The way it works is that Amazon UK pays enormous licensing fees to Amazon USA for use of the brand. That way the money ends up back in America where it can be spent on things Amazon wants to spend it on.
The moment such a company paid money to the owner so they could buy a new TV or whatever, it'd count as personal income. So in a well designed tax system it'd not be quite that easy.
"and therefore corporate taxes are evil, and should be abolished, not raised." - if you do that then the people will have to pay more to make up the shortfall.
swillden's point is that it would be neutral. There is no shortfall, exactly. Tax reallocates resources that would have been used for other things, it's not like a mine that you actually dig gold out of.
Whilst governments might feel the need to raise personal tax rates if they no longer received corporation tax, as corporations are no longer being taxed that money will end up doing something else instead. It might lower prices, in which case paying more personal tax to government wouldn't change your standard of living. Or it might get paid out to shareholders, i.e. you or your pension fund. Or it might get re-invested into developing new products, which again would improve your standard of living to offset the fact that you have less money than before. Remember money is just a proxy, what ultimately matters is wealth not money. (or happyness)
At the moment personal taxes are high because not everyone pays their fair share of tax, that includes businesses and personal, if everyone did the right thing and paid what was owed, we'd all be taxed less.
A common misconception spread by propaganda in the press. Tax evasion rates in western societies are very low. Almost everyone already pays what they owe. The UK is not Greece - there's no blood to squeeze from that stone. The entire tax avoidance argument is that some people should owe more than the rules say they do.
Personal taxes in Anglo countries are high for a bunch of reasons, including but not limited to: extremely expensive and pointless foreign wars, increasing life expectancies that cause spiralling healthcare and pension costs as governements are loathe to adjust the retirement age, hangover from the banking bailouts, the general decline in labour force participation over time meaning more people on benefits, unaffordable tax cuts (USA), the massive interest payments on debt incurred by previous governments (UK), etc etc.
They are not high because immoral people are somehow dodging the tax man.
Free trade is only desirable to the stronger economy/ies in the bloc
Maybe you didn't notice all the little countries with tiny economies that bent over backwards to join the EU in recent years. Obviously a whole lot of countries came to the same conclusion independently - they wanted in, because they wanted access to the single market. If you're a specialist company in Bulgaria making a particular type of ball bearing and joining the EU means you can suddenly easily sell to a market of several hundred million people, that's a win. Yes, your lone local Bulgarian customer might decide to jump ship to a Spanish supplier once it gets easier to do so, but that's offset by the sudden ease of replacing them.
I don't think you can argue with this reality - if the EU only benefited large economies, then all the smaller Balkan and eastern European countries would have simply formed their own trading blocs. But they didn't. Your position assumes they are all stupid.
Amazon doesn't make profit in any country. But hey, would you prefer they sent the money from the UK immediately to Seattle? If the USA and EU were in a single trade bloc then they could certainly do that and cut Luxembourg out of the equation, but it wouldn't make any difference to the UK's tax take.
Uh, Amazon aren't taking billions out of economies. That's not how economics works. Amazon CREATE billions by the act of doing useful things, like selling people products at prices they want and managing complicated global supply chains. That's not exploiting helpless countries, and it's insanely dangerous to start thinking that it is. We do like Amazon selling us things, right?
I'm not an economist so correct me if I'm wrong here
You don't have to be an economist to understand this stuff. Governments will always be perpetually broke because they expand to fill whatever funding is available. Very few governments actually hold savings accounts (petrostates being a rare exception) - if they get new tax revenues, they immediately spend it or waste it and then go back to being broke again.
So it doesn't matter how much money the UK or Australia raise from taxing companies. It will never make any difference. Look at the recent UK election - despite that the country is drowning in interest payments (25% of the budget!!), politicians simply could not resist promising to lower taxes and spend more money. The SNP is flat out attempting to sabotage the Tories spending cuts as their main political strategy and even the Tories kept throwing in tax drops they can't afford as part of trying to get elected.
The UK could drain Amazon, Apple and Google dry and the UK would still be utterly, utterly skint. The UK will always be skint. In the unlikely event that it stops being skint for a moment, politicians will award pensioners more free bus passes or something and then it'll be skint again.
Meanwhile, those evil corporations everyone loves to think of as their personal ATM don't roll their dollar bills into cigars and smoke them, you know. Amazon is notorious for reinvesting ALL their revenue into the business, such that they never make a profit. It's because of that sort of behaviour that we have the Kindle, we have Amazon Web Services, we have (soon) flying drones that drop parcels at our door, etc. This stuff is to some extent zero sum - the money can either be spent by Amazon on improving Amazon stuff (which mostly benefits the global population), or it can be taken by governments and spent on giveaways to Brits or Ozzies or the French or whoever. But the money can't do both things at once.
Why should companies like Amazon get all the benefits of our country - working roads, efficient transport systems, a stable legal system, health facilities and crime prevention while paying nothing towards it
This is a really messed up way of looking at things. Amazon doesn't get the benefits of the UK - the people living there do! Amazon is just a convenient legal handle for a large group of people around the world working towards a common goal, with collectively owned assets. So let me turn that question around - why should that group of people, many of them not living in the UK, collectively pay for British roads that they may never drive on? Surely it's up to British people to pay for that?
And incidentally, the entire point of my post was that the UK no longer has a stable legal system as far as large corporations are concerned. A stable legal system would be one in which you can read the law and then know what you can or cannot do. The UK GAAR breaks that: you really have no idea whether your companies financial arrangements might be OK today and retroactively "unreasonable" tomorrow. It depends mostly on political winds, some arbitrary judgement by an HMRC bureaucrat, how in debt the country is etc.
I and lots of people in the UK are frankly sick of your attitude. If they are making billions from selling to UK consumers, they should damn well pay their fair share of tax on it. We're not asking for taxation of other countries to be paid to us, just our fair share from these heartless global behemoths. They're not working on your behalf buddy.
Frankly, I and many other people are sick of the UK attitude too. Yes you are asking for the taxation of other countries to be paid to you. Every time a company is whacked because they chose to pay Irish taxes or Luxembourg taxes instead of British taxes, you are demand that money be spent on YOUR needs instead of the needs of the people of Ireland or Luxembourg. Hey, guess what? That's a double edged sword.
Maybe tomorrow, France will decide that companies headquartered in London are all engaged in dirty tax evasion because the British corporation taxes are by no means the highest in Europe. They will argue that there's no real reason to be in London other than to avoid French taxes. Then maybe it'll decide to just slap a nice fat 75% tax rate on those companies, I heard Hollande likes that sort of tax level. And if that leads to job losses in Britain, well, they were heartless tax avoiders who just wanted to wriggle out of paying French pensions so fuck them, right?
Or what
By the way, I'm British myself. And the debate over tax avoidance there makes me embarrassed for my country. The UK is marching towards authoritarianism so fast it makes my head spin. Tearing up the rulebook in frustration and beating up on whoever is unpopular is certainly not the first step down that road, but it's an important one.
But somehow marketing in all these different languages isn't overwhelming enough to stop them from selling their goods in these countries.
Eh, yes, it is actually. Many online services aren't universally available throughout the EU because they aren't translated into the local languages, and it wasn't so long ago that we were reading here on Slashdot about how the EU Commission is annoyed by geo-blocking of services. These rules aren't just about Amazon and Google you know. They also apply to a huge long tail of smaller companies who given a choice between "having to respond to letters from the Bulgarian government, written in Bulgarian" and "spending the time on other things" will choose the latter.
And if you're worried about efficiency, let's remember that it would be FAR more efficient to only tax corporations, than to tax EVERY SINGLE CITIZEN.
No, it really wouldn't. This whole fiasco is demonstrating that very clearly.
Taxing people makes sense. People cannot be in multiple countries at once: figuring out if someone should be a taxpayer can be as simple as adding up how many days they spent in the country. People are what use government services. Companies don't use them anywhere near as much - companies don't get sick and go to hospital, they don't drive down roads, they don't draw pensions etc. Companies get the services of the legal system, although sometimes those "services" may involve being sued by a competitor and other times they have to pay fees to use the courts anyway.
What's more, the moral justification for taxation fails when applied to companies - they suffer taxation without representation. Companies cannot vote. Heck, they get demonised even for talking to governments, so voting is entirely out of the question.
The biggest problem with taxing companies though, is figuring out how to slice the pie between different governments. Unlike people, companies can be in many places at once. So suddenly every cash-starved government feels like they're entitled to a bigger piece of pie. It turns into a crazy tug of war with the company being torn apart in the middle.
In the old days this problem didn't matter much because large scale free trade is a relatively recent thing, so previous generations of companies were mostly based in one or two places. But sometimes, especially with modern companies, there's no really good way to divide the spoils up. Where does Google make its profit? Is it in California where the search engine is developed? Is it in Ireland where the advertising contracts were signed? Is it in Germany where the datacenter handled the request, or Oregon where the data the datacenter served was generated? Is it where the customer who clicked the ad is located, or the customer who paid for it? If it's the latter, what if the customer is itself a transnational company?
These questions are enough to feed an army of lawyers and accountants for all eternity, and the end result will still seem unfair to big groups of people. Accusations of "avoidance" (whatever that means) will still fly. There is just NO WAY to do this well.
The logical conclusion to all these problems is to simply zero out corporation taxes entirely, and raise revenue from the individuals who live there. Of course this is deeply unpopular because corporation taxes feel "free"
I am not contradicting myself. The point of a single market is that the distinction between national and multinational companies disappears. Inside the EU, as conceived, there is no such thing as a national company. There are only European companies, selling to Europeans. The concept is supposed to be as meaningless as talking about "state companies" would be in America. There's no such thing - people only talk about companies being American, regardless of which part of America they may have physically originated in.
The politicians and bureaucrats who set up the EU/EEA may have been thinking of short term benefits to pre-existing companies. But the system created was very straightforward in its goals - to tear down national boundaries across the trading bloc, starting with tariffs and later, standardising bureaucracies to eliminate red tape. And the way corporation and sales taxes worked were chosen to meet those goals.
And if it was the latter, why is the Commission investigating whether the arrangements negotiated between various companies and the Luxembourgeois tax authorities constitute illegal state aid?
Because the commission is a creature of EU politicians who represent countries that are, by and large, broke (except for the Germans). The notion that setting taxes lower than your competitors is illegal state aid didn't crop up until the European debt crisis, which isn't surprising because "taking less of your money than others would" is only "aid" under some very strange definition of the word. Aid normally would mean giving money, not taking it. But many of these laws are vague enough to be stretched to meet more or less political goal, and scapegoating foreigners for domestic problems is always popular.
I would not have any problem if their actual warehouses were all in Luxembourg and all shipments departed from there; however, they most certainly do not
So what? Why is the last hop on a long supply chain special to you, exactly? Many of those goods were made in China and shipped through several warehouses before they ended up at whichever facility dispatched the product to you - so picking that one specifically as where tax is owed is no less arbitrary than any other place.
The EU rules are quite clear about this and always have been. Attempting to carve up a company between countries is a losing proposition that explodes complexity and discourages trade, so companies are free to choose where their headquarters are and where they book sales. It requires nothing more than a nameplate, technically. This may seem "unfair" but any other scheme you can think of is ultimately no fairer.
The single market was intended to be used for simplification, not for tax avoidance.
See, this is why I hate the term "tax avoidance". It's meaningless. It literally doesn't exist and this statement is a great example of why not - simplification is tax avoidance. Every time a British company ships something to someone in Poland overland via Germany, and doesn't have to fill out dozens of company registration and tax forms in Poland or Germany, that is in some sense "avoiding" tax. But it's avoiding it because of the simplification. You can't have it both ways - paying taxes in foreign countries adds complexity to trade and results in less of it
Basically every argument I've ever come across about tax avoidance founders immediately, due to this problem. Attempting to define tax avoidance is like trying to define terrorism. People think it's simple and they know it when they see it, and then the moment they try and nail down exactly what it means they realise it's nothing more sophisticated than "behaviour I don't personally like".
Banning Mosques is cultural self-defense.
You mean cultural suicide. After all, it violates the freedom of religion, which is absolutely vital for the marketplace of ideas to exist. That marketplace is the essence of Western Culture, underlaying every currently reigning local ideas.
The only thing mosques do is give the local populace a chance to copy whatever good ideas Islam might have, and of course the other way around. And the only ones it threatens are those who are on top in current status quo and wish it to remain.
Raise the tax rate to 75% of the corporate profit and see what happens...
Companies will reinvest revenue rather than pay it out as dividends. Also, stock prices fall as future expected dividends are cut by 75%, and then rise again as said reinvestment makes economy grow faster.
Actually, this could be just the stimulus economy needs...
The only way to do that is raise prices.
If you can make more profit by rising prices, why haven't you done so already?
If I am unable to raise prices that far, then I'll invest the $10 million of capital somewhere else.
"Somewhere else" is taxed too, so it'll do you no good. You'll simply have to settle for a level of profit the market can offer, the same as everyone else. Of course, you could sit on your $10 million and let inflation eat it away.
If my current profit is $1 million and you now say it will be only $100K due to new taxes, then either my prices have to go way up, or the product/service won't be offered.
In the latter case your profit will be negative due to inflation. $100K is the best option you have. And, should you decide to pass as a protest or whatever, that's okay too, your competitors will gladly expand their market.
Definition of irony:
a state of affairs or an event that seems deliberately contrary to what one expects and is often amusing as a result.
But if you're aware of the concept of irony, and people find it amusing, and that people are fond of posting things they find amusing, this logically means that you're expecting something unexpected, which thus is not unexpected, thus nothing can be ironic to one who knows of irony, not even this very fact.
Ya'll hear about the geometer who went to the beach to catch some rays and became a tangent ?
