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UK Announces 'Google Tax'
mrspoonsi points out that the UK has announced a "Google tax" on corporations that send a significant portion of their profits overseas to avoid local taxation. Any "economic activity" that is pushed to another country would face a 25% tax.
George Osborne, the Chancellor of the Exchequer [said], "We will make sure multinationals pay their fair share of tax. We will introduce a 25% tax on profits from multinationals here in the UK which they artificially shift out of the UK. Today we're putting a stop to it. It's unfair to British people." ... [C]orporate taxes are still low, because the system does not tax sales, it taxes profits. And those profits are fiendishly difficult to pin down. Intellectual property payments to holding companies, the movement of sales activity to lower tax jurisdictions and the cost of licensing fees to holding companies all confuse the picture and allow firms with very mobile business models (such as in the technology sector) to be highly tax efficient.
For me the real problem isn't that some corporations don't pay taxes in some countries, its that some corporations hardly pay taxes anywhere. That is the real problem. I don't mind Starbucks not paying taxes in the UK, as long as they pay a fair share of taxes somewhere. What I would do is this: I would demand from all corporations operating in the country an overview of the corporate income taxes they pay anywhere in the world. If this is the same or more than the national corporate income tax rate, I would not add any tax. If it is lower, I would take cut of the lower amount equal to the percentage of total business they do in the country. Example: Apple makes 10 billion profit a year and pays 500 million in corporate income tax (anywhere in the world), while the corporate income tax is 25%. So they should have paid 2.5 billion in taxes, a shortfall of 2 billion. If they have 50% of their revenue in the US, the US should take 50% of the shortfall, i.e. 1 billion. This way, you avoid double taxation and you still force corporations to pay a reasonable tax to some country at least. In your example, theoretically Apple could have shifted all their profits to the UK and paid a regular 30% (or whatever the corporate tax rate is there) corporate income tax, and then also be forced to pay in the US over their revenue share (if the US implemented your system)
If by income you mean wages then your talking about taxing profits of the individual essentially. In a business you might have high costs, low margins, and quick turnaround to compensate. That is one business model. If you start basing taxes on income those businesses would go bankrupt or you would see prices increase drastically. On other sorts of items where there is a high margin low cost the seller would greatly benefit. We would have nobody wanting to sell anything for which has a high cost as they would then have to pay more in taxes. No more cars, no more houses, no more computers... more junk made in China, etc.
Simple math:
$1000 in costs per widget
$1050 sells for
$50 profit
$1050 income
$52.50 in taxes if based on income @ 5%
$12.50 in taxes if based on 25% profit
$2 in costs per widget
$10 sells for
$8 profit
$12 income
$0.60 in tax if based on income @ 5%
$2.00 in tax if based on profit @ 25%
Umm, no.
Your "profit" is the difference between the price you sell your labor for and the cost to produce your labor. Since it doesn't cost you $50, then your "profit" isn't zero.
Theoretically, the "standard deduction" (if you don't itemize) is supposed to approximate the cost of your labor. It hasn't for a very long time, but theoretically it did.
Do note that when the Income Tax was proposed and passed, the intention was to tax people who made tens of thousands of dollars per year (at the time, that kind of income was in one-percenter territory), and that virtually no normal worker would pay any of it.
Inflation, of course, put paid to that idea three generations back.
"I do not agree with what you say, but I will defend to the death your right to say it"
You know, corporations have no inherent natural right to anything. Corporations are a construct created and regulated by governments.
Corporations have no such thing as natural rights, because corporations are not a natural thing. They are a legal construct, and nothing more. They aren't some protected species.
So, yes, when you incorporate to get certain benefits from the government, you do it under their terms. And that has a pretty good chance of including paying taxes.
So, your status as a corporation isn't some magical, inherent thing in the universe. It's not an objective fact. It's not defined by physics.
Governments keep giving tax breaks to corporations and the wealthy under the lie that this will create jobs and stimulate the economy. And the they destroy jobs, and sit on record high piles of money and not do anything for the economy.
From what everyone who isn't a corporation can tell, giving tax breaks to corporations has NONE of the claimed benefits. All this has done is put more money in the hands of the few, and leave the rest of us begging for scraps.
But don't think for a minute that a corporation is in any way entitled or has some inherent natural right to make money which isn't taxed.
Because that's complete bullshit.
Corporations do not exist without the permission of governments. Which means it's corporations which don't have any natural rights in this equation. And they certainly don't have some inherent right to not be taxed.
Lost at C:>. Found at C.