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Isn't taxing on revenue just sales tax, or at least, it will have the same effect? If companies have to pay 5% of revenue as tax they'll just raise prices to co

by FigBug 9y ago

Isn't taxing on revenue just sales tax, or at least, it will have the same effect? If companies have to pay 5% of revenue as tax they'll just raise prices to cover it?

mtkd 9y ago
Everyone in the game pays the same sales tax. The issue is that some of the bigger players avoid making a profit on the operation in the EU. The national budgets expect a certain level of corporate profit and tax on sales to make the numbers. When you have many massive players avoiding that tax - plus smaller players unable to get the same tax structures/advice to even compete - it starts to become an issue. For a long time the megacorps have argued they create a lot of jobs - but they've likely crested on that now as they push to eliminate jobs - and there is a lot of evidence that government is supporting many of the low paid jobs these companies do 'create' (£11BN in UK in 2014 according to this report - https://www.theguardian.com/sustainable-business/2015/apr/20/taxpayers-spend-11bn-to-top-up-low-wages-paid-by-uk-companies https://www.theguardian.com/sustainable-business/2015/apr/20...)
- distances 9y ago
  > For a long time the megacorps have argued they create a lot of jobs Plus I don't get this reasoning to start with. Isn't it inherently more efficient to provide services as a large corporation? Thus, lots of smaller companies would probably employ quite a bunch more people to achieve the same.
  - mtkd 9y ago
    This is likely to become a more heavily debated subject as AI starts to strip-out professions that need people today (truck drivers). Small inefficient local businesses that provide some local families an income and pay a bit of corp tax - start to become more important to a country than global megacorps providing a few government subsidised minimum wage jobs whilst offshoring all the gains from capturing massive market share.
    - distances 9y ago
      My thoughts as well. It could make a lot of sense to block mergers more aggressively, and perhaps even implement progressive company taxation to lessen the competitive advantage of massive corporations. I suppose this would reduce overall economical efficiency though is thus hard to imagine actually happening.
      - xxs 9y ago
        >progressive company taxation Currently companies manage to pay close to 0% (see Apple) tax rate. Progressive tax won't be enforceable with any creative accounting. Progressive tax works only as income tax (pretty much) as it is virtually impossible to hide and the 'creative accounting' at lower amounts is not cost effective.
csomar 9y ago
Nah, it gets cut like sales tax but the deductibility is different. You deduct VAT from sales tax. You deduct taxes you have to pay on profit from that 5% tax you paid (or was paid for you).
xxs 9y ago
VAT applies only to end users in the EU (VAT is not sale/use tax, exactly). Business pays no VAT for transactions that have no end user. Currently min VAT is 17% which is higher than corporate tax in quite a few member states.

by FigBug 9y ago

Isn't taxing on revenue just sales tax, or at least, it will have the same effect? If companies have to pay 5% of revenue as tax they'll just raise prices to cover it?

mtkd 9y ago

Everyone in the game pays the same sales tax. The issue is that some of the bigger players avoid making a profit on the operation in the EU. The national budgets expect a certain level of corporate profit and tax on sales to make the numbers. When you have many massive players avoiding that tax - plus smaller players unable to get the same tax structures/advice to even compete - it starts to become an issue. For a long time the megacorps have argued they create a lot of jobs - but they've likely crested on that now as they push to eliminate jobs - and there is a lot of evidence that government is supporting many of the low paid jobs these companies do 'create' (£11BN in UK in 2014 according to this report - https://www.theguardian.com/sustainable-business/2015/apr/20/taxpayers-spend-11bn-to-top-up-low-wages-paid-by-uk-companies https://www.theguardian.com/sustainable-business/2015/apr/20...)

distances 9y ago
> For a long time the megacorps have argued they create a lot of jobs Plus I don't get this reasoning to start with. Isn't it inherently more efficient to provide services as a large corporation? Thus, lots of smaller companies would probably employ quite a bunch more people to achieve the same.
- mtkd 9y ago
  This is likely to become a more heavily debated subject as AI starts to strip-out professions that need people today (truck drivers). Small inefficient local businesses that provide some local families an income and pay a bit of corp tax - start to become more important to a country than global megacorps providing a few government subsidised minimum wage jobs whilst offshoring all the gains from capturing massive market share.
  - distances 9y ago
    My thoughts as well. It could make a lot of sense to block mergers more aggressively, and perhaps even implement progressive company taxation to lessen the competitive advantage of massive corporations. I suppose this would reduce overall economical efficiency though is thus hard to imagine actually happening.
    - xxs 9y ago
      >progressive company taxation Currently companies manage to pay close to 0% (see Apple) tax rate. Progressive tax won't be enforceable with any creative accounting. Progressive tax works only as income tax (pretty much) as it is virtually impossible to hide and the 'creative accounting' at lower amounts is not cost effective.

csomar 9y ago

Nah, it gets cut like sales tax but the deductibility is different. You deduct VAT from sales tax. You deduct taxes you have to pay on profit from that 5% tax you paid (or was paid for you).

xxs 9y ago

VAT applies only to end users in the EU (VAT is not sale/use tax, exactly). Business pays no VAT for transactions that have no end user. Currently min VAT is 17% which is higher than corporate tax in quite a few member states.