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Taxes Lead Angry Birds Maker Rovio To Consider Move To Ireland
jones_supa writes with this news, straight from The Irish Times: "Rovio, the Finnish company behind Angry Birds, is considering moving its headquarters to Ireland, chief executive Mikael Hed has said. Rovio employs approximately 400 people, mostly in Finland, but Rovio is in contact with IDA Ireland about establishing headquarters here. The reason for the move would be corporation tax rate, which in Finland is 24.5%, while Ireland's rate is 12.5%. Companies such as Google and Facebook have also set up European headquarter operations in Dublin for the same reason. Hed said that if the decision was made to move to Ireland, the company would then decide exactly what elements of its operations would move. 'If we did make that decision then it would be a natural thing to do to have some production [in Ireland] also.'"
State governments here in the US try to raise revenue by luring companies to set up shop in their states using tax incentives. The net result is a sort of tragedy of the commons - overall tax revenue is lower and even though politicians try and claim they're "creating jobs" they're really just stealing them from other states.
When governments (collective entities) try to act like businesses (competitive entities) it seldom works out. Usually only a few who are able to take advantage of the situation benefit.
They benefited from the system all their lives but when it's their turn to pay in, they leave. For what? A 10% reduction on taxes on profits? Currently, Rovio has a net income of 48 million Euros according to Wikipedia (for how long is anybody's guess, Angry Birds won't stay popular forever and that's the only game for modern phones that they have, the rest appears to be old J2ME games, none of which gained any real popularity), so that means saving about 4 million euros in taxes, while at the same time dealing with both a perception of greed which can certainly hurt them among conscious consumers as well as the costs associated with moving the operation to Ireland.
For better or for worse, betting on self-interest over altruism usually wins.
Don't bet on it yet. The government sponsored benefits in Finland are much better than in Ireland. If management (and possibly staff) move to Ireland with their families they'll be giving up things they take for granted at the moment. This could result in higher salaries and benefit costs. It may not rise to the 12.5% they'll be saving on corporate taxes on profits, but it will surely eat into it ... and affect their quality of life.
I can attest to that. I lived in Ireland for six years. I'm now back in Scandinavia and is more then happy to pay my tax here again.
The PROBLEM is, states need to get a clue about such deals, ensuring it's beneficial for both parties.
No, that's not the real problem, either. The problem is that they are, as you put it, deals. Instead of having a set of tax rules that are applied uniformly to everyone, some companies get special deals. Since those deals are done at the discretion of some politician or appointee, the politician is given more power to toss tax breaks and unfair advantage to his/her friends or people that will contribute the most money/votes to his/her re-election. The deal is beneficial for both parties -- the politician and the company. Like much of modern politics, it is all about amassing power to take money from one group of people and give it to another, rather than benefiting society overall. How many times have you heard that small companies are the real job creators? How many times have you heard of these deals going to small companies?
What is it with people that take advantage of the high social development afforded by higher tax rates only to run off to a low tax rate area when they become rich?
We really need to make sure people understand that ALL wealth comes from government. Government makes sure your employees are educated instead of brain-dead religious morons, that roads/trains/airports exist to deliver your products to customers, that the banks holding your money don't have disappearing bank accounts, and on and on.
None of this would have been possible without a government paid for by taxes.
The richer you are, the more dependent you are on government, as a larger portion of your wealth came about because government made it possible for you to be wealthy. You can't be rich in a libertarian paradise like Ireland or Somalia. Does anyone even know any rich Irishman? Do they even exist?
It seems people become libertarian AFTER they become rich, as they have the mistaken belief that they somehow made their wealth themselves. They have no idea the kind of infrastructure and work government put in to get that one dollar to travel into their hands in the first place. No, the wealthy didn't magically conjure up that dollar into their pockets.
The entire process is rife with opportunity to rip off taxpayers. Here in Madison, WI, a locally based company, Spectrum Brands, hired a Florida firm to make overtures to the state government for tax breaks in consideration for "moving their business to Madison". Yes, a company that was already located here had a firm from another state negotiate for a 7-figure forgivable loan to move where they were already located.
Then, when the Madison public got wind of it, they moved to Middleton, anyway. With their loan, of course.
Gotta love corporate extortion and the transfer of public funds to private corporations. Oh yeah, plus the CEO of Spectrum Brands received a compensation package last year worth 13.7 million dollars. He couldn't take a little bit of a pay cut rather than bilking the government out of 4 million bucks? Heavens, no! That's just punishing success, right?!
And these are the "job creators" we're supposed to bend over for and throw money at for the privilege of working for them (which obviously generates them more revenue then it costs otherwise the job wouldn't exist in the first place)? America! Fuck Yeah!!
cost reductions *rarely* result in lower retail prices -- they *always* increase profits, though.
Increased profits result in increased competition.
Increased competition results in lower retail prices.
yeah, that worked really good for ma bell.
Let me guess, you're not old enough to actually remember Ma Bell.
I am old enough, and I remember having to rush through long-distance (and even local) calls, so they wouldn't end up costing a fortune. That was when Ma Bell was a legal monopoly and didn't have to worry about competition.
Prices dropped dramatically once competition was allowed in.
Some of this is by design. Creators should be able to profit from their work for a while, which is why we have patent / copyright laws.
This is a misconception. Patents don't exist to help inventors profit from their invention. They exist to encourage inventors to reveal the technical brilliance behind their inventions to the rest of society, thus benefiting society at large. That's why they exist. In order to lure the brilliant people at Angry Boids to tip the hand of their overwhelming genius to the eternal benefit of a grateful society, they are offered by the government a time-limited monopoly. Not all inventors opt in, e.g. Google.
Patents are not issued to help inventors make money or profit from their invention. They're issued to further progress in the useful arts and sciences.
It's an important distinction. If the patent system doesn't have the effect of advancing the useful arts and sciences, then the patents should not be issued and the inventor be damned.
This goes to the heart of the software patent debate. Do software patents advance the useful arts and sciences? In fact, they impede them. So they should stop being issued and those issued should be nullified. What about the inventors profiting from their work? That is not the concern of the government or the patent system.
"However that money will be reinvested into the company to allow the company to grow, and hire more people."
Assumption. And even if that's what's being said, it's a rationalization. Effective tax rates for corporations are at the lowest they've been for decades. Many industries, like the aforementioned oil industry, are enjoying record profits and sitting on mountains of cash.
And yet job creation is at a standstill. If giving more money to the rich "creates jobs", everyone would be employed by now. They're not.
In all likelihood, the extra profit will sit on the companies books or be doled out to upper management in the form of bonuses and other executive perks. The only "reinvestment" likely to occur is in yet another Ferrari.
Any sect, cult, or religion will legislate its creed into law if it acquires the political power to do so.
Why would it not make sense, to have the US charge 0% corporate tax, since in thought, these taxes just get passed to the consumer in price considerations?
It's a silly argument.
All taxes are ultimately passed to the consumer. Personal income tax, too - since the company has to pay higher to its employees to entice them to work for it, and of course it also needs to raise prices for compensate. Ditto for sales and property taxes, since they affect the cost of living, and therefore indirectly how much people will ask in wages.
At the same time, you could similarly argue that taxes are "passed on to the corporations" - if I'm taxed higher, I'll ask for a bigger wage.
The truth it, taxes aren't "passed on to" anyone. They are simply extracted from the economy. Both companies and physical persons are actors in that economy, so both pay.