calls them Libertarians, and the American first-past-the-post voting system calls them personae non gratae.
>They’re just a bunch of jealous incompetent insufferable pompous politicians than don’t understand a thing about the private sector
Talking about knee-jerk reactions.
I strongly dislike this type of empty populist diatribe, that's how we give up on democracy and end up with incompetent fools at the government, just out of spite. Screaming "tous pourris" is not improving anything and is frankly insulting for the many elected officials who are genuinely trying to improve things. Regardless of what they did or didn't do there would be people like you who scream bloody outrage because they're obviously stupid people who understand nothing about nothing. Meanwhile you're not the one trying to balance the budget of a country within the EU.
>let’s fix the tax heavens in Europe then
And how do you propose we do that? Have Le Maire go to the various tax heavens (which in this particular instance would have to include Ireland) and tell them to tax more? How many bottles of Bordeaux would he have to bring to seal the deal?
Having a uniform tax code across the EU would be awesome but it's not like we're anywhere close to something like that.
the ability of member states to set their own taxes is about the only protection they have handling down turns and getting new industry. their currency was given up and without the ability to print money they need other means to mitigate adverse changes to their economies. it is one reason Greece was trapped so long in their misery, bound up by EU laws and stuck with a currency they had no control over.
In the US it works by forcing states to compete on regulation and taxes which benefits everyone. because onerous taxation on one group will certainly follow with others because once that line is crossed it becomes to easy to keep doing so. Indirect taxes are a politicians best friend because you have ready bogeymen and no apparent affect on the public though in reality they are paying the end result
>In the US it works by forcing states to compete on regulation and taxes which benefits everyone.
Everyone except the environment at least, it's often the first regulation to go. This kind of competition gives an edge to rich people and big companies who can afford to relocate if they dislike the way they're taxed or regulated somewhere, meanwhile low-skilled workers and small companies can't generally move a thousand of km away on a whim.
In Europe this is even worse because we have cultural and language barriers. Even for an educated worker moving from London to Berlin to Paris to Prague is not a simple thing at all. The only ones who benefit from this infighting are large companies and rich people who can more easily relocate their income in order to get the best deal possible.
See the whole Amazon HQ2 thing for an example of that in the US, you end up with a huge company getting great benefits that no small player could ever dream of. How is that fair and how does that benefit everyone? How does tech giants moving to Ireland to pay less taxes benefit everyone? It benefits Ireland arguably, but overall the EU gets less money than we otherwise would.
I mean just for the sake of the argument we could imagine that the EU as a whole would agree to tax these tech giants a certain amount, bigger than what Ireland makes them pay now. Then we give the Irish exactly the same amount they're currently receiving and we redistribute the rest within the EU. Wouldn't we be objectively better off in this scenario?
Now of course that would be a weird arrangement but you see my point, the real winners here are Google and Facebook, not Ireland, Germany or Poland.
Please don't take this the wrong way but: There's a whole body of tax-literature and tax-philosophy that renders such a statement naive.
How do you figure e.g., how the current money Ireland makes is linked to the increase or decrease of tax-rates? How is it linked to other factors making Ireland worthwhile to invest? How much was Ireland accumulating on those other factors, because it has been a tech tax haven so long? How much future growth of these factors is taken from Ireland because of your proposed regime? And how do you deal with a decrease in overall EU tech tax income (per country) because of your proposed regime? Would you e.g. go so far as to pay Ireland its current income even if the overall EU tech tax income would be lower? Would you otherwise grow Ireland's pay with an increased overall EU tech tax income, beyond Ireland's current income, and if so what would be Ireland's fair share?
And while those questions can have multiple correct answers, those questions have to be answered in a consistent way, because rule of law. And that consistency alone is often enough a problem, because other countries have other consistencies their taxing has to apply to, again because rule of law. And those laws are usually not just paper, but codifications of hundreds of years of cultural norms and customs.
I mean the EU, the free market, the euro, all that doesn't have "hundreds of years of cultural norms and customs" behind it. Why couldn't we go further? The only thing that we've had consistently over hundreds (or even thousand) of years in Europe is warfare and royal inbreeding. If we could avoid having to invade Ireland or having our finance ministers wed each-other in order to settle this tax dispute I think it would be grand.
While I used to say exactly that for most of my life, trust me this is a gross oversimplification. With an emphasis on gross. Law traditions date back to the Romans, Celts, Germanics and others at least. And of course no sovereign country on the onset of the EU would have accepted the new EU norms if they were to contradict with their own. That the EU nowadays tries to impose rules that contradict those norms is reason for the ever rising resentment of Brussels around Europe.
> If we could avoid having to invade Ireland
You say it yourself: How can we declare moral superiority if we are openly discussing invading Ireland because we've abandoned pillar principles like national sovereignty?
How can you lament "over hundreds (or even thousand) of years in Europe [of] warfare" while simultaneously abandon the core lesson of those wars (sovereignty)?
This revenue tax won’t change anything. It’s just ransom, and i hate feeling like my representatives make me look like a lazy thief.
I’d even prefer something like what china is doing : since google is a monopoly in europe, which makes it impossible for competitor to compete, let’s impose tarifs or prevent them from doing business in europe as long as they haven’t split, or a true local competitor has emerged. At least this would be very specific to one very particular case. Not the kind of gigantic tax on a whole economy.
The parent's point was that a) is not true for Google as a search engine.
b) doesn't seem to be true either; while money and experience can make you provide better search results, you don't get an advantage just from a high current percentage of searches.
In a trivial sense you can "SilasX has a monopoly on SilasX's labor" or "Joe Schmoe has a monopoly on hot dogs sold at Elm & Main St". That's not the monopoly anyone cares about. What matters is whether it's difficult to bring online the alternatives to employing my labor or buying a hot dog in that vicinity. In that respect, Google's monopoly on search is not the worrisome kind of thing we associate with monopolies.
I'm trying to outline a useful definition of "[bad-]monopoly" that captures the stuff we generally care about when we worry about them.
It's important to have a definition that excludes "they're just unusually good and so people happen to be currently buying from them, purely as an issue of merit". (If Joe happens to be the best hot dog vendor on some intersection, that's different than if he can prevent others who want to from opening shop nearby.)
I said Google doesn't count as the kind of bad-monopoly because they're easy to switch away from, and the market share isn't self-reinforcing.
It doesn't follow that Google is easy to take market share from. That could be the case of "legitimately good at what they do", and is not how you should define a worrisome monopoly.
A company being so good that others can't gain market share isn't (necessarily) a bad-monopoly. Only if that difficulty came from the factors above, would it count as a bad-monopoly.
(Those factors being the vendor lock-in and the self-reinforcing aspect.)
The argument is that large market share cause user capture. It is relative trivial to bring online an alterative youtube, but video creators can't switch unless the audience also switch and the audience can't switch unless the creators also switch. A subpar job by youtube won't automatically mean that competitor can disrupt, and a lot of users, content creator, advertisers, basically every type of users has been cited as disliking youtube but being locked in with no realistic alternative.
a) it's easy for users to switch
For google search, online stores that use google for advertisement and getting new customers can't easily switch as that would result in abandon 90% of new customer. They can't just buy their hot dog elsewhere. Online stores have to deal with google, unless their customer base is located elsewhere.
The problem is when things require unanimity. It's very hard to get all 28 countries to agree to something.
Here in the USA we have an analogous situation, but it is maintained - for at least a century and a half - with enough top-down brute force to keep the resulting tensions simmered-down such that they are only expressed via things like the "culture wars" phenomenon.
I don't see any justification for your position besides a nebulous wish for Europe to have an equivalent of google/facebook, and to be honest, besides adding an extra line on all those "european unicorn" blog posts, i don't see much advantage to it either. There's obviously positives to more profitable businesses - but why another google/facebook?
Some Europeans want in on the industrial surveillance tech complex profit machine.
The only thing they’ve managed to do is to increase the cost of the public sector. So yes, indeed i don’t have any kind of trust in their ability to understand pretty much anything.
That’s the « they ». Everybody in the fifth republic believes that the state should regulate the economy, while having absolutely no personnal experience in the private sector. The only differences they have are on society issues, but from the economical point of view i have yet to witness one government that actually lowered the tax ratio ( just look at the CSG which was supposed to be temporary and 3% 25 years ago, and is now still alive and reaches more than 10%)
As for the efficiency of the public sector and the tax system look at france’s tax vs gdp ratio compared to other european country, as well as our ranking in education performance ( both young children school and university). Also have a look at unemployment rates, compared to other european countries.
Edit : to be fair, macron did come from the private sector ( just a few years though), and he did in fact remove a huge chunk of the ISF last year. That was a glimmer of hope. Also another reason why seeing France go back to its old habits makes me mad.
2 - I know a capitalist system that notoriously fails to redistribute wealth even though it's the richest economy in the world. Its ruling class seems to be keen on implementing those ultraliberal taxation ideas of yours. Sub-par healthcare and expensive education is the result. Then again, that is not a system that I think is worth emulating.
3 - As much as I appreciate politicians in general, I wouldn't be so immodest as to pretend that they're a bunch of stupid bureaucrats, meaning by that that I know how things work better than they do.
how fast things evolve...
The cost of the public sector has increased because of the large wave of privatizations, it's called the cost of capital.
Ireland has been busted (among others) for secretly passing sweet taxation deals with Google, Facebook, Amazon & co. According to you, that's the way to do it, right ? Tax race to the bottom, give deals to big player that no small company has hope to ever negociate, that's sure to bolster competitors. Any kind of attemp to level the playing field by applying tax uniformly on the European level is "sick".
That is 100% uninformed nonsense.
If you are conflating it with Apple vs EU, you can read this primer: https://en.wikipedia.org/wiki/EU_illegal_State_aid_case_agai...
Nothing to do with a country offering a multinational a deal which results in a lower effective tax rate, and is something _EVERY_ country in Europe offers.
Also this is not just about 'taxation policies'. They are pretty free in their policies, except that they can't make exceptions for particular companies because such special deals give a company a competitive advantage, distorting the market.
This is not true. Only those with a EU country citizenship are fully covered by the free movement rules. You can read more about it here: https://ec.europa.eu/immigration/general-information/already... but I will give you a quote: "To move from one EU country to another for more than 90 days, you will need a long-stay visa or a residence permit for that country. If you wish to work, study or join your family in the second country, you may have to fulfil more conditions."
An exception to this are so called Blue card holders, but only those with certain education/ professional experience plus job offer with a salary above a certain level are eligible for such a card.
Criteo is « just an ad business » ( which is going to take a huge hit from all the privacy measures, btw). It’s extremely vulnerable compared to the company that own the content platform, aka the search engine, or the social network. Calling them a competitor to google is true, but it’s also a very narrow point of view.
Just look at how well it’s doing on the stock exchange and you’ll see what i mean,
They just have no clue about what to do so they try to tax it.
Well, guess what, people who actually want to achieve something productive, who want to make a good living, who want to start a company and not see our profits taxed again and again to feed a bunch of bureaucrats who have never even run a business before, those people they have already left and they are not coming back.
Google cannot get rid of the EU market, if it does, EU competitors might have a chance. So the EU can just tax Google as much as it wants. What are we to be afraid of ? Google leaving EU ? Please do ! This will only gives us a chance to come we our own solution to the web Google&FB think they invented.
I don't get how we could not be glad that we tax more those dystopian companies. Google, FB, etc... don't respect any values of privacy and freedom, they should not have even the right to do what they do in EU and GDPR is step in the right direction for that.
The only problem is that we have no weight if we don't act together, so if some European countries are too short-sighted and put their self little short term interest above the rest and prefer offer encourage Google's development, then yes we will fail.
"Standing up to multinational corporations and making them pay their fair share (ra! ra!)" is exactly the type of rhetoric our most generic politicians love.
An American equivalent might be some "government out of your hair" initiative to reduce professional liscencing.. or somesuch.
Once you've got something like that on the table, all the cheapest politicians come out of the woodwork.
On a serious not though, I think it's a good idea if (and only if) this names and addresses the problem which this actually intends to fix: company tax.
Companies have always been difficult to tax properly for 2 reasons. (1) "profit" is whatever your accountant says it is, and this is a manipulatable figure. (2) companies operate in multiple tax jurisdictions. Between these two things, these companies don't pay tax. Besides denying the taxman her due, this gives bigger piles of money and advantage over smaller ones. Not fair. Sad.
I just don't see how modern democracies can address something like this. It's at the nexus of all the things we suck at (politically) at the moment. Cheap idealogy, corporate interest groups, and complicated systems.
Once you accept taxing corporate profit is a very bad idea the solutions magically appear: tax consumption and things we don't want (pollution, land usage etc.) It's very easy to make consumption tax progressive if you want that (higher rates for luxury goods, refunds up to X amount per month, funding social services with it etc.).
There is no reason to debate what a company based in country at the end of the world should pay or how your neighbors choose to tax their companies. If they do business in your country the revenue is collected by consumption tax. If your country is nice to live in people will move and pay tax there. The incentives are right for the politicians: make your country businesses friendly and a nice place to live and for the companies who move to places which are more business friendly and better to operate in as tax rate isn't an issue anymore - everyone sets their consumption tax rates and everyone who sells there must oblige.
The countries setting their corporate tax to near 0% have the right idea. I hope they won't be bullied of their position.
Wouldn't the same argument hold for income tax then?
I mean, I can evade income tax to a certain extent by making my boss buy me a nice car, computer, bicycle etc.
But yeah same is true for income tax, my country has a really high wage income tax at top bracket (close to 50% with health&benefits) that kicks in really fast, but profit income tax caps at 20% because people would just take profits out of the country if it was higher. so a lot of people work around it by invoicing their salary as self owned company pay min wage and take the rest as profit.
The profit out of salary (for most people) is just not big enough to justify an accountant to optimize.
There is a lot to be said about replacing income tax with a pure consumption tax (it is one possible financial model for the universal basic income).
Most systems tax these at a higher rate. See e.g. https://en.wikipedia.org/wiki/Fringe_benefits_tax_(Australia...
Many countries apparently nice to live in are doing their best to keep people out.
those purchases are taxed as income
It's not about fixing the Bahamas here.
I do agree with your first sentence though, whether this is good or bad depends on the particulars.
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...
They also don't buy anything locally, except electricity at negotiated prices close to or below the costs of production. Maybe they lead to some earnings/profits to be at their location? Considering the issue discussed here, I doubt that.
Eh, I've always seen them more as Kryten than Marvin.
You just wrote the plot to The New IT Crowd..
due to taxes which companies don't pay, so that doesn't matter.
Look at the following graph (you need to expand it). Denmark has the lowest prices. https://www.statista.com/statistics/263262/industrial-sector...
Price of electricity in Denmark is less than 51% of the price in Ireland!
Having said that, EU law is supposed to prevent governments from propping up local industry.
Can anyone expand on which knobs an EU country is allowed to fiddle in order to attract these types of projects? I believe tax breaks and direct subsidies are not allowed.
It's like they have a vested interest, or something.
I'd be interested to here their objects if anyone can point at a fuller article or discussion of the issues.
>“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 counterparts from Denmark and Finland, Kristian Jensen and Petteri Orpo, said in a joint statement on Friday.
https://www.reuters.com/article/us-eu-digital-tax/nordic-cou...
It's either disguised as loan interest repayment or licensing fees, but the goal is tax avoidance.
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.
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.
I do get tax credits for some essentials but it's relatively speaking a miniscule amount.
There's an interesting formula for a progressive tax regime if anybody wants to take it up ...
Taxing only your disposable income would mean that a person living in a mansion would pay much less than someone living in a small home, which is weird; arguably, the extra niceness of the house is "profit", whereas the shareholders don't usually benefit from paying more for their inputs (some exceptions notwithstanding).
Oh! What's the name of this country?
In my country all taxes are applied before you get to see the actual money.
Just as weird as a corporation with billions in revenue paying a zero or negative tax rate? Or weirder?
You are being a little bit funny here. This paragraph basically proves the OP's point.
Because companies would never abuse the taxation rules, of course. They would never cheat by shifting money around in opaque ways so as to lower the profits they have to report for taxation purposes. Clearly, that's why they can be trusted to be taxed on profits rather than revenue, but mere mortals cannot.
/sarcasm
I think in your gas station example, the net effect of a 4% tax on revenue would naturally be a 4% increase in the sales price of goods. Or, the gas station would go out of business...
I actually don't think a flat revenue tax would necessarily overall be better than the current system where taxes are based solely on profits, precisely because of examples like the one you give. It seems like some sort of combined model of a revenue tax and profit tax may be the way to go. Which is incidentally where the EU was going with this particular proposal.
The degree to which businesses generate expenses is the majority of the degree to which they take on risk. It's pretty well understood that most economies are already too risk-averse. We should not further punish those willing to take risk.
The thrust of my argument is focused around the fact that low margin businesses would have an EXTREMELY high sensitivity to variable cash flows. I should have focused more on how unfair this is to small businesses, which already are a risky proposition. It is strange to me that multiple people have replied without having any acknowledgement of this.
The benefits of taxation must be balanced against the potential for abuse and the damage it does to the businesses that are taxed.
Taxing revenue would likely have less potential for abuse, but I would argue the damage it would do to the economy would be much larger than the benefit this may provide.
That is the thing. Maybe a person could do that if the rules let them, but businesses are already doing it, at scale. I think that either businesses should not be able to do it, or normal people should be able to do it. As for the "low margin business" example, I see no reason for the government to support any particular kind of business over another under a capitalist system.
I don't think that is actually the closest you could get, even ignoring that you're asserting two wildly different things should necessary be equivalent. But even so: Do you literally never take any deductions at all? Never expense anything? No mortgage or whatever? Have zero capital gains income of any kind an in turn never have any losses of any kind there? You just add up all income sources and simply pay the top rate off the sticker price and ignore all the rest? I mean, it's not impossible or illegal to do such a thing and pay more if you want to, but I think you'd be somewhat in the minority there. Even personal income taxes at least haltingly, imperfectly and politically try to take somewhat into account that there are certain expenses necessary for humans to live or that further societal goals and that if after paying those someone has little left over then the tax system should take that into account.
>why should I as a person be taxed...[differently from business]
Humans and businesses aren't the same thing, businesses (like government) are a tool composed of and serving humans. It is a structure for dealing with and directing flows of capital towards human decided ends, and all money that goes through it ultimately ends up in the hands of humans as income upon which it is taxed there too anyway. A "business" has direct societal costs in terms of corporate law and such, but it does not need to ever use an ambulance or get housing or food support or whatever. Taxes on business, separate from the humans that compose said business, should be for dealing with business specific requirements, cost internalization, and so on. It makes absolutely no sense to simply tax a business the same as a human, not even if you are simultaneously proposing not taxing any of the humans involved. If it's done be prepared for perverse consequences. If a business has high revenue with genuinely 3% margins that still represents a huge amount of money flowing from and too various humans (including all the employees, all suppliers and contractors, their employees, and on), "revenue" is still taxed somewhere. But if you then simply slap a tax on the revenue again and make the margin go negative now the business dies, simple as that, and all the flows cease. Is that actually your intention? Why not just seize it then and take it all for the government directly?
If you want to argue that the income flows going to humans are themselves ultimately not taxed fairly, that is not merely doable but I think fairly widely agreed at this point. And if you want to argue that specifically and properly assessed business income taxes should not be possible to evade as so many do sure, that too happily seems to be inching forward. But you seem to be going a lot more radical and just throwing out everything.
Well, welcome to a part of the world were software development doesn't necessarily mean big money. I don't own a house (I share a room with my SO in an apartment with other two people and a dog), and I don't have anything invested because I don't have money to invest, so no capital gains of any kind. The only expenses I could deduct are for prescriptions and my glasses, which I don't do because the burden is too high for the kind of money I would get (think <100€ per year) and I don't buy drugs often anyway.
> if you then simply slap a tax on the revenue again and make the margin go negative now the business dies, simple as that, and all the flows cease. Is that actually your intention?
No, I was just asking why am I not taxed based on what I earn minus rent, food and transportation.
> Why not just seize it then and take it all for the government directly?
Why not, indeed? I mean, I get that a lot of people in here are libertarian, but that doesn't mean it's the only way. I'm not actually advocating for State ownership, I'm just saying it's not necessarily impossible to have such a system.
with our lives now largely tracked electronically, that’s becoming less true (but is still at least an undue burden for the ~40% of the population who are poor or near poor).
As an individual taxpayer you can deduct certain expenses from your revenue when calculating your taxable income, just like a business. But businesses do generally have a broader set of deductible expenses.
What accounting standard means that business is making a profit in the EU?
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. It would encourage companies to keep prices low to reduce gross income, and give an advantage to incumbents in the same marketplace. But one Amazon with it's fulfillment centers, delivery networks, etc, is more efficient than two overlapping half-sized Amazons. Twice the delivery trucks means twice the delivery costs and pollution.
Overall I'd be for such a system, provided it were not too onerous and didn't target specific companies.
How so? Your argument makes 0 sense because the tax is proportional regardless of size. What it will encourage is high margin business and it will discourage low margin business. Larger businesses are able to increase their margins because of increased efficiencies.
What I'm saying is that if there were a small additional tax on giants based purely on their company value or gross sales, it would 'level the playing field' for incumbents who don't have the efficiencies of scale that the big companies have, which I think is beneficial to society.
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.
Google and Apple would be fine. Amazon would be toast. Your local supermarket would be toast (avg grocery store margins are 1%). Any startups that are just scraping by, no matter how small, would be toast.
You would basically crank up the difficulty level of business across the board. This would generally help successful incumbents by making life punishingly difficult for challengers, who have to climb up through a period of unprofitability.
It is a terrible idea.
There are so many ways a company can legally and artificially lower its profit numbers.
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.
Given our current economic situation and our effect on our environment I'm not convinced that it is that simple.
The effective tax rate is far lower than this, but also, most countries have an effective tax rate for megacorps far lower than what they advertise once exemptions, subsidies and tax-breaks come into play.
That's not the case in other EU countries.
Speaking as an Irish resident, I can tell you that this is effectively untrue. Indigenous businesses, or even businesses small enough to not get the sweetheart treatment of the relevant authorities definitely do not get equal treatment. The difference is vast.
GP was indicating that Ireland has one of the lowest standard corporation taxes at 12.5% available to everyone, not that there aren't even better effective rates offered to larger corps & multinationals.
Are you referring to the non-trading income corporation tax rate, or is there something else going on? If something else, that sounds an awful lot like corruption
> Nothing in the Treaty of Lisbon makes any change of any kind, for any Member State, to the extent or operation of the competence of the European Union in relation to taxation.
It's legally binding, and ensures that Ireland retained the right to set our its corporation tax rate.
All the other EU nations at the time (some have joined since) unanimously ratified the Irish Guarantees, so if anything, it's rich of them to now complain about an agreement that they willingly and knowingly signed up to.
The EU allows for free cross boarder trade and movement of assets within the EU. Having a lower corporate tax rate in one country means businesses operating in the EU put their revenue through there. It's an automatic incentive.
There are rules here because otherwise it would be a race to the bottom. Each country wants Amazon, Google, etc for their employees' income tax.
The whole EU loses out from one state giving multinationals preferential treatment.
Some people seem to assume that high corporate income tax rates are a good thing, but there's really no proof of that. We would all be better off if every country eliminated corporate income taxes entirely, and made the change revenue neutral by increasing taxes on high income investors and employees. This would encourage economic growth by eliminating resources wasted on tax accounting and avoidance.
Zero Corporation Tax allows multinationals to make huge profits and just chuck the money back home, even if that's outside the Union. Yeah, they're probably paying tax on it somewhere, but it's not taxed in the place it was earned. That's the problem here. Countries are losing cash and tax revenue to this.
Your trickle-down economics is similarly unproven.
I'm not sure this is true any more, at least not everywhere
"Amazon has become the first technology company to abandon controversial corporate structures that divert sales and profits away from UK in the face of a clampdown imposed by George Osborne.
From the start of [May 2015] the online retailer has started booking its sales through the UK, meaning resulting profits will be taxed by HMRC [the UK tax authority]. The group made $8.3bn (£5.3bn) of worldwide sales from British online shoppers but for 11 years all these internet transactions have been booked in Luxembourg."
source: https://www.theguardian.com/technology/2015/may/23/amazon-to...
But there are still lower tax areas. This is still an issue that is not simple to unravel because flat tax was not a founding part of the EU, something we figured out after the fact.
Amazon, Ebay, and Google all put the vast majority of their earnings through secondary states within the EU, not the main markets. I'm not sure what Apple do these days, but they've just paid a couple of ~£200m in extra tax found from an audit. The others "claim" they are going to rectify this, but it's all face-saving. They're all lying tax cheats.
Their UK businesses are tiny. Warehousing and marketing.
For examples of the same mechanism: Amazon's HQ2 farce aptly shows what happens when jurisdictions cannot effectively coordinate and are forced undercut each other. Is there any doubt that Amazon would settle in some city and hire people and pay taxes without their little version of Hunger Games? So the net effect is simply some city being marginally better of but forgoing the jackpot that would usually come with being chosen, and therefore those citizens having to pay instead. Plus the harm that comes from Amazon making decisions based on money alone, to the detriment of other factors such as quality-of-life for its employees.
That's why any trade deal includes provisions prohibiting subsidies not covered by a few narrow exemptions: they distort the competition and simply lead to losses in a zero-sum game between nations and private corporations.
Not from the economical standpoint.
What's really good is that this creates a system where it's not only nonexistent, but it's also not even possible at all. It's like what Typescript/a linter does to Javascript: the EU greatly discourages entire classes of problems threatening the life/well-being of its citizens.
The leverage against foreign countries is a real pragmatic thing, though, not some ideology. Why else do you think Trump celebrated Brexit, and actively tries to break up different unions that we've spent years building, like NATO? I'm not saying that he's the devil, even though I'm not a big fan, but I understand that he's doing it to have his way with less opposition. Divide and conquer?
Every person has their breaking point where mere pragmatism no longer holds sway. Peace, but at what cost?
Seeing so many people discussing this under wrong assumptions, even on HN, makes me sad and makes me think there's a very low ceiling on tax complexity, above which people lose track completely. This means we'll never be able to fix tax. Only tax lawyers will ever even begin to grasp it. It's also a pretty good argument against direct democracy as well as an argument for abolishing the corporate tax completely.
Besides, it's not like your alternative is any more appealing anyway. I'm not so sure about the absolutism of saying "oh, it's not perfect, so let's just abolish it completely to make sure countries get even less to subsidize healthcare and education".
Before implicitly calling other people braindead next time, maybe consider that none of us are 100% right and we are all just having a discussion.
For example:
Hungary 9%, Bulgaria 10%, Lithuania 15%, Romania 16%, Croatia 18%, Poland 19%, Czech 19%, Slovenia 19%, UK 19%, Estonia 20%, Finland 20%, Latvia 20%
Even Denmark is at 22% and Norway is at 23%, traditionally high tax countries.
Outside the EU in Europe you have Montenegro 9%, Macedonia 10%, Bosnia 10%, Serbia 15%, Georgia 15%, Albania 15%, Belarus 18%, Russia 20%, Armenia 20%.
Another decade of rate competition and the EU average might be down to something close to 18%.
The real unusual stand-outs these days are the high total rate nations, like France, Belgium, Greece and Germany, rather than the low rate nations.
Q: How many companies would site a corporate office in Luxembourg if there were no tax advantage?
That's not to diminish Ireland's accomplishments in the least. The combination of a well-educated population and speaking (something akin to) the English language alone made them predestined to catch up eventually. Being able to engage with their former enemies in the Good Friday Agreement was also exemplary and undoubtedly returned fantastic dividends, both economically as well as morally.
But to deny that being part of the world's largest free trade block was an essential part, or to insist that when Ireland joined 40 years ago the EU was expecting, and motivated by, any short-term financial interests just seems...unnecessary petty?
Because there's nothing dishonorable in that story. Nor are those two aspects contradictory.
Germany does pretty well with an origin story far darker: not only to have started far lower than Ireland has ever been, and receiving far more support at a time where the idea of short-term returns were laughable (the Marshall Plan). But to have caused that same miserable situation pretty much single-handedly, and being the recipient of gratuitous support by essentially the same countries they had devastated in that mad crusade less than a decade prior.
+ "permission to screw over the other countries they're in economic union with by acting as a tax haven for transactions that occur in those other countries"
It's not even that in this case, because it's not like there are serious European competitors to these companies (except maybe the odd Samwer clone here and there) that could even be protected. This is purely an attempt to rip these companies off, because the governments can.
I find it interesting that the companies are often portrayed as smart for doing this, but politicians are jealous and incompetent. Almost like we worship businesses and malign government. I wonder whose interests that viewpoint supports.
...well they did create these tax loopholes in the first place. That’s pretty much the definition of incompetence.
So are you arguing that corporations should pay more tax than they are legally required as a gift of charity to countries? If so, how much? What if a competitor decides to pay less?
Megacorps have been systematically screwing people for several hundred years. By comparison, most of the book of Exodus is a story about government systematically screwing people. People seem to prefer the devil they don't know right now. The arc of progress is long.
One could argue that the statist systems in Scandinavia work quite okay... don't you agree?
How about you share how you think this could work? While I agree for more competitiveness for my country, history has shown me repeatedly that low taxes isn't actually working out that great.
Equating low taxes with increased competitiveness is to me dishonest as a generality. I'm certainly not opposed to admitting that it can work in some cases, but I can't agree to this as a general rule.
“It just remains for me to offer Paschal a beer in a Dublin pub, and then I think we’ll be able to move toward a decision,” he said, referring to his Irish counterpart, Paschal Donohoe
> Spearheaded by France, the plan has met resistance from countries such as Ireland and Sweden, which question the wisdom of the EU going it alone given the global nature of digital services.
First, not all services are digital, especially not Amazon packages.
Second, the "global nature" is a technological aspect. The corporations themselves are local to some jurisdiction, as are their clients.
This argument is similar to computing in the "Cloud": Technologically, the service is perhaps global, but the physical manifestation of it certainly isn't. That data center is located somewhere, and when it goes down, one is reminded of the limitations of the "global" aspect.
[1] https://www.bloomberg.com/news/articles/2018-11-05/eu-s-divi...
My latest invoice from AMZN says "Sold by Amazon EU S.à r.l., UK Branch". Amazon EU S.à.r.l. is based in Luxembourg.
My order was one (single) LTO cleaning cartridge. Does anyone here think that cartridge even went anywhere near Luxembourg at any point between manufacture and reaching me?
I doubt it.
I'm sure they would pay a lot more for their trademarks if other companies could otherwise snitch it for like a year.
Or why not having to accept or at the least pay taxes on the best offer you get, when you want to sell to some IP and later lease it from some other company?
Yes, that seems unrealistic. It might at least be possible to use this in e.g. the court of law to test for abuse.
It's not like US tech giants have much competition to fear from European companies anyway. A 3% price increase isn't going to get anyone to switch to another service (except maybe in the case of Amazon's physical sales).
In the end, consumers would pay and this would add to the already large price difference between the EU and the US, due to the much higher applicable VAT in the EU, as well as other similar taxes applied in some EU countries (private copying levy [0], eco-participation [1]...).
We don't pay for Google with money but with our privacy. I'm perfectly fine with making my privacy more expensive to buy for Google.
I don't understand all the negative comments here. Look at the big profit margins of all big tech companies (maybe with the exception of Amazon retail) and ask yourself whether a moderate, unavoidable tax is really unjustified or will have negative effects on anyone (except maybe the shareholders). I don't think so and in my opinion tech workers should be a bit more mindful when thinking about these taxation topics. I prefer paying high taxes strongly to further social segregation, which will lead to the development of civil unrest and lower quality of life for everyone sooner or later...
Aside from my opinion on corporate taxing and government approaches towards it in general, I will give an opinion on new taxation policy in general developed as a counter to avoidance. More and more frequently, legislation is drafted to combat the lack of enforcement of existing statutes. And that same legislation is similarly unenforced like its predecessors. Most watch this history repeat and cheer it on with incredulity towards disagreement. Some believe this time will be different, others believe the same institutions that are failing at their obligations shouldn't be given a mandate to fail using the same approaches. It adds more codified word and less substantive meaning. Replace tax structures (only if you must), enforce, move on. Don't pile on, leave unenforced, and keep giving pitchforks to the citizenry while ignoring the responsibility of the collectors.
2. Sweden is lobbied by Spotify
3. Denmark tries to attract Google.
Cui bono.
This tone
"lumbering continental countries"
wasn't called for though. Could we be civilized here without insults and hate?
There's a bunch being built or in the pipeline at least in Denmark.
all while getting elected on the empty flawed promise and getting money under the table to lower companies data center and telemarketing center costs.
As for the rejection of the tax, i honestly think it has more to do with avoiding double taxation.
Company taxes are at 22% in Denmark.
Denmark already collects 25% VAT on everything sold. If a 3% tax was to be imposed on "tech giants", it would ultimately end up being passed on to the consumer, effectively increasing retail price by 3% or more (depending if it's calculated as cost+28% or cost+3%+25%)
In the end it fails to accomplish the goal of forcing companies to pay local taxes instead of transferring them to wherever they can pay the least taxes, and instead drives up sale price and ultimately inflation.
and its not clear how paying taxes on local profit would have any more effect on consumers than taxing revenue
1. tax corporations on revenue too. Which this thread is about 2. tax employees on profit. Food, gas, utilities, ... - these are basically cost of operation of a human being, aren't they?
Income taxes will never work. Monopoly taxes are a solution though. Monopolies behave as money sinks in economy. Their prices are not competed down, so you can't talk about monopolized system as capitalistic. The more monopolies and wealth concentration you get the more you approach something like feudalism. Which is where we are heading as a civilization right now.
Monopolies are usually created and maintained by heavy regulation, because you don't allow small projects to challenge them. Also monopolies influence regulation in such a way to make it so.
So why not embrace monopolies, but tax them for the service of letting them be monopolies? You can then even not call it tax, but a pay-per-use license granting certain social privileges. Perfectly progressive tax. The more you use, the more you pay.
In well functioning market with many competitors, the price of good would be determined as costs + margin. Over time given enough competition the price should converge to that sustainable minimum basically. If you introduce sales taxes into the equation, then obviously you hike up the cost, therefore you shift this minimum.
Monopoly goods prices are not determined by cost, because there is no competition which would make it go lower over time. Monopoly prices on the other hand have opposite tendency - ie. to maximize to the point where almost all disposable income of its customers gets eaten up.
That's why you get the phenomenon of rents being ever so higher. They just catch up to increases in wages and eat it all away. There is no sufficient competition to compete the price away, simply because there is not enough land to house the people, especially in cities.
House rents are the biggest of the monopolies, because everyone has to pay it and often it is significant portion of a paycheck.
Back to the point. Introducing monopoly taxes has the exact opposite effect - it lowers the prices for consumers.
Explained further here http://blog.lvrg.org.au/2011/08/why-land-tax-cant-be-shifted...
You mean a single market???
> Businesses should be taxed based on where the revenue is generated and not where their tax domicile is placed.
How would that make sense? If a product is built & sold in country X to a person in country Y, then only sales tax is paid to country Y. Revenue goes back to country Y to cover the costs and then tax is paid on what remains. That's like one of the fundamental things tying EU together.
What differentiates this 'tax' from a tariff?
The difference between the taxes and tariffs is that the tariffs target a specific country while the tax is same for everyone (working in a specific industry).
Tech companies seems to be the most notorious tax evaders so this was just a push to make them pay a fair share of tax in the EU.
>> Traditional tax systems have so far failed to capture revenue from companies with global reach but limited physical presence
But this is an EU tariff against US companies. Will any EU company be affected?
However US (and other multinational) companies set up subsidiaries and then funnel money through them to get tax breaks thanks to bilateral double-taxation-avoidance agreements. These would be affected, but they've structured themselves this way intentionally so that their profits are collected in a company headquartered in the EU. (Though it should be noted that headquartering EU operations in an EU country is generally a requirement for dealing with EU consumers without tarrifs and so on, but many multinationals funnel their international money through the EU company).
You can't have it both ways. Either you're an EU company which gives you certain tax breaks, or you're a US company that has no tax benefits in the EU for global revenue.
Too many people here act like this is something specifically aimed at US companies, when in reality it's not. US companies just happen to be affected the most by it due to their dominance in this particular business sector.
But this is something that has been long overdue and was bound to happen regardless of who was dominating that sector.
[0] https://ec.europa.eu/taxation_customs/sites/taxation/files/p...
(Not to mention this will affect companies like SAP and Spotify, which are real EU companies.)
> Traditional tax systems have so far failed to capture revenue from companies with global reach but limited physical presence, fueling anger from voters disgruntled after years of austerity and meager wage growth.
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?
Response to edit: Please describe the full calculation (with factual numbers) of "national wealth", and then we'll talk.
That's not how burden of proof works. You made the claim that "the country would literally be better off if those people were unemployed!", so prove it.
> But I'll give you a hint, if tax evasion was good for a country, why would that country have taxes at all...?
A "hint" is not what's required here.
also, you seem to imply a scenario where the company is kicked out of the country. That does not recoup any taxmoney to the state. It also likely doesn't make the infrastructure cheaper to maintain or any less desired, so the correct equation is just that you'd loose whatever taxes they do pay (surely they don't dodge all of them),and the sum of the salaries of their employees, plus whatever service the company provides, and you gain nothing.
"you do the math"
edit: missing "don't"
The folly so many keep making is they think every tax dollar is necessary to support every company present. That type of thinking makes even one cent of avoidance appear to be a net negative, when amount paid overall can still be a net positive compared to impact of presence.
But the argument doesn't have to be as extreme as that to support enforcement of some sort of equitable taxation: Take, again, the extreme case of the policy applying to all employers. That's broadly equivalent to abolishing corporate taxation PLUS that corporate windfall accumulating not in the countries they operate in, but whatever happens to be the go-to tax haven.
This being taxes on profits, there's zero effect on the company's activity (i. e. investment, hiring etc.) in the country. That's because Facebook will let someone in, say, Brasil, spend $5000 on ads irregardless of them having to give half of that to the local government. It's either $2500 or $5000 in profits, produced with 0 marginal costs.
Net result therefore is a zero-sum game between that government, and Facebook's shareholders. Even ignoring the geographic aspect (very little of Facebook's shareholders being likely to spend that money in Brasil), it seems rather intuitive that the public is better served by the money taking another lap paying for some school, rather than allowing some retired VC to improve the decorations on his next yacht.
Only some areas still require unanimous consent. And even those have historically not been insurmountable. What usually happens is a bundling of issues until you get an overall package that's net positive for everyone.
What helped, historically, was a fundamental willingness to act constructively, based on the common understanding of the EU's importance for both economic growth as well as stability and peace. I think it's easy to underestimate how large the horrors of the 20th century still loom in Europe.
That's why even something as controversial as the Greek crisis somehow ended in a compromise (of that singular kind that nobody is entirely happy with).
Of course recent history has shown some cracks in this idealized story, what with Brexit, Italy, Hungary, and Poland all going full Trump-idiocracy, and the EU being a rather excellent proxy for any nationalistic, xenophobic, anti-semitic, or otherwise egocentric jingoistic tribalism that lingered below the surface previously. It's kind of ironic that so many Europeans enthusiastically agree how much they hate each other. Agreeing as in: they have actual pan-european conferences and working groups where they apparently join in complaining about "them" subjugating "us", without ever realizing that Italy's "them" is Germany's "us", and vice versa. Anyway: exciting times!
That sounds too good to be true, can you give examples?
International trade agreements make good examples: People often decry their incredible size, with thousands of pages and topics ranging from the legal system to GMO to copyright to cheese. Yet the size is the natural result of requiring the package to contain every signing country's pet issues. If Canada is mildly opposed to adopting US standards for turn signal frequency, just add a provision defining minute details for maple syrup classification and they'll be happy again. And on to Japan... etc.
Another example from US law would be the "sequester" that put caps on both military as well as civilian spending. If you want something broader, it's how the budget process used to work, and to some extend still does. Yes, these examples from the US require only majorities (or 60-vote supermajorites in the Senate), not unanimity. But the mechanism is identical.
That mechanism is, by the way, why there have been calls to once again allow "pork", i. e. specific grants of money to projects in individual congressional districts. While those payments had an incredibly bad reputation as being wasteful and borderline corrupt, they allowed for "bundles" of legislation to be tailor-made to get exactly the quorum required. Money happens to be perfect in that context as it is in others: it's fungible, meaning you don't have to start researching each districts' current needs when you want to make an offer. It's divisible, allowing the sum to be just right to get the vote without "overpaying" as often happens if you only have the crude instrument of actual policy.
And there's one advantage of money that's unique to this use: Nobody actually cares that much about spending. While yes, overall spending levels are somewhat significant, giving some 12-term Republican from East Nowhere, MI a million $ for whatever idiotic pet project they care about carries far less of a risk of losing you support on the other side of the spectrum as implementing their favorite policy (slightly exaggerated: vegan-only school lunches; or required heterosexual target practice in preschool) would.
I understand it's all about horse-trading, it's the meaning of the word "everyone" in the claim "a net positive for everyone" that I question.
My understanding of European Union horse-trading is that it's all about "you scratch my back, I'll scratch yours". This might well be good for most if not all EU politicians and bureaucrats, it's patently not going to be a net positive for every single citizen.
Example: the travelling circus that is the EU Parliament moving back and forth between BRU and SXB.
"The campaign to end the European parliament's expensive monthly commute to Strasbourg received a boost yesterday when a European commissioner criticised it as a sign of "insanity". Margot Wallstrom, a commission vice-president, said: "Something that was once a very positive symbol of the European Union, reuniting France and Germany, has now become a negative symbol - of wasting money, bureaucracy and the insanity of the Brussels institutions."[0]
"though MEPs have voted to scrap a second parliament, the French government has the power to block any such move [..] It is perhaps the most outlandish of the European Union’s excesses; a £130 million travelling circus that once a month sees the European Parliament decamp from Belgium to France.
Over the course of the weekend, some 2,500 plastic trunks will be loaded on to five lorries and driven almost 300 miles from Brussels to Strasbourg.
On Monday, about 1,000 politicians, officials and translators will then make the same journey on two specially chartered trains hired at taxpayers’ expense."[1]
sources: [0]https://www.theguardian.com/world/2006/sep/05/eu.politics
[1]https://www.telegraph.co.uk/news/worldnews/europe/10565686/T...
For the EU this discussion is basically identical with the tired flame war of "EU is undemocratic cleptocratic fascist/communist (please circle according to preference) monster bureaucracy deciding on banana and keeping brave people of Somecountry down" vs. "Nope, it isn't, and the banana example is no longer just wrong, but also outdated".
Never mind all of them, one could ask whether some "horse-traded" policies are even a net positive for a simple majority? I'm thinking of, for instance, the Common Agricultural Policy.
This certainly isn't just an EU issue, or even confined to politics, small groups often seem to wield a disproportionate amount of power.
Taleb has commented on this.[0]
[0] https://medium.com/incerto/the-most-intolerant-wins-the-dict...