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US tech firms make eleventh-hour attempt to halt tax avoidance reforms

• dmk23 13y ago
  Let's call these "reforms" for what they are - a shameless and unjustified money grab by the government.
  • nodata 13y ago
    Can you explain your comment a little bit? From the way I understand it, this is a way to get large companies to pay the same amount of tax as smaller companies.
    • alan_cx 13y ago
      To me it reads like the usual right wing rhetoric, and that any tax collection is some form of evil socialism. Not quite sure how these people expect their flag waving military, for example, to be funded without the big corporation paying their fair share, but there you go. Never understood why many Americans don't see paying tax as the ultimate act of patriotism, paying for the country they claim to love. They love the country, but resent paying for it. How does that work? Are they the ultimate freetards?
      • alexbilbie 13y ago
        I'm confused by your statement - a right-leaning Government is attempting to collect more taxes from multinationals who have huge sales in a country and pay little tax and yet you're claiming that they also consider tax collection some form of evil socialism?
        • mercurial 13y ago
          This is clearly an attempt to explain dmk's post, but not the article which was submitted.
        • anon1385 13y ago
          The Conservatives are right leaning from a European perspective and compared to most of the UK governments since the war. From an American perspective they are more akin to the Democrats: they support gay marriage, support legal abortion, don't support reintroducing the death penalty, support public health care (to some extent), generally support public education, do at least claim to accept that environmental issues are a concern (although we do have an environment secretary who denies climate changes science…). They support giving benefits to at least certain groups in society (pensioners, land owners) and accept the need to provide some level of support for the disabled, unemployed, single parents and so on. They made commitments to maintaining the level of foreign aid. For all their talk of pulling out of the European Convention on Human Rights they have not actually done so. So they have a lot of policies that your typical Republican would be fairly disgusted by. I wouldn't vote for them myself of course…
          • timje1 13y ago
            This is because the US Democratic party could be considered center-right by European standards, with the Republicans heading into extreme-right. If a party in the UK hinted at dismantling public health care (the NHS) out loud, they'd be lynched (either in the polls or the streets, whichever was more convenient).
      • mercurial 13y ago
        I could understand not wanting to contribute to NSA funding, but it does sound like a vocal minority (?) does believe that tax collection should be as low as possible. Possibly due to a mistaken belief in trickle-down economics (if something yellow-coloured trickles down from the top, it doesn't mean it's gold...), or maybe caused by a belief that increasing disparities between social classes is a desirable goal.
      • coolsunglasses 13y ago
        What sort of value do you think the typical American taxpayer gets out of their taxes as contrasted with somebody in one of the wealthier European countries?
      • kelnos 13y ago
        I love my country in spite of what our government has done to it in recent decades. I do not support the majority of dollars the US government spends, but feel powerless to effect change. I resent paying for foreign wars I don't agree with, for secretive government agencies that unnecessarily pry into our private lives, and for ridiculous departments like the DHS which are largely ineffective and throw money away. I would love to pay more for public education and a public healthcare system. I would love to pay more for innovative, effective solutions to poverty and homelessness. I'm happy to pay for the maintenance of our roads and for services like police and fire departments and public libraries. Unfortunately, there's no good way for me to express this preference. All viable political candidates at the national level want to spend money on too many things I do not want for the voting apparatus to be of any help here. So I sit back and grudgingly pay my taxes, hoping that people of like mind but with more political acumen and drive than I have will be able to make sense of the mess eventually.
      • mindcrime 13y ago
        To me it reads like the usual right wing rhetoric, and that any tax collection is some form of evil socialism. Not quite sure how these people expect their flag waving military, for example, to be funded without the big corporation paying their fair share, but there you go. Bunk. Being anti-tax has nothing to do with being "right wing" at all. In fact, the entire term "right wing" is 100% meaningless in modern terms. Plenty of us who oppose taxation ALSO oppose our empire building overseas military operations, and aggressive foreign policy, and want the military rolled back to only what is required for defense of the USA. I for one want the US out of the "world police" role. Just cutting a huge chunk out of the military budget would be a great start on reducing government spending and decreasing the tax burden. Never understood why many Americans don't see paying tax as the ultimate act of patriotism, paying for the country they claim to love. Our country and our government are not the same thing. And Americans have a long history of having issues with excessive taxation by the government.
    • soup10 13y ago
      Small companies(S corps and LLCs) don't pay corporate taxes. C corps pay a wide variety of taxes depending on where they earn their profits, how aggressively they working to minimize tax burden, and how hard their industry lobbyists work. Certainly some companies pay far more and far less than their fair share. I'd wager the tech companies who generally have little in the way of physical presence where they earn revenue, and have towns and cities competing for the chance to host their offices and data centers, probably pay very little relatively.
  • Eye_of_Mordor 13y ago
    Is there any point in taxing companies at all - they provide jobs for tax payers.
    • lmm 13y ago
      Taxing their profits encourages them to spend any spare cash hiring more tax payers rather than sitting on it.
      • Eye_of_Mordor 13y ago
        Corporations pay out taxed dividends from their profits.
        • lmm 13y ago
          Taxed at a much lower rate than ordinary people's income though. (And more to the point the kind of person who gets money from dividends is less likely to spend it on tax-generating economic activity like buying food)
          • Eye_of_Mordor 13y ago
            Yes, the logic is that the corporation paid tax on their profits before dividends. Perhaps there's a case for corporation tax abolition and increased dividend taxation?
            • lmm 13y ago
              I actually wouldn't be averse to that, but it'd be hard to internationally coordinate such a change (and it would have to be internationally coordinated, or corporations would move to the places that had the lowest corporation tax while their owners would move to the places that had the lowest dividend tax). And there's still the problem of keeping your wealth in a corporation and avoiding paying tax on it until you use it (which creates the wrong incentive - we want to encourage rich investors to spend the money and put it back into the system, or at least invest in new ventures, rather than leaving it in their company's bank account accumulating compound interest).
• adaml_623 13y ago
  Society has decided that companies should pay a corporate tax rates of 20% (UK), 35% (US), etc on profits. Finally governments have noticed that these companies are shuffling money around (between countries normally) and are not paying anywhere close to those rates. It's very sad that these companies do have a slim chance of fighting this kind of reform. Ideally they should just pull their heads in and concentrate on building wealth under a new slightly more sensible tax regime.
  • FireBeyond 13y ago
    A slim chance? More than likely, unfortunately, they have an exceptional chance of fighting this kind of reform. I don't get a particular sentiment of anti-corporate perspective from either major party in either the US or UK.
• mercurial 13y ago
  > Suggesting that any leakage of tax revenues flowing from the complex corporate structures of digital groups is merely coincidental, the Digital Economy Group says: "Enterprises that employ digital communications models do not organise their business operations differently as a legal or tax matter." Hell of a coincidence, mate. They're incorporated in Ireland purely by accident, they would never threaten to leave at the slightest mention of "corporate tax increase", and what they really wanted to do all along was to move to the Scandinavian countries. They should all band together and get a stand-up comedy act going.
• Claudus 13y ago
  Personally, I'd rather that Google keep as much of their money as possible and continue to spend it as they see fit. I believe that society benefits far more from a company like Google having and spending the money than any federal government.
  • justincormack 13y ago
    OK but shrink the government first. Then you can cut taxes. And cut them for everyone not just companies who can afford a Dutch sandwich.
  • wmt 13y ago
    Good that you raise Google as an example! As Google is currently paying almost no taxes, I'm curious that how and how much is Google spending its money to support stuff now supported by the federal government? For instance, how much is Google paying to people living on federal welfare money, and as the current job markets are what they are, would they have to decide between starving and stealing to survive, or could they still survive with Google handouts? Military spending is a huge portion of the federal budget. While it is ludicrous how much money is being burned in it, what kind of shape would be military be with the money Google & co are currently spending to support it? Medicare and Medicaid also are big items in the federal budget. How much is Google spending to offer health care to people who cannot for whatever reason, e.g. disability, cannot pay for it?
  • techsupporter 13y ago
    Awesome. I am very interested to read your round-estimate list of what items to cut from the Federal and state budgets (only the state where you live or have an active interest, just for brevity's sake). If you would, please provide either a dollar or percentage amount. Bonus points if you can get to 10 items per entity that comprise at least 20% of either entity's budget. (To reply to my own snark: "Just cut taxes" sounds great until you realize that SSI, Medicare, and the military are far and away our largest expenditures in at the federal level of the United States. In Texas, health care and education together account for 54% of the state budget. What to cut, indeed.)
  • gaius 13y ago
• benpbenp 13y ago
  Wealth is meant for people. All of a company's wealth is ultimately destined for somebody's pocket. Why can't we just tax it when it gets there, and abolish corporate taxes? Naturally I'd assume in that case that dividends would be taxed at the same rate as earned income, and that both would have to rise somewhat at the higher brackets to cover the lost income. But given that is the case, I honestly don't see any downside. Can anyone help?
  • justincormack 13y ago
    In theory that is true. But in practise a broader tax base, on income consumption and companies has some advantages. If we moved all taxes to income then the incentives for avoidance and evasion would become much higher. Companies can also not pay out for long periods eg Apple so there is a time aspect, and taxing shareholders when profits were made might not be popular. Historically taxes were mostly about ease of collection. Putting everything on income would raise the big question of whether wealth not income taxes are fairer. Right now the big win is massive simplification not changes in tax base.
  • pedrocr 13y ago
    That depends on how you account for it reaching someone's pocket. With the current rules someone on a salary will pay tax the moment they earn the money. Someone that owns a company will instead pay himself a small salary and keep the cash inside the company earning interest before tax. But if you were really willing to reform the way corporate/personal taxes are done you could potentially fix that too.
  • cperciva 13y ago
    Naturally I'd assume in that case that dividends would be taxed at the same rate as earned income What you want is an "integrated" tax system like Canada has, where individuals receive "dividend tax credits" which are approximately equal to the taxes paid by the corporation. All of a company's wealth is ultimately destined for somebody's pocket. Why can't we just tax it when it gets there, and abolish corporate taxes? Compounding investment returns. If I loan you $1000 at 5% interest, I have to report $50/year of interest income on my tax return. Since I pay approximately 40% income tax (federal + provincial), I have an after-tax return of 3% compounding annually. If you abolish corporate income taxes, then I could have my company loan you the $1000 and receive the interest; it would then compound at 5% per year, and I would only pay income tax when the money is paid out to me as a dividend. In effect, you would be turning corporations into tax shelters. Now, this isn't absolutely insurmountable; in fact, Canada already has different tax rates for "active business income" vs. investment income, and theoretically you could have a 0% rate on "active business income" and a 40% corporate tax rate on investment income (which would then create non-taxable dividends when finally paid out to individuals). But you'd still have the complication that "retain profits" produces a different taxation result than "pay out profits as dividends, then raise more funding a few years later".
• netcan 13y ago
  Since this became such a public debate issue in Europe, I've actually more or less landed on the idea that maybe corporate taxes (taxing profits) are a lost battle. The only way to really combat it is for different countries to collude and perhaps sanction tax havens. Even then, I doubt they will be able to raise much tax. Modern tax systems are diverse by design: sales tax/VAT. Excise/sin taxes, income taxes, CGT, employer taxes, etc. The mix is designed to reduce volatility. It's also designed to max out tax revenue while avoid damaging the economy by discouraging things like labour, savings, or other important activities too much. The effective maximum revenue for a country to collect in taxes appears to be somewhere in the 35%-45% of GDP range. After that diminishing returns on taxes kick in. Most euro countries are taxing (or rather spending) near that max. So, they can't afford to let corporate taxes. Problem is that corporate tax is unavoidably problematic. Large multinationals can arrange their activities (not just their paperwork) depending on taxes. I doubt an single country want to create a tax the ensures large companies avoid setting up local subsidiaries within their borders. The end result is a different set of rules for the large and/or sophisticated that is more lenient than the rules on small companies. Personally, I would rather see corporate tax abolished than see it applied in such a way that it discriminates against small companies.
  • vinceguidry 13y ago
    Except if you don't tax profits, you're forced to tax consumption instead, forcing consumers to bear a larger than fair share of the tax burden. It's really hard to properly tax corporations because they have the resources and the motivation to really fight back. But we shouldn't stop trying.
    • netcan 13y ago
      Sure, but this is more rhetoric than practicality. Whether you tax profits, salaries or consumption, you are taking it away from people. Often the same people.
  • ihsw 13y ago
    > The only way to really combat it is for different countries to collude and perhaps sanction tax havens. Sounds like textbook prisoner's dilemma -- if they betray each-other then they both lose, but there's still a chance that they could betray their opponent without being betrayed themselves. It seems to me that international law is riddled with subtleties where the general rule is "cheat effectively" rather than "don't cheat."
• deleted 13y ago
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• SilkRoadie 13y ago
  > In the UK many leading retail groups have called for reform, highlighting what they see as unfair tax advantages afforded to multinationals such as Amazon by outdated tax treaties. Currently Amazon pay very little corporation tax in many of the countries they operate in which gives them an unfair tax advange against local competition. This allows them to set lower prices and trade more efficently.. In Amazon's case it would seem like closing some tax loop holes to get them to pay their share would help level the playing field and potentially increase competition between Amazon and regional stores. This can only be a good thing. The one worry though would be how changing the tax system would affect smaller tech companies. Companies which serve multiple countries with low staff could be caught out by increased tax or just technical / accounting costs if you suddenly need to track and file taxes for every country you have customers in.
• doctorwho 13y ago
  Just waiting for the founding of "Techlandia" where a big corporation (or several) form their own country and abolish all tax laws. Maybe they buy up some land, maybe they sponsor a country in trouble and take it over. As their own country they would make all the rules. All their employees live in Techlandia and pay no income tax. No more annual filings. No more tax audits. No more whiny politicians coming with their hands out. All infrastructure costs: roads, power, water, sewage and possibly even housing are borne by the corporations for their employees (who live there). They have their own national bank and keep ALL of their profits. Workers retire with huge cash hoards and live wherever the hell they please, like kings.