Reply to post: Re: About bl**dy time

US slaps tariffs on countries that hit Big Tech with digital services taxes ... then pauses them immediately

Ben Tasker Silver badge

Re: About bl**dy time

> A wealth tax, yes. As usual, it's a ridiculously terrible idea. We tax flows, not stocks in very nearly every case.

That's the point you seem to have missed in his reply though.

He was suggesting a means (good or otherwise) by which you could change that approach. Your reply was "but we have capital gains", which is completely ineffective at changing the approach because it taxes flows.

Why does LDS want to change approach? Because further up the chain you're replying to, it was discussed how certain shareholders "always" find away to avoid taxable flows - the example here being sitting on (and presumably leveraging) shares rather than liquidating them.

Your replies could be much shorter if you just wrote "that's not how it is now", which'd still miss the point he's talking about a change from the status quo.

> It is an increase in investment in productivity, and one that doesn't cost the recipient country anything.

No, you're taking an extremely blinkered view.

- UK Company B sells widgets to UK customers, and pays $x corporation tax

- US Company A acquires Company B

- US Company A licenses Company B it's original IP from it's Virgin Islands subsidiary

- UK Company B pays licensing fee to Virgin Islands sub and makes no profit in the UK

Company B is employing exactly the same number of people as before that "investment", the customers served are in the same location, but the UK taxpayer is now seeing less revenue.

I'll accept that that involves an acquisition though, so lets go for a simpler example with a real foreign investment

- US company A buckstars opens branches over here selling hot beverages

- As a result, creates 10,000 jobs (Woot!)

- UK subsiduary licenses the logo from US company (or one of it's subsiduaries)

- UK sub has low profits

Now, at step 2 we've had your investment, we've added jobs to the economy, which is good. But the money that UK consumers are spending is mostly going offshore rather than recirculating into the economy (via treasury, or employee's wages) - the company, after all, takes more than they pay their employees otherwise the business won't be viable.

> It is wholly good; end of story

You _should_ be hearing warning bells - you're talking in absolutes, which almost certainly means you're wrong.

> I'll give you the benefit of the doubt and assume there's some meaning you didn't manage to put into words. I have literally no idea what you were trying to say there. I assume it's wrong, given how you started, but really I can't tell. I'm somewhat amused by the concept that people sending you money means 'your' funds being offshored. It's the exact opposite, obviously.

I've read it again, and can only conclude that the issue is with either your comprehension or your ability to look at anything but a narrow scope.

A foreign company does not operate over here in order to send money here - there's an expectation that (at some point) returns will be larger than investment. When those returns materialise, that's money being taken out of the national economy and sent off-shore.

> You appear to be labouring under the misapprehension that exports are good. They aren't. The benefits of trade are imports, not exports. This has been well-known for over three centuries.

It depends on your business (or more precisely the size of the business). Imports enable you to acquire materials more cheaply, increasing profit margins etc. That, of course, is only advantageous to us if taxes are then paid here.

Exports, however, bring money in from other countries, so they shouldn't be overlooked.

I'm writing this from the UK, which is primarily a service economy: it's all about exports, so yeah, you'll forgive me if I'm focusing on the bit that actually makes us money (or did, pre B word).

> Please, if we're going to try and talk economics, can't you at least learn the basics? It's like discussing maths with someone who argues about whether addition is commutative.

There's no need to be a prick just because you disagree - your misplaced sense of superiority says far more about you than it does me

> Ultimately, I think you're basing your ideas on the notion that the tax system is supposed to be fair in some way or other.

Actually, that's your misapprehension.

I entered the thread to point out that you were wrong for suggesting CGT achieved what LDS was aiming for, and to point out that your statements in general were fallacious.

At no point have I argued in favour of any of the changes, I've simply pointed out that what you are saying is *wrong*.

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