back to article Ireland's tax arrangements are as clear as a pint of Guinness

Ireland has repeatedly been in the spotlight for its favourable and controversial tax incentives - which have attracted numerous large tech companies to its shores. However, the country has also been accused of being less than transparent in some of its tax arrangements. The European Commission is currently investigating the …

Just get rid of corporation tax

It's inefficient and can be gamed too easily. Companies don't actually earn money anyway, their owners do (shareholders or whoever), so just tax people properly.

Very tricky I admit, but easier than trying to sort out the international corporation tax mess

15
10
Silver badge

Re: Just get rid of corporation tax

It's impossible though.

If a right-wing government did it, it'd be called "handouts for billionaires".

If a left-wing government did it, they would be called red-tories.

If Karl Max himself did it, he'd be accused of selling out to the interests of big business.

Remember, there's always somebody more left wing, more virtuous than you. If you're thinking of doing something sensible, make sure you think twice.

10
4
Silver badge

Re: Just get rid of corporation tax

This does not solve the root of the problem with "offshore money extraction".

A significant part of the offshore tax arrangements of big companies and 100% for the smaller ones which have offshore dealings is exactly for that reason:

To move money into a jurisdiction where paying to a physical individual involves little or no tax. While it is theoretically possible to ambush that money on the way back when it is paid to an individual who is non-resident in the tax-heaven, this is difficult as there is little or no audit trail to prove that the money is from tax fraud. In fact, once it is offshore the horse has bolted, there is bugger all you can do short of blanket taxing 40% any financial transaction coming from Panama, Virgin Islands, etc.

So anything making it more difficult for companies to move their profits offshore into a tax heaven jurisdiction also results in increased personal taxation rates of the highest tax bracket as a direct consequence. As someone who pays highest tax bracket on income tax where I reside and highest tax brackets on local and council taxes in two countries I am all for it.

10
0
Silver badge

Re: Just get rid of corporation tax

It goes in a circle.

The farther left you go the close you become to the far right.

{as described to me by a Trotskyist in the 1970's).

10
0
Anonymous Coward

Re: Just get rid of corporation tax

Hear hear!

The first step forward would be to simplify or permanently eliminate most taxation. After all, how many different taxes do we really need? Do floor space and window taxes really improve the poor working man's prospects? I don't think so.

Corporate tax inspires massive efforts and expenses in tax avoidance while needlessly complicating the rules for everyone. In the end, "modern" tax systems are an opaque, unevenly applied clusterf*k which leaves individuals at the mercy of direct and indirect taxes enacted to make up the shortfall.

Joe Blow and the corner street shop owner simply can't afford high priced tax lawyers and accountants. Thus they get permanently screwed and also pay 20 % VAT on their remaining disposable income.

When taxes get too high, big companies simply move on after firing everyone. How long will this work? There must be good business reasons for 12 of the top 13 internet companies to have their EU HQ in Ireland. It certainly isn't for the weather.

Not only do these corps pay less tax, they aren't constantly pilloried and slapped across the wallet with increased social costs and excessive labor regulation.

Remember Producers = Predators, Consumers = prey.

When the prey diminishes, eventually the predators do also.

And in latest news, Africa's economies are now growing faster (in percentage terms) than those of the developed West. The Ivory Coast grew its economy by nearly 9 % last year.

Whether we like it or not, lower taxes and lower salaries are still engines for growth.

High taxes and low salaries are not. Ask Adam Smith.

I believe we could all use a bit more growth right now.

Unfortunately, if your business takes on the government as a 33 to 50 % partner, without providing the corresponding investment, that can become challenging, to say the least.

Perhaps it is time for a new rulebook.

7
4
Silver badge

Re: Just get rid of corporation tax / Karl Marx

Karl was able to come up with a reasoned series of arguments to support (or oppose) more or less anything.

3
0
Anonymous Coward

Re: Just get rid of corporation tax

>The Ivory Coast grew its economy by nearly 9 % last year.

Yes, they are far better than the Nigerian princes at extortion.

2
0

Re: Just get rid of corporation tax

To reform tax on a global level, one would need to also reform company law in multiple locations at the same time. Corporations have the ability to become themselves limited shareholders of shell companies in many different locations by simply paying basic registration fees and listing a few individuals as directors/secretaries. It is fairly cheap for a global corporations to create a network of loosely owned firms which have no other purpose but to reduce their global tax exposure or to hide losses or to hoard cash etc.

The concept of Corporation Tax has not evolved quick enough to deal with what a Corporation was allowed to become.

5
0
Silver badge

Re: Just get rid of corporation tax / Karl Marx

The take I got from reading his Communist Manifesto was that if arguments are weak, repeat them regularly.

4
2
Anonymous Coward

Re: Just get rid of corporation tax

When the company has an HQ offshore and the shareholders are non-dom or non-resident or just plain foreigners how will taxing them help bring money into the country of your choosing?

A company at least has some traceability often with public accounts and the need to publicise profits to shareholders and VCs.

A shareholder can hide money away anywhere with no public declaration needed. There's also often thousands of significant ones per large company. So rather than trying to tax one company you've now got to unravel the network of thousands. By the time you do the effort on each individual may not create significant returns to make it worth your while.

"Very tricky I admit, but easier than trying to sort out the international corporation tax mess"

I'm not sure it is easier at all...

5
0
JC_

Re: Just get rid of corporation tax

In fact, once it is offshore the horse has bolted, there is bugger all you can do short of blanket taxing 40% any financial transaction coming from Panama, Virgin Islands, etc.

Sounds like a solid idea to me!

2
1
Silver badge

The problem with getting rid of corp tax

While it is true that people end up paying all taxes, including corporate tax, it isn't as simple as just "stop taxing corporations". A corporation is a more desirable structure due to the liability shield. Isn't that protection that allows the corporation to go bankrupt without affecting the finances of its owners worth something? Obviously it is, and that's a big reason why corporation tax should continue to be collected. Corporations are also given other benefits in the US, such as "corporate personhood" that arguably should be paid for (or better yet, eliminated)

Even if you say "we'll address that by taxing dividend income at a higher rate than normal income" that works fine if the corporation and its owners are in the same country, but in today's world that's often not the case. Ideally the corporate tax would be low enough that dividends could simply be treated as normal income, one of the main reasons why we've ended up (in the US) with dividends being taxed at a lower rate is because of the high corporate tax rate.

It would also be easier to justify taxing worldwide income if the corporate tax rate was say 10-15% with most loopholes eliminated, such as the one that allows delaying taxes for an arbitrary amount of time so long as the money is left overseas.

4
0
Silver badge
Trollface

Re: The problem with getting rid of corp tax

Equally, we could do it the other way round: we could dispose of VAT, income tax, and personal taxation in all its varied forms, and just tax corporations. After all, it doesn't matter where in the system we tax it; and all that money has to flow through these wealth "creating" businesses at some point...

3
0

Re: The problem with getting rid of corp tax

"A corporation is a more desirable structure due to the liability shield. Isn't that protection that allows the corporation to go bankrupt without affecting the finances of its owners worth something?"

Ask the employees of BHS how desirable it is to enable an asset stripper to bleed a company dry?

Incorporation lets investors insulate themselves from poor (or downright criminal) management decisions, while corporation tax only targets profits not earnings, a double bite of the cherry.

The fairest solution would be for corporations to pay income tax at source. It levels the playing field between small local businesses and global multinationals, and if everyone is paying their fair share, the rate would come down for all.

1
0
Coat

Re: Just get rid of corporation tax

The majority of corporations taking advantage of these arrangements stockholders are foreign to the UK, or Europe. If there is no corporate tax, then no tax will be received from these firms. It is unfair that the citizens of a country not involved in the spending of funds should primarily benefit, rather that the citizens who earned and spent those funds. In short, if you earn income in a country, you should pay taxes in that country.

Taxman's hand in my pocket.

1
0

Re: Just get rid of corporation tax

"so just tax people properly."

If corporations want to be legal persons, they can fucking pay tax like a person.

3
0
Silver badge

Disposing of VAT and personal income tax

If you do that then all but the largest corporations would be taken private thereby avoiding all taxes. The liability issue would be sorted via insurance - it only has to be less than the taxes that were being paid before to be worth it.

I'm sure Berkshire Hathaway would be happy to enter such a lucrative new market, even if that corporation would be one that would be too large to be taken private (well, maybe not, I suppose it could be done as a partnership of Buffett and a few hundred super rich friends kicking in a billion or so apeice)

If you want to starve government to a tiny fraction of its present size, you've got a good recipe for it right there! I'm sure some conservatives reading this are drooling right now but they've got to realize that mean the US ending social security, medicare, and shutting down the armed forces. For a start.

Tax policy would be a lot easier with a single government. When you have different countries doing things different ways, different states in a country doing different things, different cities in those states sometimes doing different things there are plenty of ways to game the system, especially if you have the sufficient income to make it worth the expenditure to take arbitrage the different governments. While it would be possible to design a pretty good system if you were king of the world, in the real world you aren't so it isn't. Everything is a compromise.

0
1
Silver badge
Pint

Re: Just get rid of corporation tax

IHWAT "...so just tax people properly."

In the USA, corporations won the right to be considered people (in respect of unlimited bribery, I mean campaign contributions to their on-payroll politicians).

Next issue is that your proposed Tax The Shareholders algorithm funnels tax money into the wealthy nations.

Where the rich people live. Like Monaco and the Cayman Islands.

Flawed suggestion with multiple redundancy.

1
0

Re: Just get rid of corporation tax / Karl Marx

Karl was, after all, a journalist, writing for the New York Times.

0
0

Re: Just get rid of corporation tax

Shareholders don't pay much tax anyway (unless they are in the USA). Employees do. Ireland gets income taxes from greater employment, and VAT on their consumption. That is where the greatest tax takes for most countries comes from.

0
0

Re: The problem with getting rid of corp tax

The USA taxes foreign shareholders by means of withholding taxes.

0
0

Re: Just get rid of corporation tax

Governments tend to disagree with you. Their thinking is that if you live in a certain country and make use of public facilities in that country (be they infrastructure, social services or something else), then you should pay taxes in that country. Technically, you have earned the money in that country even though they may originate from another country.

0
0
Silver badge

Re: Disposing of VAT and personal income tax

@DougS

The only people exempt from corporation tax in the UK are sole traders and I presume, if we were doing this for real, we would make them pay corporation tax. (If you're a small business, this might actually be simpler.)

Your analysis also overlooks the ability to raise capital. I think that's more important than the limits of liability.

But it wasn't a serious suggestion.

0
0
Anonymous Coward

"I would love to have these rules simpler, so we could explain it to people who are not tax people,"

I think regardless of the specifics of the tax system, the explanation will go something like this:

"By cleverly contorting our business processes so as to pass them through some loopholes in the law, we can legally pay almost no tax whatsoever."

3
0
Silver badge
Happy

>Ireland's tax arrangements are as clear as a pint of Guinness

Not for very long, especially when said pint is in my hands ... ;-)

0
0

It's all Double Dutch to me

I'd prefer a double Irish with Dutch sandwich please.

Guinness, a small whisky, and a nice bit of Gouda. Lush :-)

2
0
Anonymous Coward

Yet us lowly citizens get to pay 23% VAT maybe we should get that halved if we buy Irish products!

1
0

The US and Europe all say they want to combat this, but they will offer these big multinationals a discount (sometimes FREE) to repatriate the money. Heck, even this "trump" guy says he wants to lower corporation tax to 15%, and only charge 10% on money repatriation.

If the "Tax" rate was set to 15% and the "Repatriation" rate was set to 15% then there wouldn't ever be an issue as the money would stay where it is needed!.

Woz should be upset, but every person who is not a 1%'er (or tax cheat) should be upset. It's a huge loop of corruption from Tax Policy > Company > Official > Tax Policy > rinse and repeat.

The US has made many of their own problems by allowing this money to flow back in without penalty, they will do it again in the future, so companies will just hold out for 10 years until they get the chance to bring it all back.

0
0
Silver badge
Pint

"...funnelling royalty payments for intellectual property..."

When corporations export their untaxed profits under the guise of "IP Royalty Payments", then slap a 33% Import Duty on the "Imported" IP rights.

It should be right there, on their Balance Sheet.

One bald-face accounting trick deserves another.

1
0

Re: "...funnelling royalty payments for intellectual property..."

"When corporations export their untaxed profits under the guise of "IP Royalty Payments", then slap a 33% Import Duty on the "Imported" IP rights."

Wouldn't it be more straightforward to simply not allow IP royalty payments as a tax deductible expense when paid to an offshore entity in the same corporate structure. I've long wondered why some local EU countries haven't tried that. Maybe cap the total deductible IP royalties on top of that in case someone creates a different, more clever offshore IP tax scheme.

1
0
Silver badge

EA - You missed a trick

The next version of Simcity should allow you to write you own tax laws, then use them in capitalist market warfare with other players.

Then later release a DLC of the real tax laws, and see what happens.

2
0

Ireland is at least 10 years ahead of the UK in terms of abusing lower income groups.

All that tax fraud money is being used to provide massive medical, education and other subsidies to an already affluent middle class. At the same time as engaging in frenzied economic assaults on the working poor etc. If you spent any time in a developing country you would know that it doesn't take a lot of effort or resources to feed and provide basic housing to people. I don't see the justification in someone working 12 hours a day in a fully developed country and being unable to house themselves or provide food to one dependent.

That's the way it is in Ireland and the way the UK is going.

3
0

Ye see, It helps Ireland have the highest "growth" rate in EU. In fact this is generated by the multinationals, ergo, carry on. In reality as a poster earlier said, the residents don't get any advantage. It is called fiscal competitivity.

BTW, if I was presented with that pint I'd say "put a bit of a head on it" the photographer doesn't drink stout!

0
0

POST COMMENT House rules

Not a member of The Register? Create a new account here.

  • Enter your comment

  • Add an icon

Anonymous cowards cannot choose their icon

Forums

Biting the hand that feeds IT © 1998–2018