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EU Google Government

Four EU Countries Seek Higher Taxes On Google and Amazon (reuters.com) 205

An anonymous reader quotes Reuters: France, Germany, Italy and Spain want digital multinationals like Amazon and Google to be taxed in Europe based on their revenues, rather than only profits as now, their finance ministers said in a joint letter. France is leading a push to clamp down on the taxation of such companies, but has found support from other countries also frustrated at the low tax they receive under current international rules. Currently such companies are often taxed on profits booked by subsidiaries in low-tax countries like Ireland even though the revenue originated from other EU countries. "We should no longer accept that these companies do business in Europe while paying minimal amounts of tax to our treasuries," the four ministers wrote in a letter seen by Reuters.
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Four EU Countries Seek Higher Taxes On Google and Amazon

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  • by Solandri ( 704621 ) on Sunday September 10, 2017 @10:24AM (#55169095)
    Because it makes it completely clear who is actually paying the taxes - the customers. A tax on revenue is otherwise known as a sales tax.

    Companies don't pay corporate taxes. It gets passed on to customers as higher prices, to employees as lower wages, and to owners/stockholders as reduced dividends. You see, companies are just paper entities - they don't really exist. They're just a line a bunch of people (owners/stockholders and employees) draw around themselves so they can declare "we are working together." All the productivity, all the innovation, all the decisions are made by those people, not "the company". The company is just an inanimate banner, a flag they hold over their operations.

    So you can't really tax a company. That's like impounding a car for assisting in a bank robbery, or sentencing a PC to prison for being used in a hack. Losing those items just turns into an additional financial expense for the people who used to own them. Likewise, corporate taxes are just additional financial expenses for the people involved with a company - owners/stockholders, employees, and customers.

    Once you realize this, you realize how stupid it is to have a million different taxes for a million different things. It's a horribly inefficient way to collect tax revenue. The most efficient method would be to have a single tax which you assess against all people. If you believe in progressive taxation, then the obvious tax to keep is the income tax. Pretty much all other taxes* can be eliminated with no effect on the economy or tax revenue, other than vastly reducing the amount of money wasted on collecting taxes and forcing people/businesses to keep track of a million different taxes.

    * (Behavior-modifying taxes would still be useful since their primary goal is not to collect revenue for the government. e.g. Fuel taxes to encourage energy efficiency, property taxes to prevent speculators from holding on to fallow land [latimes.com] which could otherwise be put to much better use.)

    This also avoids the hypocrisy of saying you believe in no taxation without representation, then simultaneously wanting to tax corporations while believing they should have no role in government.
    • by fluffernutter ( 1411889 ) on Sunday September 10, 2017 @10:53AM (#55169293)

      It gets passed on to customers as higher prices

      You're ignoring a little thing called 'the market' that may or may not allow them to rise prices. They can't rise prices if they can't sell enough stuff at those prices.

      • It gets passed on to customers as higher prices

        You're ignoring a little thing called 'the market' that may or may not allow them to rise prices. They can't rise prices if they can't sell enough stuff at those prices.

        Markets prevent one company from charging significantly more than its competitors for the same goods. The market generally doesn't prevent prices from going up if costs go up for all competitors, as they do with tax increases. In a competitive market, tax increases will usually get passed on alm

        • by Chrisje ( 471362 )

          Which is why governments can step in with subsidies, minimum and maximum price levels, tariffs and other protectionist measures.

          There is no such thing as a free market, by the way. Theoretically such a thing contains an infinite number of sellers, an infinite number of buyers and no regulations whatsoever. So don't come and tell me you believe in letting the market decide when, for instance, you dislike the notion of child labour or slavery: The minute you decide to impart any kind of moral or regulation on

          • A free market does not require an infinite number of buyers or sellers. Thats just garbage. A free market allows buyers and sellers to exchange goods and services without having to deal with a third party. Hence: "Free" from outside influences. Slavery doesn't count, because you need a third party to coerce the slave to work for no wage and against will. you can't do it, otherwise, someone else could come and enslave you.

            Child labor on the other hand, if the child agrees to the wages: Imagine if for a momen

            • Whatever potential labor savings this decision would yield, would cost them more in terms of lost sales from people opposed to child labor.

              More importantly, parents are generally only going to let their children engage in child labor if it is in the interest of the children; that is, if they are so poor that child labor is preferable to other options.

          • Which is why governments can step in with subsidies, minimum and maximum price levels, tariffs and other protectionist measures.

            They can, and consumers end up paying the price for it.

            There is no such thing as a free market, by the way. Theoretically such a thing contains an infinite number of sellers, an infinite number of buyers and no regulations whatsoever.

            A free market is simply one in which any two people can engage in voluntary business transactions according to conditions that they choose. Free marke

          • Oh, I see, you're Dutch, that explains your latent fascism. A shame you haven't learned from your history. I'm just putting it out there for all Dutch citizens on this thread.

        • We're not talking about costs going up for everyone. We're talking about costs going up for Google and Amazon. Besides, no tax code is ever going to be so simplistic as to rise costs equally for every business across the board everywhere. It just doesn't work that way.
          • Sure it does: its called a consumption tax. Oh, and everyone uses google and amazon. I'm sorry, but they do. Your accountant who needs a laptop might buy it from Amazon. Their prices rise, so she has to charge you more. See? Lookup the monetary price system to learn more.

            • No one I know uses Amazon, prices are on average quite higher there than they are in local stores. I guess maybe people use Amazon where the cost of living is high, but smart people don't move to places like that. Good thing I always have the choice to go to an accountant that's smart enough to find a cheaper place to buy a laptop.
          • We're talking about costs going up for Google and Amazon.

            Well, that would violate equal protection, but maybe Europeans don't care about that. In any case, so what? What does that have to do with what we were discussing?

        • by pnutjam ( 523990 )
          And theoretically making companies all pay for health insurance should be a wash, but it definitely is not. It varies significantly from company to company.

          You don't see companies unilaterally return money on lower taxed items and they don't unilaterally increase prices on higher taxed items. That's just a convenient fiction for a certain type of man.

          Glossary:
          A certain type of man = evil person
          • You don't see companies unilaterally return money on lower taxed items and they don't unilaterally increase prices on higher taxed items.

            How do you know "you don't see" that?

            And theoretically making companies all pay for health insurance should be a wash, but it definitely is not. It varies significantly from company to company.

            "It varies"? What exactly "varies"?

            That's just a convenient fiction for a certain type of man.

            Well, you leave me with no doubt as to what "type of man" you are: an economically illit

            • by pnutjam ( 523990 )
              I've seen it happen.
              • You've seen differential responses to taxes / cost increases; it's your interpretation that's ludicrous.

                • by pnutjam ( 523990 )
                  Taxes are not passed onto consumers. [huffingtonpost.com] It's ludicrous to think that happens. It could only happen if there was only one cash flow, between consumers and businesses, but that is far from true.

                  As to what varies. I'm talking about insurance, both cost to employee, cost to employer, coverage, etc... I've turned down a 20% pay raise because the new companies insurance would eat every penny and then some, pre-ACA.
                  educate yourself [openroadmedia.com]
                  • Taxes are not passed onto consumers.

                    Dave Johnson is not an economist, he is a left wing activist.

                    It's ludicrous to think that happens.

                    So why not tax companies at 50%? At 100%? At 200%?

                    I've turned down a 20% pay raise because the new companies insurance would eat every penny and then some, pre-ACA.

                    Thereby illustrating my point: if an employer provides you healthcare, they pay you less to make up for it.

                    educate yourself [openroadmedia.com]

                    Odd how that leaves out how government was responsible for the robber

                    • by pnutjam ( 523990 )

                      So why not tax companies at 50%? At 100%? At 200%?

                      Your strawman is showing.

                      Thereby illustrating my point: if an employer provides you healthcare, they pay you less to make up for it.

                      r Not true, this was just a classic small company, small pool, big cost vs. larger pool and lower cost. Companies pay the prevailing wage and cough up for health insurance because it's mostly expected. The fragmentation in the market makes it nearly impossible to compare plans between employers and I've clearly seen where one company is paying $20k of my insurance and another similar sized company is paying only $10k. Both plans had similar costs to me and similar coverage.
                      After I

                    • So why not tax companies at 50%? At 100%? At 200%?

                      Your strawman is showing.

                      That's not a "strawman", it's a valid question: if you say "taxes are not passed onto consumers", why not increase taxes even more?

                      Not true, this was just a classic small company, small pool, big cost vs. larger pool and lower cost

                      You gave it as an example in the context of a discussion about passing on costs. Now you say it was an example of big pool/small pool. Now, that's a straw man.

                      After I changed jobs again, a bigger company (s

                    • by pnutjam ( 523990 )
                      Totalitarianism? Fascism? That's what your preaching, it's just not coming from the elected gov, but our duly appointed corporate overlords.

                      Let me educate you about your stupid strawman argument.
                      Corporations are taxed on profits. Before profits are expenses. Expenses include salaries, inventory, depreciation, loans. Generally, none of this is taxed. Whatever you have left over, is profit. Profit is paid to shareholders, or reinvested, returned to customers in the form of lower prices, given to employees a
                    • A higher tax might mean a lower profit to shareholders, slower expansion, lower bonuses, higher prices, or lower salaries.

                      Companies usually can't lower profits (they lose investors) or lower bonuses/salaries (they lose workers). But if they happen to be in a position to do either of those things, it means that groups like retirees or employees make less money, which effectively translates into higher prices for those groups. If companies expand slower, that means lower supply, and hence higher prices. And i

                    • by pnutjam ( 523990 )

                      No, it's what you are preaching: strong government intervention in the economy and services like healthcare.

                      Where the hell did you get this from? I'm just saying taxes are too low and should be better targeted at companies that make money in a given area.

                    • You wrote: "This is why single payer makes sense."

                    • by pnutjam ( 523990 )
                      Duh, larger pools for insurance, lower overhead, standardized costs, portability when you change jobs; what doesn't make sense? Why is America too incompetent to do what every other country in the world is doing?

                      But the point I was making was how companies vary in how they pass costs to consumers or employees. One company might contribute 75% of premiums which is, for example, $500. Another company might contribute 50% which is $800. The insurance market is crazy. It only exists because of government inter
                    • Duh, larger pools for insurance, lower overhead, standardized costs, portability when you change jobs; what doesn't make sense? Why is America too incompetent to do what every other country in the world is doing?

                      We have a huge public health care system in the US, and far from delivering "lower overhead, standardized costs", it costs about 3x as much as the British NHS. If the US lowered the costs of Medicare/Medicaid to that of the UK, we could already cover everybody out of existing contributions. Forcing

                    • But the point I was making was how companies vary in how they pass costs to consumers or employees.

                      Yes, they vary in how they pass it on: some companies pay you more and reduce benefits, other companies pay less and increase benefits. Some companies lay off part of their workforce.

                      Likewise, when you tax products, some companies explicitly raise prices, other companies lower quality or decrease quantities, and yet others just get out of the market. Economically, all of those amount to "raising prices".

                    • by pnutjam ( 523990 )
                      And some companies will just have to be happy with slightly lower profits. That's not an alien concept to companies. Profits decrease all the time and shareholders make a bit less.
                      You guys act like this has never happened in the history of corporations.
                    • by pnutjam ( 523990 )
                      German healthcare [commonwealthfund.org]:

                      FTL; "Coverage is universal for all legal residents. About 85 percent of the population is covered by social health insurance and 10 percent by substitutive private health insurance. The remainder (e.g., soldiers, policemen) are covered under special programs. Undocumented immigrants are covered by social security in case of illness. All employed citizens (and other groups such as pensioners) earning less than €4,237.50 (US$5,422.80) per month (€50,850.00 [US$65,074.00] per yea
                    • Coverage is universal for all legal residents. About 85 percent of the population is covered by social health insurance and 10 percent by substitutive private health insurance.

                      I'm not sure what you're trying to say there. "Social health insurance" is still a system administered by private insurance companies and paid for by individual premiums; it's simply highly regulated. And "mandatorily covered" means that you are required by law to buy coverage under certain conditions (and under other conditions, you

                    • And some companies will just have to be happy with slightly lower profits.

                      Profits may go down slightly, but there usually is very little room there; that is, most companies operate close to the minimum profit margins at which it is worthwhile for them to stay in business.

                      You guys act like this has never happened in the history of corporations.

                      I was carefully stating this: Companies usually can't lower profits (they lose investors) or lower bonuses/salaries (they lose workers). But if they happen to be in a

                    • by pnutjam ( 523990 )
                      You'd be surprised. Apple can certainly afford more taxes in their profit margins, most businesses can.
                    • by pnutjam ( 523990 )
                      Most people only need basic coverage. You can talk about outliers, but letting people see a doctor or take insurance with them is a life changer, even if it a low bar.
                    • Most people only need basic coverage. You can talk about outliers, but letting people see a doctor or take insurance with them is a life changer, even if it a low bar.

                      Yes. The German system delivers that.

                      The ACA and the crony capitalist crap that Democrats have been proposing as "single payer" does not.

                    • You'd be surprised. Apple can certainly afford more taxes in their profit margins, most businesses can.

                      Apple is a luxury brand with a monopoly, catering mostly to rich, spoiled millennials.

                      Most businesses cannot. Unlike you, I actually checked the data. I suggest you do it: you'll be surprised (if you actually manage to understand it).

                    • by pnutjam ( 523990 )
                      The ACA could become the german system with few tweaks, it's closer to that then the Canadian or English single payer model. I'm not picky, but what we have isn't working.
                    • by pnutjam ( 523990 )
                      This article is about Google and Apple, both have comfortable profit margins.

                      In any case: https://economix.blogs.nytimes... [nytimes.com]
                      "Probably most people assume that the corporate income tax is largely paid by consumers of its products or services. That is, they assume that although the tax is nominally levied on the corporation as a whole, in fact the burden of the tax is shifted onto customers in the form of higher prices.
                      All economists reject that idea. "

                      From Econ101 at Carnegie Mellon University. [cmu.edu]:
                      Myth: An
                    • The ACA could become the german system with few tweaks

                      Turning the ACA into the German system would require massive cuts in services and coverage, eliminating Medicare/Medicaid entirely, as well as giving up on the kind of premises that the ACA is based on (equality, redistribution, using healthcare for social policy). I don't see any chance that Democrats are going to let that happen.

                    • The CMU statement is technically true but trivial; when people say that "companies pass on taxes as higher prices", they are implicitly talking about fairly inelastic demand curves. For elastic demand curves, it is true that prices don't go up much, but that doesn't mean that companies eat the difference. I leave it as an exercise to you to figure out what happens in that case. Apparently, such simple economic reasoning is beyond the people teaching Econ101 at CMU. As for the NYT quote, it's just ridiculous

    • A tax on revenue is otherwise known as a sales tax.

      That pretty much sums it up, since their revenue primarily comes from sales. A tax is a cost to the company, just like any other, and will be rolled into prices.

    • If you believe in progressive taxation, then the obvious tax to keep is the income tax.

      That income tax is progressive is a huge myth. Most of the real wealth is not from people trading their hours for money. It might be slightly more progressive than sales tax but that's about it. If you really want a progressive tax then you need to tax assets or net worth. A yearly tax of 5% of net worth could fully fund the entire federal government with money to spare. Another progressive tax would be to tax the movement of money. By my calculations, the USA could replace all our tax revenue with a

      • by djinn6 ( 1868030 )
        If you put a tax on stock trades, it would reduce the amount of trading, making your initial revenue calculations wrong.
        • If you put a tax on stock trades, it would reduce the amount of trading, making your initial revenue calculations wrong.

          It *might* but a $200 tax on a 1 million dollar transaction will likely not have much effect on volume. There is likely other things in the transaction that introduce more friction than this. Same with a 20 cent tax on a $1k transaction. This is likely not enough to actually change trading patterns.

          • No, not might. Will. A $200 tax on a $1m transaction will stop if the transaction was done to earn $200 in profit. Look up high frequency trading to learn more.

            • No, not might. Will. A $200 tax on a $1m transaction will stop if the transaction was done to earn $200 in profit. Look up high frequency trading to learn more.

              If someone is doing a $1M trade to make $200 then they are likely doing a MITM attack that shouldn't be legal anyways. For the average person buying $1M of stocks to actually own those stocks, $200 isn't going to matter. Even for a day trader, the stock would only have to move that same 0.02% (0.0002) to get back to even. Most stocks fluctuate 10 times that amount every minute. A day trader isn't going to do a trade that it expects to only move 0.02% (0.0002).

    • by djinn6 ( 1868030 )

      A tax on revenue is otherwise known as a sales tax.

      No it's not. Revenues is more sources than just sales. Sales tax does not apply to investment income, loans, IP licensing costs and many other revenue streams.

      • If you think you can tax revenue, your smoking something good. What would your tax rate be? Now take every industry with margins lower than that and wipe them out. Or, raise the prices across the board of every single item you ever buy or sell, or pay for, or charge for by that amount. Now, add in a 5% overhead for actually calculating and collecting those funds to the cost of running the agency assigned with such a task.

        • If you think you can tax revenue, your smoking something good. What would your tax rate be?

          A typical value added tax in a European country is in the neighborhood of 20 percent.

        • by djinn6 ( 1868030 )
          If it takes you 5% of your revenue just to calculate a much simpler revenue tax instead of the current labyrinth, you probably shouldn't be running a business.
    • by pnutjam ( 523990 )
      So wait, taxing them is just taxing the people who own them, right? So wouldn't those very same people be the ones representing them in this tax structure?
      Do you know how many people "own" your average company?
      You should read "The Big Change" by Frederick Lewis Allen so you can see how the real world works, although it's even more complicated now.
  • The entire world, including America, has the exact same issues. Basically, as long as we all make laws/tax rules that allow them to manufacture goods/services elsewhere and then ship cheaply to western nations, they will continue this.
    The best way is to drop all corporate taxes for a company that makes/produces local goods. And then put on a subtractive VAT on nearly everything, except create an additive VAT for imported parts. With this approach, it means that anything that is moved from wholesale to ret
    • by nasch ( 598556 )

      Countries would probably have to drop out of the WTO to do that. It's effectively a tariff, and I would think they would be inundated with complaints trying to enact something like that. I'm not an international trade lawyer or anything though.

      • you do realize that nearly all nations, EXCEPT for America, in WTO have VATS. Yes?
        And many of those have sales taxes on TOP of that.

        And they STILL want to charge corporate taxes to companies outside of their region.
        • by nasch ( 598556 )

          Sure. Not to be snarky but is that related to my comment? I'm not seeing the connection.

  • Why don't they close these tax loopholes? Or are they only for euro countries?

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