12 ms·

I wonder how much tax revenue the EU would have lost if Google and Facebook didn't exist.

by DVassallo 9y ago

ryan-allen 9y ago
That is a very good point. They should be grateful for these multi-nationalistic monopolies. /s
- DVassallo 9y ago
  Just stating how much taxes are being "avoided" is an imperfect perspective. If, say, it turned out they contributed $100B to the economy, then that $5B wouldn't look that big in that context.
  - confounded 9y ago
    I always struggle with this logic. Is your argument that if 100B EUR in Facebook ads were sold (presumably the way in which Facebook 'contribute'), then this 100B was 'created' by Facebook? I imagine other measures would be proxies for Facebook's profits too (e.g. some portion of engineers' salaries to go private landlords). Isn't this reverse-progressive taxation? If Facebook were outraged at paying taxes enough to shut up shop in Europe, wouldn't that 100B (or something like it) still be kicking around, just in different hands?
  - latch 9y ago
    I get what you're saying, but I think it's fundamentally wrong for two reasons. First, it is "big" when you consider how that money could be used. Cynicism aside about funding wars and filling walls with cash, it could be used for substantive (read: big) social good Secondly, this is an important market. If they don't want to pay taxes, they have the legal option to not do business in Europe. So while you say "5B is small compared to 100B", I say "5B is a small price to pay for the billions they made."
    - dangsmum 9y ago
      "they have a legal option not todo do business in europe" Do you see any way to do that other than to prevent eu businesses buying ads from google? Because i think that might have a few severe unintented consequences for businesses in the eu, and have exactly zero impact on google.
      - ryan-allen 9y ago
        It'd also open the market to a new competitor when people in the EU (and elsewhere) realised that they can't find local ads on Google.
      - latch 9y ago
        Not sure I understand. You're saying EU business' not allowed to buy ads on Google would have "exactly zero impact on google" ??
        dangsmum 9y ago
        google would still charge the same to display an ad exactly the same number of people will see google ads exactly the same number of people will click on an ad The only thing that would change is companies outside of the eu will burn through their ad budgets faster. plus a whole (not quite so new) industry would emerge outside the eu bypassing the regulations. such as happened in China.
        lovich 9y ago
        Corporations have a lot of power over countries right now, but does the world you live in ignore everything countries can do to companies who ignore their laws? They can attempt to block everything Google while they build their own local services, ala China. Google is also a US company and while their software might be hard to prevent getting into the EU, they can start leveling sanctions against physical US goods if the US won't do anything to reign Google in. I dont think any of this is likely to happen, but political entities on the scale of the US, China, the EU, etc have options to bend companies to their will
aweb 9y ago
This isn't the point here though? These companies are doing business in the EU and not playing fair by not paying their share of taxes. This isn't about preventing them from existing, it's about making them contribute what they owe to the EU countries.
- lefstathiou 9y ago
  I don't want to put words in the parent's mouth but I believe his point is that what is "fair" and what they "owe" are up for debate. Additionally, his question hints at a potentially equally significant and subtle issue: is the effort to capture this increased tax revenue from 4 companies really worth the potential costs on a society to get them? $5bn isnt going to balance Greece's budget. Setting aside the potential arguments defending Google (I have genuinely have no opinion on them or any of the other companies), a comprehensive law that requires every internet company to track every dollar by country and pay proportional taxes on their revenue could, in my opinion, severely cripple innovation in a continent that is finding itself falling behind at a global scale due to a variety of macro-issues. I like to give governments the benefit of the doubt that they won't do something silly like that, but then I look at this net neutrality issue and start to wonder. Bottom line, there does not appear to be a consensus on this issue "morally" (for lack of a better word) which is why we're seeing such diversity of views on HN and globally. Just throwing it out there...
Oletros 9y ago
I wonder how much revenue and profit would have lost Google and Facebook if they didn't exist in the EU
- DVassallo 9y ago
  How do they "exist" in the EU? One way to see it is that people from the EU are simply buying services from a US company. It's as if they caught a plane, and paid at a cash register in California. But instead of making the trip, they just sent a check.
  - Oletros 9y ago
    > One way to see it is that people from the EU are simply buying services from a US company I would like how they do businesses, including Amazon and Apple if they leave the EU because the way you see it is totally wrong. Starting with data protection directives and following with dealing with VAT, and EU customers
  - seszett 9y ago
    > How do they "exist" in the EU? They both have headquarters in Dublin.
    - Oletros 9y ago
      And physical presence in almost every EU country
    - DVassallo 9y ago
      So if they didn't have a physical presence in the EU, then it would have been fine not to tax them?
    - DannyBee 9y ago
      Which i'm sure they would happily burn to the ground if it meant they weren't taxed there. I don't think you want to go with the argument of physical presence. It rarely works well with any multinational.
rockinghigh 9y ago
Facebook most likely reduces the productivity of citizens.
kuschku 9y ago
No company just adds 100% of its value. Facebook isn’t anything new – maybe it adds 10% more value than MySpace would have had if Facebook didn’t exist in the EU. Maybe it adds 20% more value than the VZ Networks would have added. You can’t just look at the entire value these companies provide, because local providers existed before Facebook and Google replaced them. Yes, Google and Facebook are overally more efficient, but only by a small amount.
qxmat 9y ago
Large tech companies employ hollywood accounting techniques to continually reinvest surplus revenue. In doing so they rarely post any significant profit, depriving the taxmax of corporation tax. This 'reinvestment' is used to compete and drive profitable competitors out of business. This is an unfair practice. The result - no profitable companies, smaller taxable base and nothing for the taxman to collect. The bigger the juggernaut, the more influence they have on the taxman ("but we're contributing to pay/income/property taxes - surely you don't want us to relocate abroad"). Large multinationals use their corrupting influence to strike sweetheart deals and use these deal-made tax savings to abuse the market even more.
- mjevans 9y ago
  It doesn't just have to be tech companies, but the interesting thing is the abuse of 'intellectual property' (a thing which governments literally imagined in to existence) being used to transfer around wealth through agreements that, without it, wouldn't hold any water.
themihai 9y ago
Well, I guess Myspace and Yahoo would still be a thing...or new players would take their palce...so don't worry about that.

I wonder how much tax revenue the EU would have lost if Google and Facebook didn't exist.

ryan-allen 9y ago

That is a very good point. They should be grateful for these multi-nationalistic monopolies. /s

DVassallo 9y ago
Just stating how much taxes are being "avoided" is an imperfect perspective. If, say, it turned out they contributed $100B to the economy, then that $5B wouldn't look that big in that context.
- confounded 9y ago
  I always struggle with this logic. Is your argument that if 100B EUR in Facebook ads were sold (presumably the way in which Facebook 'contribute'), then this 100B was 'created' by Facebook? I imagine other measures would be proxies for Facebook's profits too (e.g. some portion of engineers' salaries to go private landlords). Isn't this reverse-progressive taxation? If Facebook were outraged at paying taxes enough to shut up shop in Europe, wouldn't that 100B (or something like it) still be kicking around, just in different hands?
- latch 9y ago
  I get what you're saying, but I think it's fundamentally wrong for two reasons. First, it is "big" when you consider how that money could be used. Cynicism aside about funding wars and filling walls with cash, it could be used for substantive (read: big) social good Secondly, this is an important market. If they don't want to pay taxes, they have the legal option to not do business in Europe. So while you say "5B is small compared to 100B", I say "5B is a small price to pay for the billions they made."
  - dangsmum 9y ago
    "they have a legal option not todo do business in europe" Do you see any way to do that other than to prevent eu businesses buying ads from google? Because i think that might have a few severe unintented consequences for businesses in the eu, and have exactly zero impact on google.
    - ryan-allen 9y ago
      It'd also open the market to a new competitor when people in the EU (and elsewhere) realised that they can't find local ads on Google.
    - latch 9y ago
      Not sure I understand. You're saying EU business' not allowed to buy ads on Google would have "exactly zero impact on google" ??
      - dangsmum 9y ago
        google would still charge the same to display an ad exactly the same number of people will see google ads exactly the same number of people will click on an ad The only thing that would change is companies outside of the eu will burn through their ad budgets faster. plus a whole (not quite so new) industry would emerge outside the eu bypassing the regulations. such as happened in China.
        lovich 9y ago
        Corporations have a lot of power over countries right now, but does the world you live in ignore everything countries can do to companies who ignore their laws? They can attempt to block everything Google while they build their own local services, ala China. Google is also a US company and while their software might be hard to prevent getting into the EU, they can start leveling sanctions against physical US goods if the US won't do anything to reign Google in. I dont think any of this is likely to happen, but political entities on the scale of the US, China, the EU, etc have options to bend companies to their will

aweb 9y ago

This isn't the point here though? These companies are doing business in the EU and not playing fair by not paying their share of taxes. This isn't about preventing them from existing, it's about making them contribute what they owe to the EU countries.

lefstathiou 9y ago
I don't want to put words in the parent's mouth but I believe his point is that what is "fair" and what they "owe" are up for debate. Additionally, his question hints at a potentially equally significant and subtle issue: is the effort to capture this increased tax revenue from 4 companies really worth the potential costs on a society to get them? $5bn isnt going to balance Greece's budget. Setting aside the potential arguments defending Google (I have genuinely have no opinion on them or any of the other companies), a comprehensive law that requires every internet company to track every dollar by country and pay proportional taxes on their revenue could, in my opinion, severely cripple innovation in a continent that is finding itself falling behind at a global scale due to a variety of macro-issues. I like to give governments the benefit of the doubt that they won't do something silly like that, but then I look at this net neutrality issue and start to wonder. Bottom line, there does not appear to be a consensus on this issue "morally" (for lack of a better word) which is why we're seeing such diversity of views on HN and globally. Just throwing it out there...

Oletros 9y ago

I wonder how much revenue and profit would have lost Google and Facebook if they didn't exist in the EU

DVassallo 9y ago
How do they "exist" in the EU? One way to see it is that people from the EU are simply buying services from a US company. It's as if they caught a plane, and paid at a cash register in California. But instead of making the trip, they just sent a check.
- Oletros 9y ago
  > One way to see it is that people from the EU are simply buying services from a US company I would like how they do businesses, including Amazon and Apple if they leave the EU because the way you see it is totally wrong. Starting with data protection directives and following with dealing with VAT, and EU customers
- seszett 9y ago
  > How do they "exist" in the EU? They both have headquarters in Dublin.
  - Oletros 9y ago
    And physical presence in almost every EU country
  - DVassallo 9y ago
    So if they didn't have a physical presence in the EU, then it would have been fine not to tax them?
  - DannyBee 9y ago
    Which i'm sure they would happily burn to the ground if it meant they weren't taxed there. I don't think you want to go with the argument of physical presence. It rarely works well with any multinational.

rockinghigh 9y ago

Facebook most likely reduces the productivity of citizens.

kuschku 9y ago

No company just adds 100% of its value. Facebook isn’t anything new – maybe it adds 10% more value than MySpace would have had if Facebook didn’t exist in the EU. Maybe it adds 20% more value than the VZ Networks would have added. You can’t just look at the entire value these companies provide, because local providers existed before Facebook and Google replaced them. Yes, Google and Facebook are overally more efficient, but only by a small amount.

qxmat 9y ago

Large tech companies employ hollywood accounting techniques to continually reinvest surplus revenue. In doing so they rarely post any significant profit, depriving the taxmax of corporation tax. This 'reinvestment' is used to compete and drive profitable competitors out of business. This is an unfair practice. The result - no profitable companies, smaller taxable base and nothing for the taxman to collect. The bigger the juggernaut, the more influence they have on the taxman ("but we're contributing to pay/income/property taxes - surely you don't want us to relocate abroad"). Large multinationals use their corrupting influence to strike sweetheart deals and use these deal-made tax savings to abuse the market even more.

mjevans 9y ago
It doesn't just have to be tech companies, but the interesting thing is the abuse of 'intellectual property' (a thing which governments literally imagined in to existence) being used to transfer around wealth through agreements that, without it, wouldn't hold any water.

themihai 9y ago

Well, I guess Myspace and Yahoo would still be a thing...or new players would take their palce...so don't worry about that.