Spain planning on going ahead with ‘Google tax’ despite US tariff threats
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UK corporation tax rate is 19%.
USA corporation tax rate is 21%. Pushed down partly due to low tax competition from the rest of the world, i.e. places like the UK.
Facebook pay little corporation tax in the UK because it isn't a British company. It's an American company. It was created in America. Most of its employees are there. Its headquarters are there.
The EU works the same way. Corporate taxes are levied where the company is headquartered. It's arbitrary but all other ways to try and divvy up something inherently multi-national are even more arbitrary.
I am British myself and I really don't understand why my fellow Brits have such a hard time understanding this - foreign companies pay little UK tax on profits because they are foreign. They were not made in Britain. If Facebook had been formed in the UK then for sure, most of its corporation tax would be paid to the Exchequer. But unfortunately it wasn't.
There's VAT, which is essentially passed through to their customers but the seller collects it.
There's employment, local government taxes. Facebook pays those because it has workers in the country.
There's corporation taxes, which are taxes on corporate profits. Facebook pays some of these because technically speaking there is no one company called just "Facebook", there's Facebook Inc (USA), Facebook Ltd (UK) etc and they buy/sell services from one another. Specifically, Facebook USA buys software development and sales services from Facebook UK, and Facebook UK buys the rights to the name and the ability to insert ads into the ads system from Facebook USA. We think of them as a single firm but legally they aren't, and this follows from the lack of one global government so it's not a small quirk or weird legal hack Facebook are engaged in: there is literally no such thing as a company of the world.
To what extent corporate profits are allocated to specific countries determines what amount of corporation tax is paid, however, all such allocations are entirely arbitrary. None can be said to be more rigorous or accurate than any others, although tax lawyers make a lot of money out of trying :)
For instance, all of these positions could be reasonably argued:
1. Facebook makes zero profit in the UK and thus should pay no corporation taxes at all. That's because Facebook makes money due to the actions and software written by the employees in the USA; without the UK office Facebook would still exist but without the USA office it wouldn't. Therefore all money is "made" in the USA and none is "made" in the UK.
2. Facebook makes lots of profit in the UK because if every British person stopped using Facebook tomorrow, it'd punch a big hole in their revenue stream. The incremental costs of serving a British customer over an American customer is tiny because they even speak the same language, so once the US version of the site was developed, the costs were already sunk. Thus all revenue from British users is pure profit and so 19% of all revenue originating from British firms should accrue to the UK government.
3. Facebook doesn't make any money in the UK, it actually makes its money in the Ireland because that's where its EU registered headquarters is, and EU corporate tax law was designed to allocate profits to the nameplate location.
4. Facebook makes its money in Ireland because that's where the datacenters are. This is the critical aspect because it's ads are sold in real time auctions and thus the location where the click is processed is where the "sale" is being made.
Of course this is circular: in argument 2 we talked about "British firms" but what is a British firm? Is ARM? It's owned by the Japanese now. Maybe it's a Japanese firm. Or maybe it's still British because that's where most of the work is done.
Because the concept of "making money" for an international firm is so vague, and impossible to refine in a principled way, in practice what happens is a bunch of well paid corporate tax lawyers sit down with the government tax agencies and thrash out some sort of ad hoc deal or arrangement. The company agrees to pay some tax to the UK even though they may feel entirely American and in return the government agrees not to go to court and fight a very complex and expensive tax case that they might well lose, depending on the whims of the judge and/or how vague the various tax treaties are written.
1) If you pay tax where you do business do you pay tax on global profits there? For example, France’s new law taxes 3% of global revenue if you do more than €28m in business in the country. Should it be taxed on 3% of global revenue or on the exact amount of business it does in France?
2) If BMW sells a car in the US, do we tax BMW global for doing business in the US at the 21% tax rate?
“ The levy designed by Spain included a tax rate of 3%, which would be applied to certain digital services from tech giants whose global revenues exceed €750 million and whose earnings in Spain are greater than €3 million.”
So let’s say the US goes back to Europe and says ok Europe, all of your best industries/companies face a 3% tax if you do more than a million dollars worth of business. How would those companies react? Think they might press their governments to do something about it?
I’m not a fan of tax-avoidance or anything, but I hardly think this proposed solution is fair, or won’t elicit a significant response from the US. It’s protectionism - so call it that and make sure you are railing against the internet about it like you do when Trump does random tariffs.
Spain doesn’t export a lot to the US maybe? Ok then the US can just pick and choose Eurozone members to arbitrarily tax. That’s what I’d do. 15% tax on global revenue for European cars sold in the US. Why not?
Aren't there import tariffs and sales tax in US?
> All countries tax income earned by multinational corporations within their borders. The United States also imposes a minimum tax on the income US-based multinationals earn in low-tax foreign countries, with a credit for 80 percent of foreign income taxes they’ve paid. Most other countries exempt most foreign-source income of their multinationals.
https://www.taxpolicycenter.org/briefing-book/how-does-curre...
Facebook customers in Europe pay Facebook Ireland, who are subject to 12.5% corporation tax. Facebook Ireland in turn pays "licensing" fees to Facebook Cayman Islands, where there is no corporation tax and high bank secrecy.
Remember the Vodafone tax scandal? You might think that as a predominantly British company (spinoff of Racal in the 80s) listed in the uk, they ought to pay tax on the UK profits. Instead most of the profits appear in Luxembourg.
This conflates a few things. As I'm an American, I'm going to speak about US tax law, but concept should be applicable. No normal US business is paying taxes on their _revenues_, they're paying taxes on their earnings (profit, roughly speaking). So if you made $1B in revenue selling $1 bills for $0.50, you'd have lost $500M and not have to pay taxes on top of that.
The point about fiddling with where revenue is accrued to impact tax rates is true, but the more accurate way to phrase it would be "FB paid only $X in taxes after record $XXX earnings in the UK". This isn't always as simple to derive, but you could back into an estimation of it by taking revenue from UK businesses and subtracting UK headcount and purchases made in the UK or from UK businesses. The tax number they'd owe is definitely higher (and there's a very strong argument that they should pay this rate), but it's not anywhere near "corporate tax rate * revenue in country" (or worse, global revenue).
You'd have lost $1B. You'd have to sell 2B $1 bills @ $0.50 to make $1B revenue.
It would make more sense if EU countries would make laws that extend normal VAT to all internet business in EU and close all Irish loopholes. Google and others use Irish tax arrangement schemes like "The Double Irish" (base erosion and profit shifting), the Single Malt, and CAIA to avoid paying taxes.
12 EU states reject move to expose companies' tax avoidance https://www.theguardian.com/business/2019/nov/28/12-eu-state...
So Spain can act now, or wait a few more decades...
Most matters are done under qualified majority - which is a small super-majority based on population.
A post-Brexit UK going full on offshore tax haven might encourage the EU to get their act together on finance, and come up with some ways to crack down. Well, one can hope...
Primarily the new rules are based on the existing UK rules and I'm guessing whatever legal changes were required are still going through.
This represents a case of perfectly elastic demand. No matter how taxes change, the price the advertiser is going to bid never changes and thus all taxes will be off burdened onto google and facebooks margin until obviously the point where the would lose money and then shut it off but that's unlikely to happen.
khan academy article on elasticity and tax revenue: https://www.khanacademy.org/economics-finance-domain/microec...
I send the VAT money to my government every month. If I didn't have to do that it would be my profit. "The customer pays" rhetoric doesn't hold water. Customers don't care how much of the price is the tax. They make their buying decision based on sticker value.
If your competitors didn’t have to do that either there would be pressure on prices and a new price would be set by demand/supply.
When VAT changes (usually increasing) if doesn’t just affect profits. It also affects prices (to what extent and how rapidly depends on many factors).
These companies show their profits in places like Bermuda (British Overseas Territory) Ireland, or Luxembourg and use all kinds of schemes and special arrangements to reduce them.
The ad sales might make sense, but why not just add a tax on all advertising.
The marketplace tax is confusing because do they tax the value of the transaction? The full customer value that results of the acquisition? Why not just use existing sales tax for retail transaction (which e-commerce is).
The last one is the hardest to understand. Do they mean sale of data from Spanish citizens? Or only people created data while in Spain?
It seems simpler to just create a “data sales tax” that happens specifically for transactions where data is sold to or from Spanish orgs.
I think this will just result in a tarrif on Spanish goods.
I doubt it would be easier than a Spanish tariff on goods from a single US state.
My guess is that they already do. The government just wants more tax revenue as usual. Tech companies are just a good punching bag right now.
Edit: I cannot imagine that they are not collecting VAT on these transactions. Digital VAT is a very explored topic in the EU.
Also, corporate profits are double-taxed anyway, as taxes are paid once on profits then again as dividends / capital gains by the shareholders. This is one reason stock buybacks are so popular - way to benefit shareholders without the ridiculous double taxes.
The issue is that you can already do this by using a corporation incorporated in a jurisdiction with no (or lower) corporate income tax -- which is what international companies and billionaires do and it gives them an unfair advantage, so we should level the playing field.
Meanwhile notice what you're really doing -- you pay no income tax only because you have no income. But that only works as long as you never want to spend the money. Which works great for Apple, because they don't have anything to spend the money on anyway, but they're already doing that.
The consultant making $100K is going to have to choose between spending the money (and so paying the tax on it) or taking a vow of poverty, because you have no equity to borrow against if it wasn't already at some point taxable income, and once you've spent that you still want to eat.
Not true. Apple spends boatloads of money on dividends and share repurchases. Apple doesn't pay taxes on that, but shareholders do.
How will you pay back the loan without income? Company you will pay you income that is taxed.
Eventually the company sells the house and pays taxes.
It might defer taxes, but won’t avoid them.
It boggles my mind that people try to defend tax evasion by insisting that a dollar can only be taxed once... and then never again as it is used?
Some nonsense comparison like "harder than it should be" doesn't mean anything, it's an opinion-based weasel phrase with no definition.
Considering how dramatically wealth and income inequality has exploded over the past 2 generations in America, the only priciplied, data-based perspective is that corporations and the astronomically tiny number of people who control them have gotten fabulously more wealthy at the direct expense of workers who are working longer hours, more productively, doing more jobs, for less real money and wealth.
You can spin it however you want, but corporations and the capitalist class are more wealthy now that at any time in our history except the Gilded Era, and the working class is poorer now that they have been in many generations, and tax policy is really the only tool the people have to try and right this listing ship before another Wealth Destruction Event, another Great Reset.
P.S. in America, the retirement system is failing, from social security to public and private pensions. All of them are either being redone to ensure folks won't get their money when they retire they way they were promised, or they're just monetizing debt to keep up. Perhaps European style systems are better funded (which would likely correlate with dramatically higher taxes) but massive pension protests in France starting today would seem to suggest otherwise).
Yeah, they tend to take on a more selfish attitude. People will also believe all kinds of dumb or awful things if they think it justifies their self-interest (hence the cliched quote I won't repeat).
That's why I think moderation rather than ideological purity is probably the way to go.
> Anyone who thinks running a business is easy or more profitable than it should be should try to run one.
Making ends meet isn't easy for a lot of people, either. For them, their hard work doesn't have as much of an upside at your hard working business owner.
Also capital gains aren't double taxing corporate profits the benefits are going to two completely different groups of people.
The corporation can deduct the wages it pays employees, which is why they’re fully taxed at the individual earned-income level—this is the personal income tax. In theory, the corporate tax takes a cut of profits (i.e. what is due to the shareholders), so the capital gains tax is lower to make up for it. The problem is that the corporate tax is too easy to legally avoid for large sophisticated corporations, an almost impossible problem to solve within the international system. The solution is to just abolish it and tax capital gains at the same rate as earned-income.
Howso? You still have income tax and capital gains tax.
Corporations, small businesses, private citizens all benefit from state funded systems. That's part of the point of having a state in the first place.
It could be seen as hyperbolic to conflate paying the minimum legal amounts with tax evasion. Corporations pay payroll taxes, VAT in relevant countries, capital gains, etc. as required by law.
Whether our laws have large wiggle-room is another matter, but they are not evading taxes. People go to jail for tax evasion.
For example: https://www.cbc.ca/news/business/canada-revenue-kpmg-secret-...
Until they lobby/'donate' for laws (and enforcement) to be relaxed. Which continues to very very effective. So effective that campaign-finance-reform is still outside of all public discussion.
It's much harder to move your family offshore to avoid tax than it is to move your profits offshore.
The capital gains preference is a relatively recent development in the tax world.
For example, if you bought a lump of silver thirty years ago and sell it today, the nominal price is higher, but that's basically just a result of inflation. Shouldn't we be taxing the real gain and not the inflation? But in that case maybe instead of a lower capital gains rate we should only adjust the gains for inflation and then apply the normal rate.
Then you have the double taxation argument, but in that case you should either just get rid of the double taxation or dividends should be treated the same way.
And there are several others, but what they all amount to is that the lower rate is a bad hack and we would be better off in each case to account for the thing that needs adjusting directly instead.
(Note that large categories of shareholders are in pensions or other tax-sheltered vehicles that don't pay capital gains!)
I'd say either 20% or profit or 2% of turnover, whichever is higher. Before dividends and stock buybacks.
The corporations need to sustain the social infrastructure that made them possible in the first place.
You might call them a “defector”. Others might say “well, they’re sovereign and what does that mean if not determining how to set their national tax policies?”
I would have thought it would out-compete companies that actually do pay taxes, so it would reduce revenue (presumably) without increasing job numbers.
A company that doesn’t pay income taxes can still provide useful services to consumers, provide employment and purpose for workers, and those workers will pay income tax and employer will pay payroll taxes.
Obviously, some companies provide useful and socially beneficial services, but many (most?) do not, or even provide socially destructive services (e.g. tobacco industry). Even in the case where they do provide social utility through their products, it strikes me that a company that doesn't pay income taxes is essentially taking away customers from one that does, and so, all of the usefulness is kind of amortized.
I guess the limitation here is that companies are not all fungible - if TSMC didn't want to pay taxes, you couldn't just replace them with another semiconductor company - they do sometimes bring unique utility to the table. But on balance, I think TSMC is a unusual case, and even there, the expertise and utility is almost entirely in the skilled workers and machinery, which would survive the company's dissolution (be picked up by competitors, etc).
Shall we restrict competition, in order to maximize corporate income taxes paid?
I’m not opposed to corporate income taxes or making an “is theft” argument, but I don’t see maximizing corporate income tax paid to be a first-principles good outcome to seek.
In general, though, I would argue simply that regardless of the specific tax revenue figures, if a company doesn't pay taxes, they get free access to a lot of services other people have to pay for. That is in essence a subsidy. There's no compelling reason why the public should subsidize a private concern.
This goes double for a competitive marketplace, where companies that aren't subsidized in this way will suffer (and have suffered - try competing with amazon on price while paying taxes!)
The social utility of making money lies in the fact that in order to persuade people to give you money you have to satisfy their wants and needs. Taxation has nothing to do with it.
The social utility of taxation lies entirely in the proposition that the government can better decide how that money should be spent than the people that earned it. It is unclear that this "utility" is actually positive when considering the system as a whole. (The proceeds of theft obviously benefit the thief, but when you consider the cost to the victim as well it turns out to be a net loss.)
I don't think this is true at all, even if we accept that all wants and needs are good ones (opiods, for instance). I pay a substantial portion of my income in rent. That's not because my landlord is satisfying my wants or needs. Far from it. Actually, he's the most miserable, difficult person I regularly have to deal with. However, because land is a natural monopoly, I have to suck it up. There are many, many companies that work like this.
The social utility of taxation is simply that in a democracy, the people can decide what they need. Notable achievements of this system include stuff like courts, roads, and (in some countries) efficient, affordable healthcare.
If you don't need or want shelter then why are you paying the rent? Clearly the landlord is providing something of value to you.
> The social utility of taxation is simply that in a democracy, the people can decide what they need.
Nonsense. People can decide what they need perfectly well in the absence of taxation. It isn't a prerequisite for fair arbitration, travel, or health care either—all of these things have at one point or another been provided without any government involvement whatsoever.
People wouldn't mind free market radicalism so much if they were restricted to just those things in which a free market is possible. Otherwise, you can enjoy deciding which broadband provider you're going to choose, when there's only one set of cables serving your region - or any of the other great 'decisions' you can make when confronted with monopoly.
Or, you can nationalize, and give monopolies to an organization precisely designed to manage monopolies (primarily the monopoly on violence) in a way that's more or less livable.
We're straying away from the point here, though. I think it's obviously possible for companies to exist that serve no good whatsoever. Companies exist to make money. Unless there's an apriori link between some people making money and universal good that I'm unaware of, there's no way you can step around that. Therefore, making taxes zero will always be an unfair deal for some people - since there will be some companies that contribute nothing, and yet use resources and services provided by the government.
Obviously, you could have a mad-max style anarcho-capitalist system, or something, then all my concerns would be void, but probably soon, all your concerns would be too - and all of your neighbors, except that guy Benno, with the gun collection.
The issue here is that there is no such thing as an objective "universal good"; that's just code for "things of which I happen to approve". The closest analogue which actually does objectively exist is "actions agreed to by all participants which do not actively harm anyone else". Granting the participants the barest courtesy that they are in the best position to know their own concerns, such actions can be considered at worst neutral and in general a net-positive on the basis that the action would not occur if anyone affected by it did not see it a priori as being in their own best interest. Others may not perceive the action as "good", but as these others are by definition not impacted and thus have no standing in the matter, their opinion is irrelevant. Participants may be wrong about whether the action will benefit them, of course, and you are welcome to attempt to persuade them to your view if you feel their judgement is in error, but right or wrong this is ultimately their decision to make, not yours.
Obviously actions which harm non-participants should be out of bounds—that's something the anarcho-capitalists (a.k.a. libertarians), minarchists, and most others can agree on in principle, though for some reason only the anarcho-capitalists are consistent in applying the same rules to governments. With that caveat, however: companies exist to make money, and they do so by engaging in voluntary trades that each participant expects to benefit from. These trade are thus both individually and collectively a net benefit to the participants and either neutral or beneficial to everyone else, according to the only objective measure available.
If your happiness depends on others doing only those things which you consider "good", and not what they collectively see as their own self-interest, then I'm sorry but I really don't know how to help you. This is harm you cause to yourself and not any result of others' actions.
I guess here is where we part ways. I can understand it in the sense of objective morality not existing, but I don't think it makes sense to say there isn't a common good. I don't know what the word good means if it doesn't refer to something that happens between people.
I think it's a basic function of groups that they establish what is and isn't good - that forms customs, then law. Obviously, this is a flawed process, but I don't think it makes sense to go total nihilist about it, and just say because you can't prove positive and negative outcomes about given actions, you shouldn't try.
We're fully capable as a society of discussing outcomes of various actions and laws - and that's what we've been doing since the beginning of time. You're doing it yourself when you say 'actions that harm non-participants should be out of bounds'. You're just drawing arbitrary boundaries around the few rules anarcho-capitalists consider sacrosanct[1] and saying that these are obvious, while others are matters of personal opinion that are indeterminate.
I think the idea of 'voluntary trades' is also a bit strange. All trades have side-effects, and most trades are with an element of coercion, natural or otherwise - people need food and shelter, they can't simply not trade for them. So even if you freely trade to build a dogfood factory next to my house, I'm implicitly part of that trade, because I live next door (or if you push the argument along, we're all implicitly involved in basically every trade, because we live on the same planet - e.g. global warming).
[1] - by the by, but I'm pretty sure these rules wouldn't be enough. If you look at early modern history, you can see that a lot of state formation was driven by the needs of capitalism - as states respond to one crisis after another.
As for the news article you mentioned, it should be noted that the £28m is corporate tax, not _all_ the taxes. I'm reasonably sure that FAANG is not shirking the government on VAT or payroll taxes. As for why they pay so little corporate tax, I'd guess it's because they're not an EU company.
All of FAANG's cost centers are in the US so it makes sense that they are allowed to offset those costs with revenue from the rest of the world. Whether they are doing so fairly is another matter, but even then, I suspect the victim here is the US (since the money should be going there instead of some tax haven) and not individual EU member states.
"An unexpected conclusion from Hines-Rice was that: low foreign tax rates [from tax havens] ultimately enhance U.S. tax collections; by paying little/no foreign taxes, U.S. multinationals had avoided building up foreign tax credits; the 15.5% Tax Cuts and Jobs Act of 2017 levy would prove this finding again in 2017"
Scott Dyreng; Bradley P. Lindsey (12 October 2009). "Using Financial Accounting Data to Examine the Effect of Foreign Operations Located in Tax Havens and Other Countries on US Multinational Firms' Tax Rates". Journal of Accounting Research. 47 (5): 1283–1316. doi:10.1111/j.1475-679X.2009.00346.x.
The proper way to stop this is for counties to make anti avoidance laws.
I recall a fuss in the press over Google along the lines of
"Using dubious tactics dubbed the 'Double Irish' and the 'Dutch Sandwich', Google apparently was able to pay only 3.2 per cent in tax on its overseas profits in 2011 even though most of its sales were in countries with tax rates from 26 to 34 per cent,"
and Google's CEO said
"We pay lots of taxes; we pay them in the legally prescribed ways,” he told Bloomberg. “I am very proud of the structure that we set up. We did it based on the incentives that the governments offered us to operate."
And basically if the governments want more tax they have to pass appropriate tax laws:
"If the British system changes the tax laws, then we will comply. If the taxes go up, we will pay more, if they go down, we will pay less. That is a political decision for the democracy that is the United Kingdom."
Which is kind of what Spain is trying to do.
You mean tax evasion, not tax avoidance, right? Last time I checked, avoidance was legal, evasion was not.
If you actually did mean tax avoidance, then I must point out how dangerous the idea of somebody arbitrarily deciding what _legal_ option is okay or isn't okay on a case by case basis.
I'd much rather have some things reclassified as tax evasion rather than having a "just trust us" system in place that decides when something is legal or not.
GAARs ultimately boil down to the question of "did you do this rather than a more obvious transaction structure simply to pay less tax", a sort of Occam's razor.
> dangerous the idea of somebody arbitrarily deciding what _legal_ option is okay or isn't okay on a case by case basis.
This happens all the time in precedent-based systems whenever something unclear is litigated. In some sense it's what the legal system is for, and it's the very opposite of arbitrary.
Okay, so it is a "just trust us" system of deciding who is breaking the law and who isn't. In that case, I'll gladly take multinationals not paying taxes over some government official arbitrarily deciding that I am avoiding taxes and should be punished. Even more so because I live in a country where that same official might be untrained, apathetic or downright corrupt.
> This happens all the time in precedent-based systems whenever something unclear is litigated.
Which, AFAIK, the European system is not.
You also have access to the court in case of actual tax evasion, though I assume the odds would not exactly be in your favor.
My whole point is that you're better off avoiding the whole ordeal in the first place and that having large multinationals and governments playing whack-a-mole over the tax system is an acceptable price to pay.
I don't know about Spain but the UK has FAANG cost centres, Google employees 3,500 people in the UK for instance.
The first is basically an extension of local sales while the second is a genuine cost center that should be offset by worldwide revenue.
At an average of £225K per year I don't think there are many support staff.
EDIT: Comment below explained the double Irish way better!
> But saying all of of FAANGs cost centers are in the US is factually wrong.
Care to shed some light on this? What exactly does FAANG develop in the EU? And why?
Is this an accurate interpretation? If so, is it that they're less fearful of reprisals (tariffs?) or that they're less confident in the benefits of cooperation with the USA? Or a mix? Or something else?
Unfortunately the new possible friends look less friendly than the USA of the second half of '900.
What the USA is doing is in no way isolationist. That is something completely different with no parallels or relations in any way. Using the word isolationist is misleading to the point of mistruth.
It would be more accurate and representative of reality to say the USA appears to be acting more independently on the international stage. Isolation would imply the USA is not acting on the international stage at all.
Definition of isolationism
: a policy of national isolation by abstention from alliances and other international political and economic relations
Further reading. American Isolationism in the 1930s[1].
[1] https://history.state.gov/milestones/1937-1945/american-isol...
"America First refers to a foreign policy in the United States that generally emphasizes American nationalism, unilateralism, protectionism, and isolationism."
The US is the center of NATO and, despite Trump's occasional rhetoric, is not moving to leave the alliance.
The US is persistently using its naval projection capabilities to challenge China's territorial ambitions around Asia (including constantly sailing its navy through the illegally annexed South China Sea territory). Nobody else in the world can or will do that, including none of the fellow NATO members.
The US has a very large military presence in South Korea and Japan, positions both countries are openly thankful for and willing to pay more money to the US to keep (as North Korea continues threatening both countries and both are weary of China's military ambitions in the region). Currently the US has around 75,000 to 80,000 (!) military personnel stationed in South Korea and Japan combined.
The US is persistently deploying its military in the Middle East, including in Syria, Saudi Arabia and the waters near Iran.
The US is the extreme exact opposite of isolationist. Go by what the US does, not what Trump campaigns on to win an election (he also has built zero miles of a new wall on the Mexico border thus far and is deporting fewer illegal immigrants than Obama did, again despite his rhetoric to the contrary).
At least in terms of major repercussions, threats do happen, but it seems like compromises are the end result, usually done quietly with little press (e.g. the recent Canadian free trade agreement).
Economic politics from USA the last years has been quite protectionist and it seems in the coming future it will have to fight against countries with literally billions of people, so my feeling is western countries better stay together.
Is not about fear but working class being tired, among other things, of big corporations avoiding taxes and they having to maintain the social structure.
I should point out that this isn't a universal problem in Europe. For many countries in Europe, a bloated, inefficient and sometimes corrupt government is the reason why tax rates have to be so high and not multinationals avoiding taxes.
Sure, taxing those multinationals _might_ make it easier on the working class, but it's just as likely that the government would find other ways to spend that money.
I am not positioning myself about how European social system works but it seems something has to change, specially after the crisis. Also this is obviously happening in the weakest economies in Europe.
The USA behaves like Russia and China, they spy on foreigners, influence their elections, start unjustified wars for oil and generally have a very low regard for freedom and liberty outside of their soil.
USA are not the good guys and Russia and China are not the bad guys they are just powerful, and USA are clearly loosing that power to Russia and China.
> If so, is it that they're less fearful of reprisals (tariffs?)
These sorts of threats only work on small poorly established countries and Europeans know it. We wrote the game Americans are playing and I hope they learn from our mistakes, or they will end up like us.
The 'problem' with China is that it's an ethnostate, or wants to be. So in a practical sense most Westerners are better off fixing their allegiances to the US, for better or worse.
At least then you can be part of the apparatus and not pre-emptively sidelined. I like some aspects of China vs. the US too, but China is for the Chinese, as they say.
You could say that this is somehow improved since the civil rights movement, and you'd be right, but its legacy as a de-facto patriarchal ethnostate looms large to this day and if this is the beacon of inclusion and harmony that the rest of the world aspires to that's a sorry situation indeed. The US line of "all men are created equal" should have come with a footnote explaining that "some are more equal than others."
Today Americas police and prison system has institutionalised racism. USA has camps they keep Mexicans in and separate their families.
China and Russia do these things too I know but that doesn't white wash what we do.
> Americans (and Europeans) are very used to the idea that no matter your race or creed you can be just as American as anyone else
As long as your race is white and your creed is western. I would say the same thing about china as long as you are Chinese.
I would say most westerners would be better off not fixing their alliances to any imperialist machine, Russian, Chineese, or American. Even the EU is suspect, but its moderating influence against the worst possible facism still seems to be worth the costs and is worth reforming.
If you look at the way they're trying to integrate the outer provinces, and even just the way they view day-to-day and business interactions between Chinese and Westerners.
A Chinese billionaire in the US is no big deal, a US billionaire in China is unimaginable--they'd consider it out of order and I'd be surprised if it could even happen without them being cut down mid-journey. A contrived example maybe but success is reserved for the Han, not for outsiders.
Yes there are restrictions on what people there can say about the party, but it's not North Korea--people say what they really think in private conversations, and from what I've seen they are mostly happy with their government.
Will that change if government performance changes? Possibly, but I don't think there's any noble suffering aspect to it.
Our current president is not the United States, despite his tendency to speak as if he is. I would argue he does not represent the main stream of American foreign policy and has continually fought against the majority opinion to protect institutions that preserve these freedoms and liberty (NATO / OTAN) and oppose actions that threaten said freedoms (annexation of crimea, etc).
September 11th had a huge impact on the country's view of civil liberties (rightly or wrongly is another discussion entirely) especially looking outward. While that might undermine the argument about America being a protector of liberties, I think it would be a mistake to believe that there is no belief held at all, or that America does not continue to fight for these beliefs. History is not something to rest on, but it does leave an indication of a country's intentions, I think.
What are these "liberties" and "beliefs" of which you speak? I'm an American and think the place is run by lunatics and mafiosos and has been for my entire life. It's more obvious now, and the lunatics are vastly less competent and more ham handed and corrupt.
NATO was there to keep the Russians out and the Germans down. I don't support this organization at all in current year; it is simply a tool of US imperialism, and is spectacularly dangerous as US power fades and they add more shitty non-countries to it so some ding dong from Georgetown can win an award.
Without NATO, the Baltics would probably already be a part of Russia again.
Can you tell me more about keeping the Germans down? I'm not sure I follow, but I'm probably misinterpreting what you mean by "down".
The mainstream of American foreign policy is completely divorced from mainstream voters, which is one of the reasons for Trump's election: the foreign policy establishment has remained utterly impervious to American political sentiment for decades.
Most Americans are non-interventionist and veering on isolationist. They don't want to send foreign countries billions of dollars of foreign aid and they don't want endless US military expeditions. The US foreign policy establishment has ignored this at their own peril. They were able to neutralize Obama's foreign policy electoral platform; they haven't been so fortunate with Trump.
It's not very clear that American foreign policy has done anything to serve the interests of the average American in the past fifty years. It might have done great things for Europeans - I'm not a European, so I don't feel qualified to judge - but decades of American empire building have, if anything, hurt Americans, who have died in terrorist attacks caused by US foreign policy, been maimed in endless wars, and who have suffered from the economic globalization promoted by the foreign policy class. And frankly, I don't care about European interests or Crimean interests if they come at the expense of my interest.
That perfectly summarises the sentiment I get as a European in Europe, the UK and elsewhere in the world. The US is not different to any other bad actor. In fact the US looks increasingly worse to the rest of the world, which not only means that lots of other countries (and their leaders) lose respect for the US, but it also fuels a bigger sentiment that the Western values represented by the US are doomed to fail, because the US is visibly more plagued by social and criminal issues which you don't find elsewhere.
I haven't heard any clear views on that one way or the other, although I'm not sure the question itself makes perfect sense in terms of actual real world politics.
Really goes to show that Europe aren't "good guys" either. A European who could look at despotic China and their Uighur Holocaust and say "not bad guys" is not a good person themselves.
Lest we also forget that Russia is openly engaging in non-stop assassinations on European soil, caring so little for their soverignity that they announce to the world their power by murdering folks in the streets.
The false equivalence here is very sad. "Sure, Russia murders citizens in the streets and China literally has a Holocaust going, but America spies on people (just like us and with our help but shhh)!"
> The USA behaves like Russia and China, they spy on foreigners, influence their elections, start unjustified wars for oil and generally have a very low regard for freedom and liberty outside of their soil.
As a natural-born US citizen...Yeah I feel the same way. I feel like my government uses "freedom" the same way they use "think of the children" or "terrorism." To a lot of folks it seems like it's just a nebulous concept they can use to push a -- in my opinion unrelated -- political agenda. It's very sad to me.
So Spain with it's $12B of export can risk imposing tariffs (it's essentially a tax at mostly US companies) compared to e.g. Germany which exports much more.
I don't follow your point?
I'm sorry, but which of those do European nations not engage in as well?
By recent, I'm willing to accept things in the past 30 years. Again, exclude France, the UK and Russia.
> We wrote the game Americans are playing
It's truly insane how people are so poorly educated on current events, and their magnitudes, outside of polarizing media, that they sincerely believe this is true.
This is a very naive and unrealistic take. In a world where nations like Russia and China are willing to play dirty to encroach on western democracies, you cannot simply counter by playing fair. Where do you think the world would be if Allied forces did not resort to spying and influence operations (which were crucial by the way)?
Now Turkey acquired Russian made defence system s400 that was supposed to devastate the economy through embargoes. A few years ago a wealthy Iranian businessman living in Turkey was caught laundering billions of dollars through a Turkish state bank, He was well known for his connections in the Erdogan government. This was supposed to devastate the Turkish banking sector, bringing huge huge fines like those that French or British banks paid back in the day. These and many other actions were supposed to make Uncle Sam very angry and punish Erdogan.
Nothing of significance happened. Actually, a year ago Trump plummeted the Turkish lira with few tweets but it was about a prisoner that was kept hostage that created political trouble to Trump.
These days it's not a credible position to say "Erdogan, don't do that it may bring trouble", everyone who advocated this position is now a laughing stock.
Europe seems to be behind the curve on this, they are still afraid to trade with Iran but I think that it will happen. They just need to find a way to do it while helping with the presidents career, it worked marvellously with Erdogan. Sometimes I think Erdogan has Jedi superpowers over Trump, it was amazing how He and Trump entered Syria despite of Pentagon and the US allies.
Anyway, times are changing. I hope after the change we plateau in a nice position, I would not be thrilled to see Chinese or Russian style governments be the new de facto way of how the world works. The liberal waster world order was nice(though not perfect) when we had it, I dislike the current trends.
Turkey was removed from the F35 program, for which they are a manufacturer. They are barred from purchasing the 100 F35s they wanted. They will lose that manufacturing position and the jobs that go with it. They have been demanding to still have the right to purchase the F35 jets - they will not be able to so long as they have the S400s.
Turkey was manufacturing about 1,000 parts for the F35. That has now been reduced to 12 as of November. It will drop to zero during 2020.
Losing access to the next generation of planes to upgrade their air force and losing their manufacturing role is significant, according to Turkey's own behavior and words on the matter (Erdogan states it very plainly that they are upset about it). The Turkish economy is a mess right now, having just finally climbed out of a recession. The unemployment rate had climbed from under 10% to 14% as of August. Clearly Turkey could use those manufacturing jobs and they know it.
Also, as it Turns out Turkey does have its own flourishing defence industry and the Brits are helping Turkey to actually build it's own gen 5 warplane and Russia is offering to sell some.
That's the catch with nationalism and authoritarian governments: The citizens are willing to endure economic pain in the name of patriotism and the US doesn't seem to bring much of that anyway.
The US-led world order seems to be vanishing and it's scary when you know some of the alternatives.
If you displease the USA economically you may get tariffs, but then, if you don't you may get tariffs too, because the President is tweeting in bad mood, or because America first, or whatever random reason. So why even bother?
Also note that Brexit has increased the cohesion of the rest of the EU. The UK government with their ludicrous attitude has managed to make all other EU countries agree, euroskeptic movements have been largely discredited by the utter chaos that is Brexit, and there's also the fact that the UK itself always acted as a roadblock vetoing integration policies, and a pro-USA influence in the EU. So lately I'm seeing more teamplay and mutual support between EU countries than ever, which makes them stronger.
Corporation tax feels like it should be agreed between nations, not between individual nations and corporations. The Google multinationals of this world expect to pay a certain amount in corporation tax but right now too much of that is concentrated in the US and Ireland. Of course the US government is tied — it doesn’t want to give up the giant share of the pie it currently has, and would lose out on if some of that went to Spain instead.
It’s right that it should be a shared source of revenue between all countries in which the multinational operates, but I think a new kind of tax is the wrong way of going about it when corporation tax reform could solve the same issue and be more generally useful.
Payroll tax — a significant source of government tax revenue spread around the world, when a corporation has expanded worldwide — is distributed fairly in this way already.
Would it just be cheaper for these companies to pull out? And what international recourse would happen?
And in my opinion, countries should be taxing (domestic revenue - domestic costs), rather than allowing companies to move their undeclared profits around to the nearest tax haven to dodge all taxes.
On the other hand, having pure profit in a foreign market without any costs there, doesn't sound like a terribile position to be in. And maybe local businesses could use a bit of an edge compared to multinationals.
We saw this happen already when Spain tried to force Google to pay taxes on link clicks in Google News. The outcome was they shut News down entirely.
So, this seems very high to me? Is this amount annual, or decennial like how US spending and tax amounts are reported?
How come it's easier to impose a tax on particular area (which sounds unfair) and risk international relations with US instead of doing something else to gain just 0.4%. Either it's ideologic or they really can't find the money.
Looked at in a different way: if Google was a paid for service you could levy sales tax on that service.
What exactly is new here? Is it just the size (and wealth) of Google and similar companies that has encouraged the governments to try to take a larger slice of pie?
Donald Trump is leading a charge to stop unfair taxation of American tech companies abroad, while they openly work to get him out of office by any means necessary.
The proposed new tax is on top of everything in place, just to placate political rhetoric about big American tech "getting away".
This is entirely a nationalist, protectionist tax Spain is levying, and it's not rooted in reason
Sure, they're taking advantage of tax loopholes I'd bet but in themselves, they're not necessarily against the law.
They're probably paying all the tax in Spain they're currently, legally obliged to pay at the moment.
Just my £0.02
Edit: Just thought of something? Is there a google.es? If this is what they are talking about, would it not be easier for Google just to bin that one and for Spaniards to be automatically redirected to another Spanish-speaking version, like one of the South American ones?
Who in their right mind would say "you know what, I'm going to pay more tax"?
Have you seen the size of modern tax laws?[1] They're utterly gargantuan!
[1]https://www.theguardian.com/commentisfree/2015/feb/13/britai...
Usually a loophole is more complicated like the Double Irish with the Dutch Sandwich which requires some complex maneouvering on the part of the company to pay minimal tax.
I run a small business and that kind of thing is beyond my capabilities and would also cost too much but not for Google.
That's what I assumed you meant by loopholes... my explanation of the process was a bit too simplistic.
To me, a loophole is looking through all the laws and saying, "ooh, if we put our money here, then declare this thing, we can show a loss that allows us a rebate on a particular tax" or something... it's a symptom of excessive complexity in our tax systems.
I don't blame organisations for doing it.
For example, there is an interaction between US and Dutch laws that essentially means that US companies that transfer copyright to Dutch subsidiaries don't owe any tax to anyone on the profits from that copyright (it's something like this: Dutch laws say that the tax is payed in the country of origin, US laws say that the tax is payed in the country where the copyright owner resides).
A much more likely scenario is that not all outcomes can be accounted for, and for those willing to pick through the laws there is money to be made by finding the loophole.
When one is found the politics of changing the law to fix it come into play of course.
That's true, but it's also true that Spain is free to change its laws whenever and however the Spanish government wants. If Spain wants to change their laws to negatively impact American companies by modifying the 'loophole' so it no longer works they're completely within their liberty to do that. America using tariffs to protect American interests is also fine. That's just how international politics works.
Or to take a more extreme example, why do we give a lifelong salary for nothing in return to people who are unable to work for the rest of their lives? Surely killing them would be more efficient.
I do think states should, can, and do care about right and wrong to a certain extent. That's the difference between us and governments like the Chinese.
Maybe to recruit most of the people who can question the exploitation of these places? like in Africa?
Why are there little aid to helping to develop economic corridors/systems but billions to treat diseases are mostly side effects of poverty that won't be issues if said places are not so poor
1) so people from benefiting countries don't want to immigrate to the paying country (or to put it differently - aren't as motivated to leave because the differences are smaller)
2) so the paying country has somebody to sell their stuff to
There have been many stupid attempts to target Google in the past from vested interests (snippet tax, link tax) - but this one isn't very objectionable.
The main legitimacy to the complaint is that even though nation neutral it is defacto targetted by industry concentration because of the lack of international Spanish internet companies. A flimsier one but there. The second is the populist rhetoric to sell it caused offense by targetting their companies. Plus countries in international relations are best anthropoisized as a bunch of hypocritical petty bastards.
A flatter 3% corporate tax rate wouldn't have those grounds but would piss off the local corporate interests and possibly ideologe powers abroad still.
edit: spain is merely taxing legal entities within their jurisdiction not in US
For me it is obvious that BMW should pay taxes in US for cars sold in US. Are they taxfree there?
And Google should pay tax in country where they sell given good - assuming a tax can be goods based.
He was talking specifically about income tax, not other taxes such as sales taxes or import taxes.
Services are usually taxed at the point of delivery, goods are usually taxed at the point of import or on the manufacturers net profits based on where they are based. Either way, taxes are paid, directly or indirectly.
With Google the situation is such that all their income is abroad, and the service is free so not taxable. This is arguably a situation that the present day tax regime did not foresee so an adjustment is logical. A similar thing has happened inside the EU with respect to transnational sales tax. See MOSS.
Maybe instead of retaliatory tariffs, we should try to actually tax the massive tax evading tech giants in the USA properly.