Google, Apple and Microsoft Squirm As Global Tax Schemes Scrutinized 312
An anonymous reader writes: Google, Apple and Microsoft chiefs were hauled in front of an Australian Senate Committee on Wednesday and forced to answer questions about their tax dodging structures. "Under questioning from Greens Senator Christine Milne, [Google's Maile Carnegie] revealed none of the revenue derived from Google's lucrative advertising business is taxed in Australia, rather it is booked in Singapore where the corporate tax rate is set at 17 per cent, as opposed to Australia's 30 per cent. ... However in the strongest defense yet of the company's complex tax structure, Ms Carnegie attempted to highlight the hypocrisy of criticising global technology companies for using the same approach that Australian mining firms, like Rio Tinto, use when deriving profits from China. 'These are international tax arrangements and what Google is doing in Australia is very very similar to what Australian companies are doing outside of Australia. I am not sitting here today trying to defend whether those practices are right or wrong, they are simply the way the global tax system is currently working and we are trying to operate within that.' Ms. Carnegie said it was up to the government to create a different system, which the company would then abide by."
In other words ... (Score:5, Insightful)
Governments all over the world have been hoodwinked or bribed to set up loopholes which are beneficial to corporations, and not so good for domestic economies.
Because people have been buying into the lie that somehow cutting taxes on corporations is a net benefit, when in fact it's just a way for corporations to pay less tax and skim off the time, while taking ever bigger profits.
There has been a lot of evidence that all of these tax cuts don't benefit anybody but corporations, and that trick down economics is pretty much not working as advertised.
It's time to start saying "too fucking bad" to the corporations and stop giving them special loopholes to play shell games with money.
Start handcuffing CEOs to bears, make the world a better place.
Re:In other words ... (Score:4, Informative)
There has been a lot of evidence that all of these tax cuts don't benefit anybody but corporations, and that trick[le] down economics is pretty much not working as advertised.
In that respect, trickle-down economics is working exactly as intended. That trickle is a leak, they're working on plugging it.
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The fact that nothing is working as intended is because people think taxes and government regulation have no negative consequences, and keep making more of them to fix the previous consequences of bad government taxes and regulations.
True, but also somewhat misleading as it implies that removing taxes and regulations also has no negative consequences, which is false. Like many things in life it tends to be a trade off and you have to weigh the advantages and disadvantages of each tax and regulation. Many of our current ones should probably go away, others should be modified, a few should be strengthened and in some areas we probably need new ones.
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I would dare say that most "regulations" are the result of dimwitted politicians doing the bidding of powerful money lenders who dole out re-election campaign contributions to leverage their wealth, against the average American.
Take the "net neutrality" changes recently being made. They cloak their new regulation in geek friendly terms, create a whole new set of regulations that will do nothing to change the actual practices of the cable companies.
My solution would have been much cleaner, more efficient, an
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Didn't we try minimal regulation and near unlimited capitalism about 150 years ago? As I recall it wasn't so good for the majority of workers.
On the other hand countries with a higher level of regulation than the US, such as western European states like Germany, France, Sweden and Denmark, or eastern ones like Japan have pretty good quality of life. Less inequality than the US, affordable healthcare, not run by corporations or corporate owned politicians...
Do you have an example of a country where minimal g
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Governments all over the world have been hoodwinked or bribed to set up loopholes which are beneficial to corporations, and not so good for domestic economies.
It's not just national governments, but local governments as well; who like to tout that they got company X to locate in their jurisdiction, so they grant all sorts of tax cuts to get them to move from place A to place B in the same country. They only get pissed when someone does it to them.
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There are zero good reasons not to do so.
Other than being highly regressive and requiring a massive federal agency to manage it, it's just a peachy idea. Unless you create a whole series of exemptions and credits just like the exemptions and loopholes we have today, which then means even more federal employees to manage and enforce.
States and business a like are already setup to cope with sales tax,
Not all of them, and none of them have anything in place to cope with a federal sales tax.
EVERYTHING not on that list gets taxed, no matter who or what type of entity is transacting.
Uhhh, no, there are a large number of sales tax exempt organizations. You're talking about the existing ways of keeping a sal
The "spirit" of the law... (Score:5, Insightful)
This is what happens when you have two sets of rules to follow - the "law", which is laid out in black and white as to what is allowed and what is not allowed, and is backed by the courts and amended by acts of government. And then there is the "spirit of the law", which is fluffy, ethereal and changes depending on who you talk to, when you talk to them and what their agenda is.
As Ms. Carnegie points out, if you want stuff taxed in your jurisdiction, change the law so that happens - dont wave the "spirit" of the law around as if it has any meaning other than a method of blackmail.
Exactly (Score:3)
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Those laws have existed for a long time. Google, Apple, and the rest used what was already common practice for international corporations. It's only now that lawmakers have decided that it's bad.
Lower taxes (Score:4, Insightful)
If countries want tax revenue to stay in their countries, lower the tax rates to be come more competitive. After all, 17% of something is much better than 30% of nothing.
Re:Lower taxes (Score:5, Insightful)
If countries want tax revenue to stay in their countries, lower the tax rates to be come more competitive. After all, 17% of something is much better than 30% of nothing.
All that does is encourage a race to the bottom.
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All that does is encourage a race to the bottom.
It's a race. You can call it "to the bottom" if you think you somehow benefit from high taxes. (I don't, because I work and pay taxes instead of sitting at home collecting a benefit check.) If you benefit from having employers able to hire you and pay your salary, it's a race to make your country competitive environment for employers to hire.
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Uh, no. Hiring isn't really connected to taxes. That's a lie that the Big Businesses and Fox and Friends have been telling for a long time. In fact, if taxes are going to be high, I might hire *more* pay *less* in tax.
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the Big Lie is that cutting taxes and eliminating regulations and reducing wages will encourage businesses to employ more people.
this is complete and utter bullshit. All that those things do is increase profit for the business - which they do NOT pass on to consumers and do NOT use to hire more people.
the one and only thing that causes businesses to hire more people is if they have more customers buying so much more of their stuff that their existing employees can not keep up w
Re:Lower taxes (Score:5, Insightful)
I, personally, rather enjoy having things like running water, roads that can actually be driven on, bridges that don't fall down, food that's been inspected, and some other things that government provides. How are those things provided if we set up corporate-friendly tax regimes that wind up starving government? The private sector? Puhleez...
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I pay a water bill for running water. I pay a fuel tax that goes for roads and bridges and a property tax that goes for streets. I pay sales taxes for prepared food that can go for restaurant inspections, and the restaurants themselves pay for various permits. I also pay a property tax and a local sales tax for fire and police protection. That's how those things are provided.
Income taxes on individuals or corporations are not needed to provide water or roads or food inspections. Why would you imply tha
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Air traffic control and airports are paid for by ticket taxes.
"Mandates" and "standards" don't pay for anything -- and setting mandates and standards need not require a huge, costly bureaucracy.
Let automobile manufacturers and buyers pay for automobile standards like electrical appliance makers and buyers pay for UL certification.
Let food-buyers pay for USDA inspections and medicine-buyers pay for FDA. Let shippers pay for rail car inspections.
These things don't require corporate or personal income taxes a
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You need to look at the Laffer Curve.
http://en.wikipedia.org/wiki/L... [wikipedia.org]
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Re:Lower taxes (Score:5, Interesting)
If you think the government gives you nothing back, you're right to be annoyed. I get free health care, free education, free social care, a welfare system to look out for me if I'm in trouble, a pension when I got old (perhaps). I get police to keep things in order and try to make sure that I get to keep what's left of what I earn, and a fire brigade to look out for me. An ambulance that'll take me to hospital if that doesn't pan out. I get money channelled into research no company would have an interest in pursuing, but that makes people's lives better. I get roads to drive and walk down, and parks to take my kids to. I get playgrounds and lakes. I get food that doesn't kill me, and toys that don't hurt my kids. I get a computer that doesn't injure me.
But yeah, down with the government.
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Slight correction - you get roads to drive and walk down without having to stop every quarter mile (or kilometer) to pay a toll.
In the olden days, there were no such things as "public roads" - they were all private and they demanded a toll to travel on them. London is a particular fascinating example because it was impossible to go anywhere within London without paying money to someone (or usually, multiple someones).
The fact that government stepped in and bought up the pr
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If you think the government gives you nothing back, you're right to be annoyed. I get free health care, free education, free social care, a welfare system...
None of that stuff is free; it's bundled. All or nothing—and if you choose "nothing" they make you move out of the country, among other costs. You're still paying for everything you get, and more, but you're deprived of your right to decide for yourself whether a particular service is useful enough to justify its cost, who supplies it, or how it's implemented. That's plenty of reason to be annoyed even if you do feel that you get some value back in exchange for what the government takes in taxes.
It's
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Simple to fix (Score:3)
You have ANY presence (Brick and Mortar, offices, internet) and obtain ANY income there, you pay taxes there.
Countries can demand fair taxes (Score:2)
Re:Countries can demand fair taxes (Score:5, Interesting)
I believe that this is the law. The trick is defining "earnings". Earnings implies gross revenue minus operating expenses.
Let's say a multinational corporation operates in the USA (30% tax rate) and in the Cayman Islands (1% tax rate). Call them Foogle. They get 99.99% of their revenue from the USA, and 0.01 from the Cayman Islands. However they have a subsidiary, also based in the Cayman Islands, and they "license" the intellectual property for their company from this Cayman Island corporation for an amount precisely equal to the amount of their global revenue.
So in the USA, they show zero "earnings" (profits) and in the Cayman Islands, they show a ton of earnings (profits). So they pay 1% tax to the Cayman Islands and 0% to the USA.
That is the type of game they play. And when the laws get written to tighten that up, they just play more complex games.
If you try and tax corporations on their gross revenue, you will make a lot of activities unprofitable. For example, if you are a bookstore and you sell $10m worth of books for a profit of $100k, and you now have to pay 5% tax on the $10m instead of 30% on the $100k, you will now owe more 5x more in taxes than you have in profits.
you can't get all countries to agree (Score:5, Interesting)
there will always be moldova, antigua, vanuatu, etc.
but the major countries, the ones that provide certain legal frameworks corporations need and desire, need to get together and agree upon a common set of policies, and commit to sharing info with each other about company's returns, and stamp this shit out
the motivation is simple: to not be screwed financially. the motivation should be sound and compelling. didn't a lot of countries recently (last 15 years) band together and force switzerland to stop being the secret banking haven for narcothugs, selfish tax dodgers, corrupt politicians, etc around the world? if we can bring sleazy amoral switzerland to heel, we can do this
if a company wants to file in a country that is cheap, then let them get extorted by corrupt government officials, have their shipment of good confiscated/ help up at borders, etc. all the problems that come with countries with shit legal enforcement and bad laws
and those financially responsible countries that agree on sharing tax profiles can exclude such companies and such countries from certain streamlined benefits, if not outright ban them if their activities are too financially scumbag
of course, one country or another will be more attractive for financial reasons than another country
which is absolutely ok. i envision a future where ireland or singapore or wherever is the country of choice for corporations to pay taxes, like delaware in the usa for incorporation, or liberia for ship registration, etc.
but for anyone defending this tax avoidance as "fair": corporations are not made from the loins of a single "captain of industry" standing all alone. please understand the difference between low iq fantasy and reality. corporations exist because of the benefits of a stable secure society that allows them to be created and to grow. those benefits need to be paid for. corporations need to be contribute their share. especially if we want to make believe they are "people" as some philosopher-morons insist
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but for anyone defending this tax avoidance as "fair": corporations are not made from the loins of a single "captain of industry" standing all alone. please understand the difference between low iq fantasy and reality. corporations exist because of the benefits of a stable secure society that allows them to be created and to grow. those benefits need to be paid for. corporations need to be contribute their share. especially if we want to make believe they are "people" as some philosopher-morons insist
I'd take the position that what is best for any nation is more of a symbiotic relationship with corporations. This is because while the nation provides the benefits you stated, that nation couldn't do so without the support of corporations...products and jobs. The determination of a "fair" taxation rate will never end, but it should be based upon what is best for the nation as a whole...what rate provides the most jobs, GNP, etc., and makes us the most competitive globally.
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and i have absolutely no problem with anything you said
and if another country provides a better rate, let that corporation file there. which provides certain additional benefits and liabilities, depending upon where the company primarily does business, and where they file, which all has to be evaluated
but what is absolutely unacceptable is this creative shell game where no or little tax is paid, simply because some shitbag accountant noticed a loophole
of course, there will always be loopholes. close one and
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I'd take the position that what is best for any nation is more of a symbiotic relationship with corporations.
If labor is also involved that's called Fascism, if it isn't then it's Corporatism. Both are quite effective but have unpleasant side effects.
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the point is not to have a simple tax code genius
the point is for companies to pay taxes, somewhere, anywhere, period
changing the subject doesn't mean you have a point
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the motivation is simple: to not be screwed financially. the motivation should be sound and compelling. didn't a lot of countries recently (last 15 years) band together and force switzerland to stop being the secret banking haven for narcothugs, selfish tax dodgers, corrupt politicians, etc around the world? if we can bring sleazy amoral switzerland to heel, we can do this
Except that those countries don't play the same game as Switzerland so there was no net loss to them. Many do play the tax break game and thus have something to lose and so favor the status quo, except when a company minimizes taxes in their jurisdiction.
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there isn't winners and losers
all countries lose when loopholes mean companies don't pay taxes at all
even if there is one "winner" (getting a tiny amount of taxes because a lot of companies file there), the financial pressure the losers can bring to bear on the "winner" isn't worth preserving any status quo
especially since getting actual real taxes from a handful of companies is a lot better than getting pennies from a thousands because of a sleazy loophole
Hauled? Forced? (Score:4, Insightful)
No, they were not hauled or forced. Did they come and answer questions reluctantly? Sure, but can we drop the hyperbole?
Re:Hauled? Forced? (Score:5, Insightful)
You try refusing to appear in front of Congressional, Senate or Parliamentary Committee once they have required your attendance. Those invitations are akin to subpoenas, so yes they were forced to appear and answer questions.
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"Those invitations are akin to subpoenas, so yes they were forced to appear and answer questions."
Yes, and its about time. With global warming soon to make planet Earth uninhabitable for humans in as little as 200 years, massive amounts of money will be needed to radically change the infrastructure associated with energy production and delivery and transportation and manufacturing. Since only a tiny fraction of the world's population really has any money, humanity will be forced to get it from the tiny fr
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With global warming soon to make planet Earth uninhabitable for humans in as little as 200 years
That's extremely unlikely in all of the published scenarios. End of technological civilization, sure, end of humanity, no.
Poor Google.... (Score:5, Funny)
There's a reason I feel zero guilt in using ad-block. It's perfectly legal for Google to dodge taxes this way, and it's perfectly legal for me to dodge Google's ads using browser extensions.
I don't see how this is a "Poor Google" situation (Score:5, Insightful)
There's a reason I feel zero guilt in using ad-block. It's perfectly legal for Google to dodge taxes this way, and it's perfectly legal for me to dodge Google's ads using browser extensions.
You shouldn't feel guilt about thwarting Google displaying the ads.
You should maybe feel a teensy bit of guilt over the fact that you are using an ad-supported site which derives its revenue from displaying Google ads to its visitors, in lieu of a subscription fee.
Google could probably care less; in fact, in cafeteria discussions at Google, this came up once, and the general consensus was that, if the ads were not going to result in sales, Google preferred that people run the ad blockers.
Of course, this reduces the revenue for the ad-supported site which you liked well enough to visit, but not well enough to pay for. So I suspect, at some point, that the ad-block-detection code (which is there) will give you a temporary redirect to another page that says:
"If you don't like seeing advertisements, fine, we'll save that in your preferences and quit trying to show them to you; but in lieu of having ads, would you please support the continued operation of our site with a small donation, so that we can continue to provide you with the content you came here to see?"
So, actually, if anything, it's a "Poor Site I Like Who Is Now Getting Any Income..." situation.
Just saying.
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I wasn't aware that Adblock had an option for blocking only ads from large multinational corporations that dodge taxes.
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The real problem is local competition (Score:4, Interesting)
This pretty much makes it impossible for a homegrown company in any of these countries to compete. Nobody can compete with a company that is has all that extra tax free profit to use in acquisitions, research, marketing, or just making their product higher quality.
What baffles me is that nearly all the countries being screwed out of those taxes aren't even more angry that they are also potentially being screwed out of viable competitors. If a country such as the UK had the next Google or Apple it could literally change the face of that country's economy as companies of that size don't just hire lots of people and pay lots of taxes but also create a nexus of similar companies. You can't build a Silicon valley out of a few government IT contractors and a handful of Best Buy warehouses. On the otherhand you can build one based upon a Google or two.
To me this is a very simple tax problem. All they need to do is say if you make a profit in our country you pay the same taxes on that profit that a company in this country would pay. But the key is that the profit is calculated by estimated real costs, not the costs presented on paper. Thus Apple could no longer claim that each iPhone cost $699 to build and sell it for $700.
But the real win would be if these countries were able to mostly ignore R&D costs that happen outside their own boarders. If this was no longer easily deductible it would become an instant R&D win biasing in favour of their own country. The simple reality is that as the future comes closer and closer countries that train and use the brains in their countries will do well, while those that outsource their IP development will falter. This tax exploitation by these companies provides an opportunity for various western countries to swing the pendulum unfairly in their own favour as a punishment for past exploitation.
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Here's an idea. Governments could cut corporate taxes to 0%. Then it would be a level playing field.
But the left will never allow that, because EVIL CORPORATIONS.
Actually, I think that's a great idea (Score:5, Interesting)
And I'm pretty far left, and have heard the same idea from other "lefties." Go ahead and cut the corporate tax to zero. The largest and most powerful corporations will bribe governments and set up special loopholes that work for them (but not smaller competitors) anyway. Level the playing field, as you say.
...and do away with special tax treatment of dividends and capital gains. Tax the owners of the corporations rather than the corporations themselves. This has a side benefit of no longer taxing investment income at a lower rate than actual earned income from working.
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Yes, except of course for the 99% of humanity that can't afford to buy any shares. One can't presume that somehow they will sit idly by, while corporations ask them to go extinct.
Better yet, establish the same rate on capital gains as salaried income worldwide and tax all stock transactions at 1% per share without exception. Admittedly, it might require some ancillary laws that make it legal to burn at the stake, politicians, donors, and judges who think political kick-backs in return for tax breaks are a
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I've never seen a massively large Google logo rolling down any street.
I have seen real live, taxable Google employees walking down streets.
In other words (Score:4, Insightful)
Ms. Carnegie said it was up to the government to create a different system, which the company would then abide by."
In other words: "if you lower your taxes to a number that we like, we might consider paying them".
Must be nice being a multinational corporation, getting to chose how much taxes you pay and where you pay them...
Meanwhile in the real world, people go broke (no more jobs... sorry), small and medium-sized businesses go broke (can't compete with Amazon? Too bad), local governments and states go broke (not enough revenue? Your taxes are too high, just lower them so you can compete with the 0% rate in Dubai and the United Arab Emirates).
The system works.
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Companies work within existing tax laws, and they have nothing to be ashamed by abiding by current tax laws. If the government offers you a tax break for buying a new home, of course you are going to take the tax break - even if you think the tax break is total bullshit.
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Ms. Carnegie said it was up to the government to create a different system, which the company would then abide by."
In other words: "if you lower your taxes to a number that we like, we might consider paying them".
That's a rather gross misrepresentation, even reading between the lines. I think that a real read between the lines would be:
(1) Our primary booking agency where we contract with people in Australia to provide ad service to them is in Singapore
(2) All of our booking expertise is also (currently) in Singapore
(3) If the situation were more favorable in Australia, we would consider establishing a booking agency here as well
(4) Maybe
Must be nice being a multinational corporation, getting to chose how much taxes you pay and where you pay them...
Technically, private individuals can, and some do, the same thing. Then they
About time... (Score:2)
Maybe... (Score:2)
They squirmed? (Score:2)
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False equivalence, 10 yard penalty.
As long as a company is obeying the law and not hurting anyone, they are legally and morally in the right.
Re:So - the fact that others are doing it makes it (Score:5, Interesting)
Your definition of not hurting anyone is fairly important though. I think in this case, the company *and* the government could be morally but not legally in the wrong. They transferring money from the government to their own bank account. If you pretend for a minute that the government does things that are good for the people, then they're preventing some of this from happening.
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Your definition of not hurting anyone is fairly important though. I think in this case, the company *and* the government could be morally but not legally in the wrong.
Then you are sending the wrong authorities after them. Instead of sending tax men, you should be sending Bishops, to correct their moral violations. Tax men are only applicable when there are legal violations.
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In an ideal world, the electorate can deal with the immoral government, and the government can deal with the immoral company by making their actions illegal (if indeed it's the will of the people to crack down on immoral activity).
I'm not arguing that they should be punished for being immoral, but long term, they probably *should* expect the law to stop treating them so favourably.
Shifting the tax burden to others (Score:3)
As long as a company is obeying the law and not hurting anyone, they are legally and morally in the right.
Fact is that these companies ARE hurting people. Specifically the taxpayer. By avoiding substantial tax burdens these companies are forcing the government to either borrow more money to cover the shortfall or raise taxes on everyone else. That borrowing costs interest and that affects everyone else who pays taxes.
So they ARE hurting others by their actions and trying to justify it by pointing out that they haven't technically broken any laws is letting them off on a technicality. If you want to argue th
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As long as a company is obeying the law and not hurting anyone, they are legally and morally in the right.
I would argue that in a vertically integrated company, charging "costs" to parent companies over and above what an open market would bear might be legal but isn't morally right.
The problem for the law is how to determine what these open market costs should be. When a patent is licenced to a (true) independent company it would (presumably) be a fair cost for internal use too at the same price. But when a
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Re:So - the fact that others are doing it makes it (Score:5, Insightful)
Mis-reporting income and expenses is fraud last time I looked. This goes for businesses where one division over-charges another to shift profits from one country to another. These practices are coming under increasing scrutiny globally.
Want to straighten the ad problem out fast? Sales tax in the country/state/county of purchase.
Re:So - the fact that others are doing it makes it (Score:5, Informative)
Mis-reporting income and expenses is fraud last time I looked. This goes for businesses where one division over-charges another to shift profits from one country to another. These practices are coming under increasing scrutiny globally.
Then these companies will soon be in court on fraud charges, won't they?
Want to straighten the ad problem out fast? Sales tax in the country/state/county of purchase.
Yeah, let's put all those mom-and-pop Internet businesses out of business because they don't want the hassle of complying with the tax laws of three hundred pissant little countries. Right on! That'll stick it to the Man!
Re:So - the fact that others are doing it makes it (Score:5, Interesting)
Re:So - the fact that others are doing it makes it (Score:4, Insightful)
When you cheat you tax collectors a few thousand then you end up in court. When a large corporation is minimising tax then it is much more of a negotiation. You are insignificant. Google employs lots of people and generates lots of revenue and can hire the best legal advice and accountants.
That's also the reason bankers and corporate use news media like the Daily Mail or Fox News to get you worked up over J.Q Public down the street cheating on his taxes or scrounging a few $ / £ / € in benefits because it distracts your attention from their corporate and banker friends who are cheating the public purse out of billions upon billions. It is a constant source of puzzlement to me how people can get so worked out about Polish/Romanian/Bulgarian workers coming to the UK and cheating on benefits (when in actual fact studies have shown that they work more and cheat less on benefits than native Britons) that I have actually heard people talk about wholesale deportations (and some ideas that are way scarier than that), but they do not seem to be bothered at all by bankers and corporations (read: the owners of organizations like the Daily Mail and Fox News et. al.) swindling the state out of amounts of money that make benefits swindling look like a mosquito on an elephant's ass.
Re:So - the fact that others are doing it makes it (Score:5, Informative)
tax Evasion is illegal.
tax Avoidance is perfectly legal and is taught in accounting classes in every business school.
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So the resisting arrest, and the heart attack/asthma attack had nothing to do with his death, it was all that evil cop trying to arrest a guy for selling loosies.
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Why should a mom-and-pop internet business be exempt from taxes that the mom-and-pop brick-and-mortar store has to pay?
Let's have a level playing field. After all, that mom-and-pop internet business benefits from the services collected by the mom-and-pop brick-and-mortor.
And the same goes for large internet vendors vs. large brick-and-mortar vendors. Don't tell me that Amazon or Google can't figure out the tax rates for every jurisdiction they serve - they can just google for it.
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Why should a mom-and-pop internet business be exempt from taxes that the mom-and-pop brick-and-mortar store has to pay?
Because in the second case, mom-and-pop live in Singapore?
Is this a trick question?
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In case you don't realize it, you actually make the case that all these tax schemes are designed for Corporations to drive out the independent competition from existence. ALL Taxes are regressive.
Re:So - the fact that others are doing it makes it (Score:4, Insightful)
Why should a mom-and-pop internet business be exempt from taxes that the mom-and-pop brick-and-mortar store has to pay?
Because the mom-and-pop brick-and-mortar store only has one set of three tax structures which they are beholden to (federal, state, city). The mom-and-pop Internet business would have literal thousands of tax codes to be subject to (that is, the tax laws of every nation, province/state, county, city, federation, etc. on the planet - at least outside of North Korea). That is not, as you declare, a "level playing field" by any means.
Large brick-and-mortar international concerns and large internet international concerns are already level with each other tax-wise aside from sales taxes (which vary by locale).
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Why should a mom-and-pop internet business be exempt from taxes that the mom-and-pop brick-and-mortar store has to pay?
You think a mom-and-pop internet business should have to deal with tax law in over a hundred different jurisdictions over the world?
Let's have a level playing field. After all, that mom-and-pop internet business benefits from the services collected by the mom-and-pop brick-and-mortor
If I have a mom-and-pop internet business in Canada and I make a sale to someone in Japan just how much do you think I'm really benefiting from the government services in Japan?
And the same goes for large internet vendors vs. large brick-and-mortar vendors. Don't tell me that Amazon or Google can't figure out the tax rates for every jurisdiction they serve - they can just google for it.
I have a feeling your model of an Internet company is a building full of accountants. Personally that strikes me as an incredible waste of human potential, there probably should be some way for Internet
Re:So - the fact that others are doing it makes it (Score:4, Insightful)
Where do you see anything on them misreporting, or charges of fraud?
Legal, just morally dubious (Score:5, Interesting)
Mis-reporting income and expenses is fraud last time I looked.
They aren't mis-reporting their earnings. They simply are taking advantage of loopholes in the law. It's almost always perfectly legal. Morally dubious but quite legal.
Frankly when you can afford literally hundreds of staff specifically for the purpose of avoiding taxes by exploiting obscure loopholes in the law, you are engaging in something that is ethically on the edge. I'm an accountant and I find the tax avoidance practices of these companies to be reprehensible. I'm particularly disgusted by my colleagues who facilitate this sort of activity.
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only having sales tax is unfair taxation
there's people who derive income that have nothing to do with sales. so you're putting all the tax burden on one sector of the economy and letting a bunch of other sectors off tax free
tax code is complicated for a reason: the economy is complicated
i'm not saying the tax code doesn't have parts which are insanely complex for no good reason. i'm saying you will never have a simple tax code. more simplified than our current byzantine monstrosity? yes, that is good, and t
Re:So - the fact that others are doing it makes it (Score:5, Insightful)
Unfortunately, I would agree.
If a country wants a piece of the action, maybe they should take a good hard look at their tax code. They may have to lower taxes *gasp* Perhaps getting 17% of something is better than getting 30% of $0.
The reason companies do this is because it's more profitable to hire an army of lawyers and accountants to skirt local laws.
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The BBC had a news article a while back about an African country that officially had a 30% (I think) tax rate, but no-one paid it, so they offered people the option of registering for a 3% tax rate, which increased their income because the average they actually managed to collect with their 30% rate was only 2%.
But, hey, it's all the fault of the EVIL BASTARDS who won't pay their FAIR SHARE!
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Of course people don't want to pay their taxes - they just want to reap the benefits of living in a civilization (what taxes pay for). It's the prisoner's dilemma, and what is best for the individual is that they don't pay their taxes and that everybody else does.
This unwillingness to pay taxes doesn't prove taxes are inherently stupid, just that people haven't collectively worked out the dilemma yet.
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Reference needed. There is no country on earth where police, fire, health and education systems costs 30% of the GDP. Governments want that to do all sort of stuff most members of the population don't want. This is why people try to evade taxes. Because they're spent 90% on bullshit. If my country was asking for 3% of the GDP and that was it, nobody in their right mind would try to evade taxes because they would be fair: (almost) insignificant for the people and providing quality services.
Unfortunately, thi
Re:So - the fact that others are doing it makes it (Score:4, Insightful)
In itself, that's just a race to the bottom on corporation tax. Then you find rich people earn nothing and simply channel all their funds through companies... oh wait.
Re: So - the fact that others are doing it makes i (Score:4, Informative)
That's not true. Companies charge what the market can bear, and if they had lower taxes, they'd mostly just reap higher margins. Do you really think Apples prices would significantly rise if their tax burden went up? That's certainly not true of all markets.
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If a country wants a piece of the action, maybe they should take a good hard look at their tax code. They may have to lower taxes *gasp* Perhaps getting 17% of something is better than getting 30% of $0.
The reason companies do this is because it's more profitable to hire an army of lawyers and accountants to skirt local laws.
I agree that this sounds reasonable, but I am afraid the reality is that once countries start changing their laws to do this, it won't be enough. If country A says "OK, we'll change the law to get 17%" then country B offers 15% and then later country C offere 12% and so on, businesses will continue to complain about the declining tax rates as still being "excessive" until they reach zero. I can't rule out that some enterprising country might find a way to make a tax rate of 0% work for them if it's done i
Legal != moral (Score:2)
No, the fact that it's legal makes it OK
Don't confuse legality with morality. It may be legal but I think you'll find more people than not think it is very much NOT ok. I happen to be one of them. I'm an accountant so I understand very clearly what they are doing and I think it is as shady as hollywood accounting [wikipedia.org]. I very much hope that our government closes these loopholes. I don't really care if we charge corporations taxes or not but I do care about companies using "creative accounting" to the detriment of the larger society.
Though why anyone thinks the world will be a better place if governments have yet more billions of dollars to waste is beyond me.
The vast major
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Don't confuse legality with morality. It may be legal but I think you'll find more people than not think it is very much NOT ok.
I think it ok. If Google keeps the money, they will spend it on research into deep learning, robotic cars, and better organization of human knowledge. Microsoft dollars are finding a cure for malaria. The government would use the money to drop bombs on Iraqis.
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"Though why anyone thinks the world will be a better place if governments have yet more billions of dollars to waste is beyond me."
Of course, we shouldn't let governments have extra money to feed the poor, educate citizenry, provide health care, protect the environment, make streets safer, or let the citizenry vote to decide how to spend it, for after all, we should simply let corporations establish tax policy through an army of lawyers armed with political kickbacks so that the already ultra wealthy can ge
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"Though why anyone thinks the world will be a better place if governments have yet more billions of dollars to waste is beyond me."
The answer is obvious: so governments can waste their money on little, average guys like me and you, instead of always wasting it on a few already incredible rich people, who get every break they desire by corrupting governance by making it fundamentally unfair.
You aren't really that stupid are you?
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The answer is obvious: so governments can waste their money on little, average guys like me and you, instead of always wasting it on a few already incredible rich people, who get every break they desire by corrupting governance by making it fundamentally unfair.
You're making an awfully big assumption that extra funds would be spent on little people instead of further spending on powerful special interests.
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Tax loopholes are put there for a reason. In general, it gets the businesses to invest in their particular areas.
Give a tax break to Google, so they can setup a data center in your community, You get hundreds of new jobs, who do pay taxes.
This use to work, until companies got much smarter. Why bother putting in a big building, where you only need a place with a telephone forward to you non-corporate office/vacation home, and reap the tax savings.
Trickle down theory works only when the higher up is willing
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Tax loopholes are put there for a reason.
Of course they are, you didn't think all those lobbyists get paid for nothing do you?
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No, the fact that it's legal makes it OK. If governments don't like that, they can change the law.
The problem is though unless every government in the world does it, they'll just go elsewhere.
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In the United States, your assertion that "working stiffs" are burdened with most of the taxes is not supported by the facts. If you look at total taxes paid (local, state, and Federal) as a percentage of income, the bottom 40% are taxed at about 20% and the top 20% are taxed at about 30% (Washington Post [washingtonpost.com]). So the rich are paying taxes at a higher rate then the "working stiffs."
If you look at it from the "income to the Federal government" perspective, as of tax year 2011 [taxfoundation.org], the top 5% paid 57% of the collec
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I suspect that the disconnect lies in one sentence:
Most people seriously confuse "fair share" with "fair misery" when it comes to wealth and taxation.
What I mean is, when some folks say they want "progressive taxation", or "fair tax", what they really mean is that they want the wealthy to be just as miserable financially as the average person after taxes are paid. It's an emotional rather than a logical demand.
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Don't blame Google for doing what the government allows. Blame the government for thinking it can tax without consequences. Tax avoidance is a responsibility of the tax payer, and if government can't figure out how to design a tax system that is "fair" and "progressive" that is not the fault of those avoiding taxes.
The rich can always learn how to avoid paying taxes. This means that even "progressive" taxes are regressive. All of them. The problem is taxes shape behavior in unintended ways, and often ways t
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It's either legal, or it's not. If it's not illegal, calling it abuse is inaccurate.
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Have you not heard of Guernsey either? It's a British-owned island out in the middle of the sea between England and France and technically in Europe.
Tiny island, population 65,000 and for many years the central hub of almost every EU delivery for Amazon as it was possible to avoid VAT. The money that went through that place was incredible, and hiding behind a historic tax law designed to protect growers of tulips (I believe).
Or Luxembourg? Similar thing, ten times as big (but still a tiny little country)
Emergency shipments of contraceptives needed! (Score:2)
Singapore's population went up by 500,000 in the 25 minutes between the two parent posts. At this rate, their population will reach 2.2 billion by this time tomorrow!
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80%.