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

Thanks Tim!

Finally a sensible article on tax. I don't agree with every point, but not having it all wrapped up in a load of hyperbole is a nice and refreshing change.

The main issue with this article is that it assumes that tax is the only issue at stake here (i.e. raising of revenue). The main issue as I see it is that, as the law stands today, a company that has the means to do this cross-country faffing about, is naturally more competitive than a smaller company that does not. The small companies, which do have to pay the tax, end up less competitive and they starve and die. Given that these small companies are the ones who employ the most of the workers in the UK that should be a worrying trend.

By all means we should change the law - corporation tax on large companies has to be a fair reflection of the global market and unless we change something they are all going to move overseas (many have already) - but until that point we need some means to defend the "little guy" or we end up with no tax and ever increasing unemployment as everyone buys things from "Luxembourg Plc".

Err

"removing rights to own 'intellectual property' (make them license it from the original creator-person),"

This already happens. Patents are issued to a named person. Who then licenses it. Usually, for $1 to the corporation that's been paying his wages for a decade.

Would raising personal taxation work?

I can understand the argument, sort of. What's the solution? Removing rebates and raising taxes on dividend income? Would that work?

On a side note, something needs to be done about companies not paying realistic wages and expecting to public to make up the short fall in tax credits and benefits to low income households. There's something twisted about hugely profitable companies whose employees need state benefits to survive.

*checks map*

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*double checks map*

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I can't seem to find Bermuda in the EU, can someone point it out? Is it near Luxembourg?

ERR

"Companies should pay tax where there headquarters are"

But that's what the EU system is, as I've described it. If Facebook Eire sells an ad in the UK then it pays the tax on that in Eire, where it's based.

That's actually what people are complaining about.....

Depends really

Personally I'm all for companies with operations in this country not paying taxes as long as they are paying decent wages to the staff. Unfortunately many companies that make a great deal of money here are dead set on shipping all the work overseas, and in some cases paying such low wages that their staff are reliant of working tax credit, housing benefit etc.

corporate tax should be paid by the people at the top

so everyone in the company earns kinda the same amount overall.

the first rule of pyramids is you can cut the top off and they still work

Tax the people not the machine..

Ok I get that, but it's when obscene profits appear as a result...

There should then be an annual points of percent tax on total global profits paid to each country hosting a branch. Giving it to the govt means it's sure to get spent somewhere more creative.

Cash hoarding corporates or wasteful governments?

Great system...

Re: Would raising personal taxation work?

Dividenst already GET taxed.

In fact in Belgium earning on intrests get taxed from 15% (upto 2011) to 21% (from 2011) (which is an increase in taxes of +30%) and above a certain amount of interest you pay 24% taxes!

Don't believe the propaganda that rich people pay no taxes at all. They do. But as taxes increase gradually with their big income they try to avoid these increase.

In my example salary taxation in Belgium starts at about 40%. So if you earn 2000 euro gross in wage your net salary would be 1200 euro or 60% of your gross wage. If you earn 5000 euro gross then taxes are about 55% and your net salary is about 45% or 2250 euro. Gross wage is 2,5x yet net salary is LESS then double.

THAT is the problem. If I'd earn 5000 euro gross then I expect to have 3000 euro net (60%/40% divide) not the other way around. So it's obvious that I will find ways to get that +700 euro back that should have been in my wallet instead of in the wallet of our prime minister.

Plus there are so much things that have taxation. Even if e.g. you get your company car. The company or the employee has to pay road-taxes, taxes on petrol, VAT on repair and maintenance, yearly mandatory car inspection etc...

So in the end it doesn't matter if the corporations seem to avoid paying the big corporate tax, in reality they pay a dazling amount of small taxes (like all of us do).

Don't believe all the propaganda. Especially not on El Reg ;-)

Clearly the solution is european fiscal union with unified tax arrangements (at least as regards intra-EU trade). Presumably we're all in favour of that?

I disagree

This is the mentality that allows politicians to flip houses by renting them to each other. It's not specifically prohibited in the rules so therefore it's OK. There's a spirit of the law and a letter of the law, and just because a company or a person is rich enough to be able to operate out of Luxembourg doesn't mean it should be allowed.

The fact that the EU continues to allow it just shows what an insidious organisation it is. Being on the referendum.

The tax bill for the small company I work for was £69,000 for last year (and that was a very quiet year). That's up to two salaries being eaten up by taxes. If Starbucks, Google, etc paid more of their fair share maybe smaller companies could finally be given a break on taxes.

I suppose the counter argument could be that if Apple, Amazon, etc started paying more they would have to increase prices which would negate any additional spending power afforded to employees, but given the obscene cash reserves of these companies and the vast sums the executives earn it seems they could easily afford to sacrifice some profit margin.

Don't get me wrong, I'm not the socialist type who thinks taxing everything is the answer. I'd much rather see lower taxes overall than the current mentality of taxing everything that moves. However, there are rules on taxes and I want to see them obeyed fairly across all businesses, rather than the current situation where large business can afford to avoid all tax responsibilities increasing the burden on smaller business.

The point that is missed so many times is the fact that the tax laws suits the large companies who have bases in numerous countries.

This puts the smaller companies based in one country at a disadvantage.

So a UK company selling furniture is going to be at a disadvantage to someone like IKEA.

The Reg is good at covering technology. Like many specialist publications it gets weaker the further it moves away from that.

Arguing that corporations don't really pay taxes because taxes cause them to make decisions which have a knock-on effect elsewhere (on wages, profits or cost of goods depending on elasticities) is silly. All taxes distort the market and cause knock-on effects, but I assume you don't plan to argue that employees don't pay income tax just because some of it ends up as higher wages.

The key things here are twofold:

1) Taxes need to be raised somewhere, and most people think it's reasonable that corporations which make use of public resources (an educated populace, the police and fire services, public infrastructure) pay a share of that. The ones who think it's unreasonable rarely argue that those corporations aren't really paying taxes unless they've just finished reading an A level economics book.

2) If corporation tax is not abolished entirely (and trust me, that's not about to happen), then multinational firms which report profits in low tax regimes while doing most of their business in high tax regimes are clearly gaming the system. Tax regimes are still immature in dealing with globalisation, and they need to catch up. It's clearly unreasonable that companies which operate wholly in the UK and pay tax here are at a disadvantage to companies which do the same quantity of business here but report all of their profits in Ireland (for example).

I'm all for a sensibly competitive rate encouraging firms to set up and employ in the UK, and I'm fine with companies that make and support things abroad selling to UK consumers (though if they provide a poor service as a result then they won't sell much), but having corporate come over and cosy up to government in order to have favourable legislation written (looking at Google in particular here) while simultaneously fiddling the tax system then that's clearly not sustainable.