back to article US Republicans bash UK for tech tax plan

One of the top Republicans in the US House of Representatives had harsh words Wednesday for the UK government's plan to impose additional taxes on tech giants. Representative Kevin Brady (R-TX), chairman of the influential House Ways and Means Committee, said the tax was an unfair measure to extract cash from US-based …

Anonymous Coward

International norms

"Singling out a key global industry dominated by American companies for taxation that is inconsistent with international norms is a blatant revenue grab."

Flooding country with fake news and subverting democracy is also pretty inconsistent with International norms. Yet Facebook and Twatter are the prime enablers; largely with a blind eye from the US government.

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Re: International norms

Yes, they have been taking the piss for years and we that have used them are all complicit as we've enjoyed the benefits of these business being so competitive because they can use a structure that gives tax advantage not available to domestic.

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Mushroom

Re: International norms

"is inconsistent with international norms"

Is that the international norm of claiming that Megacorp UK with revenues of $Megajillion also has expenses of $Megajillion because it's licensing technology from Megacorp Bermuda?

Is it the other international norm that allows Megacorp to transfer it's humungously valuable IP that generates many $Megajillions from Megacorp US (where it's actually been developed) to Megacorp Bermuda for a token sum that keeps the money out of the US?

Or is it any of the other international norms by which the various Megacorps of the world charge their subsidiaries ludicrous sums for cross-border trade between various subsidiaries, work out sweet ad-hoc tax deals with Ireland, Luxembourg etc that have to be kept behind-closed-doors not to fall foul of EU rules against illegal state aid etc etc etc

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Holmes

Re: International norms

The big mistake that US politicos make is assuming that the big American companies pay tax in the US on their international profits. Whereas all the big companies move their profits to tax havens and pay very little tax anywhere in the world.

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Re: International norms

That's the actual issue, there's a massive tax evasion exercise going on, if we're talking about international norms. Then again it's one that relies of fairly fundamental EU law at its heart and we have no tools in the box to fix it until we leave.

I have no confidence in our [UK] government to sit this guy down and tell him to shut the f up, which is somewhat alarming really. That said W&M isn't nearly as influential as the article might suggest.

"he is threatening to take similar actions against British firms should the digital services tax indeed take effect in 2020"

Which British firms are behaving like Google, Amazon, Facebook in this area? Tell me who they are and I'll join that fight too. Also getting pissy about something that doesn't exist, will not exist for a long time and the government has made clear will be put together with the involvement of business is a pretty strong clue you're a nutjob and nobody should take you seriously. Sounds like the OECD path he's suggesting won't work anyway given how opposed to this measure he is.

Double taxation - the problem is getting these companies to pay *any* tax, anywhere.

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Anonymous Coward

Re: International norms

largely with a blind eye from the US government.

Can you elaborate on the blindness of the eye considering that it is WIRED DIRECTLY INTO THE CIA BITBARN? All USA media social media platforms provide direct data feeds and have been doing so for more than a decade now (since Bush).

What blind eye are you talking about?

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TVU
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Re: International norms

"Yes, they have been taking the piss for years and we that have used them are all complicit as we've enjoyed the benefits of these business being so competitive because they can use a structure that gives tax advantage not available to domestic"

^ This. These businesses have been undermining traditional physical businesses for years now and what has helped these tech giants do that is all the tax avoidance that they undertake (and continue to do so).

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Re: International norms

>> Then again it's one that relies of fairly fundamental EU law at its heart and we have no tools in the box to fix it until we leave.

Given as TFA states, the EU has a similar law in a similar state (IE planning stages) It looks like the EU will have the tools soon enough. However, what we (UK) don't have, is enough economic clout to make it stick.

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Re: International norms

" one that relies of fairly fundamental EU law at its heart and we have no tools in the box to fix it until we leave."

Actually, EU currently has very little power over tax issues, which are mostly handled by member nations individually. The EU is currently putting a LOT of pressure on member states to harmonise tax rules to be able to clamp down on tax loopholes devised by member states. The UK already has full powers to cut down on tax evasion, and it's good to see that it is starting to do so.

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Re: International norms

"The UK already has full powers to cut down on tax evasion"

For a better but profoundly depressing view of this, seek out the Private Eye/BBC Panorama investigation called "Tax, lies and videotape".

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Anonymous Coward

Re: International norms

>> " one that relies of fairly fundamental EU law at its heart and

>> we have no tools in the box to fix it until we leave."

> Actually, EU currently has very little power over tax issues,

> which are mostly handled by member nations individually.

Don't be silly! The EU is the cause of all our problems, and it will be rainbows and unicorns once we leave this evil institution!

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Re: International norms

"there's a massive tax evasion exercise going on"

Evasion or avoidance?

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Re: International norms

"The UK already has full powers to cut down on tax evasion, and it's good to see that it is starting to do so."

This is where we need to discriminate between evasion and avoidance. Evasion is illegal so obviously the UK has full powers at its disposal. Avoidance, which is the case here, is the use of legal means to reduce tax. That means that the only powers available to a govt. not happy with the tax take are to huff and puff but let the avoider carry on, change rules on existing taxes, introduce new taxes or, in the case of multinationals, reduce tax rates so as to make the country a more attractive place in which taxable income can be realised. The last is only really workable for a small economy such as Ireland or Luxembourg but not, at present, the UK. A new tax seems to be the most workable of the others.

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Re: International norms

The big mistake that US politicos make is assuming that the big American companies pay tax in the US on their international profits.

No they don't. In the US bribery is legal, as a corporation you just buy yourself a politician by funding their election campaign. The politician then says whatever you want him to say, no matter how dishonest, stupid or inaccurate. None of them believe that US corporations pay their taxes at home, but they don't care - they speak only for whoever has bought them.

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Re: International norms

Evasion or avoidance?

You have to check the thickness of the brown envelop full of cash to know. Was that loop hole paid for in full or are they pulling a fast one.

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Re: International norms

"The big mistake that US politicos make is assuming that the big American companies pay tax in the US on their international profits."

Hell, the biggest of American companies barely pay tax in the US on domestic profits.

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Re: International norms

"Evasion or avoidance?"

That's a distinction without much of a difference.

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Anonymous Coward

Re: This is where we need to discriminate between evasion and avoidance

Good clarity there, thanks.

A thought, not that I necessarily agree with the sentiment, but

"in the case of multinationals, reduce tax rates so as to make the country

a more attractive place in which taxable income can be realised"

is just competition/capitalism at work (just with countries in an international playground, rather than companies in a national playground) so governments that support capitalism really have no leg to stand on?

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Devil

Re: International norms

"all the big companies move their profits to tax havens and pay very little tax anywhere in the world."

Wouldn't ANYONE who COULD do this, do this?

Yeah I'll just VOLUNTARILY bend over and take it, enjoy it, etc. because taxes are used SO wisely by governments. Hell, just write a check for EVERY SPARE BIT OF CURRENCY... [yeah NOT happening]

There are basically two alternative philosophies on this one:

a) punish corporations for acting in their own interests,

- or -

b) make it so EVERYONE can benefit by lowering tax rates across the board, and no need to shop for a 'tax haven' to prevent losing a big chunk of your money

just sayin' - gummints get too much of our money anyway. let THEM budget and cut back for once...

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Re: International norms

The companies don't pay the tax anyway, the end consumer pays it and the companies are just passing it up to government.

The money tax being generated within an economy leaking out and not finding its way back to into our public fund is taking the total piss. They are eating our lunch and it's time to put a lock on the larder.

I've stopped using them as much as I can, and yes I know it's futile but....

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Re: International norms

"The big mistake that US politicos make"

I doubt it's a mistake. I would rather believe that a part of the not-paid taxes will end in their pockets.

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Re: International norms

@Dr Syntax:

"This is where we need to discriminate between evasion and avoidance. Evasion is illegal so obviously the UK has full powers at its disposal. Avoidance, which is the case here, is the use of legal means to reduce tax. That means that the only powers available to a govt. not happy with the tax take are to "

Quite right. When I said "The UK already has full powers to cut down on tax evasion", I actually meant both evasion AND avoidance. ie the UK already has full autonomy to change it's tax laws to cut down on avoidance even as part of the EU. Of course that means, as you say, new legislation or tightening the interpretative parameters of current legislation

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Trollface

Re: International norms

"In the US bribery is legal"

Propaganda and the funding thereof is protected by free speech. First amendment, baby!

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Re: International norms

"Wouldn't ANYONE who COULD do this, do this?"

I don't disagree that companies practicing avoidance are right to act in their own self-interest. What really sticks in the craw is that they spend millions to hire lobbyists, buy friendly politicians and fund supposedly 'independant' think thanks to come up with tax laws that are designed by themselves to be full of loopholes, which they then proceed to exploit. Then when challenged on the avoidance they go, with a straight face "Just following the laws", when they know full well the laws are designed that way because THEY designed them.

"make it so EVERYONE can benefit by lowering tax rates across the board"

In my opinion this is a great solution. The current system is designed so that to benefit from tax law loopholes you need to have a presence in multiple countries, including many offshore ones, AND be able to fund an army of tax lawyers. In other words only the biggest multinational corporations and the richest individuals have access to the lowest tax rates. The way to allow EVERYONE to benefit is to cut down on the loopholes that only the rich benefit from, then you could cut rates across the board.

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Re: International norms

"Wouldn't ANYONE who COULD do this, do this?"

No.

I've started and run a few successful businesses over the decades, and I have always chosen to incorporate in my own state rather than a tax haven state (such as Delaware). Why? Because it's the right thing to do.

There do still exist people who make choices based on ethics and morality rather than dollars and cents.

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Rebuilding society tax

Can we have that as well if they start getting upperty?

Just to learn 'em a bit more.

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"The United Kingdom’s introduction of a new tax targeting cross-border digital services – which mirrors a similar proposal under consideration in the European Union – is troubling,"

We thought with brexit coming the Limeys would just do what we told them ...

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Anonymous Coward

Oh, don't worry, the UK government certainly *will* do that- and try to sell it as a victory regardless- once it realises it's not in the powerful position to dictate terms to all and sundry as was promised by Brexiteers and that the US has it over a barrel when it comes to a trade deal. (#) Especially since their short-sighted non-planning didn't take into account a bullying shitstain like Trump getting into power there and actively railing against the WTO they put so much faith in.

(#) Funny, it's almost as if it benefits the US to be dealing unilaterally with a much smaller and weaker partner. Particularly one that's desparate for a trade deal thanks to its own delusion that it was still 1951 and it could still do what it wants like Suez never happened.

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No Taxes! Just call them Tariffs

Seriously, if the UK called them Tariffs then the Donald would be so so happy. But calling them Taxes gives the Republicans hives.

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Anonymous Coward

Re: No Taxes! Just call them Tariffs

While we're here, I'd like to see someone start an ostensibly right-wing campaign railing against and calling for the abolition of "socialist" and "anti-free-market" government subsidies for the US corn industry.

Trolling, obviously, but for a good reason- to see how the all-American, anti-commie (and government subsidised) Republican corn farmers actually respond.

(Spoiler; any response itself probably wouldn't be all that interesting in itself- they'd likely just come up with some bullshit rationalisation for their self-interested hypocrisy. But I'd like to see what line they'd take in *actively attacking* a campaign that (ostensibly) was arguing in favour of the exact anti-government, pro-free-market line that corporate America has pushed as being synonymous with America for decades).

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Well would you expect a thank you for taking money away from their sponsors

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Flame

This from thieves

The Republicans treat the people of the US as a piggy bank.

The Tax Bill reduced corporate tax from 35% to 21% plus directors can 'pass thought' their money from the company at corporate rate so they have halved the tax on that.

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Re: This from thieves

> "The Republicans treat the people of the US as a piggy bank."

So when big government types raise taxes, that's the opposite of taking the people's money away? Oh right, this is about taxing corporations, not the people.

Except, corporations never pay tax. All taxes levied on them are paid out of profits. So if the government takes a bigger bite, they must raise rates to cover it or go bankrupt, thus passing the tax on to their customers, the people.

Conversely, if corporate taxes are reduced then they generally reduce rates too, because if they don't and their competitors do, their market share tanks.

So in either case it's the high corporate tax crowd that are doing the piggy bank thing, and they are rarely Republicans. Democrats are the ones who want to "stick it to the corporations," which actually adds tax burden to the people, but not in an obvious way.

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Re: This from thieves

Well Big John, you might want to read the Republican President Dwight D. Eisenhower's speech about the "military–industrial–congressional complex" before you get too far into that line of thought. Or do you think that it was Fake News?

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Re: This from thieves

Well Version 1.0, I've read that speech and it basically says that corporations that directly service the government can become a big problem if not watched for signs of bribery toward politicians. Ike was quite correct about that!

But I didn't see anything in the speech about upping corporate tax rates to fix the potential bribery problem. In fact, raising taxes on military contractors more or less automatically raises their rates, thus churning the tax funds around to no purpose, unless you count "shrinkage" along the way as a purpose.

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USA: "We are the richest country on the planet, but only because we borrow so much and collect tax on profits that are made in other countries, so of course we are going to complain when you finally wake up and notice that we have been RIPPING YOU OFF for decades you stupid people"

Rest of World: "Tax ALL USA based businesses out of our markets. Lets see how FARTUS likes it when the whole world turns their back on the US."

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Thumb Up

Have an upvote

For mentioning "FARTUS"

Well done!

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China trade wars.

We'll likely see trade negotiations between China and the USA suddenly start moving again before the month is out. They're waiting for the results of the mid-terms. If the Republicans do well then China will shrug and start making some concessions because Trump's not going anywhere. If the Democrats surge then China will push harder because Trump will be politically very insecure. Either way, the deadlock is in large part because China is waiting for 6th of November to see how strong a hand Trump has to play.

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Well of course he would say that

Given that it is the duty of the US Government to defend its corporate masters at all times, it is obvious that anything that will prevent tech corps from maximizing their revenue and benefits must be quashed as soon as possible.

But hey, Senator, you're talking to another country, not to some peon in the US that you can pressure into obedience. And guess what ? It's the ENTIRE WORLD that is starting to get tired of this tax-free situation, so you'd better get your speech set to a template, because you're gonna need it.

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Anonymous Coward

Re: Well of course he would say that

>Given that it is the duty of the US Government to defend its corporate masters at all times

That is what the Senate is for - it was never conceived as an elected chamber and only has been for just over the last hundred years. It was modeled on the House of Lords with a remit to protect the land owners and oligarchs in the event of an over zealous elected Congress getting a little too literal in its interpretation of equality.

>It's the ENTIRE WORLD that is starting to get tired of this tax-free situation

Lots of noise, but there's always a queue at Starbucks and my high-street is looking pretty bare when it comes to lines available on Amazon.

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Anonymous Coward

Re: Well of course he would say that

Ironically, while what you say is true, as I noted elsewhere, the UK government itself will most likely bend over and take it from Trump and cronies when push comes to shove and they need a trade deal.

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Mushroom

Friends

Does America still have any? At the rate these arrogant shits are going there can't be many left.

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Re: Friends

Americans do.

America, maybe not.

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Anonymous Coward

Re: Friends

Does America still have any?

Did it ever have any?

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Joke

Re: Friends

Of course America had friends! There were Ross, Rachel, Joey, Chandler, Phoebe and Monica.

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Re: Friends

By all accounts we can still buy them. For now.

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Anonymous Coward

I'd like to point out that back in the early days of online poker and gaming, the US criminalised offshore operations and prosecuted anyone they could - not because it was illegal, but they were late to the market and weren't making any money from it.

Don't like it up 'em do they?

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The irony

Stated from a country that has local taxes at the state level in addition to those at the national level.

Anyhow, companies working in any given country need to comply by the laws of those countries.

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Re: The irony

On sales yes, but even the UK has local taxation on top of national taxation. Or do you not pay Council Tax?

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Re: The irony

"the UK has local taxation on top of national taxation... Council Tax"

Different entities being taxed. Personal taxes are income based, company taxes are on profits. CGT is on capital gains, VAT on value added. Council tax, including business taxes, are on occupation of property. If you want to get into double taxation you need to look at VAT on fuel taxes - but it's not local on national.

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