Slashdot Mirror
Facebook UK Paid £35m In Staff Bonuses, But Only £4,327 In Corporation Tax (gu.com)
New submitter Phil Ronan writes: After getting away with paying £0 corporate tax in 2013, Facebook UK has announced that its corporate tax payment for 2014 (total revenue: £105 million) is going to be £4,327. This is a tiny fraction of the £35 million pounds given away by the company in staff bonuses over the same period. "The share scheme was worth an average of more than £96,000 for each member of staff. Once salaries were taken into account, a British employee of Facebook received more than £210,000 on average. ... A spokesperson for Facebook said: 'We are compliant with UK tax law, and in fact in all countries where we have operations and offices. We continue to grow our business activities in the UK.' She added that all the firm’s employees paid UK income tax on their payouts."
They were going to pay £100 million, but the accountant entered it as 10e7...
This sig consists of eleven words, twenty syllables, and sixty-one letters.
Is the British corporate rate that different from the personal rate? Did the British government not collect the taxes either way, or did I miss something?
(North American here, not an expert on British tax rates)
Pretending this is my office full of bitter coworkers..
Favorable tax treatment, I'll contract out my talents and will not have an employer but clients instead.
In the US, the total individual income is something like 10.5 billion, while the total income is 12 billion. Corporations don't pay income tax on wages--they don't get $100 million, pay taxes on $100 million, then pay $90 million in salaries, and then you receive your paycheck and pay taxes on that. That $90 million is your income for working as part of the business.
Facebook paid 35 million pounds out as bonus wages, and paid very little in taxes. Surprise. Facebook is based in the US; how much are they getting as net revenue in the UK anyway?
Support my political activism on Patreon.
for the shores of America to avoid the taxman. Why?
Thank goodness all that money ended up in the hands of young, intelligent people, rather than in the hands of murderous, thieving bureaucrats who squander resources dropping bombs on brown people, and stuffing sick drug addicts in cages.
They made 0 profit but they still paid £4327 in tax... they issued shares to their employees worth £210k each and their staff paid tax on that... they also paid VAT on the income in the UK as it is VATable... so what is the news here?
This seems to be framing it as a bad thing, but the employees are paying income taxes anyway. Double dipping the taxes on both sides is silly and a waste of time/money, and only benefits big companies that can afford creative tax work-arounds. If you want them to pay more money just raise the income tax.
If not, what's the complaint? I'm sure the UK government got a nice slice of the pie in the form of income taxes on all those highly paid employees.
...in taxes received the biggest bonuses. Fair is fair, after all.
Time is what keeps everything from happening all at once.
This is actually the way I'd like to see all businesses work. Distribute profits among all employees and tax it as individual income. In a time of stagnant wages and rising inequality what about this practice is bad?
The corporation pays tax on the profits it makes.
Then the salaries of the employees are taxed - taken from the already taxed profits the corporation made. (PAYE, income tax)
Then the things purchased with the taxed salaries of the taxed corporate profits are taxed. (VAT)
Pretty simple really.
Seems to be a bit of selective clipping in the description, the key part that is missing is that the company was operating at a £28.5m loss and still ended up paying some amount of corporate tax. Not sure what the problem is? Is the company supposed to have done something wrong by paying out a large bonus that will be taxed individually anyways? While there are some interesting tidbits in the article about things like profit deferral, none of that seems relevant to the case at hand, so I'm somewhat at a loss as to what the news is supposed to be.
Companies use money to hire people and they create wealth.
Governments burn money and do bugger all with it.
UK corporations are, in theory, supposed to pay a portion of "national insurance". In practice, the employee pays all of this.
Large, tax-avoiding companies often conflate this idea with corporation tax so that they can state "we pay tax!" without it being a *complete* lie.
Then the salaries of the employees are taxed - taken from the already taxed profits the corporation made.
Um. No.
Profit is what's left when every expense has been subtracted. If you don't have anything left after paying your employees, you made no profit and don't have to pay tax for it.
Unless it's really different in the UK; which I doubt.
Yes, but I think the question is: what's the big deal whether the money is retained as profit, and corporate tax paid on that, vs. the money being disbursed as bonuses, and the individual workers paying tax on it instead? Salaries and bonuses are not profit. But either way the tax gets paid...?
Downmodding is the refuge of the weak. Don't downmod, make a better argument!
Employees aren't paid out of taxes, they're paid out of the revenue. Profits are Revenue - Expenses(one of which is payroll). I'm not sure where bonuses figure in, though. As a non-accountant, my gut feeling would be that bonuses necessarily come out of profit, or they're not really bonuses.
Can you be Even More Awesome?!
Well the Trans pacific partnership treaty and it and its European equivalent will fix that!
£4,327? Ridiculous! UK should be paying them for the likes!
The 'Corporate Sovereignty' clauses in these treaties are so bad that they won't even be shown to law makers till the last minute. It's a blatant power grab. China gets the jobs, Corporations get the right to challenge any laws, Caymens gets the cash.
They even create new IP rights for "Transfer Pricing" the tax fix used to move profits out to low tax havens, e.g. Patents no longer need to be better than the thing they replace, so you can bold something worthless onto a thing and get a patent on it. The patent is worthless, except for transfer pricing.
Basically the people negotiating the treaty worked for China or the Corporations, and they did a deal to stitch up the west which is being sold as a trade agreement.
When people point out half the US taxpayers actually pay no tax at all, the same type of people who talk cynically as you do point out these people still pay social security tax via the hidden half the company pays on your behalf, of which few are aware, by design of fraudulent politicians, to deliberately hide the size of your SS contribution.
So as to not make "pay no taxes" a *complete* lie.
(-1: Post disagrees with my already-settled worldview) is not a valid mod option.
UK corporations are, in theory, supposed to pay a portion of "national insurance". In practice, the employee pays all of this.
I'm not sure what you mean by this. The company certainly pays more that the "NI deducted" which shows on the payslip. If you mean the company takes their NI commitment into account when deciding what to pay people then yes I agree. If you mean that salaried staff have to pay the full amount from their headline salary, then no.
Nope.
The salaries are paid first, then profit is taxed.
Salaries are not part of profit.
UK corporate tax rate (on earnings, not income): 20%
(Note: US top Federal corporate tax rate is 35%, along with state corporate tax rates as high as 12%).
UK personal tax rate is 20% up to 42,385 pounds, 40% above that, and 45% above 150,000 pounds.
So frankly, the UK is receiving more tax money on income paid out as salaries above 43K pounds than if it simply retained earnings.
Is the British corporate rate that different from the personal rate? Did the British government not collect the taxes either way, or did I miss something?
The main complaint is that multinationals offshore their profits by e.g. licensing key bits of IP from a subsidiary in a tax haven. 'We would have made a profit, but we paid $100 million to use the Facebook logo to Facebook Holdings (Cayman Islands). ' (not an actual quote).
So the answer is, the US government may collect some of it down the line but not the British government.
Exactly, if the company does not pay the money to the employees, it has profit left over and that amount gets taxed. Tax collected. Check.
If the company does pay it all out to employees, the government taxes it. Tax collected. Check.
This is not the story the summary wants to imply. There are real examples of tax strategies that are truly questionable. Paying out the profit to employees (who get taxed at high rates) is not one.
Pretending this is my office full of bitter coworkers..
The point is that the UK government gets its taxes either way, whether Facebook keeps the profits and pays corporate tax, or gives out the profits as bonuses to employees and those employees pay income tax.
Absolutely! Governments don't ever do anything for me, whereas corporations bend over backwards to keep me happy, I'd much rather they got my dollars.
P.S. Nice to see Ron Swanson is on Slashdot.
FB employs very few people in the UK, what it does is known as transfer pricing.
It creates an asset that is held by an off shore low tax country, it then licenses that asset from the UK company to remove the tax liability in the UK.
The assets are typically synthetic, designed exactly for transfer pricing, so FB UK will be paying for the right to the trademark Facebook, and licenses for patents, and so on.
The EU and US came up with this plan back in the 90's, they were going to be the IP economies, licensing stuff and making money that way, and China would be the manufacturing.
What happened is that IP rights are trivial to transfer to an offshore holding company, and so they can skirt taxes using that. So EU and US ended up with Federal and National debts ( as no taxes are coming in), minimal jobs, and don't even hold the IP rights. Meanwhile you need to license these patents in EU and US, so the cost of manufacturing in the EU and US remains insanely high.
In China for example, the only patents that are licensed are for the end goods shipped to the US and EU, giving them a competitive advantage, courtesy of disloyal or incompetent treaty negotiators in the developed countries. /fuck tpp
Is this a bonus moo? And will we be taxed on said 'bonus moo'?
Pretending this is my office full of bitter coworkers..
In the UK a corporation takes in revenue - from that revenue, it deducts all necessary outgoings such as operating expenses, wages, investment, acquisitions (asset or otherwise) etc etc. What is left is the profit. Corporation Tax is based on that profit.
According to the full accounts, Facebook made a loss of £28.4Million in the previous financial year off of a turn over of £104Million (the accounts list "administrative expenses" of £131.5Million on that turn over).
The bulk of that administrative expense was staff related costs - a wage bill of £40.8Million, and a deferred share based payments charge of £35.5Million, which along with employers contributions totals £86.3Million.
The figure of £4,327 is based on the loss, as a nominal figure.
The figure of £35Million is based on share options and grants maturing for staff - they aren't straight bonuses, they have been on the books for a long time.
Because what you do is a have a company in the Cayman Islands nominally owned by your cat, and CatFace S.A. (or whatever) bills Facebook UK for IP licensing, consultancy etc. thus reducing the profits in the UK (where taxes are high) and boosting them where they're low.
The thing about salaries and bonuses is a bit of a red herring, I think. Except that in reality a company that made such low profits as they're claiming would probably be firing everyone instead of paying bonuses at those levels.
Branson was pulling this stunt for decades.
Confucius say, "Find worm in apple - bad. Find half a worm - worse."
Actually tax pays for things like the free healthcare in the UK, which whilst without the better outcomes in the US costs far less as a proportion of GDP. The rich are free to pay extra for better care in the UK so I do not understand why they want to take away the right of the poor to healthcare. Unless it is of course because they are evil.
Facts are history now plebs have politics for religion on social media.
Would that be because government doesn't do anything that's actually useful and worth paying money for to anyone ever? Or is it perhaps because government is completely and irrevocably evil and needs to be abolished today so that we can start living in a libertarian utopia worldwide?
In fact, if the money goes to the employees, the government might end up getting even more revenue, as the money is then taxed at the (higher) individual rate (less the individual's income deductions) vs. the corporate rate.
Downmodding is the refuge of the weak. Don't downmod, make a better argument!
The point is not that the tax wasn't paid on the money handed to employees, it's that it clearly wasn't paid on something else.
You don't hand out £35m in bonuses to employees if you only made £15000 profit (what you would approximately need to in order to pay ~£4000 tax). Clearly the company is doing well, and making a large profit, or the management wouldn't feel the need to give everyone bonuses, so why then is the tax bill not higher?
It's not giving *all* the real profits out as bonuses though is it?
Anyway, the first rule of economics "Companies don't pay taxes. People pay taxes."
Does anyone know how much they spent as a business expense? That's what accountants are for. Reduce taxes over the year. "Where going to have this much profit this quarter. Rather than pay the tax, find out what equipment we need and spend it there." Not a damn thing wrong with that and every business and every home owner does the same.
It may be the difference between a profit-based "bonus" and a contractual "performance related pay". E.g. sales commission would be an expense to the business, which would be subtracted from revenue to leave profit.
Corporation tax and wages are taxed at different rates, so there can be a difference in Treasury revenue between the two.
If Facebook (or any other company) paid their LEGAL tax oblation, what's the beef? If they are not cheating and breaking the rules, WHO CARES?
If a resident of the UK somehow get's the idea that Facebook *should* be paying more, then it's up to you to CHANGE THE LAW to make it fair. You guys have elections, you elect the people who write the laws, go make your case with them and insist they change the law..
I get so tired of this, "all big corporations are evil" narrative, especially for companies which are FOLLOWING THE LAW. IMHO MOST companies follow the law, both because it's good for business and because folks don't like going to jail. So can we please stop with this narrative? It's not valid.
"File to fit, pound to insert, paint to match" - Aircraft Maintenance 101
You do pay out that £35Million if its been on the books as future liabilities and it matures in the current financial year, so long as your cash flow allows you to.
The problem here is the confusion that deferred bonuses and share options creates in situations such as these - the options and bonuses were earned in previous years, and matured in these accounts financial years, so it generates an "odd" impression of the current years accounts.
That's the same thing as saying the employees pay the utilities for the electricity that keeps the lights running in the shop, simply because they are employees there.
If the money's not coming out of the mutually agreed upon salary the company pays the employees, then it's bullshit to target it as you are doing. When employees aren't paying federal income taxes, they literally aren't paying the taxes - it's not coming directly out of their slice of the pie. If they are not having money withheld from their checks to send to the government for federal taxes, and by April of the following year they don't have to pay anything - they simply aren't paying federal taxes. They may pay taxes in other situations, such as state sales tax, property tax, etc, however the fact remains they are not paying federal income tax themselves.
It's not that hard to understand. People like you are just trying to muddy the water to maintain victimhood.
Correct. And income tax is generally higher than corporate tax, so the UK government actually got more taxes out of this than they would have if Facebook had taxed this at corporate rates. Which means that anybody who complains about this as if it were depriving the UK government of money is a blithering idiot.
Do the math. How many people died in the 20th century due to government versus corporate crimes?
-jcr
The only title of honor that a tyrant can grant is "Enemy of the State."
What's going on is that Facebook (and other companies like Google) claim that their revenue occurs in other countries (such as Ireland). Facebook, Google, etc, employ many people with "Sales" titles in the UK. These UK-based employees sell to UK companies, yet these Facebook, Google, etc. claim that the sales were not made in the UK and so the revenue that is a result of the activitites of these UK-based sales people is not included in the profit and loss calculations for Facebook's UK tax accounting.
The real "Libtards" are the Libertarians!
No, you are ignorant.
This isn't a matter of paying bonuses vs. paying corporation tax. This is a matter of accurately reporting revenue in the country where it was really earned. What is happening is that Facebook is reporting that sales made by UK-based sales people to UK-based customers (to send advertisements to UK-based computers) is earned in Ireland.
If the revenue were properly reported and the taxes paid, the bonuses would still be paid, so the income tax to the UK government would be the same.
The real "Libtards" are the Libertarians!
I think the point of TFA is that facebook hid most of its profits by accounting magic rather than distribute them to employees. The figure for employee bonuses is presented to highlight the scale of profits facebook should have been making.
Sort of, yes.
The thing is, Facebook and other massive transnationals (Google, Apple, etc) stow their IP in a country with very low corporate tax rates (Ireland and Cayman Isl. are common), then that parent company charges huge "management fees" or other fees to use the IP in the target country (UK in this scenario). So if they projected to make an annual profit of £100m in the UK, the Irish entity would charge £100m in fees. Facebook UK now makes no profit, but Facebook Ireland makes an additional £100m. Any additional profits can be handed out as bonuses (if they're going to lose a significant portion of the money anyway, they'd rather give it to employees than the government).
This is all completely legal, and has been the bane of politicians around the world for decades. If there were an easy fix, it would have been done by now.
Of course, that's just the ELI5 version, it all gets much more complicated when used in the real world. See here for more.
b8b1 4ea5 805c b150
1ac6 433b 1c96 d459
06b5 8e20 9df1 0308
efee ecdc b304 d061
5b34 1c28 c7d2 c820
7dd2 e383 8b31 eb5b
da18 9cd3 8204 6c9c
219e 6387 ec20 d481
That would be a fair comment if they'd paid much tax over the past 4 years (the typical life span of share vesting schemes in the tech industry), but Facebook paid £0 corporation tax in the UK in 2012, 2013 and 2014.
When you make a £28.4MM loss, you would expect heads to roll but instead FB continues to award their staff. The employees have been rewarded for their loyalty with a huge reward as their options/stock awards vest, which is something that FB can't apparently afford to keep paying out in the UK, based on their losses. They're either lying to HMRC or they're lying to their investors!
National healthcare performance UK - Expenditure per capita UK $3,405 US 8,508
https://www.gov.uk/government/...
I am from the Internet you ignorant fuckwit.
Facts are history now plebs have politics for religion on social media.
As well as the fact that they aren't giving all their profits away as bonuses, there's also the fact that expecting employees to pay the tax rather than the company paying it is a very different thing indeed. Even *if* the government would get the same either way. Which they wouldn't as rates and allowances vary.
Wrong, wrong, wrong. How many more people have to explain to you. Why are you shilling for Facebook?
I assume a large chunk of those bonuses are going to normal employees (tech companies often have 10%+ in yearly bonus as a normal thing).
Those bonuses are taxed. And then they're spent, and thus taxed again.
I dunno what's the income tax on that side of the world, but I'm going to go on a limb that it's going to be more money than corporate tax.
The government serves the corporation. It is just following orders.
“He’s not deformed, he’s just drunk!”
I understand that part, what I don't get is what's the long game? They build a huge amount of capital in Ireland, Bermuda, the Caymans, etc. but then what? If they want to actually use that money for something in a country like the US they're going to have to pay taxes on it, no? Seems to me it's really a tax deferral strategy and not avoidance?
So far, none have. Go give it a try.
I'm "shilling" for free markets and liberty; those do indeed pay me.
Hey now, I wasn't trying to argue your points, just trying to figure out more about what kind of extremist you are. I suppose in the absence of a straight answer, I can surmise that you're one who assumes your contrary view of the world is the natural, logical one, and everyone else who opposes you is deluded, ignorant, or in silent agreement with you, the continued argument for and participation in government worldwide notwithstanding. If that's the case, it's a shame your obvious passion for the issue is being squandered by your insistence on approaching it ideologically.
And when you bring up a question that is as much of a non sequitur as that one (and I'm saying that because you haven't connected A to B, not that it is or isn't possible to do so), it doesn't bode well for actually discussing the matter at hand.
No, there is in fact no difference who pays the tax.
True, the rates are different: by giving out this money in bonuses, the UK government ended up with more revenue. That's unfortunate, but kudos to Facebook to still doing it anyway.
If you mean the company takes their NI commitment into account when deciding what to pay people then yes I agree.
This...
Every expense to a company that is tied to an employee, is money that comes out of the employee's pocket.
When I pay someone $15/hr, their real cost to me is about $20/hr, give or take.
When I budget for them, I'm really budgeting $20/hr. If they aren't worth $20/hr, I don't hire them. If I could, I'd give the whole $20/hr to the employee, but the government takes about 1/4 of it, and that is before they take part of the $15 as well directly from the employee.
So the employee might net $12/hr at the end of the day, after FICA and income tax, while it cost me $20/hr to have them, making the true tax cost MUCH higher than is obvious to most people.
They do report the UK revenue accurately: it's 105 million pounds. But they get taxed on profits, not revenues. Profits is what is left after expenses are accounted for, salaries and bonuses are paid, and money is paid back to the parent corporation, which after all, created the ideas that allowed Facebook UK to make any revenue at all.
They're either lying to HMRC or they're lying to their investors!
Neither... FB exists as a company outside of the UK, so you're only looking at a small slice of it...
And depending on how Facebook is setup the government would have actually received MORE money as personal tax rates go up with income.
Income Tax rates and allowances
Depending on how Facebook is setup in the UK this may not have been taxed as income (there's dividends, capital gains, etc.), but at nearly all levels of income the percentage is higher than the 20% corporate tax rate.
The only story here is Facebook isn't holding a lot of money in their British office. It may be going to the great Irish tech tax haven, but that's not Britain's fault.
I think the point of TFA is that facebook hid most of its profits by accounting magic rather than distribute them to employees. The figure for employee bonuses is presented to highlight the scale of profits facebook should have been making.
Hid?
How much money did Facebook Ireland or Facebook Cayman Islands make?
You might find it there.
And Facebook has been around for longer than 2012, 2013, 2014 and 2015, so its had time to accrue year on year liabilities like this. Facebook hasn't just taken one single liability, its actually done the intelligent thing and spread the liabilities out across the years so it doesnt get hit with one £300Million bill.
bonus cows make bonus moo.
It's not really different... And if you paid out all your money in wages, then those employees would have been paying income tax so the government would have got its cut anyway.
Note that frequently one nation or another caves and has a 'tax holiday' on repatriating money. So they stockpile and invest even if it's a dead end and one day they can shuffle it around. So deferral of the tax can have very nice situations. I'm sure there's other accounting games that probably revolve around repatriating during some period with relatively poor business results to be able to avoid it looking like profit.
XML is like violence. If it doesn't solve the problem, use more.
This site is hilarious now. This is basically an article that nobody with any sense gives a flying fuck about (clue: the people getting the money pay taxes, corporate taxation is populist flim-flam) meant to rile up the "progressives" who have not said sense. Sensationalist nonsense.
Your example is a simple case. My employer is a multi-national head-quartered in a small city. They pay decent compared to the city, but poorly compared to the nation. Where they do well is their benefits are top notch. Most people here get more in benefits than in salary. We get something like $30k+ in benefits, because of great health insurance, life insurance, accident insurance, longer term disability insurance any many other things that all employees get.
So far, none have.
Then you're blind as well as stupid.
I'm "shilling" for free markets and liberty
As I say, an idiot.
So as to not make "pay no taxes" a *complete* lie.
No, they realize that there is a context when talking about what people pay in income taxes so that the statement "pay no taxes" means "pay no income taxes". They aren't talking about sales taxes, for example, when they say "pay no taxes", nor do they expect you to jump up and down and say "but they pay property taxes and gas taxes and ...". Nor are people who complain that "the rich" don't pay "their fair share" talking about gasoline or sales taxes. They're talking about income tax. The context is important.
But then you point out another bit of truth: "the company pays on your behalf". So that tax is not paid by the employee, it is paid by the company on the behalf of the employee. Not the same as the employee paying it. Even if you consider that whatever the company pays on the behalf of or because of the employee could be paid to the employee in wages. Were the social security and other taxes paid by the company to be eliminated, it is unlikely the employee would be paid more. Why would he? He's working for the money he's getting now, why would there be an automatic raise?
The point is that the UK government gets its taxes either way
No, the point is that they gave their staff massive bonuses and then funnelled the rest of the profit out of the country so that they could avoid paying corporation tax on it. The government lost out on tax due on that profit because they used a loophole to avoid it.
It's legal but morally dubious and there are international efforts to stop it happening.
const int one = 65536; (Silvermoon, Texture.cs)
SJW, n: "Someone I don't like, and by the way I'm a fuckwit" - AC
If I could, I'd give the whole $20/hr to the employee,
Very altruistic, but illogical and unnecessary. If your employee is willing to work for you for $15/hr, why would you pay him $20/hr? Just because you have the money? You might. I don't know. But a rational businessman would see that his costs for labor have dropped and he can cut prices and increase sales, or maintain prices and return the profit to the investors and shareholders. In a big company, it isn't your money to just hand out as you wish, it's the company's money and there has to be a reason to spend it.
That's not cynical, that's good business.
The long game is, 'build value for shareholders.' Company A with $100m in net income and $100m in cash reserves is worth more than Company B with $100m in net income and $0 in cash.
But you're right. Cash held overseas is simply worth less because it costs so much to transfer it back to the US. That's why I think a lower corporate tax (when combined with other tax changes) could encourage investment and higher salaries in the US by letting companies bring much of the $2.1 trillion currently held overseas back to the States.
Hate the game, not the player.
Are you a total fuckwit?
Revenue: £105m
Salaries/bonuses: £35m
Other costs: £70m
Profit: £20k
Tax paid on profit: £4k
The fact that employees also pay tax on their salaries is totally fucking irrelevant.
Now lets explore that £70m in 'Other costs':
Legitimate business expenses: £40m
Fucked in transfer pricing to avoid tax commitments: £30m
Tax that should be paid: x% of £30m ~= £6m
So Facebook are £6m better off using these made up numbers without touching their employees' pay, or impacting on the tax earned from that pay.
Now do you get it, or do you persist in being ignorant?
What the fuck makes you think that Facebook paid out that money as a tax strategy?
They paid out that money because employing people in London is fucking expensive.
They'd have paid fuck all corporation tax if they were based in Grimsby and didn't pay a fucking bonus at all. The issues is their tax avoidance practices. The bonus figure merely acts as a media friendly way of highlighting just how much cash is sloshing around their UK business.
Ad Hominem really doesn't reinforce your point...
(And before you jump on me, I'm posting AC because I'm literally do not have an account.)
Oh really?
It may be legal, it's not honourable.
The real "Libtards" are the Libertarians!
IIRC, when Apple talked about paying dividends, they had some plan where they would use (some of) their $100B in cash held outside the US to collateralize a loan that they would use to pay those dividends. When you have such fantastically large sums of money, "not being able to repatriate it," is a soluble problem (unless your business is black market pharmaceuticals).
What part of "shall not be infringed" is so hard to understand?
I'd rather see them giving it to the employees who are making the company successful anyway. What's the government going to do with it? I mean besides make it disappear while providing little to no tangible benefit?
So what if a corporation pays little to no taxes? ALL taxes are taxes on people, on consumers. Governments are very good at finding creative ways to tax people so that they think they aren't being taxed. Corporate taxes are just one good example. And further, these same people who are being taxed take umbrage when a corporation "doesn't pay its fair share." But who pays those corporate taxes? You do, because all a corporation does is consider the rate of taxation before pricing their products. It's part of the cost of doing business and part of the cost of the product.
Also, every dollar spent on employee salaries is taxed. Every dividend given to shareholders is taxed. Every increase in corporate worth is taxed. The government "take"
from corporations far exceeds corporate profits. Who do you think makes more money on a gallon of gas? Big Oil or the government?
The real issue here is government's insatiable appetite for taxes. There's always another "program" that "needs" to be funded because some special interest thinks so. And the way it gets funded is by taking that money away from you and giving it to someone else "more deserving."
ALL taxes are paid by the consumer, the citizen. And the fact that anyone gets upset because some corporation paid "less" taxes than you deem "fair" just shows how well the government has deceived you into being a good little citizen.
How about a moderation of -1 pedantic.
Ever drive anywhere? Fly anywhere? Cross a bridge? Benefit from children learning about science instead of building a Mad Max style dystopia on their own, powered by juvenile crime? Then congratulations, the government has done something for you.
Da, tovarishch!
Except ISPs like Comcast and the various cell phone companies. They don't try to keep the customer happy. They try to rape the consumer. (There is such a thing as a business being too obsequious, but it's a frigging network connection. Just let me stream video and whatnot.)
Why would Facebook be paying any UK tax at all? It is not a UK company. Why would it even have a branch there if it couldn't have some tax efficient structure?
Keep crying socialists! There are things you can't have!
Slashdot has really gone to hell.
If Facebook had a rough year and the US part needed to spend $100M more than it took in for expenses, they'd just find a way for the Irish company to pay the US company $100M in fees (instead of the other way around). Since that's offset by genuine expenses, no tax there.
Socialism: a lie told by totalitarians and believed by fools.
By "staff", I assume you mean VPs and other directors. I would love to see the STDEV on that 210k "average" employee take home pay figure.
That's not cynical, that's good business.
Good business is understanding that your employees are part of your stakeholders, even if they don't own shares in the company.
Look at CostCo, they pay better than most retailers and have one of the lowest employee turnovers in the business.
They don't have to do it, they do it because they know that treating employees well is good business.
You can't run a company of any size beyond yourself without employees, so treat them well and they will return the favor.
---
Let me give you an example... If Walmart tomorrow decided to raise the base pay there to $15/hr, two things would happen.
A whole lot of people would suddenly have a different view of Walmart, and they'd get a million applications the next day.
They would be able to hire and retain good employees who care about the company and their corporate imagine would instantly improve by a mile.
I used to shop at Walmart, but I've moved most of that away because I don't like the way they run their business. I'd go back if they did the above. And keep in mind, I'm a dyed in the wool right wing conservative. But just being a Republican doesn't make me a heartless jerk (yes, I know, some of the people are, but don't paint us all that way).
Oh I'm sure there are some games where you can repatriate some of it and avoid some taxes covering losses during poor periods of performance, etc. but at the end of the day it would seem to me that would only be a small fraction of the total amount held in these havens. It seems like a lot of it is just holding on to money for the sake of holding on to it, it's not enriching the shareholders to have such stockpiled money, nor is it enriching the executives, it mostly seems silly to me but I have far to much common sense to work in high finance.
Sure, but at the end of the day those expenses could otherwise just be paid for with a loan which could be repaid in a better year as a legitimate expense you could write off (plus write off the interest) so they're really not escaping anything they couldn't do anyway, right?
Yeah, I'm typically pegged by others as one of those 'tax and spend' types but really it seems to me that these corporations have become so adept at avoiding taxes that they don't actually contribute much at the high tax bracket they're in anyway. It might increase total revenue collection $ if we lowered the corporate tax and made it more cost effective for them to simply pay the tax than to avoid it.
Also, I still don't understand how having $100m in overseas reserves you can't really use adds much value for shareholders, sure it adds some but because of the cost of actually using the money it seems like the value it adds would be roughly the same as repatriating the money and paying the taxes on it in the first place.
Ok, so that's kind of an interesting scheme. Except that someday that loan will come due and you'll have to repatriate the money to pay it off at which time you'd pay taxes, right? So at the end of the day you've just deferred them longer.
They don't have to do it, they do it because they know that treating employees well is good business.
I assume you were already treating them well. Well enough that they chose to work for you, at the wages you were paying. Weren't you? If suddenly the cost of an employee dropped by $5/hr each, there is no incentive to give that to the employee and not return it to the stockholders or investors.
If Walmart tomorrow decided to raise the base pay there to $15/hr, two things would happen. A whole lot of people would suddenly have a different view of Walmart, and they'd get a million applications the next day.
Obviously Wal-mart does not need a million more applications for the jobs they have, or they'd be paying more in an attempt at attracting them. If you can't get the employees you need at the current rate of pay, that is incentive to raise the rate of pay.
I dare say that Wal-mart has enough applications for the positions they need to fill. And that if an employee is not performing they have little incentive to keep them on, they'll just hire a replacement. Yes, a replacement costs money, but so does giving every employee a raise just because the cost of the employees has gone down.
They would be able to hire and retain good employees who care about the company and their corporate imagine would instantly improve by a mile.
That you think people would have their opinions of Walmart bought by handing out money, well. People are fickle, and buying goodwill is a losing proposition in the long run. Some people might change their mind about the elephant in the room that shoves local businesses out of town and cuts quality of every product it sells by forcing suppliers to cut their prices to the bone, but I don't think many people would.
I would not, for one. The day they tried charging me for the free reusable shopping bag they had given me just two weeks before, and neither the manager who was watching my discussion with the clerk nor the corporate ethics office cared, they lost my custom forever. I would not change my opinion of the company just because they started paying the greeter $50/hr. My opinion isn't for sale.
The point is, you personally might think it is a good idea to start paying your employees more were you to get a $5/hr discount on their benefits, but most employers would realize it is not a justifiable cost. In any case, the taxes paid "on behalf of" an employee are not taxes paid by the employee.
Also, I still don't understand how having $100m in overseas reserves you can't really use adds much value for shareholders, sure it adds some but because of the cost of actually using the money it seems like the value it adds would be roughly the same as repatriating the money and paying the taxes on it in the first place.
That's easy: you can spend it overseas without an additional tax burden.
Just don't do anything stupid, like spending it in the U.S., and you're golden.
I understand that part, what I don't get is what's the long game? They build a huge amount of capital in Ireland, Bermuda, the Caymans, etc. but then what? If they want to actually use that money for something in a country like the US they're going to have to pay taxes on it, no? Seems to me it's really a tax deferral strategy and not avoidance?
What would you use it for in the U.S.?
Build factories? What kind of idiot builds factories in the U.S.?
(1) Labor laws are more strict
(2) There are more unfunded mandates on U.S. labor, since there's no single payer medical, etc.
(3) Environmental laws are more strict
(4) Raw materials, such as Lithium for batteries, would have to be imported
(5) Component materials, such as chips, would have to be imported
It makes no sense; about the only thing of value to use that money for in the U.S. would probably be real estate in SF or NY, etc..
Sure, but it was money made outside the US to begin with anyway, right? I guess I don't have a real problem with it then being spent outside the US. I also question how much you can really spend outside the US which will be of any substantial benefit to the corporation or shareholders. Sure, you can buy some subsidiaries like Microsoft bought Minecraft but at the end of the day what are they going to do? probably make money? so you have just compounded your problem and now you are stockpiling even more money you can't use where you actually want to use it.
Oh really?
It may be legal, it's not honourable.
Since when have businesses, such as the East India Tea Company, ever given a flying F*ck about honour? Banks don't care, why should anyone else? Because corporate entities have high E.Q.'s, and are capable of "feeling bad"?
Change your laws, and you won't have this problem. Force them to execute the contracts in your country, rather than in Ireland.
Oh wait; you have that pesky little problem of being an E.U. member state, don't you? Sucks to be you, or at least sucks to be you with a higher corporate tax rate than any other E.U. member state...
Does the government physically build the roads and bridges?
Well... no... contractors do that
Does the government pay the contractors?
Well... no... the taxpayers do.
So... What... would you say... the government does here?
Why not just skip the middlemen? (politicians getting rich after they get into office?!)
Except, you know... Roads, emergency services, water, infrastructure, disaster relief, regulations to make your air breathable and your food safe... Yep, absolutely nothing.
If I could, I'd give the whole $20/hr to the employee,
Very altruistic, but illogical and unnecessary. If your employee is willing to work for you for $15/hr, why would you pay him $20/hr? Just because you have the money? You might.
I wouldn't.
If I had an extra $5/employee to throw around, and it cost me $15/employee, and I currently had 9 employees, rather than paying each of them the extra $5/hour -- I'd create 3 more jobs at $15/hour, and expand my business.
That's good business.
The main complaint is that multinationals offshore their profits by e.g. licensing key bits of IP from a subsidiary in a tax haven. 'We would have made a profit, but we paid $100 million to use the Facebook logo to Facebook Holdings (Cayman Islands). ' (not an actual quote).
So the answer is, the US government may collect some of it down the line but not the British government.
Unless they decided spending the money in Britain was a better idea than spending the money in the U.S..
Then the British government may collect some of it down the line but not the U.S. government.
Moral to this story: Be a desirable place to invest funds, and people will invest funds there.
TFA says it's 105 million pounds for the UK.
Really? Paying their employees well and paying more taxes than they would if they took the money in profit is not honorable according to you? I think there is something wrong with your sense of "honor".
Benefit from children learning about science instead of building a Mad Max style dystopia on their own, powered by juvenile crime?
You clearly have not visited an inner city neighborhood in the U.S., nor a U.S. public school, in a long time, have you?
You do your calculation as if Facebook were a completely autonomous UK enterprise. But Facebook UK wouldn't exist without Facebook US and the intellectual property and users that Facebook US brings to the table. Taking 30% of UK revenues out of the UK to compensate the US company for that is more than legitimate.
What you really advocate is stealing from Americans, nothing more.
The biggest problem is why Facebook UK made a loss (thus avoiding taxes) -- mostly it was because of the high prices of the letters a, b, c, e, f, k and o which it rents from Facebook US at extortionate rates.
The actual biggest problem: Someone fucked up, and they had to pay £4,327.
Yes, the probably "funneled" about 30% of their revenue out of the UK (according to Cederic's analysis, who thinks like you do).
I think that's entirely legitimate; think of it as licensing and franchising fees to Facebook US. Maybe the IRS has some legitimate claim to that money, but not the UK.
No, but the company simply adjusts salaries and compensations according to how much they have to pay.
It doesn't matter whether it's "the same money"; one pound is one pound to the UK government, regardless of who wrote the check.
(Sorry this simple fact is so baffling and disturbing to you that you need to resort to insults.)
Reasonable levels of transfer pricing are legitimate and valid costs of doing business, and the Facebook brand and website are sensible cross-charge items.
Running the UK operation at a permanent loss makes no sense whatsoever, doesn't sound reasonable or realistic, and is an accounting fiddle to avoid tax.
Stop pretending otherwise, and stop making stupid claims like "stealing from Americans" because you're losing the argument. Just fucking admit you're wrong and just fucking admit you're a twat, because it's pretty self-evident to everybody else.
Reported revenue. In the article that I linked to, the real revenue for 2103 was estimated at 371 Million pounds. Or are you simply not capable of reading anything that might be critical of Facebook?
False dichotomy. Facebook manipulates its reported revenue in order to minimize reported UK profits. If Facebook paid more taxes, it would still pay the same bonuses. Do you really think that those bonuses are paid out of a sense of altruism? Surely even your libertarian philosophy would allow you to see this simple fact?
This is my last response to you. Let me suggest that you go and collect your check from the Koch brothers (or whatever "think tank" or theirs is paying you) and then do some real thinking, instead of parroting their self-entitled talking points.
The real "Libtards" are the Libertarians!
Facebook isn't paying taxes for two reason: (1) transfers out of the UK, which you estimate at 30% of revenue, and (2) massive bonuses, which are another 30% of revenue. Both of these are entirely legitimate as far as I'm concerned. Your own numbers destroyed your own argument. Just admit it.
It's worth pointing out that the East India Company was a government-established monopoly with lots of special rights and privileges, all courtesy of the British government. You can hardly blame all businesses for such an arrangement. In fact, many businesses hated and objected that they were prevented from competing by the British government.
A lower tax rate they won't pay anyway, so back to square one with you.
It's pretty simple really....
Corporations exist for a single purpose : to make money. Not to "do good", not to "help humanity", and certainly not to contribute to the society that they do business in. They. Make. Money. It's beautifully sociopathic. It cracks me up that we treat them like people...but only when it benefits them. Try to get away with dumping thousands of gallons of poison in your local watershed and you'd get arrested and fined into oblivion....but if you're a corporation, well...you gave us a couple of jobs in exchange and your lawyers are awesome so here's a slap on the wrist for you and a 'don't do it again'.
Corporations are like fire. Great when they're controlled and in their place. Let them rage out of control and they'll burn the planet to a cinder without a single thought or care.
Your mind is like a parachute. It works best when it's been opened.
My own numbers were fucking made up, or did you miss that part?
If you read another poster on this discussion he highlights that transfer pricing is an even lower percentage of revenue than my guess - this year.
I stand by my statement that over a period of multiple years, Facebook is acting dishonestly, exploiting a legal loophole and paying less tax in the UK than is reasonable or should be expected.
Anything else you'd like me to admit, or are you going to make further claims that the Facebook IP (not charged out of the US, incidentally) is worth more than the fucking revenue it generates?
Looks like FB is ripping you off.
Not so keen on your overseas tax havens now, are we?
-- Tigger warning: This post may contain tiggers! --
I assume you were already treating them well. Well enough that they chose to work for you, at the wages you were paying. Weren't you? If suddenly the cost of an employee dropped by $5/hr each, there is no incentive to give that to the employee and not return it to the stockholders or investors.
Sure there is, because someone would do it, raising wages for all. It becomes a competitive environment.
Min wage is already irreverent for most companies, few places still actually pay it. I haven't paid it for more than 10 years. In fact, my current lowest paid employee is $12/hr, and that is for part-time seasonal work. I pay entry level starting employees $15/hr, and I get my pick of the better ones for that price.
Obviously Wal-mart does not need a million more applications for the jobs they have, or they'd be paying more in an attempt at attracting them. If you can't get the employees you need at the current rate of pay, that is incentive to raise the rate of pay.
While true, the question becomes, what kind of world do we wish to live in? Henry Ford had the right idea, if your employees can't afford to be your customers, then you have a problem.
Do we really want the majority of the capital held by very few people with everyone else a virtual slave to that capital?
People are fickle, and buying goodwill is a losing proposition in the long run.
I hope you're wrong, because with that worldview you have no incentive to do the right thing.
If people or companies can't change and become better to earn your goodwill back, then why bother changing?
What incentive does McDonalds have to make better food if you won't give them another try?
Corporations should paid zero tax, when you consider the employment, technology and support industries they bring to the economy.
Fuckin socialists always want to kill, dismember and distribute the golden goose to the "poor", instead of using its eggs to pay employees and for services, and to hatch new geese. Shallow ideology.
Hey government, why not just simply fuck off out of private enterprise's way.
No it wouldn't pay the same bonuses if it was declared as profit. FFS profit is AFTER expenses such as salaries and bonuses, therefore if the money was declared as profit instead it is taxed (at a lower rate) and by definition not paid as salary / bonus. How hard is that to understand!?
With these kinds of losses they should pull out of the UK. The fact that they're not tells you that they're actually making money at it.
So - from all of the 'bonus' money paid to employees... none of that income is taxed? The UK just gets paid from a different pot... it does not mean that Facebook money is not going into the state coffers...
Except half of the employees' renumeration was in employee share schemes, which if you follow certain rules are not taxed as income, but as captial gains - a much lower rate than either corporate tax or income tax.
What's the problem here? Should facebook not be generous with its employees?
I have no problem with that. Not that I like FacistBook, but they all do it this way. But while many are beating up FB for paying next to no taxes in GB, they ignore the aspect that FB has created many jobs there. Is this not good enough in its own right???? Or am I missing something here?
You don't pay taxes on revenue, you pay taxes on profit. By paying their employees more they make less profit and thus pay less tax. Those employees' paychecks are taxed however.
Employee shares are taxed as income, not capital gains. Even if they were taxed as capital gains, capital gains are taxed at 28% for these people, more than the corporate tax of 21%. Try again.
No, but the company simply adjusts salaries and compensations according to how much they have to pay.
No they don't. There's isn't a choice here. Whatever is paid to the employee is taxed as income. Employers pay employees what they need to pay to keep the ones they want. Board members pay themselves as much as they can get away with. In neither case is the amount decided based on what corporation tax the company is or isn't paying.
It doesn't matter whether it's "the same money"; one pound is one pound to the UK government, regardless of who wrote the check.
It matters who pays it, and it matters how much they pay. This idea that if the corporation don't pay, the employees do, and thats equivalent, is moronic.
The article you linked to provided an estimate by "eMarketer" for 2013 for revenue "from the region", and you compare that against a reported UK income for 2014.
Of course not. They were paid to retain valuable employees. That's why companies pay large bonuses.
Let me suggest to you that you at least get your years straight and that you stop being less gullible.
I expect having that opinion in the USA is akin to beiing a marxist.
I do not want your cheap brainburning drugs. They are useless for work. And I am a working man today.
They were your estimates you were using to support your point. I was pointing out that using your estimates, what Facebook did was reasonable.
Meaning that you have even less cause for complaint, right?
Facebook is acting according to the law: they minimized their tax liability. Acting according to the law isn't a "loophole". If the UK wants to change its tax laws, it should go ahead, but it will suffer the consequences, and there are always consequences. Right now, the UK is pretty popular in Europe for high tech companies and financial institutions to locate there. If the tax rules become less favorable, that may well change. And there are many other forms in which corporations can avoid making profits; for example, instead of leasing their new HQ, they could simply buy it.
In different words, I'm sure you fervently believe that Facebook did something wrong, but so far, you haven't made a good argument.
To a corporation, an employee is an asset like any other. Let's say a particular job generates $100000 in revenue a year. Subtracting, say, $20000 for profit and risk, that means that the company is willing to incur about $80000 in costs for that employee. It makes no difference whether those costs accrue as taxes, workplace safety equipment, benefits, or salaries. If the company pays $30000 in taxes and benefits directly, then that leaves $50000 in pre-tax salary for the position. If it can't find anybody willing to do the job at that salary, the position won't get filled. It's as simple as that.
Of course, corporations usually don't react to tax increases by firing people right away because that essentially means getting out of a business they used to make a profit at and destroying something that cost them a certain amount of money to acquire. But the various strategies they adopt (price increases, automation, etc.) amount to a combination of slower salary growth, job losses and decreased purchasing power.
Shares given directly as remuneration are taxed as income, but these are likely shares vesting under option schemes, which are taxed as capital gains if you follow the rules set down by HMRC. I wasn't aware that the capital gains rate had been raised again, a few years ago it was a flat 18%, and when I last had options it was 10%. Quite likely noone is getting the average, and you have a mixture of people coming in under the exemption limit and paying no tax, and one or two guys at the top who qualify for the special Entrepreneur rate of 10%.
It says "shares" and that's what they are.
Even if they were options, it wouldn't make a difference. Options are either aren't counted at all as expenses (in which case they wouldn't reduce FB's corporate tax) or they are expensed at their value (in which case the UK government would still get their cut as capital gains, just a few years later).
To a corporation, an employee is an asset like any other.
The world is not really like your concept of it.
Let's say a particular job generates $100000 in revenue a year. Subtracting, say, $20000 for profit and risk, that means that the company is willing to incur about $80000 in costs for that employee.
Even within the capitalist mindset that's mistaken. That only defines the top end of what an employee with perfect knowledge of cause and effect would pay. The actual pay will be the smallest amount that gives them confidence they won't lose a worthwhile employee. Itself altered by complexities like the wider job market and pay scales.
Nor does it describe what board members are willing to pay themselves. Which is the maximum they think they can get away with, regardless of what, if it were possible to calculate, was the revenue they add.
Your model isn't even adequate for a computer SIM game. Let alone a description of the real world.
And even your model doesn't suggest that tax avoided by corporations is instead paid by it's employees. That's just mindless drivel.
I have no love for foreign companies who avoid tax, but I don't think they do it simply by lying about their revenue.
Generally, multinationals use intra-group payments of "fees" to reduce tax liability in one region, with the credit side being in no/low tax regions.
To have a right to do a thing is not at all the same as to be right in doing it
"Worthwhile" is exactly the cost/benefit tradeoff that I describe.
Again, that is exactly the economic calculation I describe.
It doesn't require "perfect knowledge", it simply requires a best effort estimate. Those companies that get it right on average survive, those that get it consistently wrong go out of business.
Companies look very closely at how much they spend on employees. It's why, for example, Twitter just laid off part of their work force.
I don't know what kind of sinecure you have for a job, but in the real world (sales staff, cooks, customer service, etc.), this is exactly what companies do.
Actually, let me put that differently: it is the companies that are better on average than their competitors that survive. They may be much worse than theoretical optimality assuming perfect knowledge. They get it "right" in the sense that they are making the best possible estimate anybody knows how to make given the current state of knowledge.
If you followed UK news, you would know that this has been discussed quite a lot in the past (not so much recently). Of course HMRC are interested, but it appears that what Facebook is doing has been legal.
Google the terms "google tax uk" to see what is going on. The laws are being changed.
The real "Libtards" are the Libertarians!
And there are many other forms in which corporations can avoid making profits; for example, instead of leasing their new HQ, they could simply buy it.
No, this would increase their operating profit (as they wouldn't be deducting the lease payments). Buying a building is capital expenditure.
To return to the main point , it is a fundamental principle of accounting (and taxation) that transfer prices must be reasonable, based on genuine business activity and consistent from year to year, as otherwise you can simply make your profit figure whatever you feel like (which is as close to zero as possible for tax purposes).
The problem is that Facebook is moving its profits out of the UK via the "Double Irish arrangement" transferring them to somewhere where they will attract less tax.
To have a right to do a thing is not at all the same as to be right in doing it
Yes, the probably "funneled" about 30% of their revenue out of the UK (according to Cederic's analysis, who thinks like you do).
I think that's entirely legitimate; think of it as licensing and franchising fees to Facebook US. Maybe the IRS has some legitimate claim to that money, but not the UK.
If the profits were simply transferred to the US and subject to corporation tax (or whatever the equivalent is) there, it wouldn't be such a massive issue.
Unfortunately, the profits are transferred to places that attract very low tax, and so globally Facebook avoids paying Corporation tax.
To have a right to do a thing is not at all the same as to be right in doing it
Employees aren't paid out of taxes, they're paid out of the revenue. Profits are Revenue - Expenses(one of which is payroll). I'm not sure where bonuses figure in, though. As a non-accountant, my gut feeling would be that bonuses necessarily come out of profit, or they're not really bonuses.
If you pay an employee, it makes no difference under UK tax law whether it's salary or a bonus, it's all taxed the same.
To have a right to do a thing is not at all the same as to be right in doing it
No, the point is that GP is a liar. The taxes are only applied once in either case.
No, the point is that GP is a liar. In either case, the taxes are applied only once.
You're saying some guess better than others. And you have faith that the better guessers are rewarded. Which again is a long way from your stupid concept that employee tax replaces tax that a corporation avoids paying.
Sure there is, because someone would do it, raising wages for all. It becomes a competitive environment.
The company that does it has no incentive to do so, unless they have opening they cannot fill. If they do, then they have incentive to pay more irrespective of the change in tax costs, and they would already be doing so.
Once that company fills all it's openings, the other companies have no incentive to raise wages because they're the only ones hiring -- if they are.
If altruism were economic law, the US Labor Relations Board would not exists.
While true, the question becomes, what kind of world do we wish to live in?
A realistic one.
Do we really want the majority of the capital held by very few people with everyone else a virtual slave to that capital?
I'm sorry, what? I'm talking about a very specific issue of whether an employer has incentive to pass a savings on employee cost onto the employee or back to the people who invested their money in the company. Leaping from that to a statement about "everyone" is silly.
I hope you're wrong, because with that worldview you have no incentive to do the right thing.
I'm sorry, again? Losing customers because you have poor service is incentive to provide better service. Paying people above market rates doesn't do anything for the customer except increase costs, and thus prices.
If people or companies can't change and become better to earn your goodwill back, then why bother changing? What incentive does McDonalds have to make better food if you won't give them another try?
You changed it from Walmart to McDonalds, but I'll play along. When did it become my job to make sure McDonalds makes "better food"? Why should I care what McDonalds produces if I am not going to buy anything from them? Are you saying I should continue to buy things from a company I think is ethically bankrupt? What incentive do they have to change if I just keep shopping there as if nothing happened?
I did my part. I told them what was wrong and why they weren't seeing me again. The incentive to change is that they won't do the same thing to current customers and lose them, too.
The money is indeed stockpiled (in the end it's just a number in the bank) but that money can then be loaned against, invested through holdings and shell companies and is part of your 'net worth'. All of these companies, even though they have billions in cash, have also billions in outstanding loans because it is cheaper to loan the money than getting it out to physically pay someone. These companies don't buy things like you and me, they just promise the banks that they have x amount much like the bank does when it gives you a bank statement.
Custom electronics and digital signage for your business: www.evcircuits.com
It's more complicated than that, but let's not dwell on it. In the end, corporations have plenty of ways of making profits disappear or shifting them around internationally.
I don't see a "problem" with that. I see little reason why Facebook should face a big tax liability in the UK: the UK didn't build Facebook, its employees are well rewarded and pay stiff taxes, and the UK is already compensated for its troubles through numerous other taxes.
Yes, corporations can. And ultimately, there is nothing lawmakers can do about that.
That's something for the US to worry about, not for the UK. The point is: no matter what, this money isn't the UK's.
Good for them. Hopefully, it will induce the UK to lower its own taxes, because people and companies do leave.
And I pay extra for each of those things. If everyone got free education and health care, perhaps even a maintainable pension (social security), that would be spending tax dollars.
Right now roads and bridges get payed by gas tax, our schools and local infrastructure by property tax, utilities are self-funding. My and my business' income tax goes primarily to the war department and a host of people and issues that work against my needs (politicians), the rest goes to people that are too lazy or incompetent to get a job or save (or have saved) for themselves. And no, I won't take any benefit of it in the future because the state cannot keep funding it this way for the next 20 years.
So even though I'm half way to retirement, my projected social security income is insufficient to maintain myself even today (if you calculate it out, it would return ~5% of what I've put in to date) not even taking into account the devaluation of the currency by then. So I still need to fund my own pension and health care privately.
Custom electronics and digital signage for your business: www.evcircuits.com
What matters is not whether corporations make the right cost/benefit analyses, what matters is that they make any sort of cost/benefit analyses for their employees, and they do. Whatever benefit they assign to the employee implies a maximum cost they are willing to incur for that employees, and it makes no difference to them how the costs are incurred. I'm sorry such an obvious and basic economic fact eludes you.
But if FB give their employees bonuses, those employees pay income tax on it. Then when they spend it, they pay VAT. Then the shop that they bought from pays company tax, pays their staff who also pay income tax and then when they spend it there's more VAT again.
So sure FB get off the hook with their corporate tax, but as long as a good chunk of that money is going to local employees, there is still tax being generated.
Intelligent for them, not so much for the British taxpayer.
Unlike Capitalism, Globalization is a giant https://en.wikipedia.org/wiki/... and https://en.wikipedia.org/wiki/... WITHOUT http://en.wikipedia.org/wiki/B... AND http://worldif.economist.com/a...
Casteism
Eh?
Doesn't really sound like it, "Hey bob we are either going to loose this money anyway so we will let you have it", does that sound like they really value your work and want to pay you what you are worth?
Its exactly what they are doing with taxes, the added benefit here is they get to look good to their employees in the process. This doesn't sound like honor, its sounds like choosing the lesser of 2 evils.
That's a ludicrous analysis. The corporation gave away 30 million pounds in profits as bonuses and was left with zero. If it hadn't done that, it would at least have kept 24 million pounds in after tax profits.
Would you rather have 24 million pounds or zero pounds?
I see little reason why Facebook should face a big tax liability in the UK: the UK didn't build Facebook, its employees are well rewarded and pay stiff taxes, and the UK is already compensated for its troubles through numerous other taxes
Speaking as a UK citizen, if Facebook wants to operate in the UK then it should pay taxes on the profits it generates here, but they don't. They charge ridiculous fees from their Irish EU HQ and so they claim they earned no profit. If any business was truly earning no profit on operations in any given country then they would withdraw operations from that country, but the fact that none of the multinationals do this shows that it is all a tax fraud, albeit a currently legal one. If they dont want to pay taxes on profits generated in a country then they are free to choose not to operate in that country.
Yes, I know you want the money, but that's not a justification. Facebook UK can be viewed as a kind of franchise of Facebook US. They only make a profit because of the intellectual property and brand name of the US parent, value created by US tax payers, not UK tax payers. For that, they should pay a large amount of the profits as a franchising fee to the US parent company. What would be a "legal fraud" is if the UK could collect taxes on all the profits that Facebook made in the UK. That's the equivalent of highway robbery, simply taking money because you have the power to do so and want it.
Again, try to come up with a justification for why the UK should have a right to that money.
Corporation tax comes *after* the business' expenses. Including everything you pay to employees.
Employees, individually, pay taxes on what they take home.
Corporation tax exists in part to prevent corporations from sitting on piles of money - it encourages them to pay money out to employees, where those employees will be taxed (at a higher rate than corporation tax), and can use the remainder for, you know, buying things.
-- 'The' Lord and Master Bitman On High, Master Of All
Makes no difference to the employee, or makes no difference all around?
I can see that if you only tax a company's gross revenue that it wouldn't make a difference. Is that the case in the UK?
What if instead you tax gross revenue at a lesser rate (or not at all) and tax net profits? By the language definition, payroll is a cost of operation that would not be included in "net profit" so the money used to pay employees would only see the gross revenue tax event and the paid-to-employee tax event, while bonuses from a linguistic point of view are "not part of the normal payroll" and are discretionary on the part of companies, so they would presumably be paid based-on and out-of the profits. The money would then see all of the tax events and effectively be taxed at a higher rate (although from the employee's point of view it would all be the same rate)
I don't know how it really is. I was just stating how a reasonable interpreter of the language (i.e. me) would assume things are (absent a cynical assumption that accountants and bureaucrats have twisted the language and the law the point that no reasonable interpretation is reasonable any more).
Can you be Even More Awesome?!