His analysis of the times leading up to the collapse and the runaway 1920's are spot on, and what I"m referring to.
We were discussing the efficacy of the War on Poverty. A historian from the 1930's has nothing relevant to say about that. Many of the fiscal and social consequences of welfare programs take many decades and several generations to manifest themselves.
I pointed to that article for two reasons. First, it contains raw data supporting my point: the poverty rate was falling just until the "War on Poverty" started. That's just an economic fact, independent of whatever interpretation the Heritage Foundation puts on it. Second, I wanted to see whether you are a partisan bigot, and your response suggests you are. Thanks for the confirmation.
The stuff I cited is hardly progressive drivel.
You stated " Read some history, I recommend the financial historian Frederick Lewis Allen. The stuff he wrote in the 1930's rings true today. His analysis of 1920, could have been written about 2000." Fact is, Allen was the editor of Harper's Magazine and a part time historian. Even if he had been an economist, in 1930, there was neither the data nor the economic theory to even begin to make sense of the New Deal or the Great Depression; what Allen wrote may appeal to you, but other than that, it's irrelevant. Even today, contrary to what you imply, there is no agreement among economists about the causes or consequences of the Great Depression or the New Deal.
Shares given directly as remuneration are taxed as income, but these are likely shares vesting under option schemes
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).
A year later, Long-Term Capital Management lost $4.6bn (£3bn) in less than four months; a bailout was required to avert the threat to the global financial system.
The problem with Long Term Capital Management wasn't that they used bad economic models; people lose money all the time for all sorts of reasons. The problem with Long Term Capital Management was that the government decided to bail them out, based on the views of economists. Bailouts, tax policies, stimulus programs, health care reform, carbon taxes, environmental regulation, etc. have all been justified by economic theories. If you want to see the kind of hubris economists suffer from, just listen to Krugman.
Yes, economics "is not a science" (i.e., it does not make reliable, specific predictions). That is exactly why government should refrain from interfering in free markets, because those interventions are based on detailed specific and economic predictions and models that are not reliable or scientific.
Why would Republicans discredit their primary justification for doing anything?
It is progressives and socialists that believe that economics is sufficiently scientific that the government can use it to run and control the economy effectively; they use economic theory as the justification for everything from Keynesian stimulus programs to reforming health care and making climate predictions.
Free market advocates say that economics is so broken that using it as the basis of government policy is the equivalent as mandating the use of faith healing in health care.
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.
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.
My own numbers were fucking made up, or did you miss that part?
They were your estimates you were using to support your point. I was pointing out that using your estimates, what Facebook did was reasonable.
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.
Meaning that you have even less cause for complaint, right?
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.
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.
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?
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.
Do you really think that those bonuses are paid out of a sense of altruism?
Of course not. They were paid to retain valuable employees. That's why companies pay large bonuses.
Let me suggest that you go
Let me suggest to you that you at least get your years straight and that you stop being less gullible.
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.
You would either have to sell much of the stock immediately to cover the tax liability
Yes, that's what people do. It means that a "$100000 stock grant" is actually worth about $60000 for someone in the 40% bracket. Companies actually automatically sell part of the stock at the time of granting to cover the tax liability. But that $60000 is basically like cash.
It makes sense for almost any business that wants to reward its employees and expects it value to be higher in the future than it is today.
Oh, stock options are great for the business. They are not so great for employees because they are risky to begin with, and that risk is compounded by the fact that the stock options are on the same company where the employee is drawing a salary.
Since when have businesses, such as the East India Tea Company, ever given a flying F*ck about honour?
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.
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.
The turnover rate of welfare tends to disprove your theories. Give me a citation for decreasing poverty pre-New Deal.
You're confusing the New Deal with the War on Poverty. I said that the War on Poverty was a failure, and it clearly was, since poverty rates stopped going down just as it got started:
(The Great Depression itself was the result of failed government policies, and the New Deal hindered rather than helped recovery, but that's another argument.)
Read some history, I recommend the financial historian Frederick Lewis Allen. The stuff he wrote in the 1930's rings true today.
A lot of progressive drivel from the 1930's "rings true today" to many people; that doesn't make it right. I suggest you upgrade your reading.
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.
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.
Fucked in transfer pricing to avoid tax commitments: £30m
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.
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".
That comes with a whole host of new problems, it's really not clear whether the new problems would be better or worse than the existing problems.
Any attempt to reduce police shootings will come with "a whole host of new problems". Private security, however, has a pretty good track record.
I, for one, think the police should be accountable to the public as they are -- we just need better public representation to help enforce that accountability.
Any problem in politics can be solved by "better public representation". It's the unobtainium of politics.
The question you need to ask is how we can address our problems using the bad representation we actually have, because it's never going to get any better. And that means that a lot of problems are best solved outside of politics.
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.
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.
Which is why most companies grant options instead.
Most? I'd like to see statistics on that. Most companies I have worked for have made (taxable) stock grants. Options are something startups like to give out.
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.
No, there is in fact no difference who pays the tax.
Even *if* the government would get the same either way. Which they wouldn't as rates and allowances vary.
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.
Prosecute them. Hold them to a HIGHER standard than the rest of us, not a lower one.
Government-employed police are never going to be prosecuted much by the government legal system, because there are too many close connections.
The only way to realistically accomplish that is to replace a lot of police and security functions with private security companies; those companies are liable for their actions, and they do compete against each other.
Corporation tax and wages are taxed at different rates, so there can be a difference in Treasury revenue between the two.
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.
Yeah, when comparing your corporate salary to self-employment, you do need to keep those numbers into account. But while the employer formally "pays" half of FICA, ultimately, it comes out of your salary either way.
Slashdot Mirror
We were discussing the efficacy of the War on Poverty. A historian from the 1930's has nothing relevant to say about that. Many of the fiscal and social consequences of welfare programs take many decades and several generations to manifest themselves.
I pointed to that article for two reasons. First, it contains raw data supporting my point: the poverty rate was falling just until the "War on Poverty" started. That's just an economic fact, independent of whatever interpretation the Heritage Foundation puts on it. Second, I wanted to see whether you are a partisan bigot, and your response suggests you are. Thanks for the confirmation.
You stated " Read some history, I recommend the financial historian Frederick Lewis Allen. The stuff he wrote in the 1930's rings true today. His analysis of 1920, could have been written about 2000." Fact is, Allen was the editor of Harper's Magazine and a part time historian. Even if he had been an economist, in 1930, there was neither the data nor the economic theory to even begin to make sense of the New Deal or the Great Depression; what Allen wrote may appeal to you, but other than that, it's irrelevant. Even today, contrary to what you imply, there is no agreement among economists about the causes or consequences of the Great Depression or the New Deal.
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).
The problem with Long Term Capital Management wasn't that they used bad economic models; people lose money all the time for all sorts of reasons. The problem with Long Term Capital Management was that the government decided to bail them out, based on the views of economists. Bailouts, tax policies, stimulus programs, health care reform, carbon taxes, environmental regulation, etc. have all been justified by economic theories. If you want to see the kind of hubris economists suffer from, just listen to Krugman.
Yes, economics "is not a science" (i.e., it does not make reliable, specific predictions). That is exactly why government should refrain from interfering in free markets, because those interventions are based on detailed specific and economic predictions and models that are not reliable or scientific.
It is progressives and socialists that believe that economics is sufficiently scientific that the government can use it to run and control the economy effectively; they use economic theory as the justification for everything from Keynesian stimulus programs to reforming health care and making climate predictions.
Free market advocates say that economics is so broken that using it as the basis of government policy is the equivalent as mandating the use of faith healing in health care.
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.
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.
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.
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.
Yes, that's what people do. It means that a "$100000 stock grant" is actually worth about $60000 for someone in the 40% bracket. Companies actually automatically sell part of the stock at the time of granting to cover the tax liability. But that $60000 is basically like cash.
Oh, stock options are great for the business. They are not so great for employees because they are risky to begin with, and that risk is compounded by the fact that the stock options are on the same company where the employee is drawing a salary.
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.
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.
You're confusing the New Deal with the War on Poverty. I said that the War on Poverty was a failure, and it clearly was, since poverty rates stopped going down just as it got started:
http://www.heritage.org/resear...
(The Great Depression itself was the result of failed government policies, and the New Deal hindered rather than helped recovery, but that's another argument.)
A lot of progressive drivel from the 1930's "rings true today" to many people; that doesn't make it right. I suggest you upgrade your reading.
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.)
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.
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.
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".
Any attempt to reduce police shootings will come with "a whole host of new problems". Private security, however, has a pretty good track record.
Any problem in politics can be solved by "better public representation". It's the unobtainium of politics.
The question you need to ask is how we can address our problems using the bad representation we actually have, because it's never going to get any better. And that means that a lot of problems are best solved outside of politics.
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.
Most? I'd like to see statistics on that. Most companies I have worked for have made (taxable) stock grants. Options are something startups like to give out.
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.
So far, none have. Go give it a try.
I'm "shilling" for free markets and liberty; those do indeed pay me.
Government-employed police are never going to be prosecuted much by the government legal system, because there are too many close connections.
The only way to realistically accomplish that is to replace a lot of police and security functions with private security companies; those companies are liable for their actions, and they do compete against each other.
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.
Yeah, when comparing your corporate salary to self-employment, you do need to keep those numbers into account. But while the employer formally "pays" half of FICA, ultimately, it comes out of your salary either way.