Austria is the next country working to impose a tech tax on companies like Apple

Compare Alphabet, which has ranged from 8-25% in the last four quarters: https://csimarket.com/stocks/singleProfitabilityRatios.php?c....

Companies that produce physical goods in specific geographic locations and sell them in other specific geographic locations cannot play tax games the way tech companies (which sell intangible goods and services created from intangible inputs) can.

In any case, loopholes are entirely the providence of complexity. We need a simple, non-regressive tax scheme that eliminates subsidies for companies. Maybe start with "40% tax" at the top and above (define "top") of income and profit. For individuals and families, turn it down from there down to poverty level (define "poverty level"). For companies, there's no poverty level. Individuals and families get to reduce their taxable income based on children, educational expenses, and medical expenses. Companies get to reduce their taxable income by spending money on valid expenses (paying employees and offering perks, office equipment and supplies, vehicles as necessary to operate the business, etc) - do away with accrual accounting.

The fundamental problem is assigning a jurisdiction to the "profit" from a supply chain that snakes through twelve different countries.

When you pay $50 for a widget, 100% of that is somebody's profit. The retailer sells for $50 and buys for $40. The wholesaler sells for $40 and buys for $30. The manufacturer sells for $30 and pays $20 in salaries and other expenses. The factory employees are paid $20 but pay $15 for rent and food. The landlord and the farmer are paid $10 and $5 and either keep it as profit or have their own expenses that somebody else profits from.

There was originally $50 and, at the end, there is still $50. Somebody has it. It's somebody's profit.

But when the same entity has operations in multiple countries, the "profit" doesn't have a specific country. A US-based company pays $20 to manufacture something in China and sells it for $50 to a customer in Austria. Their total profit was $30, but did they make $10 in each country, or $20 in China and $5 in each of the others, or $25 in the US, $5 in China and nothing in Austria? The assignment is almost totally arbitrary. And when it's completely normal for many types of operations to have single-digit profit margins, that much difference in the arbitrarily assigned price can easily wipe out all the "profit" in any given country.

The answer is to forget about "profit" -- it's all profit. You need to tax the thing that actually happens in your country. If the product is sold there, that's sales tax (or VAT). If the company has a facility there, property tax. If the company employs workers there, payroll taxes. Companies can't avoid this and still do that thing in your country. You can't assign "sales to customers in Austria" to Luxembourg the same way you can assign profits.

Naturally everybody hates this, because countries want companies to sell products and build facilities and hire workers in their country, and don't really want to discourage it (or raise costs / lower wages for their citizens). But you can't tax a company that has no interaction with your country at all. All you can do is tax the interactions it actually has.

Trying to abstract those interactions into "corporate profit" only serves to give the companies an excuse to shuffle the "profit" into a jurisdiction with lower taxes.

The irony to this is Europe’s richest families pay close to nothing in taxes. (It’s why these loopholes stay open.)

It is an attempt to keep part of the local wealth local. Big corps siphoning local wealth towards fiscal havens, in that depleting territories, concur to social mayhem and the rise of populism. Re-investing part of the profit locally for the communities, would also make the general public more sympathetic.

If you want to talk about self-interest, point the finger at the tech giants.

It could well be motivated by envy. But it can't be any other way because you can only effectively tax people who have the money.

There have been a few flawed but widely successful attempts at this style of system. Namely USA style governance systems. I’d even say modern ML comes from a similar, humble insight.

I think very few people push themselves to self reflect. There’s the philosophy of objectives in, which one of the core tenants is that everyone is greedy and that that’s alright. With that acceptance, we can start understanding why we do what we do and what motivates us. Even a parent running into a burning building to save a child is “moral” because it’s the self-interested act of not wanting to live with themselves after the child [potentially] dies.

When we look at taxes, a simple tax code could be a percentage of revenue made in said country is multiplied by the tax rate. I.e. Facebook had $X million ad dollars spent in country, X * (tax rate) = amount owed.

This makes it clear to all parties involved. Although it doesn’t take into account operating costs, which he been the challenge so far. Either way, it’s admitting everyone needs their “due”. Not trying to target companies, but generally a Flat rate across the board.

[1] https://en.wikipedia.org/wiki/Protectionism

It's quite silly, since the EU would probably benefit from a uniform corporate tax rate and closing loopholes that allow the "double Irish". The EU could then afford to compensate the relative loss in Ireland (and a few other places). But this would require moving forward to a federal EU, with a bigger budget and a much greater effort at tax harmonization. Not a very popular idea these days.

I think it makes sense that a few countries start on their own, especially big ones (France, Germany, ...) We'll probably see some retaliation against big EU corporations, especially in the US. But I don't think anybody will shed a tear.

(As an Austrian I'm fairly certain that this has nothing to do with fairness: Everybody hates FB and Google at the moment, so the populists scream for taxation. At the same time Austrian companies who are active internationally get tax breaks.)