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US blocks crackdown on tax avoidance by net firms like Google and Amazon

62 points by iProject 13y ago

danmaz74 13y ago
Let's see how this pans out. Maybe this time the UK will not play for the US team, given the outrage there about this issue, but I'm afraid that without a common EU position about this the US will be able to use their usual divide et impera tactics.
- patrickaljord 13y ago
  I hope the US wins. I'd rather this money stays with Google and Amazon than it goes to the EU states. Why? Because the more profit Google and Amazon make, the more value they produce for society as in more work, better technology, better life etc. What does the state do with tax money? It spends it badly and ends up creating more debt. So, it creates the opposite of value, negative value or debt, and crony capitalism because everyone wants to influence the way this money is redistributed. To give you an idea of how bad it is here, people work until the 28th of July for the state here in France because of all the taxes, if you have a company it can be even worse. EU states are already the most taxed ones in the world and they have the biggest national debts, it's clear here that the way to fix this is not "more tax" but "less spending". For the last 60 years, spending has been skyrocketing and taxes are at the highest and are killing jobs, innovations and whole economies. Why keep spending even more by making taxes even higher than they are, this is ludicrous. It's time to admit maybe we should start spending less, not more taxes, this isn't working and hasn't worked for the last 60 years.
  - phpnode 13y ago
    Your post is a tirade against taxation in general, it's not pertinent to the point at hand. Obviously (most) governments want to avoid a situation where a foreign entity is strong enough to destroy any local competitor and on top of that, contribute nothing back to the economy in terms of tax revenue. It's completely ridiculous. If you deliver goods and services in a country, you should expect to pay the appropriate taxes in that country. It is completely unjust that Google et al can do this kind of thing, it puts local companies at a massive disadvantage.
    - patrickaljord 13y ago
      It's not tirade against taxes in general, it's a tirade against spending. Don't you understand that states have clearly refused to cut their spending and that their only answer is more taxes? We're already at 60 to 70% taxes here in France and they always need more because they refuse to cut spending, not only do they refuse to cut them but they make them bigger each year. First they're coming for Google and Amazon but you don't care because they're not you, then they'll come for your money. Here in France even if you earn around €40k, you're close to a 50% tax already when you sum they all up. They are so desperate that they even went after Nutella to tax the palm oil they use pretending it was dangerous even though scientist said there was nothing special about it [1]. The second article of the Déclaration des droits de l'Homme clearly states that private and individual properties ought to be protected. Where is the respect for private property when 50% of your property is taken by force by the State every year. Our whole revolution was about fighting unfair taxation, privileges for the few and insane State spending... and now we're back to square 1. 1: http://www.guardian.co.uk/world/2012/nov/12/france-nutella-amendment-international-row http://www.guardian.co.uk/world/2012/nov/12/france-nutella-a...
      - phpnode 13y ago
        As a French citizen, do you think it's fair that you get taxed at a high rate whilst some huge, billion dollar business pays significantly less in terms of percentage? Whether the French tax rate is too high or not is not relevant. The question is, should a foreign company be given an unfair advantage compared to a local company? I would hope your answer is 'no'.
        patrickaljord 13y ago
        Google and Amazon already pay plenty enough taxes here, they employ thousands of people and pay millions in salary tax. They contribute to improving people's life thanks to their great products unlike the State that only creates more debt. But to answer your question, I think that as a French citizen I pay too much tax and I'm glad Google and Amazon are able to get away with it. I applaud anyone who manages to not feed the beast. I, on the contrary, feel guilty for paying so much tax and helping keep this monster of State alive. The answer is less tax for everyone, not more tax especially on the company that actually manage to make a lot of money and create a lot of work. And yes, local companies are dying here because of the crazy taxation, and taxing Google and Amazon more wouldn't change anything for local companies.
  - danmaz74 13y ago
    The thing here is not about "more taxes" or "less taxes". It is about WHO pays the taxes, however high or low they are. Giving a big competitive advantage to these (mostly US) corporations isn't going to lower your taxes in France; on the contrary, you don't just have to pay more taxes (or create more debt).
    - patrickaljord 13y ago
      Any observers here for the last 60 years have noticed that the more tax revenues we get, the more ambitious we get with out spending and the more debt we create. The day France gets no or too little tax revenue and very bad rating is the day it'll be forced to cut spending. Until then, time has proven that it will never seriously cut spending.
      - danmaz74 13y ago
        Correlation is definitely not causation...
        patrickaljord 13y ago
        But there is a clear causation here. In order to keep increasing spending forever as they are doing, govs need tax revenue, the more money they are allowed to borrow, the more debt they can create. They couldn't create so much debt if they didn't have tax revenue to justify their ability to repay their debt. Problem is, at some point, if you want to keep on increasing spending and therefor your debt forever, you have to increase taxes forever too and that's what's killing the economy. Not to mention that it doesn't even work http://en.wikipedia.org/wiki/Laffer_curve http://en.wikipedia.org/wiki/Laffer_curve
        danmaz74 13y ago
        Come on, no serious economist gives credit to Laffer's curve - until taxation goes over something like 70%. And it's incredibly easy to demystify: Just try to check how many times taxes were increased, and fiscal revenues increased. If we were on the descending slope of that curve, increasing taxes would decrease fiscal revenue.
  - weavejester 13y ago
    The idea that private industry is always more efficient than the public sector is, at best, an over simplification. One need look no further than healthcare to find an example where the public sector is vastly more efficient than a market of competing, private sector companies. The state also spends money on things that would not be funded any other way. Pure-scientific research, such as CERN. Policing for people too poor to hire private security services. The idea that these things are "the opposite of value" is ludicrous. Also, if you're not going to tax Google and Amazon, then that gives large international companies who can dodge tax a huge advantage over smaller national companies who cannot. That undermines the underlying principle of capitalism: competition. Either you tax no companies, or all of them - any halfway position is worse than either.
    - patrickaljord 13y ago
      Public health-care is a complete failure here in France. We actually pay more than Switzerland where it's privatize and the French assurance maladie is going completely bankrupt while being forced on us. Many pure scientific research have been done by private entities, I don't see why only public programs could do any pure scientific research. Plus, if the people were given their money back , maybe they could use it to invest in stuff they actually care about such as pure scientific research which only represent like 1 or 2% of our national budget today. As for policing, I don't think anyone disagrees that it should remain public. Justice and Police and Military security are what the state exists for. Not for subsidizing movie producers or a dying paper media industry like we do here in France. I'm ok with a low flat tax that everyone would pay to sustain the basic functions of the state. It would probably be cheaper for Google and Amazon compared to whatever they're paying their accountants to design their tax schemes and give them huge gain in time wasted for bureaucracy.
      - danmaz74 13y ago
        In the face of ideology there is little to discuss...
      - weavejester 13y ago
        WHO ranks the French health care system as the best in the world, and the expenditure per capita is less than Switzerland (at least in 2007), so I'm not sure where you're getting your numbers from. I also suspect you'd have a hard time finding private companies willing to spend $9 billion on a particle accelerator with no foreseeable profits. I'm generally against subsidising any industry, but letting Google and Amazon get away with dodging tax is effectively the same thing as a subsidy. Speaking as someone who owns a small company, I'd rather the playing field be level.
  - Mordor 13y ago
    Perhaps, but isn't it better for companies like Google and Amazon to have competitors than a tax free advantage? Trickle down economics isn't a solution.
  - flyinRyan 13y ago
    >Because the more profit Google and Amazon make, the more value they produce for society as in more work, better technology, better life etc. Yea, because trickle down economics works fantastic: http://www.nytimes.com/2007/04/12/business/12scene.html?_r=0 http://www.nytimes.com/2007/04/12/business/12scene.html?_r=0
- disputin 13y ago
  I thought we already saw? There were some token payments, a fraction of the amount owed, sufficient to placate the majority not bothering with the details. David Cameron is weak and serves the Bullingdon types - BBC news this morning: http://www.bbc.co.uk/news/business-23273448 http://www.bbc.co.uk/news/business-23273448 This is described as economic recovery.
beedogs 13y ago
So, let me see if I understand this: the US is going to bat for the big software companies who don't want to pay taxes in other countries, and yet I, an expat American, am expected to file an income tax return with the IRS every single year for my foreign earnings, which may be subject to dual-taxation if I make "too much." What a crock of shit.
- hkmurakami 13y ago
  "too much" being $80k last I checked, where you have to pay US taxes on any amount exceeding the $80k. (or wait, it might be that you pay the difference between your US tax rate and the foreign tax rate...)
  - flyinRyan 13y ago
    You're correct. If you're married and file joint I think that number is $130k. So if a dual income family makes $180 that means paying tax, a portion of which was made by someone who isn't and was never American. Even the Mafia was never so cheeky.
  - rdouble 13y ago
    "too much" being $80k The foreign tax exclusion for a single person is $97,600 in 2013.
- dantheman 13y ago
  Well I agree with you that the foreign earnings things completely crazy. Using one bad policy to argue against a good one is just as bad. This is a good move on the part of the US, what we also need is the ability to move corporate profit from foreign subsidiaries back into the US without facing tax.
  - ezequiel-garzon 13y ago
    The moment you're trading in another country you must honor their laws and taxes. If the costs become too high and the margins too low you can always leave, or skip said country in the first place.
flexie 13y ago
The US IT sector is heavily subsidized. Giving Apple, Google, Facebook etc. billion dollar subsidies at home would spur trade wars. So instead the US uses its never failing ability to play European countries against eachother and its influence over smaller jurisdictions like Ireland, Netherlands, Switzerland, Guernsey, Jersey, Bahamas, Isle of Man, British Virgin Islands etc to make sure that large US corporations' foreign income - which wouldn't be taxed in the US anyways - can be kept untaxed.
- adventured 13y ago
  Other countries and foreign companies can't and don't take advantage of legal global tax dodging jurisdictions and schemes? I wasn't aware it was exclusive to the US. I also wasn't aware German / French / British etc. IT firms don't dodge global taxes at every opportunity.
timbrooke 13y ago
Wow. How low can you go? How corrupt can you get?
forgottenpaswrd 13y ago
It talks about France. France is a machine of expending money right now, better said, of wasting money. I am living in France this Summer, a very rich and beautiful country with a hole in the pocket. French people love to life well, and someone else to pay the bills, the Germans, the rich, whoever but not them. Mr Hollande only want to do one thing, to raise taxes. But there is never enough money when you don't expend wisely.
- camus 13y ago
  You should go back to where ever you come from or wherever it is better for you to live. Sarkozy ruined France so yes now everbody needs to pay for it. And the problem is not taxes,i'm happy to pay taxes. The problem is people like French liberals ( liberals are "right-wing" in France ) that gives hand outs to their friends or vote laws without financing their them , and then all they have left is blaming the poor,the homeless,the public workers,the artists or the muslims for France demise... > French people love to life well, and someone else to pay the bills, Whatever. Or maybe you prefer US way of life, where it is me/myself/I and there is next to 0 solidarity.
  - patrickaljord 13y ago
    Sarkozy is not libertarian at all if that's what you mean by "libéral". He's just as socialist as the left when it comes to the economy. To give you an idea, Sarkozy created more than 50 taxes during his mandate [1] and didn't cut on spending while creating more social aid programs (RSA). Only in France would he be considered a libertarian or "néo-libéral" as they say just because he limited the maximum amount of tax one could pay to 50% [2]. A 50% tax makes you a libertarian, Ayn Rand disciple in France, isn't that insanity? You still have to work until the 28th of July for the State in France. 1: http://www.contrepoints.org/2012/03/07/72137-lahurissante-accumulation-dactes-manques-de-sarkozy http://www.contrepoints.org/2012/03/07/72137-lahurissante-ac... 2: http://tempsreel.nouvelobs.com//file/318975.pdf http://tempsreel.nouvelobs.com//file/318975.pdf
    - digitalengineer 13y ago
mtgx 13y ago
If you make a certain amount of money in a certain country, then you should pay that country's taxes. Pretty simple concept, no? This whole "let's reroute all our profits from all the countries into this country where the taxes are close to zero" is utter BS. If you don't like its taxes, don't do business in that country. Simple. If the government thinks they're losing businesses with high taxes, then maybe they will lower them - or maybe not. It's their and their citizens' prerogative.
- vetinari 13y ago
  Putting my accounting hat on. It is simple concept, but its implementation is not. What does "make a certain amount of money in a certain country" mean? EBT? (Earnings before taxes?) Well, we have this revenue from this country, we are buying intercompany services (without market subsitute)[1], so let's price them in the same amount as the revenues... And bam, there you have profit of 0 and all earnings exported to tax haven. The entire point is, that is is not easy to define, what should be taxed. Sales or revenues are not profit. You still have to provide whatever you sold and the costs are tax deductible. For all companies, not just the big ones. [1] It is called transfer pricing and it is checked by tax authorities. Accounting hat off
- patrickaljord 13y ago
  > It's their and their citizens' prerogative. No it's not. Our states are not pure democracies. If a majority of people decide by referendum that we should kill all Arabs, it would not be their "prerogative". That's because we are constitutional republics before being democracies. That is to say we all have to abide by what our constitutions say no matter what the majority say. And last time I checked, our constitution protects private and individual property. Therefor, a 75% tax or even 50% like we have in France goes against the protection of private property in our constitution and it was rejected by the supreme court here. Any taxation goes against the very basis of our constitutions and therefor should not be treated lightly or abused. Or do you think that if a majority decides it's ok to tax people 100% then that's ok because it's "their prerogative"? How about if a majority decide women shouldn't vote anymore either, would it be their prerogative too? The answer is no. Google and Amazon already pay lots of taxes in the US, if they had to pay in every single country, they'd have much less money to invest in all those products we enjoy while the government would just create more debt.
dspillett 13y ago
I'm not sure why people are particularly surprised by this. Most of the large international companies that make most out of tax avoidance have large US bases. While the US economy does lose some to the schemes they use (like all the cash Apple has sat outside the US, to give a commonly quoted example) it loses less than the competing economies overall so agreeing to crack down on tax avoidance could result in a net loss. Even if it didn't, those companies can also afford to buy the best lobbyists in town who in turn can buy the relevant number of votes to threaten politicians who don't toe the line.
- hkmurakami 13y ago
  and when these US based companies eventually bring back those profits to the US (whether it be at the full current rate - unlikely - or some negotiated one time discount rate), the lower the foreign tax burden the greater the US government gains.
cletus 13y ago
I'm no fan of the overreach of the US government that includes, but is not limited to: - requiring all citizens and non-citizens to declare all foreign bank accounts (FBAR) including signatory authorities on trusts and companies; - unclear rules on the aforementioned. Do you have to declare retirement accounts? Are they taxed? Nobody really knows. It's clear the only value in FBAR is in non-compliance if the government decides to prosecute you; - requiring non-resident citizens and residents to file tax returns and pay taxes if their income is sufficiently high and either the income is in a country that has no double taxation treaty with the US or it does and its tax rate is simply lower, even for those who haven't stepped foot in the US in 20+ years. I actually know many US citizens who don't do this and it could be a real problem for them at some point. All of this while allowing the systematic avoidance of tax by US companies on a massive scale. US companies need to report their foreign income. An individual would have to pay US taxes on foreign income. Why shouldn't a company do the same? Why can't it pay the difference between US taxes and whatever taxes they've already paid as is standard in all double taxation treaty cases? But the move here by the French is blatantly political and narrowly targeted at US companies. You'll note the language is around the "digital economy". Well, why should such reform be limited to only Internet companies, which--surprise, surprise--are primarily US companies? That's actually what the US (rightfully IMHO) is objecting to. All of this is simply window dressing however. The real problem with the system is complexity. Think of tax loopholes as bugs. The more complex software, the more bugs there are and the harder it is to eradicate them. Tax law is no different. Unfortunately there is no political appetite for true reform as every complicated exception is the result of shoring up some constituency or pork barreling or other "corruption" so as much as we need to stop, say, poring money into corn subsidies, it just won't happen for the foreseeable future. Borders are disappearing. We already see the nonsensical effects of this such as attempts to limit content distribution to geographical regions. At some point we're simply going to have a global tax regime and, dare I say it, world government, scary as that will probably be.
culshaw 13y ago
So basically: "They pay taxes to us, fuck you and yours"
deleted 13y ago
[deleted]
znowi 13y ago
Actually, in the same manner the US initiated a massive FUD campaign against the "evil" (non-US) forces at the ITU summit last year in Dubai. Behind the facade of "save the Internet", the agenda was to save the Internet giants like Google and keep the US control over the net. In light of NSA revelations, it has even more sinister overtones.

62 points by iProject 13y ago

Let's see how this pans out. Maybe this time the UK will not play for the US team, given the outrage there about this issue, but I'm afraid that without a common EU position about this the US will be able to use their usual divide et impera tactics.

patrickaljord 13y ago
I hope the US wins. I'd rather this money stays with Google and Amazon than it goes to the EU states. Why? Because the more profit Google and Amazon make, the more value they produce for society as in more work, better technology, better life etc. What does the state do with tax money? It spends it badly and ends up creating more debt. So, it creates the opposite of value, negative value or debt, and crony capitalism because everyone wants to influence the way this money is redistributed. To give you an idea of how bad it is here, people work until the 28th of July for the state here in France because of all the taxes, if you have a company it can be even worse. EU states are already the most taxed ones in the world and they have the biggest national debts, it's clear here that the way to fix this is not "more tax" but "less spending". For the last 60 years, spending has been skyrocketing and taxes are at the highest and are killing jobs, innovations and whole economies. Why keep spending even more by making taxes even higher than they are, this is ludicrous. It's time to admit maybe we should start spending less, not more taxes, this isn't working and hasn't worked for the last 60 years.
- phpnode 13y ago
  Your post is a tirade against taxation in general, it's not pertinent to the point at hand. Obviously (most) governments want to avoid a situation where a foreign entity is strong enough to destroy any local competitor and on top of that, contribute nothing back to the economy in terms of tax revenue. It's completely ridiculous. If you deliver goods and services in a country, you should expect to pay the appropriate taxes in that country. It is completely unjust that Google et al can do this kind of thing, it puts local companies at a massive disadvantage.
  - patrickaljord 13y ago
    It's not tirade against taxes in general, it's a tirade against spending. Don't you understand that states have clearly refused to cut their spending and that their only answer is more taxes? We're already at 60 to 70% taxes here in France and they always need more because they refuse to cut spending, not only do they refuse to cut them but they make them bigger each year. First they're coming for Google and Amazon but you don't care because they're not you, then they'll come for your money. Here in France even if you earn around €40k, you're close to a 50% tax already when you sum they all up. They are so desperate that they even went after Nutella to tax the palm oil they use pretending it was dangerous even though scientist said there was nothing special about it [1]. The second article of the Déclaration des droits de l'Homme clearly states that private and individual properties ought to be protected. Where is the respect for private property when 50% of your property is taken by force by the State every year. Our whole revolution was about fighting unfair taxation, privileges for the few and insane State spending... and now we're back to square 1. 1: http://www.guardian.co.uk/world/2012/nov/12/france-nutella-amendment-international-row http://www.guardian.co.uk/world/2012/nov/12/france-nutella-a...
    - phpnode 13y ago
      As a French citizen, do you think it's fair that you get taxed at a high rate whilst some huge, billion dollar business pays significantly less in terms of percentage? Whether the French tax rate is too high or not is not relevant. The question is, should a foreign company be given an unfair advantage compared to a local company? I would hope your answer is 'no'.
      - patrickaljord 13y ago
        Google and Amazon already pay plenty enough taxes here, they employ thousands of people and pay millions in salary tax. They contribute to improving people's life thanks to their great products unlike the State that only creates more debt. But to answer your question, I think that as a French citizen I pay too much tax and I'm glad Google and Amazon are able to get away with it. I applaud anyone who manages to not feed the beast. I, on the contrary, feel guilty for paying so much tax and helping keep this monster of State alive. The answer is less tax for everyone, not more tax especially on the company that actually manage to make a lot of money and create a lot of work. And yes, local companies are dying here because of the crazy taxation, and taxing Google and Amazon more wouldn't change anything for local companies.
- danmaz74 13y ago
  The thing here is not about "more taxes" or "less taxes". It is about WHO pays the taxes, however high or low they are. Giving a big competitive advantage to these (mostly US) corporations isn't going to lower your taxes in France; on the contrary, you don't just have to pay more taxes (or create more debt).
  - patrickaljord 13y ago
    Any observers here for the last 60 years have noticed that the more tax revenues we get, the more ambitious we get with out spending and the more debt we create. The day France gets no or too little tax revenue and very bad rating is the day it'll be forced to cut spending. Until then, time has proven that it will never seriously cut spending.
    - danmaz74 13y ago
      Correlation is definitely not causation...
      - patrickaljord 13y ago
        But there is a clear causation here. In order to keep increasing spending forever as they are doing, govs need tax revenue, the more money they are allowed to borrow, the more debt they can create. They couldn't create so much debt if they didn't have tax revenue to justify their ability to repay their debt. Problem is, at some point, if you want to keep on increasing spending and therefor your debt forever, you have to increase taxes forever too and that's what's killing the economy. Not to mention that it doesn't even work http://en.wikipedia.org/wiki/Laffer_curve http://en.wikipedia.org/wiki/Laffer_curve
        danmaz74 13y ago
        Come on, no serious economist gives credit to Laffer's curve - until taxation goes over something like 70%. And it's incredibly easy to demystify: Just try to check how many times taxes were increased, and fiscal revenues increased. If we were on the descending slope of that curve, increasing taxes would decrease fiscal revenue.
- weavejester 13y ago
  The idea that private industry is always more efficient than the public sector is, at best, an over simplification. One need look no further than healthcare to find an example where the public sector is vastly more efficient than a market of competing, private sector companies. The state also spends money on things that would not be funded any other way. Pure-scientific research, such as CERN. Policing for people too poor to hire private security services. The idea that these things are "the opposite of value" is ludicrous. Also, if you're not going to tax Google and Amazon, then that gives large international companies who can dodge tax a huge advantage over smaller national companies who cannot. That undermines the underlying principle of capitalism: competition. Either you tax no companies, or all of them - any halfway position is worse than either.
  - patrickaljord 13y ago
    Public health-care is a complete failure here in France. We actually pay more than Switzerland where it's privatize and the French assurance maladie is going completely bankrupt while being forced on us. Many pure scientific research have been done by private entities, I don't see why only public programs could do any pure scientific research. Plus, if the people were given their money back , maybe they could use it to invest in stuff they actually care about such as pure scientific research which only represent like 1 or 2% of our national budget today. As for policing, I don't think anyone disagrees that it should remain public. Justice and Police and Military security are what the state exists for. Not for subsidizing movie producers or a dying paper media industry like we do here in France. I'm ok with a low flat tax that everyone would pay to sustain the basic functions of the state. It would probably be cheaper for Google and Amazon compared to whatever they're paying their accountants to design their tax schemes and give them huge gain in time wasted for bureaucracy.
    - danmaz74 13y ago
      In the face of ideology there is little to discuss...
    - weavejester 13y ago
      WHO ranks the French health care system as the best in the world, and the expenditure per capita is less than Switzerland (at least in 2007), so I'm not sure where you're getting your numbers from. I also suspect you'd have a hard time finding private companies willing to spend $9 billion on a particle accelerator with no foreseeable profits. I'm generally against subsidising any industry, but letting Google and Amazon get away with dodging tax is effectively the same thing as a subsidy. Speaking as someone who owns a small company, I'd rather the playing field be level.
- Mordor 13y ago
  Perhaps, but isn't it better for companies like Google and Amazon to have competitors than a tax free advantage? Trickle down economics isn't a solution.
- flyinRyan 13y ago
  >Because the more profit Google and Amazon make, the more value they produce for society as in more work, better technology, better life etc. Yea, because trickle down economics works fantastic: http://www.nytimes.com/2007/04/12/business/12scene.html?_r=0 http://www.nytimes.com/2007/04/12/business/12scene.html?_r=0
disputin 13y ago
I thought we already saw? There were some token payments, a fraction of the amount owed, sufficient to placate the majority not bothering with the details. David Cameron is weak and serves the Bullingdon types - BBC news this morning: http://www.bbc.co.uk/news/business-23273448 http://www.bbc.co.uk/news/business-23273448 This is described as economic recovery.

beedogs 13y ago

So, let me see if I understand this: the US is going to bat for the big software companies who don't want to pay taxes in other countries, and yet I, an expat American, am expected to file an income tax return with the IRS every single year for my foreign earnings, which may be subject to dual-taxation if I make "too much." What a crock of shit.

hkmurakami 13y ago
"too much" being $80k last I checked, where you have to pay US taxes on any amount exceeding the $80k. (or wait, it might be that you pay the difference between your US tax rate and the foreign tax rate...)
- flyinRyan 13y ago
  You're correct. If you're married and file joint I think that number is $130k. So if a dual income family makes $180 that means paying tax, a portion of which was made by someone who isn't and was never American. Even the Mafia was never so cheeky.
- rdouble 13y ago
  "too much" being $80k The foreign tax exclusion for a single person is $97,600 in 2013.
dantheman 13y ago
Well I agree with you that the foreign earnings things completely crazy. Using one bad policy to argue against a good one is just as bad. This is a good move on the part of the US, what we also need is the ability to move corporate profit from foreign subsidiaries back into the US without facing tax.
- ezequiel-garzon 13y ago
  The moment you're trading in another country you must honor their laws and taxes. If the costs become too high and the margins too low you can always leave, or skip said country in the first place.

flexie 13y ago

The US IT sector is heavily subsidized. Giving Apple, Google, Facebook etc. billion dollar subsidies at home would spur trade wars. So instead the US uses its never failing ability to play European countries against eachother and its influence over smaller jurisdictions like Ireland, Netherlands, Switzerland, Guernsey, Jersey, Bahamas, Isle of Man, British Virgin Islands etc to make sure that large US corporations' foreign income - which wouldn't be taxed in the US anyways - can be kept untaxed.

adventured 13y ago
Other countries and foreign companies can't and don't take advantage of legal global tax dodging jurisdictions and schemes? I wasn't aware it was exclusive to the US. I also wasn't aware German / French / British etc. IT firms don't dodge global taxes at every opportunity.

timbrooke 13y ago

Wow. How low can you go? How corrupt can you get?

forgottenpaswrd 13y ago

It talks about France. France is a machine of expending money right now, better said, of wasting money. I am living in France this Summer, a very rich and beautiful country with a hole in the pocket. French people love to life well, and someone else to pay the bills, the Germans, the rich, whoever but not them. Mr Hollande only want to do one thing, to raise taxes. But there is never enough money when you don't expend wisely.

camus 13y ago
You should go back to where ever you come from or wherever it is better for you to live. Sarkozy ruined France so yes now everbody needs to pay for it. And the problem is not taxes,i'm happy to pay taxes. The problem is people like French liberals ( liberals are "right-wing" in France ) that gives hand outs to their friends or vote laws without financing their them , and then all they have left is blaming the poor,the homeless,the public workers,the artists or the muslims for France demise... > French people love to life well, and someone else to pay the bills, Whatever. Or maybe you prefer US way of life, where it is me/myself/I and there is next to 0 solidarity.
- patrickaljord 13y ago
  Sarkozy is not libertarian at all if that's what you mean by "libéral". He's just as socialist as the left when it comes to the economy. To give you an idea, Sarkozy created more than 50 taxes during his mandate [1] and didn't cut on spending while creating more social aid programs (RSA). Only in France would he be considered a libertarian or "néo-libéral" as they say just because he limited the maximum amount of tax one could pay to 50% [2]. A 50% tax makes you a libertarian, Ayn Rand disciple in France, isn't that insanity? You still have to work until the 28th of July for the State in France. 1: http://www.contrepoints.org/2012/03/07/72137-lahurissante-accumulation-dactes-manques-de-sarkozy http://www.contrepoints.org/2012/03/07/72137-lahurissante-ac... 2: http://tempsreel.nouvelobs.com//file/318975.pdf http://tempsreel.nouvelobs.com//file/318975.pdf
  - digitalengineer 13y ago

mtgx 13y ago

If you make a certain amount of money in a certain country, then you should pay that country's taxes. Pretty simple concept, no? This whole "let's reroute all our profits from all the countries into this country where the taxes are close to zero" is utter BS. If you don't like its taxes, don't do business in that country. Simple. If the government thinks they're losing businesses with high taxes, then maybe they will lower them - or maybe not. It's their and their citizens' prerogative.

vetinari 13y ago
Putting my accounting hat on. It is simple concept, but its implementation is not. What does "make a certain amount of money in a certain country" mean? EBT? (Earnings before taxes?) Well, we have this revenue from this country, we are buying intercompany services (without market subsitute)[1], so let's price them in the same amount as the revenues... And bam, there you have profit of 0 and all earnings exported to tax haven. The entire point is, that is is not easy to define, what should be taxed. Sales or revenues are not profit. You still have to provide whatever you sold and the costs are tax deductible. For all companies, not just the big ones. [1] It is called transfer pricing and it is checked by tax authorities. Accounting hat off
patrickaljord 13y ago
> It's their and their citizens' prerogative. No it's not. Our states are not pure democracies. If a majority of people decide by referendum that we should kill all Arabs, it would not be their "prerogative". That's because we are constitutional republics before being democracies. That is to say we all have to abide by what our constitutions say no matter what the majority say. And last time I checked, our constitution protects private and individual property. Therefor, a 75% tax or even 50% like we have in France goes against the protection of private property in our constitution and it was rejected by the supreme court here. Any taxation goes against the very basis of our constitutions and therefor should not be treated lightly or abused. Or do you think that if a majority decides it's ok to tax people 100% then that's ok because it's "their prerogative"? How about if a majority decide women shouldn't vote anymore either, would it be their prerogative too? The answer is no. Google and Amazon already pay lots of taxes in the US, if they had to pay in every single country, they'd have much less money to invest in all those products we enjoy while the government would just create more debt.

dspillett 13y ago

I'm not sure why people are particularly surprised by this. Most of the large international companies that make most out of tax avoidance have large US bases. While the US economy does lose some to the schemes they use (like all the cash Apple has sat outside the US, to give a commonly quoted example) it loses less than the competing economies overall so agreeing to crack down on tax avoidance could result in a net loss. Even if it didn't, those companies can also afford to buy the best lobbyists in town who in turn can buy the relevant number of votes to threaten politicians who don't toe the line.

hkmurakami 13y ago
and when these US based companies eventually bring back those profits to the US (whether it be at the full current rate - unlikely - or some negotiated one time discount rate), the lower the foreign tax burden the greater the US government gains.

cletus 13y ago

I'm no fan of the overreach of the US government that includes, but is not limited to: - requiring all citizens and non-citizens to declare all foreign bank accounts (FBAR) including signatory authorities on trusts and companies; - unclear rules on the aforementioned. Do you have to declare retirement accounts? Are they taxed? Nobody really knows. It's clear the only value in FBAR is in non-compliance if the government decides to prosecute you; - requiring non-resident citizens and residents to file tax returns and pay taxes if their income is sufficiently high and either the income is in a country that has no double taxation treaty with the US or it does and its tax rate is simply lower, even for those who haven't stepped foot in the US in 20+ years. I actually know many US citizens who don't do this and it could be a real problem for them at some point. All of this while allowing the systematic avoidance of tax by US companies on a massive scale. US companies need to report their foreign income. An individual would have to pay US taxes on foreign income. Why shouldn't a company do the same? Why can't it pay the difference between US taxes and whatever taxes they've already paid as is standard in all double taxation treaty cases? But the move here by the French is blatantly political and narrowly targeted at US companies. You'll note the language is around the "digital economy". Well, why should such reform be limited to only Internet companies, which--surprise, surprise--are primarily US companies? That's actually what the US (rightfully IMHO) is objecting to. All of this is simply window dressing however. The real problem with the system is complexity. Think of tax loopholes as bugs. The more complex software, the more bugs there are and the harder it is to eradicate them. Tax law is no different. Unfortunately there is no political appetite for true reform as every complicated exception is the result of shoring up some constituency or pork barreling or other "corruption" so as much as we need to stop, say, poring money into corn subsidies, it just won't happen for the foreseeable future. Borders are disappearing. We already see the nonsensical effects of this such as attempts to limit content distribution to geographical regions. At some point we're simply going to have a global tax regime and, dare I say it, world government, scary as that will probably be.

culshaw 13y ago

So basically: "They pay taxes to us, fuck you and yours"

deleted 13y ago

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znowi 13y ago

Actually, in the same manner the US initiated a massive FUD campaign against the "evil" (non-US) forces at the ITU summit last year in Dubai. Behind the facade of "save the Internet", the agenda was to save the Internet giants like Google and keep the US control over the net. In light of NSA revelations, it has even more sinister overtones.