5 ms·

How can countries avoid the spiral of death with taxing? I hate how google, facebook etc. makes hundreds of millions in my country, but barely pay taxes. While

by maaaats 10y ago

How can countries avoid the spiral of death with taxing? I hate how google, facebook etc. makes hundreds of millions in my country, but barely pay taxes. While local companies do.

Jgrubb 10y ago
Seems like he only long term answer is somehow to make global companies beholden to a global tax authority, but no idea how that would work on a planet with sovereign nations.
- lossolo 10y ago
  It would be additional global tax from capital. If you are interested more read "Capital in the Twenty-First Century" by Thomas Piketty.
samfisher83 10y ago
Companies want to pay no taxes, but they want protection from the legal system infrastructure etc. that allows a company to be successful.
- lossolo 10y ago
  You can't have cake and eat cake. Without taxes there would be no system at all. It's a shame that small companies pay for this system and big corporations use this system but evade paying. No justice in this.
- refurb 10y ago
  There is so much inefficieny in gov't spending that your statement is meaningless. The biggest line items in the gov't budgets have nothing to do with the legal system or infrastructure.
  - samfisher83 10y ago
    Medicare and social security pays for the millions of people who have help build this country. Yes the government might be inefficient. How many google, Facebook, and apples are coming out of Ireland or India?
  - Frondo 10y ago
    Government, by definition, can be more efficient than any private entity because it never needs to produce a profit. Businesses need to be able to skim a little off for the owners. Government can provide services at cost, no mark up. If you're unhappy with the implementation of a specific program, like Medicare (which is, of course, more efficient than private health insurance in the US), let's talk about that. My pick is the military--very wasteful. We could fold 90% of that budget into university and health care and live in heaven on earth.
    - refurb 10y ago
      But profit creates an incentive for efficiency. Sell the same thing for 1% lower than your competitor and that goes right into your pocket. Our current gov't system provide very little incentive for efficient use of funds. I'm not arguing that all of these programs need to just disappear. I'm arguing a "race to the bottom" in terms of efficiency is a good thing, not a bad thing for gov'ts.
      - Frondo 10y ago
        I think the kind of constant oversight and worrying over how our tax dollars are spent creates an incentive for efficiency. And the ability to vote regularly on elected officials who guide our programs, that too creates an incentive for efficiency. Having seen what races to the bottom do in various other industries, I shudder to think of how government works would suffer under the same pressure. Not the kind of society I'd want to aspire to live in.
Lazare 10y ago
> I hate how google, facebook etc. makes hundreds of millions in my country, but barely pay taxes. Figuring out how much a large company makes is complex, which is why we have a very complex system of rules and laws to let us calculate it. And according to those laws, Google, Facebook, etc. don't actually make hundreds of millions in profit in your country. That's why they don't pay taxes, and it's what the linked article is about: Because your country (and mine) has passed laws which say that they aren't making money despite what your intuition tells you. If you want to fix it, the starting point would be those laws. Except...we've been trying to improve those laws for a long, long time. Many are now many decades old. Transfer pricing rules exist for a reason; simply abolishing them would cause other problems and greater imbalances. At some point maybe we need to step back and focus on taxing the consumption of real people (which is, in comparison, much easier). Facebook may be inherently hard to tax; but those profits flow into the pockets of real people, and they are (in comparison!) easy to tax.
- deleted 10y ago
  [deleted]
- sbov 10y ago
  Real people disproportionately situated in the US. I'm not sure if that helps any of those other countries. The basic problem is companies using public resources of a country but not paying back into the system.
  - Lazare 10y ago
    If you're taking about resources which have usage which is measurable and excludable (postal service, road network, legal system) then charge for use. Amazon relies heavily on the road network to deliver goods; it's trivial (and a good idea in any case) to charge commercial vehicles a fee to cover their wear and tear on the roads, carbon emissions, etc. Similarly, if they're filing legal cases, charge them a fee, etc. If you're talking not so much about them using actual resources, but benefiting in some vague sense from a country having a functioning police system, even if they don't actually use it, then no, you can't charge them fees. But if they're making sales in your country, you can charge GST/VAT. But if they're not using actual resources, not making sales in your country, and not making profits... ...then they're not going to be paying back into the system. Even if you really need them too, even if it would be highly immoral for them not to. The existence of a problem doesn't imply the existence of a solution.
tn13 10y ago
Why do you think paying taxes is a virtue ? Why does US government need 40% of our hard earned money ? May be American politicians should stop the war on drugs, wars in far off countries and medicare and reduce tax levels to 20%. Facebook, Google, Apple and push the frontiers of human knowledge at rapid rate if they can spend that money themselves. In case of government it will be used to by some junk airforce planes that dont fly.
- lukateake 10y ago
  Serious question: who pays an effective rate of 40 percent? Many of these huge corporate entities are in the single or negative digits.
  - refurb 10y ago
    That's because they are deferring the taxes on the ex-US money. It's a 401k in the US. It's a tax deferment, not a tax break. If your effective rate went from 35% to 25% due to your 401k contribution, you still end up paying 35%, just not right now.
    - uiri 10y ago
      No, you don't end up paying 35%. Part of the advantages of a 401k come from distributing dollars being taxed at a high marginal rate to another year when they are taxed at a lower marginal rate.
      - refurb 10y ago
        It all depends. Sure, if you put almost nothing in a 401k, then when you pull it out, you'd be in a lower margin tax bracket (and living on very little money). But if you put a lot in, the fact you HAVE to start taking money out at a certain again AND it all gets taxed before you die means you pretty much end up paying the taxes anyways (or more if rates have gone up).
        10y ago
deleted 10y ago
[deleted]
branchless 10y ago
They should isolate countries like Ireland who are allowing countries to wash profits through their territory to "allow investment". Ireland is 5m people. Just hang them out to dry. Either they consume as much as they add in value or their standard of living has to drop until this is held to be correct.

by maaaats 10y ago

How can countries avoid the spiral of death with taxing? I hate how google, facebook etc. makes hundreds of millions in my country, but barely pay taxes. While local companies do.

Jgrubb 10y ago

Seems like he only long term answer is somehow to make global companies beholden to a global tax authority, but no idea how that would work on a planet with sovereign nations.

lossolo 10y ago
It would be additional global tax from capital. If you are interested more read "Capital in the Twenty-First Century" by Thomas Piketty.

samfisher83 10y ago

Companies want to pay no taxes, but they want protection from the legal system infrastructure etc. that allows a company to be successful.

lossolo 10y ago
You can't have cake and eat cake. Without taxes there would be no system at all. It's a shame that small companies pay for this system and big corporations use this system but evade paying. No justice in this.
refurb 10y ago
There is so much inefficieny in gov't spending that your statement is meaningless. The biggest line items in the gov't budgets have nothing to do with the legal system or infrastructure.
- samfisher83 10y ago
  Medicare and social security pays for the millions of people who have help build this country. Yes the government might be inefficient. How many google, Facebook, and apples are coming out of Ireland or India?
- Frondo 10y ago
  Government, by definition, can be more efficient than any private entity because it never needs to produce a profit. Businesses need to be able to skim a little off for the owners. Government can provide services at cost, no mark up. If you're unhappy with the implementation of a specific program, like Medicare (which is, of course, more efficient than private health insurance in the US), let's talk about that. My pick is the military--very wasteful. We could fold 90% of that budget into university and health care and live in heaven on earth.
  - refurb 10y ago
    But profit creates an incentive for efficiency. Sell the same thing for 1% lower than your competitor and that goes right into your pocket. Our current gov't system provide very little incentive for efficient use of funds. I'm not arguing that all of these programs need to just disappear. I'm arguing a "race to the bottom" in terms of efficiency is a good thing, not a bad thing for gov'ts.
    - Frondo 10y ago
      I think the kind of constant oversight and worrying over how our tax dollars are spent creates an incentive for efficiency. And the ability to vote regularly on elected officials who guide our programs, that too creates an incentive for efficiency. Having seen what races to the bottom do in various other industries, I shudder to think of how government works would suffer under the same pressure. Not the kind of society I'd want to aspire to live in.

Lazare 10y ago

> I hate how google, facebook etc. makes hundreds of millions in my country, but barely pay taxes. Figuring out how much a large company makes is complex, which is why we have a very complex system of rules and laws to let us calculate it. And according to those laws, Google, Facebook, etc. don't actually make hundreds of millions in profit in your country. That's why they don't pay taxes, and it's what the linked article is about: Because your country (and mine) has passed laws which say that they aren't making money despite what your intuition tells you. If you want to fix it, the starting point would be those laws. Except...we've been trying to improve those laws for a long, long time. Many are now many decades old. Transfer pricing rules exist for a reason; simply abolishing them would cause other problems and greater imbalances. At some point maybe we need to step back and focus on taxing the consumption of real people (which is, in comparison, much easier). Facebook may be inherently hard to tax; but those profits flow into the pockets of real people, and they are (in comparison!) easy to tax.

deleted 10y ago
[deleted]
sbov 10y ago
Real people disproportionately situated in the US. I'm not sure if that helps any of those other countries. The basic problem is companies using public resources of a country but not paying back into the system.
- Lazare 10y ago
  If you're taking about resources which have usage which is measurable and excludable (postal service, road network, legal system) then charge for use. Amazon relies heavily on the road network to deliver goods; it's trivial (and a good idea in any case) to charge commercial vehicles a fee to cover their wear and tear on the roads, carbon emissions, etc. Similarly, if they're filing legal cases, charge them a fee, etc. If you're talking not so much about them using actual resources, but benefiting in some vague sense from a country having a functioning police system, even if they don't actually use it, then no, you can't charge them fees. But if they're making sales in your country, you can charge GST/VAT. But if they're not using actual resources, not making sales in your country, and not making profits... ...then they're not going to be paying back into the system. Even if you really need them too, even if it would be highly immoral for them not to. The existence of a problem doesn't imply the existence of a solution.

tn13 10y ago

Why do you think paying taxes is a virtue ? Why does US government need 40% of our hard earned money ? May be American politicians should stop the war on drugs, wars in far off countries and medicare and reduce tax levels to 20%. Facebook, Google, Apple and push the frontiers of human knowledge at rapid rate if they can spend that money themselves. In case of government it will be used to by some junk airforce planes that dont fly.

lukateake 10y ago
Serious question: who pays an effective rate of 40 percent? Many of these huge corporate entities are in the single or negative digits.
- refurb 10y ago
  That's because they are deferring the taxes on the ex-US money. It's a 401k in the US. It's a tax deferment, not a tax break. If your effective rate went from 35% to 25% due to your 401k contribution, you still end up paying 35%, just not right now.
  - uiri 10y ago
    No, you don't end up paying 35%. Part of the advantages of a 401k come from distributing dollars being taxed at a high marginal rate to another year when they are taxed at a lower marginal rate.
    - refurb 10y ago
      It all depends. Sure, if you put almost nothing in a 401k, then when you pull it out, you'd be in a lower margin tax bracket (and living on very little money). But if you put a lot in, the fact you HAVE to start taking money out at a certain again AND it all gets taxed before you die means you pretty much end up paying the taxes anyways (or more if rates have gone up).
      - 10y ago

deleted 10y ago

[deleted]

branchless 10y ago

They should isolate countries like Ireland who are allowing countries to wash profits through their territory to "allow investment". Ireland is 5m people. Just hang them out to dry. Either they consume as much as they add in value or their standard of living has to drop until this is held to be correct.