back to article Google, Apple, eBay shouldn't pay taxes - people should pay taxes

eBay is not paying enough tax in the UK because it sells everything through PayPal Luxembourg. So the Sunday papers tell us, adding to the stream of stories about how Starbucks ain't payin' enough tax, Google ain't, Apple isn't and... well, we're being taken to the cleaners as a nation, aren't we? We provide this lovely country …

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  1. Craig 2
    FAIL

    "if our rulers are too stupid to write decent laws that can't be twisted then more fool them."

    This one sentence illustrates the author's ignorance of the realities of virtually every biological system and mechanism in the world, since the beginning of time. Every creature (including us humans) on the planet is trying to out-perform, out-think, out-evolve and outwit it's adversaries and to say that laws should be written "perfect" is ridiculous. Or, to put it more simply: There's always someone smarter than you.

    Laws will be twisted, better laws will be passed, more loopholes will be found. Repeat ad-infinitum. (Until the revolution of course)

  2. Dave 126 Silver badge

    > Or, to put it more simply: There's always someone smarter than you.

    Especially if the mice are better motivated than the builder of the mousetrap... or rather, a company might spend a fair bit of money on hiring an accountant who can save them millions.

  3. pixl97

    Exactly.

    Trying to envision a system that requires cooperation of the majority of the players to succeed without understanding this...

    https://en.wikipedia.org/wiki/Game_theory

    is an effort in futility, ignorance, and ultimately failure.

  4. Iain Hamilton
    FAIL

    Working within politics and I.T. over the years, I've read and heard my fair share of bollocks, indeed I may be responsible for some. I do have to say, though, that you should be proud of yourself. You have far and away exceeded any bollocks I have encountered or indeed been responsible for in my lifetime.

  5. Anonymous Coward
    Thumb Down

    Bollards

    Unfortunately most of our politicians do think and write a load of bollards. Most of our media is as ignorant as the politicians and hence this country continues for many years on a downwards trajectory together with our EUSSR comrades. It's refreshing to have someone like Tim to help clarify the perspective.

  6. spib.burfank
    FAIL

    You asserting it's bollocks doesn't make it so. Given the clear chain of reasoning supported by facts that Tim's laid out, and your witless response, it's pretty clear why you've found the world such an incomprehensible place.

  7. Anonymous Coward
    Anonymous Coward

    Well, you may have worked for years in IT and Politics but you've obviously learned fuck-all except how to have a log sized chip on your shoulder then. Why, when you're such an ignorant cunt, do you bother to comment ?

  8. Iain Hamilton
    Thumb Up

    I thought that was quite witty by my own terribly low standards of humour. Oh Boris the Cockroach said pretty much everything I would probably have liked to if I had the time or intention.

  9. Anonymous Coward
    Anonymous Coward

    Corporate lackey..

    Did Google, Apple and ebay just get together and get this guy to write this load of rubbish?

  10. Boris the Cockroach Silver badge
    Windows

    The

    Point is more accurately

    "Google et al generate profits in the UK from the act of doing business in the UK"

    So why is it fair that because they are headquatered over seas that they dont have to pay tax on the profits?

    Or more correctly , the multinationals by doing this get a competive advantage over local rivals who are based in the host country, because the local rival has higher costs due to them having to pay tax on the profits.

    But if these types of tax avoidance are legal, then all forms of tax avoidance should be used by everyone in the population.

    I can foreesee the days when the TV is full of "Use us to avoid PAYE and NI taxes using our sure fire scheme and we'll only charge a 1 time fee for setting the scheme up"

    But the real punch to the gut for anyone wanting to close these loopholes is that these loopholes will continue to exist because the lawmakers themselves use them to avoid tax.

    tramp... because only us plebs have to pay tax

  11. Anonymous Coward
    Anonymous Coward

    Re: The

    I agree to some extent but the fact is that this country has been mis-managed for decades and without incentives to bring in foreign companies, hence employers, we would be in far worse straits than present, like Greece. Multi-national corporations do get away with too much, but this kind of ignorant media hysteria will simply scare off foreign investors and we have beggar all money left of our own to invest in re-building industry.

    Put another way we need to learn not to bite the hand that feeds us!

  12. spib.burfank

    Re: The

    "So why is it fair that because they are headquatered over seas that they dont have to pay tax on the profits?"

    Amusingly, the very people who are complaining about American companies Google and Amazon not paying tax to the UK are arguing the opposite for Vodafone ("dodging £6bn of taxes") - demanding it pay to the UK taxes on money it earned in Germany selling phones to Germans. And I'm sure that there are lots of the same type of people in America who right now are demanding that Google and Amazon pay tax in America for money they earned in the UK.

    Anyway, if British companies want to compete they should move their headquarters to Eire. And/or lobby the government to reduce corporation tax - because we know (if we actually read Tim's article) that the burden of corporation tax generally falls on the UK employees and UK customers anyway.

  13. Anonymous Coward
    Anonymous Coward

    Re: The

    > But if these types of tax avoidance are legal, then all forms of tax avoidance should be used by everyone in the population.

    The population already uses tax avoidance. ISAs, PEPs, Pension funds, Premium Bonds etc are all forms of tax avoidance.

  14. peter_dtm
    Happy

    AC Posted Sunday 25th November 2012 18:15 GMT

    and of course everyone who has looked for a CHEAPER price on a VAT eligible item is also 'guilty' of tax avoidance.

    For those who don't get percentages; or understand the real world :

    cost £120 - tax paid @20% VAT = £20

    find the same bit of kit for £60 then tax paid = £10

    guess what if you buy the cheaper offer you have just AVOIDED paying £10 of tax; you evil nasty vicious barstard you

    Aren't the politics of envy wonderful ?

  15. 100113.1537

    Re: The

    Boris, I think you are missing the point - tax systems are about raising revenue not about being fair.

    Governments want to raise revenue to do spend on things they think will get hem re-elected, but they have to do this is the most inoffensive way - or they won't get re-elected. Probably the "fairest" way to generate revenue would be consumption taxes (VAT etc.) because richer people buy more stuff and will therefore pay more tax, but this has lots of other knock-on effects - the biggest of which (in the eyes of the politicians) is that the people who enact such a tax get roundly villified (although the other political parties seem awfully fond of the taxes once they get into power).

  16. Nathan 13
    Thumb Up

    Thumbs up

    Good article, cuts through all the crap you read from the loony lefties!!

  17. Anonymous Coward
    Anonymous Coward

    Re: Thumbs up

    Yes good article, but one can be left of centre but possess half a brain and realise that we need foreign investment and we should avoid biting the hand that feeds us. Too many people in our country are no longer taught to think, they just follow like sheep any old craap argument.

  18. spib.burfank
    Thumb Up

    Re: Thumbs up

    Judging by the responses here, the IT industry is no longer staffed by the smart libertarians that founded computing but largely by the witless left-wing people that Britain has been manufacturing so efficiently for decades.

  19. Naughtyhorse

    Re: Thumbs up

    Biting the hand that feeds us???

    are you for real? we feed the hand!

    they are operating in this country because thay want our money.

    so long as profits are greater than tax, then they'll stay.

    thats how it works. at present they have political clout so bitch about how much they pay. with a strong leader prepared to say STFU and pay the vig, capeche. they'll knuckle under and behave.

  20. TheOtherHobbes

    The Register

    When did it rurn into Fox News?

    It's the usual 'taxes noooo - no jobs' bollocks beloved of the nutjob ranty right in the US.

    Thing is, corps in the US are swimming in cash, productivity per worker is up, up, up, but are they hiring and offering decent wages for highly skilled workers?

    Are they fuck. All the money gets skimmed off in insane CEO and executive 'compensation'.

    And let's not forget that the 50s and 60s had epic tax rates on the rich, and were both inventive and far more prosperous.

    So you should just fuck off, kthx.

  21. Anonymous Coward
    WTF?

    Re: The Register

    Taxing the rich and taxing Corporations are two entirely separate matters!

  22. Captain Save-a-ho
    Boffin

    Re: The Register

    Yes, and the 50s and 60s had massive methods for avoid taxes to protect income and profits. Raise taxes further and you'll see many of those options come back in style.

    If you were a company owner and the fuckwits that pass laws were sending you all kinds of crazy, conflicting signals about what tax laws were coming in the future, are you so insane as to hire more and spend all your profits? Or would you sit on your cash like all these companies are doing, investing what you can to fight inflationary concerns, until such time that it's advantageous to start spending capital again?

    Think, then speak.

  23. Anonymous Coward
    Anonymous Coward

    Re: The Register

    Absolutely typical comment, full of anger, spite, and ignorance. Not a single commentor who opposes this article has put forward a single useful data point as a counter argument. They've all been like this one "wah wah wah, nasty corporates aren't paying enough", not a logical fucking thought amongst the lot, no wonder Britain is rooted.

  24. nuked
    Facepalm

    Misguided article

    Let's hope not all companies in the UK take advantage of this 'moral' tax arrangement, in the same way as eBay and Starbucks et al.

    Because then, everyone will have an extra few pounds in their pocket and coffee will be cheaper, but we'll just about bankrupt the country and leave ourselves defenseless too.

    Moron.

  25. Anonymous Coward
    Anonymous Coward

    Re: Misguided article

    And change our name to Greece. though I see a lot of apparently British commentators all ready spell in American or use American examples. Perhaps we would be better off being Greece.

    By the way, the author is a bit silly. Does he really believe the less taxed profits get spent on better salaries for British workers? The few actually employed n Britain that is or even the EU (at least we have got free access to work in the EU). I note how well British employers paid most of their employees in the good old days of Victoria and before when I suspect corporation taxes and wealth taxes were somewhat minimal.

    If a firm takes full advantage of a country's infrastructure, (healthy employees, rule of law, peace, legal system, educational and training system ...) I can not see that it is wildly, evilly "lefty" to expect a direct contribution to that country and its people. That does sound a little like right wing capitalism I suppose: you want it, you pay for it.

    I can half accept the EU thing, as the EU does a lot of redistribution, sponsors projects all over the place and all citiszens can treat it, for working purposes (even for health and education to some extent) as one, large "cantonal" area. But the idea that an USA or Chinese or similarly-based company can come in, grab an advantage over local industry and so harm us in the long term, bugger off when times get difficult here or at thome, take inducement grants from our begging bowls to do us the immense favour of ripping us off .... Grrrrrrr.

    Such articles are interesting, spineless pontificating because the author does not know what to do about it or see beyond the economic theory in a world in which, as someone else pointed out, economists are rather good at being wrong rather often.

  26. peter_dtm
    FAIL

    Re: Misguided article

    so employing some one is not directly contributing to the state's coffers ?

    Lets see; average COST of employing someone in the UK is TWO to THREE times the salary paid to the worker.

    Direct state payment by the employer that can NOT be avoided :

    Income Tax

    Employee's NI contribution

    Employer's Contribution

    Just those three alone account for 30 to 50% of the employee's actual salary.

    Then there is the indirect taxes :

    Tax paid on renting/buying property for offices

    Tax paid on services :- gas; electricity; water;

    Tax paid by those providing services : cleaning companies; security companies banking; accountants

    (Tax paid eventually on the money spent bribing/lobbying/influencing the politicians)

    etc etc etc

    And last but no least the VAT paid on MOST transactions made by people paid (directly or indirectly) by any company employing people in this country

    So it is a load of bollocks to contend that a company trading in this company does not pay a large amount into the state coffers. It is normally lefties who can not understand any of this.

  27. Eddie Edwards
    Thumb Down

    Re: Misguided article

    Income tax and employee's NI come out of the salary, so 30-50% is not added on to the cost. Nice bit of double-counting there.

    Any VAT paid on furniture, computers, software, energy, etc. etc. is recouped by the company. Companies effectively pay no VAT.

    And you can't consider taxes paid on monies that the company once paid out as taxes paid by the company. Otherwise you may as well say all tax is ultimately paid by companies, and completely ignore the individual's contribution in terms of effort. Companies get value from all the things they buy, and that value is not taxed until it shows up as profit ... which is the problem with these tax avoidance schemes. The effort made by the individual is taxed yet again when he spends his salary, but that is *his* contribution to taxation, not the company's, thank you very much.

    Remove all those taxes which you claim companies pay as costs, but which they do not, and what of your argument remains valid?

    "It is normally lefties who can not understand any of this."

    *cough*

  28. Anonymous Coward
    Anonymous Coward

    @Nuked, are there many that wouldn't?

    I run a very small business, so my turnover is not large enough to make it worth shifting profits into another country, BUT if I was large enough, of course I would do this, it makes sense for shareholders & for customers, I would be able to keep prices down, increase turnover & improve my business, thereby increasing profits & increasing dividend payouts... I.E. at the end of the day I would get more money, and I could pay my employees more.

  29. IT Hack

    No corporation tax? Really?

    http://www.hmrc.gov.uk/rates/corp.htm

    As for the morality ( because that is what you are arguing...an opinion and not fact)s you can take your Randiod bollocks and shove it where the sun don't shine.

    Your 'article' is one of the most pathetic sophomoric pieces I've read in a long time. Even UKIP policy papers contain more intelligence than the tripe you're peddling.

  30. Tim Worstal

    Randoid bolllocks eh?

    The problem is that this just isn't Randoid bollocks at all. This is absolutely straight, middle of the road, simple economics of taxation. It's not left or right, liberal, conservative, communist or Objectivist.

    This really is straight textbook stuff. Corporations don't pay tax: some combination of shareholders and workers do. Corporate and capital taxes have higher deadweight costs than income, consumption or property taxes.

    Within economics this is about as controversial as pointing out that The Sun is a star is in astrophysics.

  31. Anonymous Coward
    Thumb Up

    Re: Randoid bolllocks eh?

    Well said Tim. As I mentioned earlier one can be left of centre and in possessing at least half a brain can understand the points that you highlight and the great harm to the economy, and the freeloaders themselves, that Corporation Tax can inflict.

  32. JEDIDIAH
    Linux

    Re: Randoid bolllocks eh?

    Can't comment on the UK tax code being from the other side of the pond. However, all of this nonsense with proles trying to defend the rights of corporations reminds me of scenes from the show Tudors. It shows a complete lack of understanding of how businesses are run and how the tax code already favors them. The poor and powerless are desperately shilling for the high and mighty and the King.

  33. spib.burfank
    Meh

    Re: Randoid bolllocks eh?

    But Tim, we're living in an era where facts are mere opinions, to be refuted by shouting "bollocks" when they upset one's world view.

  34. spib.burfank
    FAIL

    Re: Randoid bolllocks eh?

    You didn't understand a word of the article, did you? Who, precisely, is "them"?

  35. Naughtyhorse

    Re: Randoid bolllocks eh?

    said the obvious tea party fuckwit.

  36. Alexander Hanff 1
    FAIL

    Biggest load of bollocks I have read in a long time

    Title says it all...

  37. Wibble
    Stop

    Re: Biggest load of bollocks I have read in a long time

    Another recursive posting.

  38. TheTick

    More detail

    I agree with the main thrust of the article but it needs more detail on why taxing companies is counter-productive.

    I would have liked to have seen some depth on how not being taxed gives companies more scope to invest (more IT, buildings etc = economic boost), hire more people (less unemployment) and stuff like that. Without the meat to your argument people who haven't listened/read Friedman or Hayek et al will be genuinely confused about how it could be a good thing not to tax companies on their profits.

  39. Tim Worstal

    Re: More detail

    OK, it's not specific to the actual company being taxed. It's because returns to capital are being taxed. Thus less capital gets invested in any specific tax jurisdiction that taxes the returns to capital.

    So, because we tax (say) BP's investments in the UK then all, yes all, UK wages are fractionally lower.

    It was actually Joe Stiglitz (not a right winger at all) who pointed out way back in 1980 that this effect could be greater than 100%. That wages fall by more than the amount of tax raised. Maybe.

  40. Mark 65 Silver badge

    Re: More detail

    My issue with this theory, as much economic theory, is what's to say that the money left free from having little or no taxation doesn't just get held offshore in rich bastards' accounts? i.e. it doesn't re-enter the economy in any meaningful way as you'd hope (wages, spending, etc).

  41. Naughtyhorse

    Re: More detail

    Whereas those of us familliar with Hayek and Friedman, recognise it as such and know it's bollocks from the get go :-)

  42. TheTick

    Re: More detail

    "Rich bastards" will get taxed, rich companies are not the same thing. Dividends from the company to the shareholders would also get taxed.

    But, assuming the "Rich bastards" in question were operating in a free market then they will have become rich by providing goods and services that consumers actually want, at a price and quality that the consumer has found fair in an equal trade according to the value the consumer places on them. They might still be bastards, but that's their right as free human beings, as is your right, nothing to do with the company.

    Your point is good though, what if they just take the money away and hide it offshore? Well firstly it's their money, fairly earned (again assuming a free market) so they can do what they like with it. If they hide it in a bank then they effectively remove that money from the money supply in the system, which will have the opposite effect of the Bank of England spunking money all over the economy i.e. deflation - prices going down. I can't see that being a problem.

    But let's be honest, the issue most people have has fuck all to do with economics or tax - it's jealousy.

  43. TheTick

    Re: More detail

    "Whereas those of us familliar with Hayek and Friedman, recognise it as such and know it's bollocks from the get go :-)"

    I refer my right honourably friend to the "Fight of the Century: Hayek vs Keynes - Round 2" :)

    http://www.youtube.com/watch?v=GTQnarzmTOc

    Hayek CLEARLY won, we was robbed etc etc...

  44. jason 7
    Facepalm

    I run a company....

    ...and I have been paying tax for the time I have been running it.

    And now this guy tells me I'm doing it all wrong.

    Well I never.

    Part of some lobby group perhaps?

  45. frank ly Silver badge

    Re: I run a company....

    You need to license your company name and logo from a Luxembourg head office and buy exquisitely priced computers, hard drives and blank DVDs from a specialist Swiss supplier. I'm sure the tax authorities would accept that way of working.

    The again, they might jump up and down on you with hobnailed boots. Do you run a very, very big company?

  46. Anonymous Coward
    Anonymous Coward

    Re: I run a company....

    It depends how much money you have for lawyers.

    If you are a small company with small profits, the tax won't be much, so the potential saving is really small. If the Inland Revenue query your accounts, you have to waste a week of your time (when you should be earning money), you have to pay a grand or so to an accountant, and you run the risk of huge penalties that could bankrupt you (with associated stress while the investigation is happening). So the rational decision is to pay up.

    If you are CEO of a huge company with big profits, you can save millions in tax. And if the Inland Revenue query your accounts, you give a few million to your legal department to fight it. They can buy better lawyers and accountants than the Inland Revenue, and even if you lose you probably settle out of court for the amount of tax you would have had to pay anyway. There's no personal stress - you're unlikely to get fired for this, since you can probably find an advisor to scapegoat, and you have a golden parachute lined up anyway. So the rational decision is to avoid as much tax as possible.

    This is why the Inland revenue has decided to stop going after the extremely rich people who run tax avoidance schemes, and go after their slightly less well-off customers.

  47. Anonymous Coward
    Anonymous Coward

    Re: I run a company....

    So you're saying. Big companies can play the tax-avoidance/tax-compliance game while small business and self-employed workers can't and it's all okay!

    First of all. I agree that taxes are (mostly) paid by the local residents of said country. Some European countries have +20% income through sales tax/VAT on EACH and every product that's being sold. So saying that no taxes are being paid is indeed wrong. YOU, the consumer, pays most/all of the tax on that Starbuck's coffee. Like I pay +53% taxes on a liter diesel :-(

    That should be enough!

    But governments are run by incompetent bastards who take the easy way. They just knock on your (residents) door and simply ask/demand more money. The kind of thing you did when you where a teenager and wanted a sunday-allowance to go out with your teenager girlfriend.

    The problem is not the corporations but the governments not knowing how to make ends meet.

  48. jason 7
    Facepalm

    Re: I run a company....

    I was chatting to a customer of mine who is a well regarded tax accountant. He was telling me that the large corporations literally hang outside the door of the HRMC after their latest batch of tax inspectors have qualified to then snap up the top ones as soon as they walk out.

    Offering several times what HMRC pay its not hard really.

  49. JEDIDIAH
    Linux

    Re: I run a company....

    You don't even have to be hired by Google. You can be an independent accountant and still make out like a bandit by fleeing into the private sector. Mine is an ex-IRS auditor. So some of the skills do trickle down and are available for "the little guy" to take advantage of.

    The tax code is much easier to personally exploit as a "non-employee" than a member of the Google collective..

  50. Anonymous Coward
    Anonymous Coward

    Re: I run a company....

    Why the feck would they wait to "snap-up" someone dumb enough to work at the Revenue in the first place? They take graduates with good degrees from top universities and train them the right way from the start. If you get a job as a trainee civil servant you have failed the first recruitment test.

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