Don't be evil!
Google executive chairman Eric Schmidt has dismissed criticism over how little corporation tax his company pays, saying it's just capitalism. Schmidt is "very proud" of the corporate structure Google set up to divert profits made in European countries, such as the UK, to its firms in the low-tax havens of Ireland and The …
"but he does have a point."
Indeed, one could argue that the entire tax structure of 'Europe' has been built around these principles - why on Earth would any business not take advantage of lucrative tax situations - as long as it's all legal.
I get a bit fed up of politicians claiming someone else is morally bankrupt - talk about pot meets kettle. Fiddling expenses is ILLEGAL, but tax AVOIDANCE is not - not that hard to work out.
If the politicians weren't in it up to their necks they would be closing the loopholes - but all we get are soundbytes, inquiries and 'he's been bad - won't the public please punish them for us because we can't because they haven't done anything illegal'.
Well said, sir.
It isn't the place of politicians - corrupt or otherwise - to stand there pointing the finger and single out individuals (such as Jimmy Carr) or even big companies. It's their job to audit the companies they suspect are avoiding the most tax, and close the loopholes being used.
At the risk of sounding evil, I actually think it's quite refreshing the hear someone like Schmidt come out and basically say "Yeah, we avoid paying large amounts tax, but it's all legal, baby. Fuck you."
Tax accountants only exist to help you get away with paying as little as possible. Google's are obviously better at it than most.
"An interesting one. Short of Chinese or Iranian style measures, how do you propose you do that? I'd expect such ill-thought ideas in the Mail, not on the enlightened El-Reg."
Google are primarily an advertising business. They offer 'free' services in order to collect data about users so that they can better target their advertising. They do this because companies will pay more for targeted advertising.
You're right that Google can't be stopped from offering its 'free' services in the UK unless some form of censorship is instituted. However, if it is illegal for companies operating within the UK to advertise using Google then any data Google has collected about UK residents becomes valueless (I suspect the CIA don't pay anything for access to this data).
The google could be innocent if they weren't the leading lobbyist among American high-tech companies. You see the way it works in America is that most businesspeople are fine and upstanding, but the rules of the game are encoded in laws written by the most easily bribed politicians. How many guesses do you want as to who is doing the bribing? Hint, it is not "most businesspeople". If you guess the least ethical businessmen, then you win. You also lose, unless you're one of them.
In other words, the google is not becoming evil just because the rules of the game in America require them to become increasingly evil. The google is "investing" to control how those rules evolve to require ever greater levels of evil just to keep your company alive.
Why are people being blasted for using the tax rules to their advantage? surely it's the rules that need to be changed if this is the result of it.
I don't blame rich people for trying to pay as little as they can, we all do that. It's the rules that facilitate this that need to be looked at.
And yes, i think Google should pay a shitload more tax, just look at how much they made in the past few years.
It's easy to do; just follow the scheme set up by thatchers grubberment and availed of by David Cameron father ,
And remember it's only morally repugnant if you're not a Tory .
IF politicians want to close down these sort of tax loopholes they could, as I always say, follow the money
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"because, we wish we could do exactly the same, or even better, but can't really afford the services of those sandwich-making accountants / lawyers."
If the system is set up such that it is cheaper to pay an accountant to avoid the tax liability, then *obviously* that will happen. Apparently only the politicians are too effing thick to see this.
If we ignore this systemic problem and instead insist that Google pay more tax than they need to then firstly their shareholders will sue them and secondly we are effectively asking them to make voluntary contributions to our nation. Does "begging" sound like a sane way to finance public services?
We've identified a handful of major corporations that are avoiding tax. Great. This gives us a clear example of what is wrong with the system. Now we need to kick the damn politicians up the arse hard and repeatedly until they fix it.
Blaming the corporations merely lets the politicians off the hook. It is *all* the politicians' fault.
Not only that, I imagine executives of publicly traded companies are legally obliged to serve their shareholders by minimising their tax bill. So we have the bizarre site of committees of people who make the laws, railing against people for obeying them.
Why don't they do something useful and change the damn laws?
"So we have the bizarre site of committees of people who make the laws, railing against people for obeying them".
Very rarely, one sees a single sentence that perfectly sums up a discussion, to the point that there is little more to be said about it. This is one of those sentences - how I wish I had thought of putting it so neatly! (Like ancient Greek craftsmen, Mike has even put in a small deliberate flaw to avoid offending the Gods). 8-)
Couldn't agree more. No-one likes it and mostly everyone thinks it's a sneaky thing to do, but they didn't break any laws so hounding them for legal conduct will only ensure less cooperation in the future. And it's the future we should be looking to by closing these loopholes. In the modern business world, no CEO or CFO REALLY has any choice in the matter - if word got out they were planning to pay millions more in tax than they could legally get away with, they would be booted out and replaced with someone else.
For my money the only long term workable plan is to have a mandatory percentage of tax applied in the jurisdiction of the consumer, before whatever tax haven Amagoog is in this week gets a look in. It's the only way tax revenues will have a hope of rising or falling proportional to the population the taxes are collected to support. The big problems with this are implementing such a shift without violating international agreements, the risk of corporations sneaking on a stealthy price rise when they can blame it on the government, and the risk of smaller businesses suffering from increased complexity/costs.
Theoretically, but in reality, it's part of the price. if corporation tax were cut, or even abolished, and VAT increased, the price should not really increase. You're simply moving where the tax is taken.
Problem is, the final sale price is not necessarily related to the profit on the item and therefore it would be almost impossible to set a sensible VAT rate that worked for everyone.
Yes, VAT is paid by the end consumer, SO IS TAX,
if the tax bill goes up, so will the prices to compensate!
Anyone who thinks taxes are paid by anyone but the consumer doesn't understand economics (and unfortunately that also means most economists)
All taxes are added into the price of the goods, so the consumer pays it..
You don't understand business.
If the profit doesn't exceed the actuarial risk of loss, the business will either not be started or fold at the point the loss arrives.
There is no point in risking one's (hard earned) capital in business (especially with all these pesky laws to protect employees) if the odds aren't favourable.
"You don't understand corporate tax...Tax is paid on profit. Even if the profit on doing business is lowered, as long as it is still profitable, a company will provide that good or service."
You don't understand corporations. If you add 10% to a company's tax bill they will increase prices by 10% to cover the cost, while still supplying the product.
Seriously, you think they'll just go "oh extra taxes, but we can decimate our profits and still charge the same to our customers"? They call that kind of naivete "magic pudding" economics down our way
@Chet Mannly - Market economics and price elasticity of demand. Let's say corporate tax did go up 10%. Let's further say that 100% of that tax bill was passed on to the customer (which doesn't necessarily equate to a 10% price rise). The company has two problems:
They may not sell enough at the new, higher price (demand is highly elastic) and so have to lower it again; or
Their biggest competitor might know the above already and simply fire a few bodies to recoup the cost, or simply suck it up meaning that out fictional company cannot raise prices.
This, of course, does assume a near-perfect market with no monopoly player and no price fixing.
You don't understand basic economics - if you blunt the profit in a particular action, you blunt the incentive to do it. The most profitable actions should be ones that address the greatest scarcity. With a tax on profits, the actions that address the greatest scarcity are the actions that attarct the most taxation.
"Anyone who thinks taxes are paid by anyone but the consumer doesn't understand economics "
I think that more than adequately sums up what all these 'tax' stories are about, a lack of understanding, and that from the people we have in charge of fixing the economy the previous lot destroyed? We're doomed I say, we're doooooomed!
BOFP Calc: Google generated $4.1b in sales in the UK, and therefore extracted approx £500m from UK consumers on behalf of the UK government. That has got to be worth more to the UK economy than whatever corporation tax those fools think Google should be paying.
(Note: very approximate calculation due to not knowing whether the $4.1b included VAT or not, or even whether VAT was chargeable on all of it.)
"BOFP Calc: Google generated $4.1b in sales in the UK, and therefore extracted approx £500m from UK consumers on behalf of the UK government. That has got to be worth more to the UK economy than whatever corporation tax those fools think Google should be paying."
You mean, unless it's business-to-business selling, like, I don't know, advertising, which isn't subject to VAT. Google give essentially nothing to the UK economy but extract $4.1bn from it.
Anyone who thinks taxes are paid by anyone but the consumer doesn't understand economics
Lots of people don't understand economics, mostly commentards, politicians and economists :-)
There are a couple of factors that affect demand for a product:-
If google was taxed more and it passed on to the people who pay for adverting then that will increase the costs for people buying adverting who in turn would analyse the cost-benefits of paying for adverting with google. This may force the advertiser to look at substitutes (Bing???? Ha ha ha) resulting in a drop in income for google. Therefore google cannot afford to pass on a tax increse to advertisers (well not all of it anyway).
I'm not sure how this applies to oligopolies like google, mickysoft, etc.
Companies don't really pay tax, people do. Taxing companies is simply indirect way of taxing customers or shareholders.
What Adam Smith said about tax :-
The Four Cannons of Taxation.
Equality – Tax payments should be proportional to income
Certainty – Tax liabilities should be clear and certain
Convenience of payment – Taxes should be collected at a time and in a manner convenient for taxpayer
Economy of collection – Taxes should not be expensive to collect.
Corporation Tax does not fair too well on any of those.
Arguing that prices will go up by raising taxes is a completely false argument here.
Most companies in these countries are already paying these taxes, its a few bad players that playing lose and risky with the interpretation of these laws. Once they have to pay the same fair share as everyone else, they have a choice... loose the ill gotten added profits that they were originally stealing, or raise their prices to keep the same level of income. If they decide to raise their prices, the rest of the market that was already paying taxes suddenly becomes a lot more attractive to the end customer, and is a lot more competitive because of it.
Its the same principal that the Cess-filled wastes of human skin that call themselves the Walton use when running Walmart.. they refuse to pay fair wages and play by the full/part time laws... all their employees are part time and only subsist of off government dole and welfare. If they had to play be the rules, their prices would now longer be able to undercut everone else, and consumers would then have a real choice of going with competing companies that are not made of the same pile of stinking bile that makes up Walmart.
RE Adam Smith, Google makes the most income and should therefore be paying the most tax.
Taxes are certain, its loopholes and illegal interpretations of the law that allow this, if the governments take a few simple steps to clarify a minimum alternative taxe (no matter the loopholes you at least pay this much) then it would certain and simple)
Paying quarterly through automatic bank deductions is way more easy that Smith could have ever imagined a bank transaction to be. He did not have accounting software or electronic payments
See above about collection... should cost almost next to nothing to collect.. Now enforcement of law breakers may cost some, but should be able to pay for itself with the deterrence and regained monies collected.
Corporate tax does pretty well on all four parts if you remove these kinds of crap loopholes that only a few are able to take advantage of
Corporations are not people.
The less tax a corporation pays, the more it has for employees & shareholders.
Taking from employees and shareholders and giving to government makes sense according to who?
Before you respond, please read:
I was actually converted by the perfect logic of this piece.
"The less tax a corporation pays, the more it has for employees & shareholders."
In an ideal world, perhaps. A world where all employees earn enough to own shares in their companies and the general public holds shares so they can vote at company AGMs on things that matter to them. This is not the world in which we live.
Companies avoid paying tax, enrich their senior management and enrich the shareholders (sometimes these a pension funds, so that does play into you theory; more often that not it's tortuous shell companies to siphon the money away to the elite).
So these companies take everything, return nothing and at the first hint of trouble; they run away squealing like the pigs they are, or come begging for billions. Which their elitist pals in government decide they really must have, because their chums are much more important than schools or hospitals*. The bankers cost us billions in tax avoidance, billions again in the bail out and not one banker has been jailed or had their assets stripped in an attempt to recover their defaults; yet ordinary people are losing their jobs and homes instead.
That's the world we live in. The rich get richer, the poor get poorer and we sit here like total mugs and thank them for it.
*And it gets worse. With the likes of PFI we pay a company to build a hospital, which it then rents to us and all profits get hidden in a tax haven. When said company wants more money, it threatens to dump the hospital and we cough up. Same with school, trains and every other place that the PFI cancer has infested society.
Ye despite all the evidence on how bad PFI is, the ConDems and Labour still have a raging hard-on for it. It's almost as if their members were profiting personally from it. But that could not be, not those bastions of prudence and honour.
Corporation tax is a tax on profit, not on turnover, so it only comes into play if a company is already profitable.
What is ultimately paid by consumers is the cost of letting giant corps spirit money out of the country, because it creates a market distortion that favours the large multinationals over smaller, local businesses. This is why the loopholes need to be closed.
So, how do you measure the profit here then? Obviously it is not $4.1B as some here seem to think. I'm not saying they shouldn't pay more taxes, but it is not the £400M in taxes as some seem to think it should be.
I've seen some different profit margins quoted for Google (between 13%-33.3%), but Forbes puts Googles pre-tax profit margins at 33.3%... So to be fair, Googles taxable amount would actually be closer to $1.36B. I believe that the Corporate tax rate in the UK is 26%, which I doubt most corporations actually pay, but stay with me here. Even at that amount, Google would pay at most $355M in corporate tax - somewhere around £220M.
Tax incidence ! Corporate taxes aren't paid by the corporation either, but rather they fall on some combination of Employees, Customers, shareholders, and to some extent, broader "stakeholders". Reserach tends to suggest that if capital is mobile, then employees and customers bear almost all of the burden.
Politicians and other idiots though like corporate taxes because the can make the great unwashed (many of whom seem to post on the Reg) believe that there's a free money tree that gathers tax from someone else. It's a great trick while you get so many sheep who want to believe it.
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Yep, completely agree, it's the rules that must be changed. However Schmidt's ode to capitalism is leaving out one dirty little secret. The rules are made and can be changed by politicians, the politicians need money to be (re)elected, and the only people with enough money to give them a good (re)election chance are Google and all the other big capitalists, whose lobbyists are dictating to the politicians what laws to pass.
That's why the politicians are paying lip service to lambast the tax-avoiders in public, while privately making sure that the tax system stays full of friendly legal tax-avoidance loopholes
You really think Google can be threatened in this manner? They own politicians and in some cases, whole countries. They'll simply move their base of operation again.
Anyone who complains about his comments is basically complaining about capitalism. What other sort of system do we want to move to? A business is owned by its shareholders and should do everything it can to maximise the return for the shareholders in the medium to long term. The only way you can change their behaviour is to threaten their long term profits (and therefore dividends) to force a change of behaviour. But, how do you do that?
This assumes that Communism with a Capitalist/Slave Labor tilt will win out in the end. Russia fell as they tried to compete in the world market with a faulty moral/economic model. China will have a top and in the short term may be successful, but long term will fall as every Communist country has or will. The only thing that could stop this from happening is if the free countries move more toward communism... wait a second...
MP Stephen Williams, co-chairman of the Liberal Democrat Treasury Parliamentary Policy Committee, described that offer as a "joke".
MP Stephen Williams, co-chairman of the Liberal Democrat Treasury Parliamentary Policy Committee, described as a "joke".
having met the man on many occaisions
As Ken Hagan told us just now, IT IS THE POLITICIANS' FAULT. You can't repeat that too often, or too loudly. Here is what the egregious Stephen Williams has to say, for instance (in TFA):
"Tax is something that is a legal obligation that you should pay. It’s not a charitable donation in order to gain brand value."
But the whole uproar arose BECAUSE Google was paying the tax it was legally obliged to pay! The proposed charitable donation was simply some intelligent (but puzzled) people's tentative reply to a bunch of outraged morons who claimed that paying the tax legally due was somehow not enough.
Today we apparently have a political leadership that passes (or maintains) laws that allow corporations to pay little or no tax. That is ENTIRELY the politicians' fault. And if they then have the sheer crust to complain about it, well... maybe we should give them a hint that we are looking for more intelligent (and/or honest) representatives.
Better idea. Ask the MPs what they think Google should have paid. Subtract what Google did pay. Divide that by the number of MPs. Recover said sum for the assets of every MP.
Or, if they won't agree to that, ask them who passed the laws. Once you have a list of names, remove them from the house for gross incompetence and hold some elections.
You can bet than when it comes to the next round of tax law, all their minds will be more focused.
Either way, it's not Google, Starbucks' or anyone else's "fault". They are playing the game (perhaps a sharp and nasty game) but a game nonetheless and within the rules; we must blame cretins who gave us these rules.
Oh yes its brilliant. That would be why, as just one example, searching for a manual for a Xerox Phaser 7500 doesn't bring up a single page that is even on the xerox website. Google and Bing both have it as the first result. Like I said that is just 1 example of things I have tried to use duckduckgo for and it has failed badly. I have tried it quite a few times as I would like to move away from Google but as things stand now, it's crap but ymmv
ok, so the top result i got on DDG for "Xerox Phaser 7500 Manual" was this one...
seems to be the right one.
by the way, if you know that it is on the Xerox site (implicit in your post), then why not just go there directly? When people with an IT interest only seem to know how to use the net by using a search engine, it is a sad day indeed...
I can't speak for the OP, but "userdoc/P7500/pdfs/user_guide_en.pdf" isn't exactly obvious, so a search of some kind would seem to be in order. On the other hand, any search engine that can't be told to restrict its attention to a single site would be beneath contempt so I imagine *that* is what those with an IT interest ought to do.
Then it isn't consistent.
Phaser 7500 manual - safemanuals.com/user-guide-instructions-owner-manual/XE...
Xerox Phaser 7500 manual - safemanuals.com/user-guide-instructions-owner-manual/XE...
"Xerox Phaser 7500 manual" - sumanual.com/instrucciones-guia-manual/XEROX/PHASER-...
3 different searches, not one returning anything from xerox themselves. That is awful.
Now being tech literate I can refine searches to make the results better, even down to specifying the website I want it to search, but you try getting the average user to do that.
With Google, no extra commands:
Phaser 7500 manual - www.support.xerox.com/support/phaser-7500/file.
That is what the end user wants - a search engine clever enough to return the correct result just by typing a few words.
1) i mean go to the xerox site, click on support and find it that way, not type in the address verbatim
2) i typed in the phrase "Xerox Phaser 7500 manual" but without the quotes (i know that the quotes change the emphasis slightly)
3) i'm searchng from the UK, i guess that it might be different from elsewhere...
i use DDG as my first port of call. i i don't find something on there i will then try google or Bing, but to be honest there does not seem to be any real difference between the two.
Complaint: "Duck Duck Go is shit. I used it to search for something, and it didn't find it."
Response: "No, Duck Duck Go is fine. You should have gone to the relevant website and found it for yourself. Why would you need a search engine?"
I'm still using Google, simply because Google is the best there is at what it does (even if what it does ain't very nice).
i think you missed the point i was making.
his complaint was that none of the DDG results were on xerox.com where he expected them to be and he ignored / discounted the results becasue of this.
my question is, if you know where they are, why do you need a search engine?
Did i miss something?
Yes you did. For instance, I tell you satnav such and such is crap.
You ask, how do I know.
Well, because I'm familiar around here and there are better routes, see. And I show you these routes.
And then you answer: well, if you know the way here, why do you use a satnav?
"As an IT contractor... I don't think I'd like to have to pay tax on my revenue as opposed to my profit."
Which nicely outlines the real problem. People don't like paying taxes.
Normal salaried employees (I.e., most people) pay tax on their revenue and not their profit. People don't pay tax on what's left at the end of the month, they pay tax on what they're given at the start of the month.
Being a contractor who is "forced" to be a limited company, you are already way ahead of most other people in the world.
Ok I will bit and call B@llsh!t. Every single one of the IT contractors I know set up as a contractor for the sole reason that they receive more income and pay less tax. Deducting travelling/accomodation costs associated with working somewhere and being able to employ your non-working wife was also a great wheeze unavailable to PAYE employees.
All well and good until the IR realised that more and more people were avoiding income tax by playing "pretend" contractor and were no different to a normal employee that changed jobs every 6/12/24 months.
90% of IT contractors are not really contractors. They are just PAYE employees that change jobs more frequently. Businesses like them because they pay less tax and are easier to hire/fire.
"are easier to hire/fire"
You sent that little tidbit off a bit lightly if you ask me. There are advantages to being a contractor (otherwise people wouldn't do it) but it isn't all tax avoidance and expenses you know.
Personally I like to take a month off between contracts, try that in a full-time job and see how popular you are. I became a contractor to avoid office politics - everyone has their own reasons.
Is that really 100% accurate.
Normal salaried employees are allowed claim for expenses related to their employment - e.g. mileage up to the HMRC approved levels; professional fees; subscriptions.
All of these lower their tax liabilities.
On that basis you could argue that they are being taxed on profits not revenue.
As a salaried employee (of the state), I am allowed to claim expenses. However, when I spend that money (e.g. on petrol, car maintenance, train tickets), I am paying tax (VAT, fuel duty). At the end of the year, HMRC look at how much I've claimed, then reduce my personal allowance, ensuring that I pay tax on my expenses again. I'm certainly not making a profit out of this.
Corporate structure and paying tax on profit rather than revenue is a recognition that corporates have high expenses associated with generating revenue.
IT Contractors can keep their costs low, but if they want to keep current with training, it will cost them quite a bit. Any test kit they buy will generally be quite expensive too.
"Which nicely outlines the real problem. People don't like paying taxes".
Not really. They don't like paying taxes based on a fraction of their revenue. Tax should obviously be based on profit, as that is the income a person (or a corporation) gets.
If I buy 1000 apples for 50p each and sell them fro 60p each, I have paid £500 and earned £600. My gross profit is £100 - before paying for any business expenses I may have (such as a license to sell apples). It's obviously unfair to tax me on the whole £600. What if, for instance, the bottom fell out of the apple market (no jokes please) and I could only get 40p each when I sold them? I would have lost £100 in return for working all day, and I don't think anyone would like to see me paying tax based on the money that passed through my hands (but didn't stick).
"If you buy apples for 50p, sell them for 60p but claim that you have to pay 11p to your Bermuda based parent company for the IP rights - then claim a grant to make up for your loss."
And who lays down the laws that allow companies to set values for IP rights? Government.
And who offers companies grants? Government.
If our lords and masters would do a little more thinking (assuming some of them, at least, are even capable of that) and less knee-jerk exhibitionistic reacting, perhaps we would have fewer and more consistent laws.
You're not considering that for a Normal salaried employee their revenue IS essentially their profit!
Did they have to pay for their own office rent, their own equipment, were they 'out of pocket' while awaiting their clients/customers to actually pay them? If so, then they can claim these costs back in their tax return and receive a refund/deduction much like a sole trader.
Don't be so quick to assume that limited companies or sole traders have somehow got some amazingly better deal than salaried employees, I've been both a salaried employee and a sole trader (approx. 10 years each) and both have their pro's and con's, it is always easy to simply see the grass as being greener on the other side of the fence.
The length of time I've had to wait to be paid by clients or the dilemma of simply BEING paid by them, along with 100 other sketchy aspects I could bore you with regarding being self employed are enough to make me constantly question why I bother working for myself and don't simply go back to a guaranteed weekly wage. At the end of the day though, not being reliant on one potential asshole boss, being self sustaining and in more control of my own life/choices are the things that end up being far more important to me than a simple perceived "tax advantage" from someone who I consider 'lucky' to have a guaranteed salary.
If that still sounds like such an advantage to you then by all means feel free to become self employed yourself just get used to living with a lot less certainty and be ready to live frugally when some fucker decides they don't want to pay you 'on time' or 'at all' for work you've already done for them. If you want to take an even bigger risk then become a Limited company, risk employing some people, risk paying big money for a big office and you'll be rewarded by not being held personally financially liable when the whole thing goes 'tits up' and you walk away causing real personal financial damage to sole traders such as myself and your wage earning employees.
Like I said there are pro's and con's to all sides
Isn't it interesting how governments have managed to shift the argument from "why do we need to pay so much tax" to "why aren't these corporations paying enough taxes". If the government was serious about this issue they would simplify the tax code by removing all the exemptions, tax breaks, tax credits, etc. A simple tax system based on revenue would get rid of all this nonsense. The US Supreme court ruled that corporations are people - If that's the case they should be taxed like people i.e. a tax on Gross income - simples.
Quote: A little bit unfair on low-margin, high-volume businesses that idea and unfair on retailers in general.
Half of those exist primarily due to tax avoidance, "supply chain efficiency" and other accounting aberrations induced by business consultant whalesong.
Presently we have supply chains that are 20+ (and that is an optimistic assumption) entities long before anything hits retail. Some of these (like Starbucks selling coffee at "interesting" prices from one country branch to another) are there just because of taxation and accounting aberrations. _NOBODY_ (except tax consultants) will even notice if they go away.
In any case, I have been flamed for it before on el reg, I will get flamed again. The way things are going we will be looking at Soviet Block taxation within the next decade. The soviet block did not have VAT - they had turnover tax which was taxed at _EVERY_ step and was not refundable like VAT. Turnover tax does wonders in terms of eliminating unnecessary middlemen. You force economical entities to own the whole chain - production, distribution and retail. It also does wonders in terms of creation of spare unused capacity across the economy and dropping the overall economy efficiency. It was (by the admission of all economists) one of the things which killed the soviet block.
The truth is somewhere in between. VAT in a non-uniform tax regime is evil as it allows creation of carousel structures to do tax avoidance at tax evasion levels. Turnover tax in its pure form is similarly evil as it forces the establishment of enormous vertical mine-to-the-consumer table monstrosities. The truth is somewhere in between.
IMHO - introduce 0.1% turnover tax and be done with it. It is sufficient to kill unnecessary "fake" transactions and shorten the enormously long (and parasitic) distribution chains to something moderately sane.
It is tricky isn't it? We have companies which have huge revenues but still make a loss, so if we were to tax revenue and not profit a company which made a loss of £1b that year on revenue of £38b would find themselves in a not very nice tax position. The issue is with companies that make a profit of £1b off revenue of £38b yet use creative accounting to set that profit as a loss negating their tax on profits.
Of course, this does (in the long run) hurt the tax dodgers, they end up with huge stockpiles of cash which they can't bring into the US or the UK without that stockpile of cash being smashed by the taxman. You might think it's nice to have £100b in an off-shore bank account, but if you need that money in the US then you can't really access it, so you end up spending it on buying back stock or buying other companies, anything to use the money up. Buying other companies could introduce two problems, the first is that it's a loss-making company so you're throwing away billions on the purchase and then hundreds of millions on the annual loss that you incur (although that'll lower your tax burden...) the other problem is that the company is a profit making company so you end up shifting the profits over-seas again which puts you back where you start.
Of course, this does (in the long run) hurt the tax dodgers, they end up with huge stockpiles of cash which they can't bring into the US or the UK without that stockpile of cash being smashed by the taxman. You might think it's nice to have £100b in an off-shore bank account
This is one of the oldest banking scams ever, the back to back loan,
The most notorious case I can think of is the Guinness Mahon/Ansbacher case in Ireland, the scheme was used by the rich and famous to avoid tax. Worse politicians, including the then Irish PM Charles Haughey, were using the scheme to launder corrupt "donations". As a result of the investigations into this case two corrupt politicians were jailed for tax avoidance. The investigations cost circa €20 Million, however circa €35 Million was recovered in unpaid taxes and fines. That's an awful lot of money on deposit.
There was never any political will to close down these schemes and tax loopholes, why would there be when politicians were availing of the same schemes and tax loopholes. Always ask; Who really benefits from these schemes. The answer is not always obvious.
"Presumably you would need to increase your margins and the tax rate would be less.
20% tax on profits would probably be equivalent to 2% tax on earnings."
Exactly this. From an economics point of view, companies won't invest without a suitable rate of return anyway, so their profit margin should be at least (say) 5%. A 1% or 2% revenue tax would not eat up profits any more, in fact less, than a 20% profit tax. Furthermore, it doesn't affect investment at all like people pretend that profit taxes do, because this is a tax on *all* revenue, so opportunity cost is also lowered by the tax amount.
It really does work, and is easier to collect, more difficult to avoid, etc.
I like free stuff. I'm quite happy if someone else pays for it. That our lords and masters are not clever enough to write tax laws that don't have legal loopholes is quite OK with me. All strength to your arm Google (and thanks for the free search, free docs, free email, free calendar, etc.,etc..)
The rules exist for good purpose and from the point of view of national authorities the intention is to not penalise legitimate business practices.
Unfortunately, because multinationals operate across several national areas they are able to exploit the differences between how each nation decides its tax. With added complications due to those tiny nations where the favourable tax and or banking systems is their prime "export".
You may be being ironic about google providing free stuff. I can think of a couple of (possibly contradictory) proverbs which might apply - "never look a gift horse in the mouth" and "beware of Greeks bearing gifts"
Presumably you don't need healthcare, defence, transport infrastructure. Or do "Good ol' Google" provide that as well where you live? Equally, presumably you wouldn't mind your employer (or pension provider) using all legal means to avoid paying you for whatever it is you do (or did) for a living.
Free roads, free schools, free swimming pools, free bin collections, free emergency services, free council workers, free parks, free town centres....
Oh I'm sorry they have to be paid via TAXES you fucking moron.
Less revenue coming in = less money for above (and a lot, lot more)
And you, you fucking moron, have no idea either. Why should Google nominally pay for all those things that you and everyone else enjoys ? Google don't swim, don't use schools, or anything; YOU use those things, you pay for it.
The only reason you advocate for Google to be levied the tax is that you are so fucking stupid that you think that "Google" pays the tax and by doing so that conceals the tax from who actually, literally, pays. And that's you and yours. But as such an advocate I assume that you don't actually pay net tax but expect everyone else to fund your indulgences.
This whole tax issue is rife with such self deluding idiot thinking.
Of all the most gibberingly idiotic notions ever mooted regarding tax, this is the second worst. The worst of all is a retrospective windfall tax.
Both of these notions teach multinationals that the nation which levies them cannot be trusted to play by the rules that it imposes. The retrospective tax on oil revenues is the reason why oil companies aren't bothering to try to reach the tight oil reserves in the North Sea's British waters; if they do find a miraculous way to get this oil out, then the UK government has form for dreaming up retrospective taxes to glom onto profits. The same is true in Russia, which is why capitalism and foreign investment there is so lacking; there's plenty of hard-to-extract minerals in Russia, but there're also rapacious government-sanctioned thieves and contract-breakers.
Both of these notions are theft, pure and simple. Thievery of this nature by governments is a very good way to teach multinationals to never show a profit in these juresdictions and to exploit every single loophole going to try to show a loss. Granted, the government gets a smallish windfall lump sum and kudos from the hard of thinking for a while, but long-term such actions scare off investors and land the hapless politicians even deeper in the smelly than they were initially.
They just need to tax transactions between a company and it's overseas counterparts (and other linked companies) when dealing in intangible assets (trademarks, logo's etc...)
For physical items, any transactions above the accepted market value should be taxed. e.g. if coffee is generally £1 per kilo and Starbucks NL was selling coffee to Starbucks UK at £3 per kilo then tax would be due on the £2 difference.
Hate to break it to you - these rules already exist. Look into transfer pricing.
And what makes you think the rules for transfer pricing are fit for purpose. It's the transfer pricing rules/laws that are broken. See the starbukes example above.
In 2011 MickeySoft sold the IP and the right to sell office to offshore subsidiaries for $4 billion but those subsidiaries then sell office product for $12 billion thereby shifting $8 billion in income offshore.
If it's legal then change the law.
You may as well whine because people stick to the speed limit or don't kill people or cheekily refrain from robbing banks and call that immoral.
If it's law then it's law and if it's followed and people think it's wrong then it's the law that's wrong, not the people doggedly adhering to it. I wish people would whine to this extent about something useful like assisted suicide laws or something.
MP's calling corps immoral. that's pretty fkn rich, too.
If you got this far then thank you for reading ;o)
"To change the law requires international agreement, so it's not going to happen".
Wheeee! Extradition has apparently been abolished. And no "Coaltion of the Willing" ever invaded some perfectly harmless country and bombed it into the Stone Age. There is no European Community, and no such currency as the Euro.
I think what you meant is that "To change the law in such a way as to cost rich people serious money requires honest politicians, so it's not going to happen".
Oh it gets better, lets say (for the sake of argument) that other then the laws they pass, MPs are perfectly moral (I'm sure there is some bizzaro-morality where it works).
So MP says google is immoral for following the law.
Therefore the law google is following must be immoral.
Laws are made by MPs
QED: MPs are (by admission) immoral, for making immoral laws.
The answer is for every country to have the same corporate taxation figures. Of course, that will never happen. So perhaps the UK could apply a "Corporate VAT" e.g. 5% CV on every purchase a company makes. Thus all of this rubbish about "Startbucks UK buying its coffee from Starbucks Elsewhere and thus not making any profit" would be removed. Google and Amazon would likewise be picked up. And as it would apply to any business trade done by a company operating in the UK (irrespective of where it's based) all companies get hit the same and no one gains an advantage / disadvantage from it.
Or they could just say "companies can only claim back 15% VAT rather than the full 20%".
... But what else should Google do? They are operating according to the laws of the lands they are in and that's it. Capitalism doesn't have a conscience else nobody would be fired just to give the CEO a better Christmas bonus.
This is an interesting admission here though; Gogle is saying that what it does, it does because it makes sense in a capitalist framework. Does that mean then that the causes it supports are done so purely for the capitalistic benefit of the company? Of course. Google's motto is "don't be evil". What Google's motto isn't is "Be Good". So, supporting social groups that can pay show their gratitude through traffic and use of Google services is great while helping governments pay the bills which support services and support for the poor is not great.
That's why Google isn't going to pay this, but Starbucks now is. Nobody thinks that Starbucks has had a change of heart do they? They're losing out because of the bad press which is why they have tried to do what they have. Not paying the taxes in the UK was immoral, but the paying of the money they have promised is no more moral, they're doiing it because it makes business sense, not because it's the right thing to do.
Google is practically unboycottable, so they can say "up yours" to whoever complains.
Essentially, what I'm trying to say in these disjointed paragraphs is that morality is subject to capitalism in our brave new world and it counts for nothing. If there's no money in it, then there's no point to it.
It's got nothing to do with socialism, it's about contributing to the vital infrastructure that your business relies upon to function.
Transport, electric and gas, health care, local services.
By contributing bugger all to these in the countries they are based upon they are leaving the bill for everyone else.
I suspect that Google pay for the following:
Train tickets, road tax, petrol duty.
Their electricity and gas bills.
Private health care for their employees.
Wages for said employees that are then taxed with Employees National Insurance, Employers National Insurance, Income Tax.
The employees then pay council tax for their "local services" and VAT on virtually everything they buy.
This all probably amounts to slightly more than bugger all.
" Google was lambasted by MPs for its tax chicanery, which is not illegal but has been described as "immoral". "
Well who's fault is that?! If the slimy MPs hadn't set the whole system up to benefit them and their kind they'd have a point to argue. Much as it pains me what Google is doing, it's their business and if the UK Gov doesn't like it they'll have to change rules, you can't have your cake and eat it!
"and if the UK Gov doesn't like it they'll have to change rules"
I'd go further than that. Out of the umpty million people who live in the UK, the few hundred sitting in the House of Commons are the only ones who can *not* complain about the current legal framework precisely because they are the only ones who *can* change it.
I don't really see how MPs have a leg to stand on here. They create the laws and these companies are obeying said laws. Yes, it's immoral, but perfectly legal. With MPs; they set up the expenses scheme (rules, same as the law in theory) and still couldn't keep to it. So, not only were they immoral, but also illegal!! How can a group that sets the rules, then fall foul of them!! Just shows how incompetent they are..........
Amazon and Starbucks sell things from locations in the UK to people in the UK (as well as elsewhere in the world, of course) - I'm sure the majority of us have bought something from them in the last 12 months. They charge a bit more than they pay their suppliers, so they make a profit in the UK. If our tax laws were more straightforward (instead of being written by tax lawyers for tax lawyers), they would have to pay their share of corporation tax.
But Google are very different. I use Google products (Android phone, Chrome browser, plus the ubiquitous search engine), but I've never paid them anything directly (although I'm sure Google will have made some money by selling ad space that I've viewed). So it's far from clear (to me, anyway) where their profits have arisen.
Its also a legal way to avoid paying tax. It is legitimate in the eyes of the law to stash money in an ISA and avoid paying tax on it. Just as googles actions (and the other 'immoral' companies) was just as legal.
You are immoral. If not prove me wrong and I will likely prove you wrong, because morals are a personal opinion and certainly not constant. This is why we have laws. If you want to be ruled by morals then who's morals would you like to use. I guarantee I would prefer to use mine and everyone else would like to use theirs.
So an ISA is just as bad as google following the rules.
Be careful what you wish for
>>"Tax is something that is a legal obligation that you should pay. <<
This is true; but no-one is under any legal or moral obligation to arrange their tax affairs for the benefit of the taxman or to pay one penny more than the law requires.
The tax laws are an omnishambles; they have become so complex that most people (including MPs) simply cannot be aware of every single possible scenario. In fact, most MPs now emply specialist advisors who tell them how to avoid paying more tax than the law requires. In particular, most of those on the committee are themselves taking advantage of some of the particular arrangements used by these large businesses to reduce their own tax bill.
Pot = kettle?
The difficulty here is that international tax legislation was designed to be fair. So if I made money in Germany and paid my taxes, it wouldn't be taxed again in the UK. All the schemes devised by whizzo accountants are technically legal but essentially are trying to circumvent the spirit of the rules that were created. Part of the reason tax codes are so complex is that they keep having to create new rules to block the accountants who are essentially trying to fiddle the system.
The net effect of this is not actually bolstering Capitalism as Schmidt claims, it's undermining it by reinforcing large players who might otherwise be replaced by smaller players who don't have the scale to play (or pay for) the tax dodges.
"Do no evil" was a pragmatic statement that allows for a bit of interpretation - i.e. rather than working to a set of proscribed standards we'll go with the spirit of what's right. However, playing the tax shuffle has proved that essentially that standard is hollow (and some of the privacy breakdowns have as well). Much as I love Google, having used it when most people were still on Altavista, I think they have lost the way from their early origins, and are in danger of becoming another Microsoft.
At least Schmidt's been kicked upstairs to chairman. Sooner Larry and Sergey get rid of him the better.
"The difficulty here is that international tax legislation was designed to be fair".
I must say you have made my day! The idea of politicians earnestly striving to be "fair" is the funniest thing I have heard for ages.
What international tax legislation IS designed to do is to lure big profitable companies to specific countries and keep them there. They mostly hire masses of people, pay them, administer their benefits, rent premises and equipment, buy masses of stuff that has to be produced by other companies, etc. etc. And, with luck, they pay masses of tax.
In order to lure them to Blighty, our lords and masters saw fit to create a 10,000-page tax code riddled with loopholes, precisely so that corporations would come here rather than the USA, Ireland, Germany, Russia, India, Brazil... It's a very big world out there, and it's very tough to be (and stay) top bidder in that kind of auction.
Then, of course, it leaks out that Google doesn't pay much tax. Suddenly our lords and masters are seized with shock and horror! "How did this come about???" they shriek, before demanding someone's head on a pole.
Well, I know whose head I think it should be.
Why not just tax multinational companies doing business in the UK, according to the larger of
(a) declared UK profit; or
(b) worldwide profit * (UK turnover / worldwide turnover) ?
You can hide profit made in one country by creating an artificial overhead, but that profit will still show up somewhere in the world -- and the cost you created will contribute to your turnover in the UK.
However, I suspect the law is unlikely to change precisely because it benefits the rich.
Why tax corporations at all?
If corporations didn't pay taxes they wouldn't have to use tax havens, use loopholes, pay tax lawyers, spend energy on overhead.
If corporations didn't pay tax, there would have been more left for employees and shareholders.
Corporations aren't people.
Why tax corporations at all? For the same reason why we tax individuals: they obtain certain benefits from the civilised society in which they exist, therefore they ought to make a contribution to it.
Anyway, if corporations didn't pay tax, goods and services might get cheaper, if they passed on the savings to customers; but individuals would end up having to pay more tax, to make up the shortfall.
I am getting a bit fed up with these stories now.
It's similar to the Jimmy Carr situation. The only tax bill I care about is my own. If someone told me that I could reduce the amount I pay significantly due to some legal loophole, then I'd damn well look into it and assuming it was legitimate then why the hell not? Just another witch hunt in my opinion.
If somebody told you that you could get a discount on your council tax if you didn't have your rubbish collected but just chucked it over your fence into your neighbour's garden - that would be a good deal.
Of course they would be doing the same - but that's OK because for only 10x as mush as the council tax saving you can get a private company to come around and clean it up.
There is a reason we live in societies, not warring bands of individuals - it's not because we are nice - it's because ti works.
Bullshit, if you and your neighbours got together and organized a private company to pick up your rubbish you could probably do it for half the cost the council charges on aggregate. You however probably think it's cheap because the council charges someone else 10 times as much (because they have a bigger house, regardless of how much rubbish they generate) so they can subsidize you to get the votes to get re-elected to keep their snouts in the trough.
You don't need taxes to councils to be a society, it's a state of mind, not the mind of the state !
We could have a witch hunt tax. Maybe call it applying the bullying laws but on a larger scale. So when an entity acting legally is publicly abused like these 'immoral' companies then these companies can take the whole sodding witch hunt of bullies to court for damaging their name for doing nothing wrong.
We may disagree with them paying so little money, so we are disagreeing with the tax law. And if people think the tax law is wrong it may be changed. But the sick mob against these companies for being legal and correct is highly immoral and I would love to see the lot taken to court for bullying.
Morality doesnt exist and in someones eyes we are all immoral. This is why laws run the country not morals. If it was left to morals we could still hunt witches and bow to stupidity. I hope the mob go through an age of enlightenment at some point soon otherwise this country will only get worse as you are all immoral.
I do however offer the challenge to anyone who thinks they are moral to explain why they believe they are. But that will put your morals on show for others to debate.
Stated another way, but pretty much the same as most people here:
1) You can't blame companies for minimising tax. That's legal. You do the same, unless you deliberately don't fill in deductables when you do a tax return, or you donate more tax out of your net income.
2) If you say some companies should pay more tax, based on a feeling in your gut, that means nothing.
3) Therefore if you say some companies should pay more tax, how should we define how much? You will get to something as complicated as tax law, eventually.
4) The problem with tax law is that it creates a lot of drag on companies, with serious, boring people getting paid lots of money to find boring loopholes in laws some other people wrote.
5) Therefore if you genuinely do find a way to tax more simply, start an open source government website, let anyone implement your suggestion, and we can wave goodbye to all the drag placed on companies by beancounters (or at least some of them).
6) Please do the same with law. The sooner we automate away the expensive paper pushers, the better.
You have two scenarios: -
* If you follow the tax rules and pay what you are legally obliged to pay you get politicians whining at you for doing so when they should have had the competence to setup decent tax laws in the first place, end result, some bad PR but nothing extremely bad happens, it's perfectly legal after all.
* If you pay more tax than your legally obliged to pay (what idiot would do that) then the CEO/CFO is then seen as incompetent and will more than likely face a palace coup and/or face the wrath and possible court cases of shareholders, end result, big pile of the brown stuff and no paddle.
I wonder which one a CEO would pick?
Believe me I'm no fan of complete unrestricted capitalism, but politicians whining, moaning and bitching at companies when they should be getting off their respective derriere's and making sure this is not possible in future would appear to be the order of the day.
Our politicians need to stop grandstanding and moaning and actually start fixing our bloody economy instead of trying to raise their media profiles and wondering how to get their backside onto X Factor or that bloody awful Jungle reality television series thing.
Starbucks was embarrassed into paying more tax by the government. Google won't be, because a verbal tongue-lashing in a select committee and a bit of embarrassment for Schmidt and co. isn't worth the hundreds of millions it'd cost to concede.
Personally I think the government should make a few regular public service announcements on TV summarising the offensive tax arrangements of the worst multinationals - the fall in share price and brand integrity might convince them to rethink their schemes.
So counter it with real warfare. Since there's probably more Irish in the US than Ireland, the US can conquer Ireland, and the UK can take the Netherlands and Bermuda.
Schmidt thinks offshore tax havens are capitalism. How can he possibly object to the response of nations protecting their wealth by hostile takeovers of those havens?
Bermuda is a British Overseas Territory. Has been since 1707.
Other such places are the British Virgin Islands, Cayman Islands and Gibraltar. All rather famous for favourable tax regimes and all have informal representation at the UK parliament through the All-Party Parliamentary Group.
Why 'take' them when we already have them?
Maybe I've missed something, but it's not like the laws changed much on tax in the last 20 years and no one was bothered before... I say it's all just diversionary tactics to hide the fact the Government's fiscally done for. So their only solution is to direct everyone's attention towards "greedy" companies to avoid the public asking difficult questions about how we got into this financial mess in the first place - read borrowing FAR too much in a boom period... thanks for that Gordon, you so called economist!
In North America (and I assume in Europe it's the same) corporations and corporation-friendly government keep pushing for lower or zero taxes for themselves as this will somehow magically create jobs and improve local economy... yes, I know the line, if the corporations have a couple extra billions saved they may invest some of that back... the problem with that line is the "MAY"... they may choose to pocket the extra, there is no guarantee.
Looking at this article, they mention Ireland as a tax haven... how is that working for them when it comes to unemployment? apparently not that great at 14%
They had a huge boom and an equally huge bust. Everyone was flocking to Ireland but the property got massively pricey and now there's ghost towns of new houses that nobody wants.
You want proper commitment to a country by a global company and you just don't get that, especially when they're not paying any taxes in that country.
Globalisation is just evil in so many ways. It's a cancer we could do without.
Yes, Ireland the Tax Haven...
Our position is entirely logical - instead of having a massively complex corporation tax code with a headline rate of, say 35%, but loopholes that mean you actually pay 6% (like France, who at one point had this on the front page of their foreign investment agency site), we decided that we would charge 12.5%, with far fewer loopholes, and those would be time limited and aimed at specific sectors that we wanted to encourage investment in. You know what, it worked! Companies found that it was cheaper to deal with the lower tax rate than to work out how to use all the loopholes.
The problem is that we allow the movement of money to other EU countries in line with EU rules without a whole pile of oversight. Including the Netherlands. Who have their own idosyncracy that they allow transfer of money to the Carribean (probably for historical reasons). So you get the situation where by billions ends up in Bermuda.
The building boom fueled by cheap credit suddenly ending so that government income dropped over 20% in one period, going from a surplus to an €18 billion deficit is an entirely different story.
Fixed it for ya there, Google!
Of course., the real problem is not the companies who are graded by shareholders based on their cash flow and earnings, but its the politicians who design the tax codes and let themselves be lobbied by corporations that are (naturally) trying to improve or sustain the above-mentioned grades. Yes, Google, Amazon, Starbucks and probably a lot more companies should be paying more, but the problem goes deeper than a few thousand corporate execs and a few hundred thousand corporate tax professionals.
As always, it's the common citizen who has to pick up the bill for bad governance by the pols and opportunistic accounting by big business.
Fucking hell. Stop repeating the shit about directors being mandated by law to minimize tax/maximize profit. It is a load of shit. The UK laws say nothing of the sort, the Delaware laws say nothing of the sort (in fact there is case law in Delaware stating that there is absolutely no legal obligation for a company to either maximize profit or minimize tax).
" no legal obligation for a company to either maximize profit or minimize tax"
How about the desire to be an ongoing entity and continue to have investors remain invested in your company. People invest their own money/retirement in companies that offer the greater return on investment balanced with an acceptable level of risk.
You obviously do not have a clue about investment and do not run a business/company. Honestly, do you also have idiot written on your forehead?
It amazes me how thick some people are, but then that's part of the worlds problme. People with out the ability to apply any real reasoning/logic to a situation.
The clue is in the phrase "...mandated by law..."
Just because a company is in business doesn't mean it is LEGALLY obliged to maximise profits. Most companies have significant waste in their processes, so, in your world, directors should be prosecuted for NOT maximising profit?!? Just remind us which branch of law enforcement that responsibilty falls to, and how many times it has happened in the UK?
Oh, and BTW, once you start the personal insults, rather than attacking the message, it's a good sign that YOU'VE lost the argument.
"Stop repeating the shit about directors being mandated by law to minimize tax/maximize profit. It is a load of shit. The UK laws say nothing of the sort, the Delaware laws say nothing of the sort (in fact there is case law in Delaware stating that there is absolutely no legal obligation for a company to either maximize profit or minimize tax)."
In the USA there is the classic precedent set in Dodge v Ford (1919) https://en.wikipedia.org/wiki/Dodge_v._Ford_Motor_Company.
However, it is true that is not a law, just one decision - although a very influential one. The real basis for the claim that executives have a duty to maximize profit is that most corporations are set up to do precisely that - generate returns for their investors. Now I realize that some of the contributors to this thread are probably not large-scale investors. But just imagine for a moment that you are. You take £1000 of your hard-earned cash and use it to buy shares in Geegle Ltd. Considering stock market performance in recent years, you may see its value rise or fall, and you may actually lose every single penny of it. Ideally, you would like to see a "fair" return of at least a few percent per year.
Since no bank deposit account will give you any worthwhile interest after inflation (even before tax), it's important that there be some way for people to invest their savings and get some kind of income in return. If you think that is immoral profiteering, or whatever, don't forget that may investors are pensioners living on very low incomes, or pension funds that have to generate profits to pay the pensions people have earned through decades of hard work.
So if executives don't do everything in their power to maximize "shareholder value", in the jargon, they are failing in their duty to the shareholders and ought to be replaced.
Maybe the government should play the same game they do. Case in point:
What the government needs to do, ignore Google. They don't want to pay their share of corporate taxes by using tax havens, so be it. When the Google lobby party goes to any government agency, they need to be ignored. If Google was looking at building something and is looking for tax breaks, you don't even see them to hear their proposal. You treat Google how they treat the governments of the world.
I also see where Google is coming from. For the longest time, you have multinational companies being taxed each and every way the governments could. They post profits in country B, C. D, etc. and if they brought them back to country A they would be taxed again. This is why tax haven were used as the governments forced the companies into it.
"explain their company’s flagrant abuse of the tax code to the detriment of all who play fairly"
The simple fact that companies are following existing tax code in each country is not abuse or unfair. Only an ignorant fool would not make use of these existing/legal methods. I understand it those people who are envious of the amount of money others are making/saving and that's the only reason for this kind of childish reactions. If each country is angry about companies using other nations for tax purposes, then they should work on making their nations attractive to those companies. This loud whiners are people who do not have the sense/ability to run as successful a company, and so get angry about it. In truth, they are jealous about it. If you want fair, institute a flat tax and everyone....I mean everyone pays the same tax rate. From the bloke driving the bus to the CEO running a milti-billion dollar company that brings jobs/business to each nation they operate in.
Only shortsighted fools want to attack successful companies with claims of unfairness. The political fools are the ones that can make a change, if they just shut their hot air flapping.
I say screw them and lets see each company exit and not do business with these childish nations.
"Don't hate the players, hate the game"
Your solution to childishness seems to be to act like some teenagers think they have to - do anything to be popular, even if that means you end up surrounded by vapid arseholes and become one yourself. To continue the teenage analogy with your argument, it is therefore perfectly OK for someone whom you thought a friend to betray what you thought were confidences on the basis that only a fool would not blab such juicy gossip and, anyway, you didn't say you didn't want anyone to know this one time.
As a teenager, I was bemused at the notion of popularity and the idea that personality faults seemed to be more forgiveable to some if you had improbable hair. Just because Daddy could afford to take you skiing every winter with anyone prepared to brown nose you didn't make you an intrinsically better person.
As an adult, I'm bemused that being able to play the tax and political lobbying game well makes you a successful capitalist and it's all down to your sense/ability, while being able to play the welfare game well makes you a dole scum scrounger who should be shot and it's all down to your substandard feral genes.
I'm at neither extreme. I hope that I have a reasonably adult sense of fairness. This whole letter versus the spirit of the law type argument is akin to a certain kind of notice that I see cropping up from time to time like "no goats allowed in the public bar" or "do not use this drill as a toothpick" where you just know that someone has acted like a dick in the past and used the "it doesn't say not to anywhere" defence. Do we really need to explain to companies how not to be a dick? Is there an adult way of doing so without them throwing a hissy fit? What's the international politics version of stopping the car and telling them to walk home?
There's a rather wonderful opening to a Poul Anderson novella that's rather apposite here:
"Crime is entirely a matter of degree. If you shoot your neighbour in order to steal his property, you are a murderer and a thief, subject to enslavement. If, however, you gather a band of lusty fellows in the name of honour and glory, knock off a couple of million people, take their planet, and hit up the survivors for taxes, you are a great conqueror, a hero, a statesman, and your name goes down in the history books."
As any fule know, it is not the content of what you say that matters in public, it is how it is perceived. And public perception is kindof core to how brands are looked at. Google is a massive brand, usually topping the most valuable type lists.
He said "if you don't like it sit on this and swivel". That isn't, ever, going to increase the value of your brand. Cue unhappy share holders.
I don' think this is going to work itself out in the political field, but may have a real effect because of perception.
This is not a Ratner-scale fcuk up, but Schmidt is working his way up there. Dickhead.
I have no respect for them, they're not as intelligent as they think they are or they would be releasing groundbreaking original products left right and centre. Except they're releasing boring shit like email, social media, phone software and search engines. Whoopee shit, stuff invented by other people and then copied by Google.
When did obeying to the law become immoral? If MPs have written laws that allow for conduct they now consider immoral surely those MPs have only themselves to blame? They are after all responsible for creating those laws. Perhaps if the UK government spent it's time rewriting it's tax laws rather writing press regulations to make UK liable laws even more insanely repressive and putting CCTV cameras everywhere they could solve these problems without the hypocritical moral outrage
Isn't that the line most MP's fed us. The difference is Google are not the ones who get to make the law, they are not the ones selected to decide what is right and what is wrong. Well done to the MP's for identifying the issue, all you need to do is change the rules, it works better the whining that someone smarter than you managed to outwit you.
MP's you have the power to put this right, just do it.
Polite applause at the Google.
It is doing its legal duty and upholding local laws in a way that most multinationals might be a little envious of?
The problem in the UK is not Google's approach under law to tax and such.
MM-mm baby! Those have been left there kindly by HM Treasury and HMRC for organisations to use.
(Remember HMRC and HM Treasury are quite prepared to give instruction that UK traffic lights have to operate in a manner that gives greatest return to HM Treasury. Of course your local government (e.g. council) did that, failed to report accurately to you that it was following non-governmental instruction (in the language of the day it was colluding rather than conspiring but the difference in fact might be negligible?)
The far bigger problem is HM T and HMRC addiction to cash - your cash.
And it wants it now. Now!
re: what''s moral about taxing someone for dying?
Someone's got to pay for all the wars on the other side of the planet.
But more importantly, it's the future wars that have to be funded by taxation - they're not going to come cheap...and not paying your fair (sic) share is unpatriotic and verging on treasonous.
I'm getting more and more convinced that we are rapidly heading for a society where You will be assimilated. The future is Borg. Resistance is futile.
A family of slumlords who kept a huge set of derelict London docks before they gave the site to charity after container docks closed them. Well nearly. They never paid any tax at all and I don't know who the landlord of Canary Wharf is nor who any of the other old dockland owners are.
I do know as Britains biggest meat importers at one time, they famously never paid tax.
Google did not proclaim to be holding themselves to a higher standard than red toothed capitalism (their "don't be evil" slogan). If your going to be a no holds bar company with an army of tax lawyers, don't expect anyone to treat you as anything more than another corporation.
...isn't that CEOs/Boards are "serving" the shareholders by minimising their tax bills, it's the way they are minimising those tax bills.
In the case of Starbucks, for example, Starbucks UK is paying a shitload of cash for "permission" to use the Logos/name/etc to Starbucks in the Netherlands as well buying it's coffee at above market rates from Starbucks office in Switzerland. They claim to have made no profits in 14 out of 15 years of trading in the UK.
Supposedly, the stock market ought to be massively downgrading the value of Starbucks shares to junk status based on that performance. Plenty of profitable companies have gone to the wall because the stock traders bailed out not because the company made a loss, but because the company didn't grow as much as predicted. Yet Starbucks still exists.
Starbucks UK is still basically a US company with US management, people who worship at the alter of profit at all costs. Why have they not shut up shop and gone home if they can't make a profit? The reality is that they do make a profit. They just hide it in overly large chargebacks to parent/sister companies which may well be technically legal by the strict letter of the law, but which would never happen if these companies were unrelated, ie they'd not pay those high rates, they'd look for a cheaper supplier.
Since my wife doesn't work, maybe I could pay her up to the tax free PAYE allowance for cooking and cleaning and then I can claim that as a tax write off against my tax bill?
and especially tax law is very complex, open to interpretation and appreciation.
You claim it was it business trip, the taxman says it was a holiday. Who decides who is right?
You and your 15 experienced tax lawyers claim it was a business trip, the taxman agrees.
There's always a reason why somebody thinks he shouldn't pay taxes. A couple of centuries ago, the happy few didn't pay taxes because they were preferred by God. Now, the happy few don't pay taxes because they are preferred by capitalism.
This little shit is proud not to pay taxes. I can live with that.
If I ever have half chance I'll kick him in the gonads. And I will be proud of that accomplishment, because payback is a bitch. I hope everybody joins me. Can he live with that?
Seriously? I get we're supposed to be outraged, but how much in taxes should they be paying if they are currently legal? As it's legal, what additional authority gets to be in charge of "Tax moral obligations"?
This has always astounded me. Just like people, corporations will use whatever legal means necessary to save on taxes. They have every right to do so, and they have every obligation to do so. If the folks making the laws find that behavior distasteful....maybe they might make some laws to fix that behavior they find so reprehensible?
Of course they won't, because those laws are in place for a reason.
Faux outrage. Moving on.
Everybody knows that Greed is the basis of capitalism, "morality" is a concept invented by crypto-communists to thwart business.
Google still doesn't do evil, followers of the Golden Calf just don't have the same definition for that word. If you know that "paying tax = evil", then everything is right again!
One does not have to live by the rules rather one is penalised for not upholding the rules?
The answer seems pretty obvious regarding tax avoidance, tax evasion - if rules are not upheld then it costs money?
Besides, penalties which send money to HM Treasury really are not making justice at all.
All it does is send money to HM Treasury and what has that to do with justice?
Now that government bodies have invoked a principle of "morality" into dealings then I believe it give every UK subject opportunity to appeal against anything on basis of morality?
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