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Amazon Decides To Start Paying Tax In the UK
Mark Wilson sends word that Amazon will begin paying corporate taxes on profits made in the UK. The company had previously been recording most of its UK sales as being in Luxembourg, which let them avoid the higher taxes in the UK. But at the end of last year, UK regulators decided they were losing too much tax revenue because of this practice, so they began implementing legislation that would impose a 25% tax on corporations routing their profits elsewhere. Amazon is the first large corporation to make the change, and it's expected to put pressure on Google, Microsoft, Apple, and others to do the same.
The first rule of economics is "Businesses do not pay taxes. Businesses collect taxes."
Of course politicians make sure that the public doesn't understand such things with demagoguery.
The UK decided that Amazon will start paying tax in the UK.
Don't waste your vote! Vote for whoever you want, unless you live in a swing state it won't matter anyways
Just because it's a standard practice doesn't mean it isn't vile behavior. Passing the tax buck along is one of the worst corporate offenses.
Amazon has historically reinvested almost everything in expansion. Try and get some cash out of companies like Apple that actually generate huge profits for their shareholders and then it might be interesting to see what happens.
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It is time to tax sales all over the states, based on where it goes to.
The easiest way is to have any out-of-state (or out-of-nation) delivery to add 10% to the sale. This is above and beyond the delivery.
Then the delivery entity gets to keep 10% of that (or 1% of the total sales) for handling this.
Then the 9% is delivered to the state, along with the address of where item was delivered to. From there, the state breaks it apart into state, county, locality.
If every state will agree with this, it is actually EASIER AND CHEAPER to the business than trying to calculate the taxes based on the address.
And it is LONG past time for America to tax delivered items.
I prefer the "u" in honour as it seems to be missing these days.
No, this is NOT more taxes. This is taxed OWED, by evaded.
And personally, I am tired of tax cheats.
I prefer the "u" in honour as it seems to be missing these days.
Taxes on profits are different than taxes on products, You are certainly correct that something like a gasoline tax is passed on to the consumer because gasoline is a commodity where every supplier has the same tax cost. Apple can't just set iPhone prices higher if they lose profits to taxes, because a business should already be charging optimal prices for generating profit.
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That assumes that the business can raise prices without consequence, which is an invalid assumption. Amazon has to account for what consumers will do if faced with higher prices through Amazon, and what the effect of that will be on revenues. There's also the behavior of competitors to consider, as Amazon's prices go up it encourages other companies run by people willing to accept lower profits to step in and take Amazon's business away.
You also have to account for the fact that raising prices to cover taxes is a no-win proposition. Taxes are a percentage of profits, and are not deductible from revenue when calculating profits. So if Amazon raises their prices (and, assuming no change in consumer behavior, their revenue) by 10%, they also increase the amount of taxes they owe by 10%. So now they have to raise their prices again to cover the additional tax, lather rinse repeat. Consumers tend to get fed up with this cycle and vote in politicians willing to increase the tax rates as profits go up, which leaves companies facing a choice between accepting the taxes and somewhat lower profits or closing down and accepting zero profit.
That's not how pricing works, no matter how much people seem to think so. If they could get away with raising prices they already would have. They don't need the incentive of taxes.
Then are you saying that the products will be sold at a price range that is more competitive to brick and mortar? That might not be a bad thing.
If the taxes are seemingly high, it is for three possible reasons.
1. The government wants to cripple the affected businesses. I don't think that is the case.
2. Businesses have been evading taxes so much, that the tax rate had to be jacked up to make up for the difference in expected revenue and actual tax revenue. Quite likely. If more businesses paid their due, each business could pay less overall. More than they were paying using shell companies, but less than it is now.
3. The cost of living and working in that society is higher than you'd expect which is a problem with perspective, or bad spending of taxes in the government. Neither of which really matters in this case, as that is a different matter entirely. No need to divert the discussion.
Well if they keep evading taxes they will just invest and buy up smaller companies to get as close to a monopoly as possible. Or they will pay taxes and a portion will be spent on services people need, and the rest will be wasted by government corruption.
Instead of contriving hypotheticals, why not answer the question? Why doesn't Amazon charge more now?
That's a great red herring you made there, but it's irrelevant. Taxes are on profits, not sales.
I don't respond to AC's.
Just because it's a standard practice doesn't mean it isn't vile behavior. Passing the tax buck along is one of the worst corporate offenses.
You are proof of the poster's point...
If you actually believe that, then you've been hoodwinked by the politicians...
The OP is right, you're wrong. Corporations don't pay taxes, people do, and Citizens United aside, corporations aren't people.
A company has to make a profit to stay in business. Every dollar they pay, be it to the utility company to keep the lights on or the government in the form of taxes, is just an expense.
They must have total income after expenses that is a positive number. It really is that simple.
So if they can introduce a 25% penalty tax for companies deemed not to be paying enough tax, why the hell can't they fix the rules that these companies are using to avoid paying the existing tax? The companies aren't doing anything magical, they're just following the convoluted mess of tax law to pay the minimum tax possible, which is exactly what they should be doing.
This could get the Government in a sticky mess, if some years down the line a company challenges the 25% as a unlawful extortion (which it pretty much is) then they'll likely have to pay that tax back.
----- I refuse to have an argument with an unarmed person
Taxes on profits are different than taxes on products
No, they aren't. You've been told they are, you've been lied to that they are, but they aren't.
I've owned a business for more than 20 years, I assure you that taxes are just another expense, just like the utility bill is. It even goes on the books as an expense.
---
Yes, yes, you think that if I made $1 million in profit last year and the government wants 30% of that, that it shouldn't raise prices. You'd be wrong.
The "before tax" profit number doesn't mean anything, it doesn't exist. The "after tax" number is the only one that counts.
So in the above case, I made $700k, period. The $300k of tax is just another expense.
If you raise the tax to 50%, then my income goes to $500k.
Now you may say, "well tough, you'll just have to make due with earning less". Nice, but it doesn't work that way. At $500k, the income may no longer be worth the cost of capital investment and it is time to go do something else.
The problem is, the return on capital applies to everyone. If it doesn't make sense for Walmart to do it, then it won't make sense for Target either.
The basic economic principles don't change based on the company.
Consumers tend to get fed up with this cycle and vote in politicians willing to increase the tax rates as profits go up, which leaves companies facing a choice between accepting the taxes and somewhat lower profits or closing down and accepting zero profit.
Try this mental exercise...
Raise the tax rate to 75% of the corporate profit and see what happens...
Amazon is a publicly traded company, there are expectations of return on capital that it needs to take into consideration.
Now granted, as a dot-com company, it has skirted those for awhile, but that won't last forever. Extend that to more traditional businesses and you'll find that there is a floor to the level of return on investment that investors are willing to accept.
You assume there will always be someone to step in and accept lower profit. Only to a point, beyond which, no one wants to service the market.
Politicians make sure stupid people don't understand. There isn't much they can do to take away understanding from people who have brains.
Nah.
Texeans Rulez!
can I get my paycheck sent to an offshore account to get favourable treatment?
You maximize profit. the amount of tax you pay on profit is irrelevant to the process of maximizing it. Taxes on inputs or sales can affect prices because they also affect your competitions pricing power. Taxes on profits might encourage more re-investment of profits but they don't affect prices unless, for some inexplicable reason, you have decided to make less money that you could.
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That assumes that the business can raise prices without consequence, which is an invalid assumption.
Potentially, but not inherently so. You assume - invalidly - that the consequences do not and cannot change regardless of the conditions.
Yes, prices may go up somewhat.
But if you think about it, at the moment transnational businesses have an unfair tax advantage over national ones.
So companies like Amazon are creating and extending monopolistic positions; not because they're necessarily better companies, but simply because they're able to rig their tax positions; if you don't pay taxes, you can lower prices and take markets that you don't necessarily have any right to.
In other words, tax avoidance of the type they're legislating against is anti-competitive; and that too can raise prices in the long run.
-WolfWithoutAClause
"Gravity is only a theory, not a fact!"Yes their prices could go up. But that would give a chance to competitors who play by rules and pay their taxes alrready. Love the free market when is done properly. Given the chance any corporation would like to turn the free market into a monopoly.
The main reason why Amazon does not pay tax is that they reinvest nearly all their profits and maximise their market share. Again, this leads to monopoly.
Making up yet another straw man argument doesn't prove your point. Taxes are not 90% of profits in general - they are much smaller. If taxes were somehow fixed and happened to be close to the amount of profits, and there was price elasticity, then prices would probably go up so the business would be able to show a profit. But that's not the situation. Amazon is happy to have no profit as long as the business is growing. A better example is microsoft or google - they make tons of profit, and taxes are far below the profit. They easily and legally (but immorally) avoid taxes through the standard tax cheats, like the irish and netherlands tax dodges. They won't raise prices if they stood to make a little bit less profit.
There's nothing immoral about tax avoidance. Tax evasion, maybe.
The law has simply changed such that past avoidance schemes are no longer legal.
Do you think businesses print money? They have to take in more than the cost of doing business is. How is this possible if it is not achieved by passing the costs along to the customers? There is nothing vile about it. It's simple economics.
If they can't raise prices, they'll either see lower profits--which will result in your pension fund making less money--or cut costs. The latter means they'll offer lower wages and less benefits to employees, automate them away, or demand price cuts from suppliers.
Then all the 'EVIL CORPORATIONS SHOULD PAY MORE TAX!' whiners will be complaining that 'EVIL CORPORATIONS ARE CUTTING WAGES AND AUTOMATING JOBS AWAY! WAH! WAH!' because they're completely clueless about the real world.
Each company will do exactly the same calculation Amazon has done, and figure out which method of accounting allows them to keep the most money while remaining able to operate in the jurisdictions they care about. If the others come to the same conclusion, it's not because Amazon said so, it's because the numbers and the lawyers said so.
How is the Riemann zeta function like Trump rallies? Both have an endless number of trivial zeros.
You maximize profit. the amount of tax you pay on profit is irrelevant to the process of maximizing it.
Since corporate taxes don't affect corporate profits, we should clearly raise them to 99%. You know it makes sense, because, unlike gas taxes or alcohol taxes or cigarette taxes, corporate taxes apparently don't have any effect on human behaviour.
When an acquaintance ran a small, private business he intentionally made as little profit as possible, to keep taxes as low as possible. Why pay lots of money to the government if he could buy a new Jaguar instead? Bezos seems to have adopted the same idea with Amazon, re-investing as much money as possible so the company makes as little profit as possible. I'm sure he's happy to see companies forced to pay tax in the UK for UK sales, because he doesn't have to make a profit, while most of his competitors do. This will harm them far more than it harms him.
The British government, of course, will just take the money and buy bombs to drop on random brown people, or give it to rich landowners for 'wind subsidies'.
ridiculous levels only cause profits to be hidden and eliminate the incentives to produce them. 99% is insane. even an excessive rate like 50% leaves a reason for a business to exist. businesses can also lose money, your ridiculous 99% rate means there is a much higher chance of losing money than gaining it even for a solid business.
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Specifically, all corporate taxes paid come from three categories of individuals: consumers, who pay higher prices for items to cover the taxes; employees, who make lower wages to cover the taxes; and shareholders, who earn lower returns (and note that the two former categories are often also shareholders, via their pension plans). Suppliers can also lose, but they're generally corporations as well, with their own employees and investors who actually eat the loss. In the long run, though, the investors don't lose because capital flows away from lower returns and towards higher ones. So companies must find ways to keep their returns up to somewhere near the mean rate of return.
Once you understand that no taxes are paid by corporations, ever, then you should also recognize that corporate taxes are not only ultimately paid by individuals, but the individuals almost never realize they're paying it. How many people know their prices would be lower, wages higher, or pension more secure, if it weren't for corporate taxes? And, therefore, how many voters have any interest in opposing corporate taxation? To politicians and voters, corporate taxes look almost like free money. Ratchet up the corporate taxes and no people get hurt, just those nasty corporations. (Actually, politicians sometimes get even more value out of threatening corporate taxes than enacting them, since it tends to encourage said corporations to buy off, er, donate to their re-election funds.)
I assert that while taxes are necessary, the electorate should see and understand exactly what they're paying, so they can evaluate the value they're receiving for the money they're paying. Hidden taxes are evil, and therefore corporate taxes are evil, and should be abolished, not raised.
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You maximize profit. the amount of tax you pay on profit is irrelevant to the process of maximizing it. Taxes on inputs or sales can affect prices because they also affect your competitions pricing power. Taxes on profits might encourage more re-investment of profits but they don't affect prices unless, for some inexplicable reason, you have decided to make less money that you could.
No, you don't get it.
If I expected to make $1 million return on my $10 million capital investment, then that is the after tax profit I need to make. The before-tax number doesn't matter. It could be $1 million with no tax or $2 million with 50% tax.
If that means I need to make a $5 million before tax profit to make it, then I will. (assuming you put an 80% tax in place)
The only way to do that is raise prices. If I am unable to raise prices that far, then I'll invest the $10 million of capital somewhere else.
If my current profit is $1 million and you now say it will be only $100K due to new taxes, then either my prices have to go way up, or the product/service won't be offered.
There's nothing immoral about tax avoidance. Tax evasion, maybe.
The law has simply changed such that past avoidance schemes are no longer legal.
I used to feel that way, but I think it's all part and partial of the way that the US is destroying itself, by ending campaign donation limits, making corporations almost people, legalizing hiding who donates to candidates, and the legal way that corporations and rich people give money through lobbyists and get tax breaks that benefit only them. It's wrong. I'm not against big companies, I was fortunate to work at two of the largest software companies in the world, both mentioned up above in this thread. But I do want basic checks on their power. What do you call the use of unchecked power, that hurts the system but might help your own causes, but destroys things otherwise? I call that immoral. It's certainly legal. It's wrong too.
Brought to you by the people who SWEAR that if corporations are made to actually pay their taxes they'll flee to Somalia.
Clearly that didn't happen.
Let's turn it around, if they lower wages or cut pensions, we just increase their taxes to fund the expansion of the social safety net.
Again, my point is disagreeing with the premise that taxes on profits will simply be passed on to consumers as if businesses weren't already charging what they believe is an optimal price for making profits.
If a business could deal with a 10% increase in tax by raising prices to make higher profits than why are those prices not already being charged and those higher profits already being made?
It is a nice bumper sticker that "companies don't pay taxes they collect them" and like so much of bumper sticker level understanding it is applicable sometimes. But it is still just a bumper sticker and not a universal truth.
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Giving the government more money is like giving booze to an alcoholic.
Only the State obtains its revenue by coercion. - Murray Rothbard
That assumes that the business can raise prices without consequence, which is an invalid assumption.
Only if the competition can avoid the taxes. If all of the players in the market get hit with the same taxes, then all of them absolutely can and will raise prices, and there will be no consequences.
Taxes are a percentage of profits, and are not deductible from revenue when calculating profits. So if Amazon raises their prices (and, assuming no change in consumer behavior, their revenue) by 10%, they also increase the amount of taxes they owe by 10%. So now they have to raise their prices again to cover the additional tax, lather rinse repeat.
This is a standard financial calculation, and a trivial one. The tax is 10%, so the increase is 10%, but there's 10% tax on that, so 1%, meaning the increase needs to be 11%, continue ad infinitum (literally). In other words, the new price needs to be 11.1111...% higher than the old one to keep profit margins unchanged. More generally, the increase needs to be the sum of the infinite series with terms r^n. This series is convergent if r < 1, and converges to 1/(1-r). So for a 25% tax, the company needs to increase prices by 1-1/(1-.25) = 33.333...% to keep profit margins unchanged after accounting for the new tax.
Of course, it doesn't quite happen like that. In practice, companies don't instantly raise prices. They do take the hit for a while, where it gets absorbed by the investors, not the customers. Then they allocate a portion of the losses to employees, in the form of reduced raises, or benefits. Then they raise prices. But eventually they get back to a steady state of roughly the same return on assets that they had before the tax hike.
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That part is true, excessively high tax rates will stifle investment in new business.
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"There's nothing immoral about tax avoidance. Tax evasion, maybe." - paying lawyers/accountants to deliberately manipulate the system is immoral when it screws the public and avoiding tax is screwing the public at the end of the day. If all corporations paid the taxes, then the public would be taxed less. Tax evasion is illegal and criminal.
"The hands that help are better far than lips that pray." - Robert Ingersoll (1833-1899)
Part and parcel -http://idioms.thefreedictionary.com/part+and+parcel
they just had a meeting with the head of GCHQ
Corporations avoiding tax is anti-competitive because the bricks and mortar companies pay their tax, the taxation playing field should be level. Competition should be on service, quality of product and price. If you are paying little or no tax, you get an artificial advantage on price.
"The hands that help are better far than lips that pray." - Robert Ingersoll (1833-1899)
Try this mental exercise...
Raise the tax rate to 75% of the corporate profit and see what happens...
So Amazon shuts down because they can't be profitable enough to justify their investments and hard work. That is different than Amazon raising prices, which the topic of this little debate.
No one said that raising taxes (or suddenly paying taxes that you've been avoiding until recently) couldn't affect a business, just that it wouldn't be reflected in the price of the goods and services that a (rational) business sells. If amazon is pricing their items optimally, then changing the price of their products at all should result in less pre-tax profit, which is then taxed at a set percentage afterwards. If maximizing post-tax profits is the goal, than it's better to earn $1 million pre-tax and pay $750k (75%) in taxes with $250k (25%) left over for you than to earn $800, paying $600k in taxes with $200k left over.
If the tax were increased too much it becomes more likely that Amazon (and other businesses) would simply not operate in that country because of the poor return on investment, but until the tax reaches that breaking point where products simply become unavailable, the prices should not rise.
You're confused. There's nothing illegal about it, but it certainly is immoral.
"corporations aren't people" - thats the biggest myth of all. I don't see how the people in that corporation can be moral and ethical outside work and not inside, it just means that they are really immoral and unethical in real life too. The excuse of hiding behind a piece of paper is cowardly. They might not get to vote as a corporation but they are filled with people who do and surprisingly, those non-people can talk and lobby governments when it suits them. If a corporation is caught in tax evasion practices then the people who put that procedure into practice along with all signatories to that plan, should be taken through the courts and dealt with accordingly. (obviously not for tax avoidance)
"The hands that help are better far than lips that pray." - Robert Ingersoll (1833-1899)
"Hidden taxes are evil" - true
"and therefore corporate taxes are evil, and should be abolished, not raised." - if you do that then the people will have to pay more to make up the shortfall. With corporation tax, the people have the opportunity not to buy that product and hence not pay that tax. If people are satisfied with the product they bought then they will not begrudge the tax on the profit.
At the moment personal taxes are high because not everyone pays their fair share of tax, that includes businesses and personal, if everyone did the right thing and paid what was owed, we'd all be taxed less.
"The hands that help are better far than lips that pray." - Robert Ingersoll (1833-1899)
"... this is an attack on American economy and sovereignty!!" You pay your taxes for the markets operate in, period.
There has been a lot of research about this. They found that most CEOs especially of large corporations are psychopaths and/or sociopaths.
Corporations in the Netherlands pay 50% tax, including my own company.
If the company has stocks it pays 40%, the extra 10% is taxed once it is payed out to anyone.
Of course foreign companies that incorporate in the Netherlands pay less than 10%.
All costs are always passed on to the end customer. You're not saying anything new here.
SAVINGS, on the other hand, are seldom passed on to the consumer.
In the case of most international companies, they have been saving millions, even billions, in taxes, simply by incorporating some legal fictions into the book keeping. Routing your profits through Luxembourg? Huh, WTF? If you sell products in the UK, you need to pay the appropriate taxes on the products, on the services, on the profits realized in the UK. Ditto if you're doing business in Mongolia, Yemen, Bangladesh, or on Mars.
Amazon has had a loophole closed on them, so they are going to stop cheating the UK out of taxes owed. It's not a new cost. They've been collecting enough money from customers all along to pay those taxes. Now - the profit margin dips a little. Big deal.
"Windows is like the faint smell of piss in a subway: it's there, and there's nothing you can do about it." - Charlie Br
Unless, of course, one competitor says "Hey, I'm making a 20% profit margin currently. If I let that slip to 18% I can absorb the tax, keep my prices the same while my competition increases theirs, and gain 10% more sales as people go for my lower prices.". Certain investors, particularly the ones who don't want the business to succeed, will undoubtedly complain, but by the time they manage to wrangle the board into doing anything the first new sales and profit numbers will probably be in and most investors won't go along with them if the numbers are holding up while the competition are losing ground. If the competition don't raise prices, well, you pretty much have to hold them steady and investors who want to raise them are easy to neuter by pointing out that they're advocating giving away sales and profit to the competition.
I live in Australia and I would like to see us go down a similar path.
If the UK proves it works I really hope it spreads elsewhere and also leads to the end of the massive profits these companies are amassing. I'm sure there profits will still be quite sizable but this should make it a bit more reasonable. I'm not an economist so correct me if I'm wrong here but it seems many countries are not in the best of financial states at the moment and each of these corporations taking $billions each quarter out of economies without realistically contributing back is a contributing factor in this? If this type of taxing spreads globally it could be a big factor (amongst several others) in getting economies back on track?
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If corporations didn't pay tax, the burden of tax would move further onto the wage earners as opposed to the owners of capital. This also means that corporations will grow even bigger than they already do and become even more uncontrollable than they have already become - see To Big To Fail banks, etc. As to people not seeing that they are paying the company taxes (tax transparency), More assets would end up being owned by corporations (as they will be able to bid up prices) and only indirectly by people, losing transparency of ownership. See MERS and MBS's for what kind of issues this can create.
What are "total sales"? First you'll have to define that.
It's been a long time since I studied business administration, but I remember terms like "net income" and "gross income". Maybe "cumulative net sales". But, "total sales"? Not a meaningful term, among accountants. And, your use of the term makes me question your qualifications to argue your position.
"Windows is like the faint smell of piss in a subway: it's there, and there's nothing you can do about it." - Charlie Br
Why do you assume that putting up your prices will increase your earnings? If it was that simple Everynody would just bump up their prices when they needed mor money. Your price should be such that your earnings as max.
"I expect a certain return on that investment."
And, what do you deem to be an adequate ROI?
You do realize that millions of investors in this nation do not realize an ROI at all? A Mom and Pop convenience store may not turn a "profit" at all, instead merely supplying Mom and Pop with a stable occupation and a living salary. They "invested" as little as a few thousand dollars, or as much as a half million dollars, and the only real ROI is that they are their own bosses, with a stable job that they enjoy.
"Windows is like the faint smell of piss in a subway: it's there, and there's nothing you can do about it." - Charlie Br
You don't have perfect flexibility to raise your prices.
You might wish you did, but for most businesses, you don't.
The truth is somewhere in between you raising your prices 30% and you eating the entire tax. If you raise your prices 30%, you will sell less product. Often, raising them 30% will cut your business by more than 30%. So you raise prices by less - make a little less profit- and maximize the profits you can make at the new tax rate.
If the tax rate is unsustainable, then you'll go out of business.
Clearly with most of the targeted companies making record profits and more to the point, unusually high profit margins compared to other businesses - they have a lot of slack. They are just a new business and the government hasn't figured out how to take a share from them yet. But it will-- because police have to be paid, roads have to be maintained, the courts have to be run, and the military has to protect the country, etc. etc.
She was like chocolate when she drank... semi-sweet at first and then increasingly bitter.
Uhhhh - yes, there is something immoral about tax avoidance. Virtually all of the schemes used to avoid taxes were lobbied for by corporations, and often enough, bribes changed hands before the immoral laws were passed, making avoidance possible.
Simple loopholes that were never intended to start with might be addressed by representatives, but again, corporations are all over that, handing out bribes to prevent the closure of loopholes.
We didn't get where we are today by accident. The state of international taxes has been intentionally created and nourished by international corporations.
And, this state of affairs is indeed morally reprehensible.
"Windows is like the faint smell of piss in a subway: it's there, and there's nothing you can do about it." - Charlie Br
Massive price increases assuming sales didn't decrease would result in much higher profits and thus more tax...
In reality, increased prices will decrease sales unless everyone pushes up their prices.
If taxes on profits are high, then companies will simply find ways to make less profit, which means that instead of keeping revenue as profit they will find additional expenses to spend the money on such as expanding the business or spending more on staff wages etc...
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You don't seem to get it either. If you can increase your profit by raising prices, you should do it, regardless of the tax rate. Yes, we understand your point that at some level taxation lowers ROI to the point that it's not worth it to invest. Nobody is suggesting the tax rate should be that high.
-- Let us endeavor so to live that when we pass even the undertaker shall be sorry. -- M. Twain
You know in sports when someone finds some way to gain an advantage that is technically within the rules but clearly against the spirit of the game? People get annoyed because they expect fair play.
What Amazon and many others are doing is legal, but clearly subverts the intention of the law. We need to run tax more like a D&D session, where any rule lawyering can simply be overruled by the DM and if you piss them off too much a dragon steps on you.
const int one = 65536; (Silvermoon, Texture.cs)
SJW, n: "Someone I don't like, and by the way I'm a fuckwit" - AC
Paying more tax than they are legally required to would be negligent, and open them up to lawsuits from their shareholders.
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No sane tax system would consume all additional profit. In fact if Amazon's profits went up by 10% they would pay about 2% more tax, if that.
const int one = 65536; (Silvermoon, Texture.cs)
SJW, n: "Someone I don't like, and by the way I'm a fuckwit" - AC
Don't forget that the money being taxed through the corporation often comes from elsewhere. In the case of Google and other multi-nationals the money can be coming from other countries so it essentially can be like free money to the people of the host country for the corporation because the net tax rate (corporate plus income) can be lower because of the money flowing in from outside the country.
Of course that means the reverse can also be true and money can be flowing out of the country because few corporations are located within it.
that UK Corporate Tax [CT] is 20%
I guess they could decide to continue with their tax avoidance but since that would result in paying more tax it's not really a decision anyone would make.
Also, keep in mind that in the years Amazon did not pay taxes in the UK, the company still put a load on the country's infrastructure. In those years, the bill for that was footed by the UK citizens as part of their county taxes etc.
So why don't they increase prices as it is? Do you think corporations just figure out they are making enough profit and keep rices low out of the goodness of their hearts?
Or do they raise their prices as high as possible without actually loosing profit due to diminished sales?
People with insight have always been finding new ways to do things in sports. Sometimes the sport advances (tennis with the use of larger heads, artificial cords & composite instead of wood) and sometimes the sport bans the change (wide receivers using stickum on their hands) whereby other players find a similar advance (gloves with slightly tacky silicone surfaces) that become generalized.
Even Golf, that most conservative sport has moved with the times.
Posted AC to conserve mods
If only Australia would do what the UK has done and target tax dodging corporations.
That said, I do wonder if the UK is going to target some of the biggest tax dodgers (Mr Murdoch's media empire is VERY high on the list of global tax cheats yet no government seems to have the guts to go after them)
Paying more tax than they are legally required to would be negligent, and open them up to lawsuits from their shareholders.
Anybody can be sued for anything. Doesn't mean they're going to win and tax scams that are at the edge of the law and ignore the absolutely clear intent of the law and society in general (for all companies to pay their fair share of tax without exception) are just as risky to the health of the company long term as overpaying tax might be.
In any case company officeholders are given huge legal latitude in how they run the company (in particular allowing short term losses to get long term payoff) and it's quite unlikely that a shareholder lawsuit of this type would be successful except in extreme cases.
What a load of crap. Not once did you mention the return on investment, so total bullshit or the profitability being generated. Just the nett income. So moron invest $50 and generate $1 million profit and if you had to pay 50% tax on that you would not invest the $50 what a fucking liar.
Chaos - everything, everywhere, everywhen
Some actual evidence: http://www.sbs.ox.ac.uk/ideas-impact/tax/publications/working-papers/direct-incidence-corporate-income-tax-wages
Who pays corporate taxes is notoriously opaque, so the estimates seem to vary quite a bit. 'Employees' is generally the biggest bit, though, IIRC.
I agree to the extent that lots of taxes are simply passed through to customers. If you didn't, you wouldn't be in business for long. And yes, many of those taxes apply irrespective of company size.
But certainly not all of them. As is: different locations have different cost structures. They apply to different aspects of your business. Given the amount of goods that are transported throughout the country, it should be clear that capital costs (cost of setting up production facilities), labour costs, material costs, energy costs, insurance costs, labour productivity, production efficiency, spillage, waste and theft etc. ensure that you get different cost structures in different places.
As soon as you have that, you get a mix of suppliers in one market with different cost structures. As a result you get different profit margins and different tax burdens for different suppliers, and with it different returns on capital. Transaction costs, various constraints, and uncertainty about future costs limit how easily businesses can set up shop elsewhere.
Having a mix of suppliers with different cost structures and different tax burdens wouldn't be possible if taxes were just another cost.
No. The situation you describe is where you total all costs your business incurs, decide how much profit you'd like to make and add that too, factor in any profit taxes, and then charge whatever results to your customers.
That only works if your customers want whatever it is you're selling at that price and there's no-one around to compete with you.
In other words: a niche business.
What you're saying is that all taxes are, in the end, paid by society as a whole (including businesses), which is correct. And yes, if society wouldn't be paying taxes, it would quite simply pay for everything taxes are spent on in other ways, so ultimately all taxes are an expense.
But the fact remains that taxes on products weigh more heavily on individual consumers and taxes on profits weigh more heavily on "capital".
This is simply because an increase in profits will certainly not result in an increase in wealth for individuals that make up the "labour" part of society. They are very unevenly distributed and tend to go towards those individuals who contributed the "capital" part of the equation. Contrarywise, a decrease in profits will not *immediately and automatically* lead to a decrease in wages (and wealth for the "labour" part of society). In both cases "entrepreneurship" is in the way.
To the extent you're saying there's no difference between taxes on products and taxes on profits, that's an oversimplification.
The basic economic principles don't change based on the company.
Good luck trying to explain economic principles here. I have given up any hope of that long ago.
For all the intellectual power most /.ers profess to possess, I have concluded the understanding how economics and finance work is beyond most of them.
Because all that does is "come from our pockets!"
Odd thing is, when corporation corruption is a problem pointed out, you come back with "You can vote with your dollar and not buy from them". well, I can refuse to buy from Amazon if they decide not to pay the fine out of their money and take it from me instead.
Amazon will therefore lose massively if they merely pass the fine on to the consumer.
Or do we consumers have no choice about who we buy stuff from?
If you don't want to get taxed in Fukubistan or the UK, then don't sell to Fukubistan or the UK.
Taxes on profits affect quite a few bad things, but mostly not related to prices.
First, they reduce wage payments (75% of the amount of tax changes paid for that way according to http://www.sbs.ox.ac.uk/ideas-... but estimates vary).
Second, they reduce investment (https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/263560/4069_CT_Dynamic_effects_paper_20130312_IW_v2.pdf guesses at a 2.5-4.5% change from the 28% to 20% reduction in the UK - and about £500 more per household per year in wages).
Finally, they distort stuff. Companies borrow more and raise less in equity (no corporate tax in interest), and become less stable. They distort their operations and do pointless paperwork to exploit tax loopholes. This is waste.
Taxing a company does not make prices go up. Why would it? If they could raise the price, they already would have done so a long time ago. Higher price means more revenue.
We used to have a Bill of Rights. Now, with the rights gone, all we have left is the bill.
actually there ARE taxes on sales... it's called VAT and is charged at 20% of the price... Amazon can't avoid the VAT bill
Donald 'Duck' Dunn: We had a band powerful enough to turn goat piss into gasoline.
They would try to raise the price (not likely possible because, as stated above, if they could get away with a higher asking price, they would have done so on their own, why not rake in more if you can?) but they might go out of business. With a 90% tax, it's actually likely.
The price depends on the sweet spot of making the highest profit. Not any cost outside the cost per unit. A higher fixed cost might lead to discontinued business because cost gets higher than what the possible asking price could pay for, but the price is mostly unaffected by it.
We used to have a Bill of Rights. Now, with the rights gone, all we have left is the bill.
You maximize profit. the amount of tax you pay on profit is irrelevant to the process of maximizing it.
Not true. First, it affects debt vs equity decisions (and location decisions). Second, think about decisions on how much to invest. The tax reduces the return on investments in equities, pushing investment in to other locations and types of investment (government debt, say, or property) or reducing it in total. Corporate taxes are thought to reduce growth this way - by reducing the amount of capital and research.
They can't get away with raising prices because they all share the same bottom line. This means everyone's bottom lines go up the same amount, therefore everyone raises the prices by the same amount and therefore none of the corporations suffer.
People keep saying this will happen. Have you any examples of this actually happening?
Instead of contriving hypotheticals, why not answer the question? Why doesn't Amazon charge more now?
Because if they charge more now, they will lose some business. The increased profit from that business is greater than the increased profit from higher prices on the retained business. Adding a tax changes the profit calculations and moves the supply curve. The new supply curve will intersect the demand curve at a different place, most likely with higher prices and fewer units sold (assuming an upwardly sloping supply curve and a downwardly sloping demand curve).
Another issue is that if *everyone* has to pay the tax, the loss in business is less. Customers can't switch to a cheaper competitor because their prices changed at the same time.
The merchant has to make a profit as a result of sales. If not, then the merchant is better off not selling the product at all.
So who should run the army, police, courts, fix the roads, ensure everyone meets a minimum driving standard, set rules for immigration, charter corporations and all the other things that are required for a functioning developed nation that the private sector wouldn't do?
bribes changed hands before the immoral laws were passed
Please provide specific examples of this illegal activity. Don't you think that prosecutors would like to have your evidence?
... a bribe? No? I see.
Or are you referring to documented campaign donations, just like millions of people and organizations make to support those with whom they align themselves? If you like a candidate or cause that says they're going to do [X] to Teh Eeeeevil Businesses, do you consider providing that candidate with your support as they try to get elected to office
Don't disappoint your bird dog. Go to the range.
Multinationals have unique abilities to decrease costs by moving stuff around. They can move production facilities where work force is cheaper or where you can dump toxic waste into the sewer instead of building treatment plants. They can also move profits around. Amazon is not the first and not the last one to do that. The question is whether societies exposed to such practice are happy about this. I think if an economy where this happens is big enough to allow local competition to live well provided equal tax is levied on goods an services it is only fair to expect that legislature and law enforcement do what is needed to ensure that exactly this happens. It has nothing to do with evil protectionism or rather it is that part of protectionism that is actually needed. There are a lot of people that disagree of course - usually they are either mentally challenged, have not studied the subject or have their income dependent on the such tricks being allowed.
BTW: if you think that a corporation that goes such long ways to save money on taxes will spend additional revenue on wages then you are delusional.
SAVINGS, on the other hand, are seldom passed on to the consumer.
What are you talking about? We've never been in a more competitive environment. You have at your fingertips more information about price and availability and the quality of various retailers' services than ever before in human history. Retailers who don't react to that bright light of consumer comparison shopping lose sales to those that do. It's exactly because Amazon (and Costco, and everyone else) use their well-oiled operations and buying power to keep prices down that brings in long-term, repeat customers. Modern retail shoppers are notoriously well-informed and fickle - retailers who aren't competitive are serving a quickly vanishing audience.
so they are going to stop cheating the UK out of taxes owed
Cheating? Are you saying they were actually operating outside of the tax law?
You know they weren't. The law has now changed, and they're changing their operations and accounting to reflect that change. Their competition has to do the same thing.
Don't disappoint your bird dog. Go to the range.
They refuse to employ white people in most cases so let them take their Chinese and Indians off to Albania or somewhere. Makes sense..
Of course, you can take the whole "taxes are another expense" too far. I know somebody who tried putting his previous VAT return into his purchase ledger - effectively trying to claim the VAT back on the VAT he paid out to HMRC. It wasn't done on purpose - he was just an idiot.
If a business could deal with a 10% increase in tax by raising prices to make higher profits than why are those prices not already being charged and those higher profits already being made?
Because they have competition, which puts pressure on them to keep prices low enough to attract, rather than repel customers. How is this not obvious to you? Everyone should run a retail business for a year or two so they can learn some basic facts, thus making them a far more constructive person for the rest of their lives.
A change in the tax law impacts every business that operates under that law. The way a business structures its pricing has to take into account cost pressures that impact the entire market of retailers (their competition) so they can make judgments about what will leave them in a competitive position on prices. Business owners wrestle with that topic every single day, and are acutely aware of what factors put pressure on them (and only them) and on their entire market segment. Overhead they take onto themselves, for their own convenience (say, operating in a slightly more expensive part of town) is something they may decide not to reflect in their pricing, knowing that the better location will increase volume. Overhead costs (like a bump in taxes) that impacts everyone in their market will result in higher prices across the board. This isn't just a theoretical, you can watch it happen every day.
Don't disappoint your bird dog. Go to the range.
Some prices will go up so we the british public just end up giving the government more cash via corporate taxation. Less investment will be made in things like advertising in the UK as the budget would be better spent in countries where larger returns can be made on those costs. Staff wages will be under greater scrutiny and so fewer people will be employed and those that remain will be pushed harder.
The end result the british public pay more for things and the government has to use this new tax income to support more unemployed and low income people.
What the british government should be doing is asking how it can make Britain more competitive by reducing complexity in government and therefore reducing the tax burden. If Britain had similar tax rates to the other countries, companies would not have to try moving their income to other countries to maximise their profits.
The only win here is that small businesses who are unable to move money around the world to avoid tax will be on a slightly more even footing with the large corporates if they all have to pay the same tax.
Bullshit.
The "loophole" that Amazon has been using is nothing more than the EU single market, in all its glory, exactly as it was intended to be used. The single market was created specifically so companies could set up a headquarters in the EU once, and then sell to the entire trade region without having to register or pay taxes in every single country. This wasn't some clever loophole or corporate scheme, it was constructed, very deliberately and specifically, by politicians that wanted to bring Europe together to avoid another re-run of the World Wars.
When the EU and its predecessors were being set up, governments were all super keen to establish this sort of single market because they saw it as a way to allow their own home-grown champion companies to expand, by selling to people elsewhere on the continent. Paying tax in a single country is fundamental to having a single market, otherwise the paperwork involved with understanding and filling out dozens of tax returns in langauges you don't speak would just be overwhelming. At the time, presumably those politicians didn't care that this meant one day there would be non home-grown companies selling to their people - creating big new companies takes decades and sure enough this "scandal" has only appeared long after the EU was set up and a new generation of companies started moving in.
Regardless, the idea that these companies are grubby scheming tax evaders is pure, unadulterated propaganda. They're doing exactly what they were intended to do - set up a single HQ and sell to everyone from it. The idea that what was once desirable is now immoral is being pushed by the UK media and government to try and distract people from the core fact that there are going to be way, way more cuts and they will be way deeper than anything that's happened up until now. That's not Amazon's fault - the amounts involved are trivial. The fault rests solely on the British people and their leaders.
You are mixing morals with laws. The two do not always match.
It may be legal to funnel taxes out of a country where you make your profits, but I have not yet seen anyone make a convincing argument that it is (morally) right.
A lot of things are legal, but not moral. Lying to your best friend, cheating on your wife, pissing in the pool.
On the other hand, there are things that are moral, but illegal, usually because laws change slowly or don't cover all edge cases. Fortunately, many countries have a permissive judicial system where a judge and/or jury can decide that yes it broke the law, but in this particular case it's (morally) right to let it go unpunished.
They are not the same. Tax evasion is illegal, tax avoidance is at the very least a gray area, and in the extreme way most corporations implement it, certainly not moral.
Assorted stuff I do sometimes: Lemuria.org
Yes, they do. It's called free trade and is generally seen as very desirable, as it reduces paperwork and leads to countries competing to be better places to do business than their neighbours. That's why countries are always trying to sign free trade deals with each other - freer trade means more trade, and in the long run that leads to people being better off.
The problem the UK has is entirely and completely that it has become uncompetitive as a place to do business within in the EU. It's being outcompeted by places like Ireland and Luxembourg - hardly third world backwaters. The UK could regain all those businesses that set up shop in other countries and reap the benefits of the jobs and the income taxes those jobs create, but is unwilling to do so. The Irish people, in contrast, clearly signalled even during the depths of their (bank induced) economic crisis that low corporation taxes were popular and not to be meddled with. They're committed to being one of the best places to set up shop in the EU.
So where do things go from here? Amazon is moving and is now establishing local subsidiaries in places like the UK because the EU has rolled back key parts of the single market via the online VAT changes. If you're incredibly short sighted this might look superficially like a win, because it's eliminated the competitive advantages some EU member states had. If you look a bit closer you discover that to get Luxembourg's assent to this required effectively paying them for the lost tax income over a period of many years, so there's no net savings for a long time, it's pure smoke and mirrors. Worst of all, whilst Amazon can afford the miniature army of lawyers and accountants needed to handle the VAT fiasco, smaller companies generally can't. That was the whole point of the EU in the first place - to eliminate that sort of red tape. So everyone in Europe will suffer in the coming years from lack of services that would otherwise have existed, but don't, because the companies that could have provided them decided not to enter your local market due to compliance costs.
The most insidious effect of all this crap is that it will gravely worsen the problem that the EU tech industry is far behind Silicon Valley. Politicians love to bitch and moan about how dominated Europe is by American internet companies. One big reason is that if you start a company in America you immediately have access to a huge and linguistically unified single market. You can base yourself in California or Seattle and sell to the whole of the USA. Fixing the language issue is hard, but lots of people speak good English these days so it's going away of its own accord. Fixing the single market should have been a lot easier ..... and they were making progress, except that the moment some politicians felt they were missing out on tax revenue they rolled it all back. Perversely it's now easier for a European company to sell things online to the USA than it is to sell online to Europe!
Usually I call that "government"....
"I do not agree with what you say, but I will defend to the death your right to say it"
actually there ARE taxes on sales... it's called VAT and is charged at 20% of the price... Amazon can't avoid the VAT bill
They actually tried to avoid VAT on ebooks in most EU countries by setting up their servers in Luxemburg that had a 3% VAT on ebook sales, compared to e.g. 20% in UK. Other ebook sellers naturally followed Amazons lead, until it became public knowledge, e.g. as described in http://www.theguardian.com/technology/2012/oct/24/amazon-tax-loophole-ebooks . The latest development is that VAT on ebooks and similar is paid depending on the location of the consumer, as described in http://www.thebookseller.com/news/e-book-prices-may-rise-vat-law-kicks.
The truth may be out there, but lies are inside your head
If they could get away with raising prices they already would have
You gloss over the "if they could get away with raising prices" part. The reason they can't get away with it is competition; if Amazon and all of it's competitors have to pay an additional X% of their revenue in taxes there is no competitive pressure to stay at the lower price - prices will go up X%
Of course it depends on when and how the tax is added to what the consumer pays. In most retail you pay a certain price plus the tax. In that case then yes, the price won't change when the tax goes up. On the other hand if the tax is already included in the price that the consumer pays then the price will indeed go up. Ether way the effect is the same, the consumer pays more.
Can't you both be right? price changes tend to happen in chunks throughout the supply chain. Your aluminum is $2/kg from the supplier and then one day they tell you it is now $2.25. You suck it up for a while but then when they raise it again to $2.35 you finally say now we need to charge the customer more. That is why everything in Walmart can be *.97, you don't see a whole bunch of 1.36 products etc. prices move (stupid new keyboard is defective p apparently doesn't work with the shift key, nice) because they retailer has a pricing model, whether it be a standard ending on the end of prices, or "brackets" they place different categories of goods into etc.
I agree though: taxes on profits not total revenue does help a lot though. Same thing with the personal tax rate. When people say you can raise the top bracket it is just silly. 1) If you were making $300k and they changed the tax rate would you chose to stop at say $200k so you wouldn't hit the new high bracket or would you "settle" for making $275k this year? people tend to get used to making a certain amount and plan their spending accordingly. Which means they are still highly incentivized to earn (before tax) at least as much as before the tax rate hike. 2) A lot of high earners aren't making their money by salary: they are "choosing" to make X amount of money every year regardless of the tax rate. How much they keep and how much the tax man gets doesn't really affect them much. The investments, creative works whatever are already done. New investments needing bank loans might be another issue but that is what equity is for. If equity does get spread out because they can't get favorable loans, it will likely go at favorable multiples, which means the same revenue gets split more ways, less people in the top bracket and we get a more balances wealth distribution with fewer and fewer people hitting the "unfair" high bracket.
why not answer the question?
GP didn't answer the question because you didn't ask a question.
You asserted that increased costs to producers won't increase prices to consumers. That is not how markets work.
And what's wrong with that? Amazon wasn't collecting taxes like other companies, so they had an unfair advantage to other companies. Now the play field is levelled other web shops are in a better position to compete and that's only good for the 'free market' and ultimately good for the customers, not bad as you seem to suggest.
Amazon never owed the UK any tax it didn't pay; they were paying everything they were legally obliged to, which happened to be very little in the UK and a bit more in Luxembourg. The UK has now found a way to collect tax in the UK for companies registered in Luxembourg, which has compelled Amazon to relocate part of its Luxembourg business to the UK.
well in the UK if you are VAT registered you ARE processing VAT charges tax on behalf of the tax man.br) Businesses should absolutely pay taxes... if they wanna be classed as a fucking person they can pay fucking taxes like one!
Yes that's what this is all about. It's not to do with profits per se (Amazon makes none), it's to do with sales taxes. So absolutely prices will go up.
They have been evading taxes like this in many countries in Europe (all?). The news should be "Amazon stops tax evasion in European countries". I just read that they start paying taxes in Germany before checking slashdot where it said they start in the UK.
No, the first rule of economics is "don't talk about economics".
Seriously, as long as you have companies in competition in regard to pricing, then yes, businesses do in fact pay taxes. They can not in fact just raise prices to cover taxes, because if they could raise prices, they already would have done so.
There is no law in economics that says "Businesses do not pay taxes. Businesses collect taxes." That's an old conservative trope that gained currency when Ronald Reagan and Margaret Thatcher were busy rodgering the working people of their respective countries.
You are welcome on my lawn.
In a market economy you only can rise prices, if people are willing to pay. Prices in a market economy are determined by the benefit a good may provide to the buyer and the price the seller wants to have. Also it is determined by the production and delivery cost. If one side must pay higher taxes (on its profit or on the price volume, which would have different effects) this only allows for higher prices if the seller is willing to pay more. However, with stagnating income and competitors which are highly interested in getting customers back from Amazon (in this case), a price increase is not possible. Have a look at the deflation and low inflation happening in the EU.
BTW: You claim low taxes would be good for business. Without taxes there would be no state, no police, no schools, no education. This would result in no society and no business at all. Therefore, it is important to collect taxes. And in general there are two types of taxes possible. Sales tax, which indeed causes a price rise and directly causes inflation, and profit taxes, which in general only cause a shift in the lending pattern. If it is applied to a whole economy, and cannot be avoided, then this only minimizes the income of the lenders and has no effect on prices.
My view is parcel to your definition.
Happiness in intelligent people is the rarest thing I know.
Ernest Hemingway
You might have a small personal business in that case both taxes reduce your profit and that is what you see and that determines your thought. However, you are wrong. Sales tax applies to the volume of sales and your profit margin on every product has no effect on what you have to pay. You have to pay for the volume. Tax on profits apply to the profit. Therefore, it does not concern if you sell one coffee (with production cost $0.30) for $100.30 or 100 for $1.30, your profit would be in both case $100 dollar. Now in a personal business both taxes are paid by you, however, in large companies this is quite different. There the sales price covers, production cost (payments to the employees, raw materials and good, machinery, housing etc.), company investments, company profits, and profit for the owners. The company only pays taxes on company profits. The employer and the managers (which are somehow part of what you are in a personal business) are paid like other employees and fall in the cost area for the company. If they get more the company profits are reduced and therefore the amount of taxes the company must pay or the profit for the owners are reduced (which is in a personal business also you, but in large companies, such as Amazon, someone else). So you can see that both taxes do not affect the overall cash flow in the same way and they have a different impact on profit.
There is a wide gap between "fuck it too many tax not enough income I give up" and "we'll still try to make go, maybe more marketing, some special offers etc...". In your case, if going from 700K after tax to 500K after tax you say "fuck it I give up" then I really want to be in your place. For most people anything above 100K a year is a dream job.
That does it. An insightful comment like this is junked, and the posts from the "Yhay Free Stuff Funded by Taxes" crowd is rated 5 Insightful? I'm officially done with /.
That's the last time I run code posted in somebody's sig...
Misleading as usual.
It is also immoral and terribly stupid for executes NOT to take necessary and legal actions to cut unnecessary cost for the benefit of shareholders.
It wasn't possible to do that kind of tax evasion before. But now with globalization everything becomes far more complex for governments for manage. Amazon in UK doesn't have to base in UK. It doesn't actually have anything to do with UK at all save the name of website. I'm from outside of UK but I also buy things on UK Amazon, things that are made in Germany or elsewhere and probably never touched UK soil from raw material to assembling to transport - would it be moral for UK government to collect tax on that?
Are you on crack? Amazon as a company is famous for not making any profit = sane people dont invest in it, they are also famous for running SWEATSHOP distribution centers.
Who logs in to gdm? Not I, said the duck.
s/executes/executives
Not necessarily. As prices increase, number of sales decrease and profit per sale decreases. I'm sure Amazon has done a lot of studies into these relations in the ebook market, and found the sweet spot that maximizes their profit. Increasing prices to pay taxes may result in lower profit than paying the tax out of their own pocket ... or they may leverage their dominance in the (e)book market to force publishers to cover the tax. This notes that Amazon forced UK publishers to cover their 20% UK VAT in 2012, even though they actually only paid the Luxembourg 3% VAT, with Amazon pocketing the difference themselves.
The truth may be out there, but lies are inside your head
But somehow marketing in all these different languages isn't overwhelming enough to stop them from selling their goods in these countries. And if you're worried about efficiency, let's remember that it would be FAR more efficient to only tax corporations, than to tax EVERY SINGLE CITIZEN.
1^2=1; (-1)^2=1; 1^2=(-1)^2; 1=-1; 1=0.
UK the friendliest fascist country in Europe. Enjoy paying all those taxes suckers and living 20 years behind everyone else.
> You maximize profit. the amount of tax you pay on profit is irrelevant to the process of maximizing it.
No, I maximize my take-home, also called risk-adjusted net returns. Along with any other values you have such as environmental concerns. Gross profit (what is taxed) doesn't matter. What matters is how much ends up in your pocket. Here are some rough numbers from the choice I actually had to make three years ago. I could either:
A) Continue to run a business with the following numbers:
Revenue $200,000
Payroll expense $100,000
Tax and compliance $40,000
Other expense $20,000
Net take-home $40,000
B) I could take a job working for the government with these numbers:
Salary $52,0000
Benefits $13,0000
Tax $10,0000
Take-home $55,000
Note that "before-tax gross profit" doesn't appear in the calculations, because it doesn't matter. What matters is how much goes in my pocket after all expenses, including payroll with payroll taxes, direct taxes, compliance cost, everything. You'll note that the number that matters, net take-home, was higher if I laid off my two employees and took a government job. So that's what I did.
You may also note that if the taxes and compliance costs were half as much, the net take-home would have been better by keeping the business open and my employees would still have jobs.
Usually I call that "government"....
... I also call it corporation, and come to think of it banks also qualify.
The problem is not that taxes are collected but that some people who collect it seek to keep what they've collected and not pass it on.
The system only works if we all pay our taxes and they get spent on services or employing people who then spend their wages on stuff, which gets taxed... etc etc. Its this circular aspect of keeping money flowing that makes the economy work, when some people or corporations seek to subvert that for their own selfishness, we all suffer.
Free trade is desirable now? My, my... how much koolaid did you drink?
Free trade is only desirable to the stronger economy/ies in the bloc. For example: The Eurozone benefits the already established industrial powers (Germany) while giving no incentive for the smaller countries to set up their own factories. In a free trade agreement, Germany can now dump all of their products in a smaller country and take all of their money. Germany doesn't need to buy anything from them: they already make everything their need - so basically the smaller country is just a raw material supplier, or purely agricultural exporter. The smaller country is now doomed.
This is the real truth about free trade agreements.
So you say: then don't sign the FTA! Sure: now Germany flat out refuses to do business with you (so much for the "free market" spirit). Or they pressure you with debt you already have with them.
No. Free trade agreements are not a solution to anything. They just perpetuate the "xxxx country is an industrial power while yyyy is just a carrots producer" stereotype.
US corporate tax is 35% ...
If you can make more profit by rising prices, why haven't you done so already?
"Somewhere else" is taxed too, so it'll do you no good. You'll simply have to settle for a level of profit the market can offer, the same as everyone else. Of course, you could sit on your $10 million and let inflation eat it away.
In the latter case your profit will be negative due to inflation. $100K is the best option you have. And, should you decide to pass as a protest or whatever, that's okay too, your competitors will gladly expand their market.
Forget magic. Any technology distinguishable from divine power is insufficiently advanced.
Companies will reinvest revenue rather than pay it out as dividends. Also, stock prices fall as future expected dividends are cut by 75%, and then rise again as said reinvestment makes economy grow faster.
Actually, this could be just the stimulus economy needs...
Forget magic. Any technology distinguishable from divine power is insufficiently advanced.
The tax raise can be dealt with in several ways or a combination of all:
1) decrease outgoings (cost of raw materials, cost of staff)
2) decrease outgoings (dividends to shareholders)
3) increase incomings (raise prices).
Where there is a monopoly (or similar types of market failure such as oligopoly) most of the tax raise will be dealt with by 3).
If there is a competitive market then the tax raise will fall somewhat on 1) and 2) as well.
This is one reason that breaking up monopolies is so important.
SURELY NOT!!!!!
It's unfortunate to see posts modded up and down based on political agendas. The shills are out in force today. However, if you leave, the rest of the actual *readers* will suffer. And the terrorists win. (I kid, but you get the picture.)
;-)
But, if you do go, could you at least post where you're headed so I can check it out?
Because if they charge more now, they will lose some business.
It doesn't matter why the prices went up, they will lose business when it does. And in this case Amazon will lose substantial business if they increase their prices as then they won't be any cheaper than the many other (online or offline) retailers in the UK.
But I assure you, Amazon's prices will continue to be competitive, because they are in this to make a profit. And there may be no other company on the planet that knows as much about exactly what price it takes to maximize profits. Those metrics collections they kept making us programmers at AMZN write are really paying off for Bezos.
You're contradicting yourself. Was the single market set up so that national companies could start selling to other EU countries with minimal red tape, or so that multinational companies could pick a country and negotiate with its tax authorities prior to setting up a "headquarters" which consists of a P.O. box? And if it was the latter, why is the Commission investigating whether the arrangements negotiated between various companies and the Luxembourgeois tax authorities constitute illegal state aid?
Tax Cheat: Those that utilize government to extort money from their neighbor.
It seems to me that you, WindBourne, are the tax cheat.
Only if the competition can avoid the taxes. If all of the players in the market get hit with the same taxes, then all of them absolutely can and will raise prices, and there will be no consequences.
You are making an assumption here that the size of the market is fixed which is not true. The problem businesses are trying to solve is to maximize their profit. If raising their prices by 10% to cover the tax on the profit from that product means that they sell 20% less of the product they would be stupid if they did that.
This can happen independent of competitors. For example if Amazon increases the cost of its ebooks people might just read less or use the library more. This could happen even if everyone selling books increased their prices by the same amount. There is not a fixed number of book purchases which happen every month.
Amazon in the US tends to do the investment in R&D. How much does it do in the UK? From the sounds of it not much. It doesn't matter how much R&D it does in the US Amazon UK can't write it off. Maybe there's some way they could "offshore" those expenses and send the money to the US. So if Amazon wants to do project X then they would get Amazon UK to fund it and they could expense it even though the work could be done in the US.
All taxes are, in the medium term, incident upon the consumer. The Wikipedia article is way better than anything I can write up in a few minutes on /. http://en.wikipedia.org/wiki/T... However, this focuses primarily on short-term incidence. The reason that the incidence is always on the consumer in the long run is pretty easy. I recommend Peter Berck's class "Economics of the Environment" (UC Berkley webcast, free, Google it) for a better explanation.
In a competitive industry (not all are), things have already reached an equilibrium where most firms have similar cost structures and are making the minimum return on capital that they are willing to accept. If the industry becomes more attractive for whatever reason, that would motivate firms to enter. If things get worse, they would leave and do something else. Add a certain tax and, suddenly, everybody is making less money. Those willing to tolerate the lower returns will stay. Others will leave. This will raise prices. For how long and how much? Generally until we get to a point where the new price = old price + tax in which case it is 100% incident upon the consumers.
And most corporations don't actually pay 35%. Some large notable corporations didn't even pay 10% for the last several years.
In part due to finding a way to bypass existing tax laws.
The understanding was-- you do business in region "X", you pay taxes in region "X" to support services (like roads, court systems, police). The businesses found a way to say, "Oh- I'm legally in region "Y" even tho I made billions of dollars in region "X" last year. In some cases (like ireland) they are finding it wasn't really legal in the first place... in other places they are closing the loophole.
She was like chocolate when she drank... semi-sweet at first and then increasingly bitter.
I don't think you understand what you are writing.
What kind of business could have revenue less than or equal to its tax bill but will continue to "pay taxes"?
Ergo, all taxes a business will pay must be funded out of revenue.
Ultimately consumers pay for everything.
If the competitor could have done this, they should have done it *before* the tax increase. Why would they wait for the government to add the tax, just undercut your competition preemptively. That's why taxes disturb competitive markets. All of those things that you describe have already been done. So the only choice left if higher prices. There is a different analysis for non-competitive markets that I'm not skilled in economics enough to examine.
But in this case, it is Amazon who has been avoiding the taxes while all the existing companies (aka bricks & mortar) who have been paying the taxes.
So all this does is bring Amazon in line with the competition - aka level the playing field
But the competitors are already paying that tax - you know, those existing brick & mortar companies that operate physical stores and thus haven't been able to use loopholes to avoid the taxes in the first place - which means Amazon will likely have little ability to raise prices without losing customers.
Our defense spending has also been disproportionately high for close to three decades now.
She was like chocolate when she drank... semi-sweet at first and then increasingly bitter.
Not if it is good PR or if it is too avoid a law that would mean paying even more taxes.
https://en.wikipedia.org/wiki/Inverted_totalitarianism
> Yes, they do. It's called free trade and is generally seen as very desirable, as it reduces paperwork and leads to countries competing to be better places to do business than their neighbours.
With all due respect, if you actually believe any of that, as pertains to THIS topic, you're a fucking idiot.
This isn't any idea of free trade, nor have they been reducing the paperwork- on the contrary they've been filling a whole bunch of extra paperwork.
What they've been doing is performing most or all of the work in (say) the UK and then filling the tax in Luxembourg as if all the profit was magically done there; and this is purely and simply a tax fiddle.
By running two or more different companies in different countries you can "sell" things across the borders at artificial (fake) prices so that, no profit is made in the UK, and all of it is in Luxembourg or Ireland, on paper. There's no free market for those trades, it's all between two companies, controlled by the same people.
If they actually did everything in Luxembourg, that might well be fair enough, but that's NOT at all what's been going on.
This isn't some free trade utopia, it's essentially fraud, they're saying they made no profit in a country, when they really did. It's not totally dissimilar to the types of things that Enron got up to.
-WolfWithoutAClause
"Gravity is only a theory, not a fact!"That's upside down thinking. Corporations pay tax on income which means "profits".
This is the right-wing brainwashing at work. You can't even imagine taxes being funded out of profits, can you? Please bear in mind that a corporation is simply a legal mechanism by which capital can avoid liability. You have somehow come to believe that a companies costs exactly equal its revenue and that they only exist for the public good.
You are welcome on my lawn.
I am pretty sure that Amazon did not originate in Luxembourg, that they do not have any significant infrastructure in Luxembourg, and certainly most of the products they ship are not made in Luxembourg.
I would not have any problem if their actual warehouses were all in Luxembourg and all shipments departed from there; however, they most certainly do not. It's a good thing to pay taxes from a single country when selling to several, but one must pay taxes where the value is generated, not going around shopping for the lowest rates.
The single market was intended to be used for simplification, not for tax avoidance.
Victims of 9/11: <3000. Traffic in the US: >30,000/y
What to do about corporations wanting "Yhay Free Stuff funded by Taxes" when they don't want to pay? Do you think that you should pay for the infrastructure to make Amazon more profitable?
https://en.wikipedia.org/wiki/Inverted_totalitarianism
Have you thought for a second that, the moment you do this, everyone and their dog will set up a small company to manage their assets?
Victims of 9/11: <3000. Traffic in the US: >30,000/y
If it is tax on profits, it'll allow more competition as new companies will reinvest in their company rather then pay the tax leading to growth for the new small company.
Free market works best with lots of competition.
https://en.wikipedia.org/wiki/Inverted_totalitarianism
Everyone should pay their taxes. All countries need to start doing this. If you do business in a country, make a profit there, you pay taxes there.
Nobody is saying to cut funding to infrastructure that keeps the country running. My point is the government spends money totally unchecked. Cut all the waste and paper pushers who do nothing. I bet you could lay off half the federal government and nobody would even notice.
Only the State obtains its revenue by coercion. - Murray Rothbard
There is no such thing as "oweing and evading" tax because, until recently at least, tax regimes were based on rule of law not mob justice. There are two things:
- legal: tax minimization
- illegal: tax fraud
The second case, when discovered, leads to refiling the taxes, collecting the true tax owed, and probably penalties as well. The fact that's not happening here, and instead tax laws are changing and future corporate plans changing around them, should be an unambiguous signal to you that we're in the first category not the second.
I'm sorry that you are tired of the complex world in which you live. If you vote, that's bad news for us all.
What Amazon and many others are doing is legal, but clearly subverts the intention of the law.
Utter bullshit. The intention of the law was to make Luxembourg rich even though they produce nothing. That's why tax havens like Bermuda, Ireland, San Marino, Switzerland, and Luxembourg exist. The law is working precisely as intended. The dispute is between .uk and .lu, and sounds like .uk has just made a move in this game.
If your laws truly depend on their subjects being "sporting," you are going to have a bad time, and your country needs to grow up or isolate itself.
So who should run the army, police, courts, fix the roads, ensure everyone meets a minimum driving standard, set rules for immigration, charter corporations and all the other things that are required for a functioning developed nation that the private sector wouldn't do?
Billionaire warlords will provide a free market solution to security needs. Enlist in the local warlords junta, or die. Somalian free market style liberty!
That's just so much meaningless gibberish with misleading conclusions.
Specifically, all corporate taxes paid come from three categories of individuals: consumers, who pay higher prices for items to cover the taxes; employees, who make lower wages to cover the taxes; and shareholders, who earn lower returns (and note that the two former categories are often also shareholders, via their pension plans). Suppliers can also lose, but they're generally corporations as well, with their own employees and investors who actually eat the loss.
Corporate taxes come from one category of individual: those involved with a corporation. This means shareholders. Employees might pay a portion of it, but only if they won't be hired by non-corporations. Consumers might pay a portion of it, but only if there is no competition from non-corporations.
In the long run, though, the investors don't lose because capital flows away from lower returns and towards higher ones. So companies must find ways to keep their returns up to somewhere near the mean rate of return.
A corporate tax lowers the mean rate of return for corporations. Investors could switch to non-corporate investments, but they already have money invested in corporations.
Once you understand that no taxes are paid by corporations, ever, then you should also recognize that corporate taxes are not only ultimately paid by individuals, but the individuals almost never realize they're paying it.
Why not go a little further? No taxes are ever paid by individuals, taxes are paid by protein and DNA molecules. And the protein and DNA molecules almost never realize they're paying it.
How many people know their prices would be lower, wages higher, or pension more secure, if it weren't for corporate taxes?
Very few people, because it takes a special brand of ignorance to think that way. If a lower proportion of the taxes were paid by people involved in corporations, then the tax rate on people not involved in corporations would be higher. Most of us aren't major shareholders...
And, therefore, how many voters have any interest in opposing corporate taxation? To politicians and voters, corporate taxes look almost like free money. Ratchet up the corporate taxes and no people get hurt, just those nasty corporations.
Corporate taxes are the penalty portion of the system designed to allow profits with little or no responsibility. That low responsibility comes with a price. If some investors choose to switch to a form of investment in which they are more responsible due to higher tax burden on corporations, that is fine with me.
Don't waste your vote! Vote for whoever you want, unless you live in a swing state it won't matter anyways
The VAT MOSS rules came in on 1st January this year, and since then, Amazon has had to charge UK VAT on sales of electronic goods (ebooks, mp3s, apps, videos, etc). They have always had to charge UK VAT on sales of physical goods.
The change here is that since 1st April, they are now paying UK Corporation Tax on their UK profits rather than Luxembourg corporate tax.
Egads please not another of those idiot statements of corporations are people.
They are not, however the people that do own them are people and they deserve the right to speak, and petition their government all things that evil people like you want to take away.
You and this whole remove the right to speak is just a bunch of evil, sick people.
Very, very simple explanation.
With the tax all companies are having to raise prices. So now companies have to decide loose the profit they were making before the tax or to raise prices to pay the additional money to the government. With the modern very competitive not that many companies can afford to loose the profit so prices increase.
Companies don't pay taxes you as the customer pay taxes, the company just does some processing for the government.
you're absolutely right. and it doesn't stop there. corporations have other expenses as well as taxes and they also pass those expenses on to their customers so all those expenses are evil too.
nobody should ever charge a corporation for anything - not for goods, machinery, raw materials, rent, electricity, water, wages, or anything else at all because doing so is evil.
congratulations! your unsurpassed brilliance has solved the world's economic problems.
To say that "businesses do not pay taxes; individuals pay taxes" is a simple-minded view. At face value, it might seem "obviously true" that a company will merely passed it on, however, consider Amazon. Amazon is very often no cheaper than some independent. Now, perhaps Amazon is now dominant because of short delivery times, it being a "known" entity, or maybe because it has forced market prices down generally. Its a moot point, just compare the independent (paying 20% Uk corp tax) versus Amazon Uk (paying nearly zero). All equal, Amazon pays less tax, even with economies of operating scale on its side. The small independent does not have the option of not paying the tax and instead using that sabing to continually expand towards the ultimate conclusion of total market dominance.
The independents haven't hiked up prices just because they pay full rate corporation tax. They still make profit. Amazon is using the money that would would have been used by governments (to pay for roads, schools, hospitals, etc.) instead simply to unfairly grow quickly.
Yes, it is, and you're simply wrong...
Do this simple mental exercise... Imagine if a new gross receipts tax was put into place that said that all businesses had to pay a 50% tax on their total sales...
That is not how taxes on income work. They are taxes on income (profit), not revenues (sales).
Claus
So what? Why is the last hop on a long supply chain special to you, exactly? Many of those goods were made in China and shipped through several warehouses before they ended up at whichever facility dispatched the product to you - so picking that one specifically as where tax is owed is no less arbitrary than any other place.
The EU rules are quite clear about this and always have been. Attempting to carve up a company between countries is a losing proposition that explodes complexity and discourages trade, so companies are free to choose where their headquarters are and where they book sales. It requires nothing more than a nameplate, technically. This may seem "unfair" but any other scheme you can think of is ultimately no fairer.
See, this is why I hate the term "tax avoidance". It's meaningless. It literally doesn't exist and this statement is a great example of why not - simplification is tax avoidance. Every time a British company ships something to someone in Poland overland via Germany, and doesn't have to fill out dozens of company registration and tax forms in Poland or Germany, that is in some sense "avoiding" tax. But it's avoiding it because of the simplification. You can't have it both ways - paying taxes in foreign countries adds complexity to trade and results in less of it ..... and that's why trading blocs evolve.
Basically every argument I've ever come across about tax avoidance founders immediately, due to this problem. Attempting to define tax avoidance is like trying to define terrorism. People think it's simple and they know it when they see it, and then the moment they try and nail down exactly what it means they realise it's nothing more sophisticated than "behaviour I don't personally like".
I am not contradicting myself. The point of a single market is that the distinction between national and multinational companies disappears. Inside the EU, as conceived, there is no such thing as a national company. There are only European companies, selling to Europeans. The concept is supposed to be as meaningless as talking about "state companies" would be in America. There's no such thing - people only talk about companies being American, regardless of which part of America they may have physically originated in.
The politicians and bureaucrats who set up the EU/EEA may have been thinking of short term benefits to pre-existing companies. But the system created was very straightforward in its goals - to tear down national boundaries across the trading bloc, starting with tariffs and later, standardising bureaucracies to eliminate red tape. And the way corporation and sales taxes worked were chosen to meet those goals.
Because the commission is a creature of EU politicians who represent countries that are, by and large, broke (except for the Germans). The notion that setting taxes lower than your competitors is illegal state aid didn't crop up until the European debt crisis, which isn't surprising because "taking less of your money than others would" is only "aid" under some very strange definition of the word. Aid normally would mean giving money, not taking it. But many of these laws are vague enough to be stretched to meet more or less political goal, and scapegoating foreigners for domestic problems is always popular.
"Somewhere else" is taxed too, so it'll do you no good. You'll simply have to settle for a level of profit the market can offer, the same as everyone else. Of course, you could sit on your $10 million and let inflation eat it away.
Spoken just like someone who doesn't actually have to deal with that situation...
No, that isn't what would happen... but thanks for playing...
They would try to raise the price (not likely possible because, as stated above, if they could get away with a higher asking price, they would have done so on their own, why not rake in more if you can?) but they might go out of business. With a 90% tax, it's actually likely.
They can't raise prices all by themselves.
This is why Walmart can't just raise their base pay to $15/hr, because Target doesn't have to.
If ALL companies were suddenly forced to do so, then they would all raise their prices.
If all companies are taxed more, prices will go up across the board, just like if the min/wage was raised to $15, or even $50/hr.
If everyone has to pay it, then everything gets more expensive.
That isn't what I meant of course... Anything a company has to write a check for is either an expense, a capital investment, or a dividend to shareholders...
Which of those three would you consider taxes to fall into?
Eh, yes, it is actually. Many online services aren't universally available throughout the EU because they aren't translated into the local languages, and it wasn't so long ago that we were reading here on Slashdot about how the EU Commission is annoyed by geo-blocking of services. These rules aren't just about Amazon and Google you know. They also apply to a huge long tail of smaller companies who given a choice between "having to respond to letters from the Bulgarian government, written in Bulgarian" and "spending the time on other things" will choose the latter.
No, it really wouldn't. This whole fiasco is demonstrating that very clearly.
Taxing people makes sense. People cannot be in multiple countries at once: figuring out if someone should be a taxpayer can be as simple as adding up how many days they spent in the country. People are what use government services. Companies don't use them anywhere near as much - companies don't get sick and go to hospital, they don't drive down roads, they don't draw pensions etc. Companies get the services of the legal system, although sometimes those "services" may involve being sued by a competitor and other times they have to pay fees to use the courts anyway.
What's more, the moral justification for taxation fails when applied to companies - they suffer taxation without representation. Companies cannot vote. Heck, they get demonised even for talking to governments, so voting is entirely out of the question.
The biggest problem with taxing companies though, is figuring out how to slice the pie between different governments. Unlike people, companies can be in many places at once. So suddenly every cash-starved government feels like they're entitled to a bigger piece of pie. It turns into a crazy tug of war with the company being torn apart in the middle.
In the old days this problem didn't matter much because large scale free trade is a relatively recent thing, so previous generations of companies were mostly based in one or two places. But sometimes, especially with modern companies, there's no really good way to divide the spoils up. Where does Google make its profit? Is it in California where the search engine is developed? Is it in Ireland where the advertising contracts were signed? Is it in Germany where the datacenter handled the request, or Oregon where the data the datacenter served was generated? Is it where the customer who clicked the ad is located, or the customer who paid for it? If it's the latter, what if the customer is itself a transnational company?
These questions are enough to feed an army of lawyers and accountants for all eternity, and the end result will still seem unfair to big groups of people. Accusations of "avoidance" (whatever that means) will still fly. There is just NO WAY to do this well.
The logical conclusion to all these problems is to simply zero out corporation taxes entirely, and raise revenue from the individuals who live there. Of course this is deeply unpopular because corporation taxes feel "free" .... it's harder to understand the impact they have, whereas it's easy to understand the impact that less money in your wallet has. So I think we will continue to see a never-ending stream of asshattery and countries finger-pointing at each other over tax, especially tax of perceived foreign companies, because taxing them looks to politicians suspiciously like free money.
Free trade is only desirable to the stronger economy/ies in the bloc. For example: The Eurozone benefits the already established industrial powers (Germany) while giving no incentive for the smaller countries to set up their own factories.
Then how come that smaller countries in the EU seem to thrive economically?
In a free trade agreement, Germany can now dump all of their products in a smaller country and take all of their money. Germany doesn't need to buy anything from them: they already make everything their need - so basically the smaller country is just a raw material supplier, or purely agricultural exporter.
Germany as a whole does not decide that it needs not to buy anything from, say, Austria. It's individual people or corporations who decide to buy from supplier A, B or C. In a free market, supplier C from Austria has the same chance of being chosen as A and B from Germany.
Claus
By running two or more different companies in different countries you can "sell" things across the borders at artificial (fake) prices so that, no profit is made in the UK, and all of it is in Luxembourg or Ireland, on paper. There's no free market for those trades, it's all between two companies, controlled by the same people.
You know, tax authorities actually look at transfer prices for intra-group sales and services to ensure that they are at arm's length. If they aren't, they're taxed as profits.
Claus
Amazon doesn't make profit in any country. But hey, would you prefer they sent the money from the UK immediately to Seattle? If the USA and EU were in a single trade bloc then they could certainly do that and cut Luxembourg out of the equation, but it wouldn't make any difference to the UK's tax take.
Maybe you didn't notice all the little countries with tiny economies that bent over backwards to join the EU in recent years. Obviously a whole lot of countries came to the same conclusion independently - they wanted in, because they wanted access to the single market. If you're a specialist company in Bulgaria making a particular type of ball bearing and joining the EU means you can suddenly easily sell to a market of several hundred million people, that's a win. Yes, your lone local Bulgarian customer might decide to jump ship to a Spanish supplier once it gets easier to do so, but that's offset by the sudden ease of replacing them.
I don't think you can argue with this reality - if the EU only benefited large economies, then all the smaller Balkan and eastern European countries would have simply formed their own trading blocs. But they didn't. Your position assumes they are all stupid.
swillden's point is that it would be neutral. There is no shortfall, exactly. Tax reallocates resources that would have been used for other things, it's not like a mine that you actually dig gold out of.
Whilst governments might feel the need to raise personal tax rates if they no longer received corporation tax, as corporations are no longer being taxed that money will end up doing something else instead. It might lower prices, in which case paying more personal tax to government wouldn't change your standard of living. Or it might get paid out to shareholders, i.e. you or your pension fund. Or it might get re-invested into developing new products, which again would improve your standard of living to offset the fact that you have less money than before. Remember money is just a proxy, what ultimately matters is wealth not money. (or happyness)
A common misconception spread by propaganda in the press. Tax evasion rates in western societies are very low. Almost everyone already pays what they owe. The UK is not Greece - there's no blood to squeeze from that stone. The entire tax avoidance argument is that some people should owe more than the rules say they do.
Personal taxes in Anglo countries are high for a bunch of reasons, including but not limited to: extremely expensive and pointless foreign wars, increasing life expectancies that cause spiralling healthcare and pension costs as governements are loathe to adjust the retirement age, hangover from the banking bailouts, the general decline in labour force participation over time meaning more people on benefits, unaffordable tax cuts (USA), the massive interest payments on debt incurred by previous governments (UK), etc etc.
They are not high because immoral people are somehow dodging the tax man.
The moment such a company paid money to the owner so they could buy a new TV or whatever, it'd count as personal income. So in a well designed tax system it'd not be quite that easy.
The way it works is that Amazon UK pays enormous licensing fees to Amazon USA for use of the brand. That way the money ends up back in America where it can be spent on things Amazon wants to spend it on.
bullshit. they deliberately didn't pay tax they owed in the UK by falsely claiming that profit earned in the UK was actually earned in Luxembourg. this is not only tax evasion, it's fraud.
Hello? McFly?
Didn't you read the part that COUNTRIES ARE BULLIED INTO SIGNING FREE TRADE AGREEMENTS?
Otherwise they get ignored ("I won't buy from you unless you sign the FTA"), or pushed into it ("remember you have a debt.... if you sign the FTA we can push it a few years forward...")
You are so sweet and adorable. It's so obvious you're not into foreign politics or import/export.
Keep at your keyboard programming, honey.
Actually aren't they paying Luxemburg or Ireland the money and leaving it outside of the US hoping for a tax holiday in order to bring it back to the States much like Apple? The problem right now is that it is hard to put a value on what the license fees should be. What should the price put on the value of the Amazon (or Apple or Starbucks) name be? With my proposal you could show the exact expenses (buildings, HR, etc). Mind you they have way smarter accountants than me and it's got to be a lot more complicated than this.
An investment, if your taxes are used for the benefit of society.
The leechy government takes more, and diverts more to their cronies.
Aren't you being backwards? Personal taxes often come from corporations, if the personal tax rate goes up, then corporations will need to pay more to employees to maintain the same take home pay and not only that but startups, smaller businesses and such will be hit harder as payroll has to be paid whether a company is profitable or not while taxes on profit only has to be paid if the corporation is successful.
The idea that it is better to not tax corporate profits is a lie pushed by big corporations to stop competition from forming and lack of competition leads to higher prices and worse product. If Amazon one day was the only online seller of goods, they could jack up their prices secure in the knowledge that no-one else can afford to enter their business due to payrolls being so high as only personal taxes would have to pay for everything including the infrastructure that Amazon depends on to do business.
https://en.wikipedia.org/wiki/Inverted_totalitarianism
This would actually be true if all companies currently could evade taxes. Since most UK based companies simply cannot do that, all the anti tax evasion legislative will do is level the playing field.
We used to have a Bill of Rights. Now, with the rights gone, all we have left is the bill.
Amazon is simply paying up now instead of delaying and have to pay interest on owed taxes. If you or I does this, we be arrested on tax evasion. This is just another form of tax evasion at a global level and Amazon feels it's earned enough to pay now instead of being forced to pay more with additional penalties later.
So who should run the army, police, courts, fix the roads, ensure everyone meets a minimum driving standard, set rules for immigration, charter corporations and all the other things that are required for a functioning developed nation that the private sector wouldn't do?
That entire list adds up to less than 10% of most first world government's budgets.
ensure everyone meets a minimum driving standard
From my observations, the government just incurs additional expense on every driver, and the quality of driving is still despicably low.
set rules for immigration
If it were not for the welfare state, there would be no need for immigration rules.
and all the other things that are required for a functioning developed nation that the private sector wouldn't do?
Pray tell what those might be?
Tax avoidance is immoral but legal. Tax evasion is both immoral and illegal.
I wasn't actually disagreeing with you - it was just an opportunity to share an anecdote about a complete muppet I once knew. Yes, taxes are definitely an expense.
A Mom and Pop convenience store may not turn a "profit" at all, instead merely supplying Mom and Pop with a stable occupation and a living salary. They "invested" as little as a few thousand dollars, or as much as a half million dollars, and the only real ROI is that they are their own bosses, with a stable job that they enjoy.
Being “their own bosses” and having “a stable job that they enjoy” (with a “living salary”) is their ROI.
Claus
Ad hominem attacks don't validate your incorrect views.
Claus
In the UK, there are a few private retail banks that do issue banknotes.
Claus
Amazon in the US tends to do the investment in R&D. How much does it do in the UK? From the sounds of it not much. It doesn't matter how much R&D it does in the US Amazon UK can't write it off.
Sure it can. They can license the results of the R&D and write off the license fees to Amazon US. In fact, the US tax authorities might even demand that Amazon US collect license fees from foreign subsidiaries - otherwise they would actually transfer profits (the arm's length license fees) from the US to foreign countries.
Claus
And this is a general problem with federated governments. When it comes to socialism/etc they tend to be a race to the bottom, because companies can effectively pay the lowest tax rate anywhere in the federation. It happens in the US as well - if a US state wanted to raise state income taxes to 60% and pay basic income to all their residents, their employment would go to zero because companies would flee the state, since they could do so while still being able to sell their wares in the state's market, since US states cannot interfere with interstate commerce. This is why US states are only "laboratories of democracy" to a limited extent.
If you want to have different tax rates and social policies, then you need to have tariffs at the border. That is obviously a two-edged sword, but it is still the reality of the economics.
You're making it more complicated than it is. Virtually all taxes are various governments taking a cut/percentage of a value transfer, usually money, between two economic entities. There are various labels and percentages but that's basically all it is. That the tax is considered to be on the sender or the receiver of the value transfer doesn't mean much - they both lose in a free market where prices are competitive.
There's lots of arguments about which value transfers should be taxed and by how much but it's usually restricted to money for reasons of convenience. Since almost all value transfers are usually one side of a two sided exchange it's an interesting question to ask why the government doesn't tax both sides of such transactions. It's also an interesting question to ask which value transfers should be taxed - leads to lots of arguments about "double taxation" but the fact is as money moves through the economy through different economic entities it's being taxed all the time. It doesn't eventually reduce to zero simply because in a free market each economic exchange is creating value eg. if I sell you a banana for a dollar presumably the banana is worth more to you than the dollar and the dollar is worth more to me than the banana.
Amazon doesn't make profit in any country. But hey, would you prefer they sent the money from the UK immediately to Seattle? If the USA and EU were in a single trade bloc then they could certainly do that and cut Luxembourg out of the equation, but it wouldn't make any difference to the UK's tax take.
Amazon doesn't make profit in any country.
That may be true at the moment, because they're plowing most of it back into capital expenditure, but in the long run, it would be expected to not carry on like that. And that's also why Amazon were the first to declare that they're doing this; it doesn't cost them much right now.
But hey, would you prefer they sent the money from the UK immediately to Seattle? If the USA and EU were in a single trade bloc then they could certainly do that and cut Luxembourg out of the equation, but it wouldn't make any difference to the UK's tax take.
If they were making profits it certainly could.
Luxembourg is a tax haven, very low tax rates. But if they were declared in the UK, then there's a bigger tax take there. The UK would also probably claim tax on profits that wasn't paid in other countries like the USA that was due to economic activity in the UK.
-WolfWithoutAClause
"Gravity is only a theory, not a fact!"Companies will reinvest revenue rather than pay it out as dividends. Also, stock prices fall as future expected dividends are cut by 75%, and then rise again as said reinvestment makes economy grow faster.
Actually, this could be just the stimulus economy needs...
Oh dear Lord.
Raising the tax rate to 75% is a stimulant to the economy?
Wow.
No, the first rule of economics is "don't talk about economics".
Seriously, as long as you have companies in competition in regard to pricing, then yes, businesses do in fact pay taxes. They can not in fact just raise prices to cover taxes, because if they could raise prices, they already would have done so.
There is no law in economics that says "Businesses do not pay taxes. Businesses collect taxes." That's an old conservative trope that gained currency when Ronald Reagan and Margaret Thatcher were busy rodgering the working people of their respective countries.
Sure, individual businesses would raise prices if they could. But you're missing the point of a tax.
Example 1: There are 50 auto dealers in a state. One dealer decides to raise his prices across the board because like you said "If they could, they would." He goes out of business.
Example 2: There are 50 auto dealers in a state. The state raises taxes on car dealers 30%. Now all dealers raise their prices 30%.
Now I ask you "Who is paying that 30% increase?"
Businesses can't print money. Well, other than the Reserve. But that's a different matter. Any money a business pays out for any reason has to originally come from an individual somewhere.
The only thing wrong here is that taxes exist in the first place. When I buy a product, I want my money to go to the person that made it, not the government, who will waste it on things I never agreed to.
Faggot. Fuck you fucking faggot.
There's an ad hominem for you. Fag.
God, can your math really be that bad? If the state raises taxes on car dealers by 30%, as you say, and the tax goes from 3% to 4%, why would that require the car dealers to raise the prices of their cars 30%?
That's the first problem with your comment.
Second is the fact that some of the car dealers may choose to let their profits fall the additional 1% (from the taxes being raised from 3% to 4%) and they'll keep their prices lower than the dealers who chose to raise prices and end up being the most successful dealer in the state.
When their competition, and when there's not market consolidation to the extent that it causes concentrated pricing power, taxes will not raise prices significantly.
Let's let Bruce Bartlett, a former economic adviser to Ronald Fucking Reagan explain why "corporations don't pay taxes" is a myth:
http://economix.blogs.nytimes....
You are welcome on my lawn.
That's a great red herring you made there, but it's irrelevant. Taxes are on profits, not sales.
Not so in many many places. In Canada we have a Provincial Sales tax and a Federal sales tax, and it is on most non-food items that we buy.
In other countries, it is a VAT.
Leslie Satenstein Montreal Quebec Canada
Canada has a General Tax Avoidance Law that is designed for this very thing (at least on paper). If the Canada Revenue Agency thinks that you are doing a whole bunch of transactions just to avoid taxes, you get hit with the taxes anyway.
Okay, time for the facts of life: I, who work for a living, pay taxes too. For all intents and purposes that's an investment of time and effort, rather than money. So what happens if I'm not satisfied with my level of return and choose to cease investing - that is, quit? Why, I don't get paid, of course.
Perhaps you've never had to deal with that situation. Good for you. But don't except those who do to have much sympathy for your plight.
Forget magic. Any technology distinguishable from divine power is insufficiently advanced.
God, can your math really be that bad? If the state raises taxes on car dealers by 30%, as you say, and the tax goes from 3% to 4%, why would that require the car dealers to raise the prices of their cars 30%?
How did you get "the tax goes from 3% to 4%" from "the state raises taxes on car dealers by 30%?"
About your other point, sure some of the dealers may only raise prices by 29% and absorb that other 1%, but you're still missing the point. The consumer is still paying the full amount of the tax. So the dealer is taking less of a profit. He isn't PAYING any of the tax unless he's running that business at a loss. The consumer is the only one putting money into the equation unless the business is being run at a loss.
If you don't think only consumers pay taxes, let me leave you with this "If that car dealership doesn't have any customers and no business for a month, why are the taxes '0' for the month?"
Are you really that stupid? Do you understand the difference between raising taxes on dealers "by 30%" and raising the taxes on dealers "to 30%"?
Raising taxes from 3% to 4% is a 33% increase in taxes. Raising taxes from 6% to 8% would be a 33% increase in taxes. Raising taxes from 15% to 20% would be a 33% increase in taxes. But even the biggest of those increases, assuming there's no competition and no dealer decides to take a little less profit in order to increase market share, the largest pass-through to consumers would only have to be 5%.
I never said that. Consumers often pay taxes. In the case of Amazon, the consumers would be paying the sales tax, because up to now Amazon has been able to avoid taxes on the notion that the internet is some magical places where taxes should not exist because...computers or something.
Maybe you can understand it if I explain it another way. If you have ten apples and I take ten percent of them today, and tomorrow I raise the percentage of apples I take from you by 100%, it does not mean I'm taking 100% of your apples.
Here's a nice tutorial on calculating percentage change with a calculator if you're still having trouble. If you need help turning on the calculator, you'll have to ask someone else.
http://www.wikihow.com/Calcula...
You are welcome on my lawn.
That is the point the smaller competitors are already paying those taxes and have been for sometime.
When I say competitors this can mean an independent local online shop/store that it selling stuff.