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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.
Sadly it has to be done this way. Because countries refuse to stop giving the ridiculous tax benefits.
Thank you, Bradley Manning, Edward Snowden and so many others, for courageously defending humanity, my freedom and more!
You could just tax every transaction made with that currency at a fairly low percentage of the total transaction and do away with all the other taxes. Credit card companies figured this out decades ago.
I'm trying to teach myself to set people on fire with my mind... Is it hot in here?
Not sure if it will be as easy as that, but it's certainly true that it's a lot easier for entirely online firms to avoid this sort of thing than companies that have physical products. Ultimately, Google can operate in a country with zero physical presence.
Still, it's not just Google. Starbucks and Amazon also came in for a lot of criticism, and it's a lot harder to charge a customer in US dollars for a cup of coffee along Kensington High Street.
Individuals aren't taxes based on their profit but income. Corporations should minimally be held to the same standard. After all there is a huge benefit to incorporating which is limiting liability of the owners. Tax the income at a much lower rate of 5% or so. Think of all of the productivity lost moving money around to optimize tax payments. If your profit margin isn't high enough to cover this tax then you shouldn't incorporate.
I love Jesus, except for his foreign policy.
So they're calling it the Google tax when Google is actually based in the United States and the law doesn't affect Google in any way. Great choice of names.
I am happy a country finally had the balls to pass a law like this and end the complete nonsense of pretending to be based overseas. Hopefully the US passes it next.
I'm not sure what Britain has in mind, but I've long argued for a system like this. Say Apple does business in my country. Say they do 6% of their global business and revenue in my country. OK, then whatever profits Apple makes world wide throughout their empire throughout all associated companies, you've got to pay tax in my country on 6% of it.
If you want to argue that for whatever reason the product mix of sales in my country is lower margin than your global business because the product mix is different, ok fine, but the onus would be on you to demonstrate that, and the level of proof required would be high.
That's an interesting euphemism for "being dirty rotten cheats".
(Yes, I know it's "legal", but that doesn't make it "right".)
Because some people have a hard on to hurt Google.
When you cant win, ad hominem.
Of course killinng "Intellectual Property" wouldn't be realistical not thoroughly fair. But strongly curtailing it would go a long way towards a better wold:
* strongly limit the duration of afforded protection
* don't let IP "owners" to set an arbitrary phantasy price
* acutally force an "owner" to use the IP or relinquish control within some reasonable time limit
IP isn't some property and speculation on IP is already doing a huge damage (speculation on food is doing a huge damage too, but I disgress).
That's roughly what they're doing already. This law addresses that. Charging for server farms would be considered "economic activity" and therefore these payments would be taxed at 25%.
Mainly the multinational wall street. When people were more concerned with long term investments, and not make a buck in 1 second investment we have now , it was not a problem
When you cant win, ad hominem.
I know it sounds crazy at first blush, but I think it would make sense to totally get rid of corporate taxes. (Replaced by other forms of taxation.)
The basic idea is that a corporation is nothing but a bunch of people owning it, so instead of taxing the corporation you tax the individual owners (owners, shareholders, etc.) instead. Since corporations wouldn't be paying taxes, you could then get rid of all of the tax breaks/writeoffs for corporations, which would significantly simplify corporate accounting and reduce the incentive for large corporations to shift money around to avoid tax.
Some references:
http://www.dailykos.com/story/...
http://www.theatlantic.com/bus...
http://www.vox.com/2014/8/8/59...
Google does make their money from selling ads and services to others after all.
Sales tax at the point (country) of purchase. Problem solved.
"Transparent" is a shit show that trades on every stereotype going. A man in drag is NOT a transsexual.
The basic idea is that a corporation is nothing but a bunch of people owning it, so instead of taxing the corporation you shift the tax to the individual owners (owners, shareholders, etc.) instead. Since corporations wouldn't be paying taxes, you could then get rid of all of the tax breaks/writeoffs for corporations, which would significantly simplify corporate accounting and reduce the incentive for large corporations to shift money around to avoid tax.
Ultimately, Google can operate in a country with zero physical presence.
But ISPs and telcos can't.
Cutting certain businesses or even entire countries out of the Internet is not nearly as difficult from a technical point of view as cloud-dreaming geeks like to think, and taking billions out of a national economy by blatantly playing the system is a very strong motivator.
If they aren't careful, the same big companies that have made the modern Internet so useful in many ways will also bring about its fragmentation and at great cost to themselves. In the end, you cannot win a war over tax or legal matters against a government that has the power to levy taxes and legislate.
So, the real question is how far you can push before it becomes more politically beneficial for the government to overtly throw you to the wolves regardless of the consequences. It turns out that the answer is pretty far if you're a business that in reality does already pay quite a bit of tax to that government, but it's not forever. Big businesses that do this kind of thing are extremely unpopular right now here in Europe, and at least in the UK, next year is an election year.
If you disagree, post your argument. (-1, Overrated) isn't your personal censorship tool for views you don't like.
How much is "fair" depends on the culture the company and government are operating in.
You could have a libertarian society with minimal government involvement and minimal taxation, but where every individual has to pay for everything they do. (Roads, fire protection, ambulance, medical, police, education, utilities, garbage collection, etc.)
On the other hand, you could have a more socialist society with high taxation and high government involvement, but where most of the services are paid for by the government.
Both are viable solutions, with different tradeoffs.
Is offset that tax shift by an amount of money equal to how much is spent employing people in that country. Same idea, but provide an incentive to hire more people locally.
I've been wish the US would do something similar to use taxes to incentive employment. Right now there's so many additional rules, fees, and legislative attachments to hiring people that the government is virtually incentivizing companies to favor automation.
"Don't teach a man to fish, feed yourself. He's a grown man. Fishing's not that hard." - Ron Swanson
Lower than 0 that the internationals are paying through Ireland? Taxes aren't a marketable product, you can't pick and choose. If they're too expensive, don't do business in that country.
What's funny is that these kind of "tax optimizations" (read "fraud") appeared in the UK :-)
(Cost of Government) / (Number of Citizens) = the fair tax per citizen.
Anything else is unfair, but necessary simply because not everyone can afford their fair share.
The tax code boils down to extracting unfair amounts of money from whomever can pay, muddied by the politics of helping friends and punishing enemies.
Sadly, politicians have a disincentive to keep a "reasonable" Cost of Government.
This issue is a bit more complicated than you think.
I appreciate the use of the term "fiendish" as artfully coined in this discussion.
It paints the companies trying to avoid taxes as nearly-diabolical agents skulking around in the dark, not to mention adding a delightful soupcon of sinfulness.
Of course, what this seems to conveniently ignore is that national taxation policies are likewise "fiendishly" complicated, sometimes driven by complicated corporate structures, but just as often driven by a quasi-socialist, populist, and (as long as we're painting in Medieval imagery) a quasi-Dulcinian desire to appropriate at least a piece of anything valuable "for the public" meaning actually "for politicians to spend and gain votes without the usual pain of public taxation or debt".
Companies respond to these policies. If the policies are so contrived and convoluted that there remain loopholes that are worth pursuing to evade tax, that's the LAW WRITERS' fault, not the companies' for exploiting it. But it plays so much better in the press to blame companies for being greedy, rather than politicians for being incompetent.
-Styopa
Yeah, that kind of attitude goes down really well.
Hence why Microsoft kowtowed to the EU requests and paid millions of dollars in fines, etc.
Pulling out of one of the top two world markets (depends what you look at exactly, but Europe and the US are either 1st or 2nd in almost any product/industry), especially over a sales tax, is corporate insanity and will see stockholder lawsuits within seconds.
And, to be honest, there are countries that survive just fine without Google. Google is only really the top search engine in English-speaking countries. And Google Maps? What about it? I can name ten different companies producing maps accurate enough for almost any purpose. You think ONLY Google get the mapping and aerial photography data of a country? Maybe StreetView (because they're the only ones really doing it seriously), but maps? No.
Hence why this is a tax on sales, not a tax on profits.
Whatever you do with the money, it gets taxed. Even if you "pay yourself" via a roundabout method.
Meaning the money a company takes in. The difference between revenues and profits is vast, and varies by company and company type. Some companies take in a lot of revenues to make very little profits. Target would be an example. They took in 73 Billion dollars in revenues the last 12 months. However on that, they only made about 1.5 Billion in actual profit, or 2% when put another way. Retail doesn't make a lot of money, particularly discount retail. So once you add up all their costs (buying the merchandise, payroll, buildings, taxes, power, insurance, etc) there isn't a huge percentage left over.
Compare that to Apple. Not only do they make more money, but they have a much higher profit margin. They took in 182 Billion, and made 39 Billion on it, a 25% margin. Because of the nature of their business, they make more profits per dollar of sales than a place like Target.
This is, of course, only talking about profitable businesses. There are plenty that don't make money. My parents ran a small quilt shop for a number of years. Did about $750,000 in sales per year, yet never made a profit. After they'd paid rent, taxes, insurance, salaries, replenished merchandise, and so on there was not only nothing left over, there was a deficit they had to cover.
In the US the lever is adjusting the tax rate whereas in the EU governments simply give generous bags of cash directly to corporations. It's a different kind of protectionism but the effect is the same.
Countries should make a treaty creating a global tax on corporations. X% would be withheld and then apportioned to each country according to the percentage of revenue. A corporation would have little incentive to play games with profit shifting because X% of global profits would be withheld no matter what. The tricky part would be to distribute the tax fairly among the different countries and to agree on this treaty in the first place. So I'm not holding my breath.
___
If you think big enough, you'll never have to do it.
They always want more and never have any answer for how much is enough. That's the problem with the "we built roads, so pay up" argument. We already pay many times the cost of building roads. There are a limited number of roads, but no limit to the calls to pay.
to sponge off of the hard work of everyone else just because you think you are special or manage to bribe a few politicians. If you don't want to pay your fair share, then leave and stop sponging off of everyone else.
It is not possible to tax a corporation.
Corporations exist to provide a return on shareholder investment.
Taxing a corporation requires that the money for the tax comes from the customers.
Thus all so-called corporate taxes are hidden taxes on the consumer of that corporations products and services.
there are bridges on the brink of collapse. roads don't last forever.
also, lets take your argument to its absurd conclusion. One guy in America controls all of america's wealth, everyone else lives in abject poverty.
what do you think happens? oh wait, what happens involves a great deal of guillotines. Enough of us agree that respecting property rights is a good thing, even protecting really terrible people and their rights. Without us all agreeing that laws have value and money has value, the laws are meaningless and money valueless.
The far better way to view it is "companies are shifting assets and income out of our country because of the ridiculous tax penalties here."
Spoken like a selfish right wing ass hat, good on you sir!
Companies are using infrastructure and resources that were paid for or are the property of the people. They have to follow the laws set down by the people, and in exchange they get to set up and do business. If they start to cheat the system and break the spirit of the law by using all sorts of legal tricks to avoid paying their legally mandated share of the taxes, don't be surprised if the government imposes new taxes to remove loopholes and punish dishonest behavior.
Companies are shifting assets out of the country because they are being run by dishonest ass stains that want to maximize profits by letting others pay taxes to support government and maintain infrastructure. Roads, bridges, laws and stability have a cost that someone has to pay. You want to keep 100% of your profits without paying taxes? Move to Somalia or some other anarchy ridden shit hole and do business there.
'Taxes == slavery' is just a selfish person's way of saying they want the benefits of a modern society without paying the costs.
HA! I just wasted some of your bandwidth with a frivolous sig!
That position wasn't libertarian in the slightest. You can tell because it claimed that there was a (non-zero) "fair share" of taxes. Libertarian means the Non-Aggression Principle, which leaves no room for taxation.
As for your proposal... you do realize that you've described a flat income tax, right? It would significantly reduce taxes on the "1%ers", who currently pay much more more in taxes, proportionally, than they receive in income. That would certainly be a nice first step.
"The state is that great fiction by which everyone tries to live at the expense of everyone else." - Bastiat
In that scenario you really only need one guillotine...
I see the glass as full with a FoS of 2.
Nothing you just said refutes "That hour is worth less to you than $50 otherwise you wouldn't trade." This is stuff people learn in Econ 101. Yes, it's worth more than $50 to the employer, that's where their profit comes from. If they weren't profitable, the employer wouldn't exist in the first place.
I don't think anyone is arguing that the rich are, in fact, poor. Seems a little paradoxical, right?
The point I was making was simple. There is no such thing as government money. There are only individuals paying taxes. If you exempt one group from paying more taxes, that still doesn't mean that there is "government money". Now, it is just a smaller pool of individuals paying taxes, but it is still humans paying taxes. It's now just "someone else".
You need to get money from somewhere to spend it. There is really only one place value is generated: from the production of goods and services by individuals. If you try and spend more than you produce, you run out. Governments try and use tactics like borrowing to offset that, but really, they can only do that by making sure that individuals somewhere have money extracted from them. It's a slight of hand game.
The point is, Soylent Green is people. It may look like the government has "plenty of money", but no one gets "plenty of money" without extracting it from the source, which is people, mostly non-rich people. It is dangerous to view the government as a magical money pinata.
Didn't mean to imply that it was trivial. Google obviously sees a business need for a presence in the UK. More the observation that it is genuinely a lot harder to claim conclusively that a transaction with Google happens in any specific place. Sure a British company advertising to British customers paying Google UK is a British transaction, but what about a Canadian company that does 17% of its business in Europe paying Google US for international advertising? And with multinationals selling to other multinationals things get even more complicated.
Oh, I completely agree. International tax rules are certainly not easy things to set up in way that is transparently fair to all parties. That's how these big businesses can play these games right now, but going too far the other way would be harmful to commerce as well.
The current thinking from the tax authorities in the UK seems to be that they should have generic rules available to them, so they can unilaterally and possibly retrospectively declare a tax scheme against the rules. The General Anti-Abuse Rules that came into effect last year were already one significant step in that direction. I'm not sure how I feel about those, because on the one hand abuse has obviously been taking place, but on the other the new rules fundamentally rely on the tax collection authorities (HMRC, in this case) to make fair decisions about who owes them money but they have a track record of interpreting other rules to claim more than they were entitled to.
If you disagree, post your argument. (-1, Overrated) isn't your personal censorship tool for views you don't like.
Multinationals like Google are so complex, how is a national government supposed to figure out what is has a legitimate claim to tax? Without a formal international structure for tax collection, it won't work.
hell, i'd imagine in that scenario someone would be selling a great deal of replica guillotines for the kiddies too, they'd celebrate guillotine day every year. also, the french revolution.
Companies in this country, and the one in question (both the UK) do not have a sole obligation to provide a return for shareholders, to quote the FT (http://www.ft.com/cms/s/0/a7319a86-cc5f-11e2-bb22-00144feab7de.html#axzz3KwTHMDBP) "they must have regard to six specific factors: the long-term consequences of their decisions, the interests of employees, relationships with suppliers and customers, the impact of corporate activities on the community and the environment, the company’s reputation for high standards of business conduct and the need for fairness between different members of the company."
this is actually an announcement of new tax loop holes but spun as a shutting down old ones.
The big 4 accountancy firms in the uk regularly place staff in the treasury as a gift , this allows them to get privileged information about the the new tax rules , by the time the rules are implemented these firms already have tax avoidance schemes setup to exploit them which then they then sell on , typically each scheme will raise them several times the cost of the staff secondment to the treasury.
labour , libdem and conservative all do this , please if you can vote in the uk vote green so this will stop.
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indeed , this also applies to punitive fines which is how a lot of taxes start out
the problem here is the limited liability of the company officers who are making these decisions.
untill we start fining shareholders , directors and investment brokers personally nothing will change
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Florida state stopped taxing income in the 80s because there was so much money off the books in the drug trade. They switched to sales tax and got in on the action because even drug dealers need to buy stuff.
Instead of Taxing Individuals/Corporations, why can't Govt just Print currency?
Casteism
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Ireland and Iceland have been some of the English speaking beneficiary countries. But there are more (not necessarily English speaking as a primary language).
This is why the US is about to do something to 'repatriate capital' in giving some tax breaks to bring some $$/capital back to the US. I think I heard there is about $20T and they hope to repatriate at least $2.5T of it. - but I could have the numbers off by a large factor too
... "When you pry the source from my cold dead hands."