6 ms·

Part of this makes an intuitive sense, a sausage stall has one trivially accessible "throat to choke", whereas Austria's access to e.g. Jeff Bezos is much more

by hga 10y ago

Part of this makes an intuitive sense, a sausage stall has one trivially accessible "throat to choke", whereas Austria's access to e.g. Jeff Bezos is much more difficult. Starbucks, though, I'm assuming they've got retail shops in Austria? That just means they can afford better tax lawyers.

mschwaig 10y ago
Being able to pay tax lawyers that are so great that you basically don't have to pay taxes kind of breaks the concept of taxation though.
- daniel-levin 10y ago
  ROI(tax lawyers) > taxes to pay without them.
  - charlesdm 10y ago
    The int'l tax system summed up. It's that simple.
- hga 10y ago
  Or this is a establishment politician with a weak hold on power who has not necessarily got his facts right, or if he's talking about absolute numbers vs. rates is probably lying through his teeth, but knows bashing foreign companies is a crowd pleaser. And maybe they overtax those sausage stalls, lots of/most every? country has tax regimes with lots of insanity. Apple wouldn't be playing the games it plays with the US if we didn't have the 2nd highest or so corporate tax rate in the world (e.g. see https://en.wikipedia.org/wiki/List_of_countries_by_tax_rates https://en.wikipedia.org/wiki/List_of_countries_by_tax_rates when you factor in state tax rates only Cameroon is perhaps higher). While I was doing the search for that, I noted that as a region Europe has the lowest, but that's no doubt not accounting for VATs, which the US is allergic to, at least unless one of the big other categories of taxes is totally killed off (like, with a "this time we mean it" Constitutional amendment). Anyway, my point is that all this results in all sorts of distortions. For example, when the Reagan individual tax rate cuts kicked in, I noticed my parent's business and investing strategies change as tax avoidance became much less important. In his working lifetime, the top rates went from 91% ("We Like Ike???") to 70% (which as I recall was split between 50% or more for "earned" and 70% or more for "unearned" (investment) income), to 38.5%, to 28%, before it started going up again (even the George W Bush tax rate cuts only dropped them 4.6% to 35%). And going back to the distortions, the family exemptions allowed a normal family prior to JFK's 1964 supply side rate cuts to survive with the lowest bracket being 20%; those weren't adjusted for inflation until Reagan's reforms, which turned them into a pretty minor thing with how inflation savaged the dollar during that long period (the CPI peaked at like 13-14% around the time Reagan entered the Oval Office).
  - fauigerzigerk 10y ago
    >Apple wouldn't be playing the games it plays with the US if we didn't have the 2nd highest or so corporate tax rate in the world How low do you think that tax rate would have to be? Ireland's corporation tax rate is just 12.5%, but Apple didn't pay that either. They had a special deal under which their effective tax rate was as low as 0.005% to 1%. This is the deal that the EU has now ruled against under furious protests from Tim Cook personally and the US government. So yes, if the US lowers its corporation tax rate to effectively 0% then Apple will stop playing games.
    - nickff 10y ago
      Apple's latest report said that they paid a little over 6% in taxes, whereas the 0.005% number came from someone looking to score political points (without any evidence); do you have a trustworthy source for either the 0.005% or 1% numbers?
      - Marazan 10y ago
        It's in the EU documents.
        deleted 10y ago
        [deleted]
        nickff 10y ago
        My understanding is that EU documents estimate that number for the Irish tax take as percentage of total global revenue, it isn't their total effective tax rate (on profits as is common for corporations). The parent used a meaningless number in a misleading fashion.
        fauigerzigerk 10y ago
        I think it was completely obvious in the context that I wasn't talking about Apple's global effective tax rate but only about the taxes they pay in Ireland where all of their European sales are booked. My understanding is that the numbers I quoted (in good faith) are derived from the profits Apple would have made in Europe had they not been allowed by the Irish government to use unrealistic transfer pricing. http://europa.eu/rapid/press-release_IP-16-2923_en.htm http://europa.eu/rapid/press-release_IP-16-2923_en.htm The numbers are certainly not meaningless, but whether or not they are misleading is for a court to decide. It was certainly not my intention to mislead and I do not have all the information to come up with more reliable estimates of Apple's real profits in Europe. Also, as someone who is liable to pay personal taxes on top of profits already taxed through corporation tax I don't feel particularly biased or inclined to score political points in favor of higher taxes. It is simply my opinion that shifting government income from one tax to another isn't necessarily going to improve avoidance overall. It is also my opinion that taxes always have to be compared to what they buy us, in terms of actual services and also in terms of being humane.
- deleted 10y ago
  [deleted]
- oh_sigh 10y ago
  Whose fault is that?
kijeda 10y ago
Maybe it has changed recently, but an interesting factor is the Austrian Starbucks have been run by an Austrian master franchisor, not by the company.
- Maarten88 10y ago
  The Austrian franchiser probably pays a lot for using the Starbucks brand and franchise concept to an offshore company (not in the US) owned by Starbucks, that pays a kickback to another offshore entity owned by the franchiser. Now all the profit is offshore. Everybody happy, except the Austrian government (who don't get corporate tax because the franchise hardly makes any profit in Austria) and sausage stands (who wonder if they could make more money if they join the Starbucks franchise)
  - peletiah 10y ago
    > Everybody happy, except the Austrian government And the population of Europe, who does missing out on taxes from these large corporations. This is not an Austrian issue, but one of the whole EU.
- tedmiston 10y ago
  This is interesting because Starbucks doesnt franchise in the US [0]. They do have one alternative that's what you see in most airports and in coffee shops with the sign "proudly serving Starbucks coffee", for example Barnes & Noble cafes are this style. These third party stores, for instance, cannot accept payment from the Starbucks mobile app and offer only a subset of drinks. I'm not sure what the term for this is but it is some kind of licensing deal. [0]: http://investor.starbucks.com/phoenix.zhtml?c=99518&p=irol-faq http://investor.starbucks.com/phoenix.zhtml?c=99518&p=irol-f...
  - seanmcdirmid 10y ago
    B&N serve full Starbucks menus in most of the states, not just Starbucks coffees, but everything else...they are effectively franchised Starbucks. Marriott franchises a lot of Starbucks in airports but also some hotels. In other China, Starbucks in tier one cities are mostly JV-owned, while in tier 2 cities they were able to convince the CCP to let them do fully owned stores.
manmal 10y ago
No need for tax lawyers. Money is just drawn out via franchise fees etc to be taxed elsewhere.

by hga 10y ago

mschwaig 10y ago

Being able to pay tax lawyers that are so great that you basically don't have to pay taxes kind of breaks the concept of taxation though.

daniel-levin 10y ago
ROI(tax lawyers) > taxes to pay without them.
- charlesdm 10y ago
  The int'l tax system summed up. It's that simple.
hga 10y ago
Or this is a establishment politician with a weak hold on power who has not necessarily got his facts right, or if he's talking about absolute numbers vs. rates is probably lying through his teeth, but knows bashing foreign companies is a crowd pleaser. And maybe they overtax those sausage stalls, lots of/most every? country has tax regimes with lots of insanity. Apple wouldn't be playing the games it plays with the US if we didn't have the 2nd highest or so corporate tax rate in the world (e.g. see https://en.wikipedia.org/wiki/List_of_countries_by_tax_rates https://en.wikipedia.org/wiki/List_of_countries_by_tax_rates when you factor in state tax rates only Cameroon is perhaps higher). While I was doing the search for that, I noted that as a region Europe has the lowest, but that's no doubt not accounting for VATs, which the US is allergic to, at least unless one of the big other categories of taxes is totally killed off (like, with a "this time we mean it" Constitutional amendment). Anyway, my point is that all this results in all sorts of distortions. For example, when the Reagan individual tax rate cuts kicked in, I noticed my parent's business and investing strategies change as tax avoidance became much less important. In his working lifetime, the top rates went from 91% ("We Like Ike???") to 70% (which as I recall was split between 50% or more for "earned" and 70% or more for "unearned" (investment) income), to 38.5%, to 28%, before it started going up again (even the George W Bush tax rate cuts only dropped them 4.6% to 35%). And going back to the distortions, the family exemptions allowed a normal family prior to JFK's 1964 supply side rate cuts to survive with the lowest bracket being 20%; those weren't adjusted for inflation until Reagan's reforms, which turned them into a pretty minor thing with how inflation savaged the dollar during that long period (the CPI peaked at like 13-14% around the time Reagan entered the Oval Office).
- fauigerzigerk 10y ago
  >Apple wouldn't be playing the games it plays with the US if we didn't have the 2nd highest or so corporate tax rate in the world How low do you think that tax rate would have to be? Ireland's corporation tax rate is just 12.5%, but Apple didn't pay that either. They had a special deal under which their effective tax rate was as low as 0.005% to 1%. This is the deal that the EU has now ruled against under furious protests from Tim Cook personally and the US government. So yes, if the US lowers its corporation tax rate to effectively 0% then Apple will stop playing games.
  - nickff 10y ago
    Apple's latest report said that they paid a little over 6% in taxes, whereas the 0.005% number came from someone looking to score political points (without any evidence); do you have a trustworthy source for either the 0.005% or 1% numbers?
    - Marazan 10y ago
      It's in the EU documents.
      - deleted 10y ago
        [deleted]
      - nickff 10y ago
        My understanding is that EU documents estimate that number for the Irish tax take as percentage of total global revenue, it isn't their total effective tax rate (on profits as is common for corporations). The parent used a meaningless number in a misleading fashion.
        fauigerzigerk 10y ago
        I think it was completely obvious in the context that I wasn't talking about Apple's global effective tax rate but only about the taxes they pay in Ireland where all of their European sales are booked. My understanding is that the numbers I quoted (in good faith) are derived from the profits Apple would have made in Europe had they not been allowed by the Irish government to use unrealistic transfer pricing. http://europa.eu/rapid/press-release_IP-16-2923_en.htm http://europa.eu/rapid/press-release_IP-16-2923_en.htm The numbers are certainly not meaningless, but whether or not they are misleading is for a court to decide. It was certainly not my intention to mislead and I do not have all the information to come up with more reliable estimates of Apple's real profits in Europe. Also, as someone who is liable to pay personal taxes on top of profits already taxed through corporation tax I don't feel particularly biased or inclined to score political points in favor of higher taxes. It is simply my opinion that shifting government income from one tax to another isn't necessarily going to improve avoidance overall. It is also my opinion that taxes always have to be compared to what they buy us, in terms of actual services and also in terms of being humane.
deleted 10y ago
[deleted]
oh_sigh 10y ago
Whose fault is that?

kijeda 10y ago

Maybe it has changed recently, but an interesting factor is the Austrian Starbucks have been run by an Austrian master franchisor, not by the company.

Maarten88 10y ago
The Austrian franchiser probably pays a lot for using the Starbucks brand and franchise concept to an offshore company (not in the US) owned by Starbucks, that pays a kickback to another offshore entity owned by the franchiser. Now all the profit is offshore. Everybody happy, except the Austrian government (who don't get corporate tax because the franchise hardly makes any profit in Austria) and sausage stands (who wonder if they could make more money if they join the Starbucks franchise)
- peletiah 10y ago
  > Everybody happy, except the Austrian government And the population of Europe, who does missing out on taxes from these large corporations. This is not an Austrian issue, but one of the whole EU.
tedmiston 10y ago
This is interesting because Starbucks doesnt franchise in the US [0]. They do have one alternative that's what you see in most airports and in coffee shops with the sign "proudly serving Starbucks coffee", for example Barnes & Noble cafes are this style. These third party stores, for instance, cannot accept payment from the Starbucks mobile app and offer only a subset of drinks. I'm not sure what the term for this is but it is some kind of licensing deal. [0]: http://investor.starbucks.com/phoenix.zhtml?c=99518&p=irol-faq http://investor.starbucks.com/phoenix.zhtml?c=99518&p=irol-f...
- seanmcdirmid 10y ago
  B&N serve full Starbucks menus in most of the states, not just Starbucks coffees, but everything else...they are effectively franchised Starbucks. Marriott franchises a lot of Starbucks in airports but also some hotels. In other China, Starbucks in tier one cities are mostly JV-owned, while in tier 2 cities they were able to convince the CCP to let them do fully owned stores.

manmal 10y ago

No need for tax lawyers. Money is just drawn out via franchise fees etc to be taxed elsewhere.