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> True, in that it would better to fix the underlying problems that allow companies to pretend they have no profit Profit is a complex calculation when talking

> True, in that it would better to fix the underlying problems that allow companies to pretend they have no profit Profit is a complex calculation when talking about cross-borders. If you company spends $20B in country A, $0 in country B, has revenue of $10B in country A and $10B in country B, how much profit did it generate in country B? Just because information services have a near-zero marginal cost, it doesn't mean they have zero cost.

matthewmacleod 9y ago
Just because information services have a near-zero marginal cost, it doesn't mean they have zero cost. I totally agree, but equally we know that the company makes profit in both countries, regardless of how the figure is juggled. That leaves regulators with the puzzle of figuring out how to fairly tax them; a levy on revenue isn't an awful idea if it's correctly applied, but there might be better solutions.
- ucaetano 9y ago
  > a levy on revenue isn't an awful idea if it's correctly applied, but there might be better solutions. It is a terrible idea, because it tends to favor companies that have their cost base in the country. In other words, local companies. This is a trade war move.
  - louthy 9y ago
    > because it tends to favor companies that have their cost base in the country. Which is just the opposite of the current situation where the non-EU/offshore company has an advantage. My UK based company pays taxes in the UK on its profits, but a US company could come in and undercut us with the mechanisms already discussed. Why shouldn’t the EU have the unfairness stacked against the non-EU organisations? It seems that’s what they should be doing. If there’s a way to make the situation into a level playing field then that’s even better. But you can’t play the ‘trade war’ argument when it’s already being abused to the detriment of EU companies and tax payers.
    - ucaetano 9y ago
      > My UK based company pays taxes in the UK on its profits, but a US company could come in and undercut us with the mechanisms already discussed. That's why this is a trade war between countries with different tax rates. And they don't even need to have different tax rates. This also isn't any different from sending production to cheaper countries. Not only that, but this is a basic condition for global trade and globalization. Countries will compete, and that's good for the world. > But you can’t play the ‘trade war’ argument when it’s already being abused to the detriment of EU companies and tax payers. I'll translate that as "less efficient countries refuse to reform and increase efficiency to compete in global markets, so decides to close borders to global markets". That has had a positive outcome in exactly zero percent of the times it was tried.
      - louthy 9y ago
        > Countries will compete, and that's good for the world. Sounds like opinion rather than fact. It’ll just be a race to the bottom of countries cutting corporation tax, etc. Which means less revenue for the governments and therefore less societal services for the residents of those countries. Society is predicated on the notion that if we all chip in a percentage of our gains from work performed then the really difficult stuff (that corporations won’t and individuals can’t achieve) can be done by a central authority - it minimises risk and provides stability. If external corporations syphon off 100% of that value then society suffers. Why should countries compete? What’s the point? What benefits does it bring to their residents? Countries are not corporations trying to vie for a place in some Global Index, they’re places with people in who want a certain level of service for the work that they do. Local tax rates are what they are because the people living in those regions think it’s an acceptable level. What rights does an external corporation have to just ignore their wishes? You don’t have to be a socialist to understand this concept. We all need governments for the tough stuff. The current system can’t continue because it’s anti-competitive and anti-society. Those corporations need to pay their fair share toward the societies that they’re profitting from. I don’t blame them for gaming the rules: the rules must change to stop this from happening.
        9y ago
  - matthewmacleod 9y ago
    It is a terrible idea, because it tends to favor companies that have their cost base in the country. I'm not completely sure why that would be the case – wouldn't it result in a relatively level playing field?

matthewmacleod 9y ago

Just because information services have a near-zero marginal cost, it doesn't mean they have zero cost. I totally agree, but equally we know that the company makes profit in both countries, regardless of how the figure is juggled. That leaves regulators with the puzzle of figuring out how to fairly tax them; a levy on revenue isn't an awful idea if it's correctly applied, but there might be better solutions.

ucaetano 9y ago
> a levy on revenue isn't an awful idea if it's correctly applied, but there might be better solutions. It is a terrible idea, because it tends to favor companies that have their cost base in the country. In other words, local companies. This is a trade war move.
- louthy 9y ago
  > because it tends to favor companies that have their cost base in the country. Which is just the opposite of the current situation where the non-EU/offshore company has an advantage. My UK based company pays taxes in the UK on its profits, but a US company could come in and undercut us with the mechanisms already discussed. Why shouldn’t the EU have the unfairness stacked against the non-EU organisations? It seems that’s what they should be doing. If there’s a way to make the situation into a level playing field then that’s even better. But you can’t play the ‘trade war’ argument when it’s already being abused to the detriment of EU companies and tax payers.
  - ucaetano 9y ago
    > My UK based company pays taxes in the UK on its profits, but a US company could come in and undercut us with the mechanisms already discussed. That's why this is a trade war between countries with different tax rates. And they don't even need to have different tax rates. This also isn't any different from sending production to cheaper countries. Not only that, but this is a basic condition for global trade and globalization. Countries will compete, and that's good for the world. > But you can’t play the ‘trade war’ argument when it’s already being abused to the detriment of EU companies and tax payers. I'll translate that as "less efficient countries refuse to reform and increase efficiency to compete in global markets, so decides to close borders to global markets". That has had a positive outcome in exactly zero percent of the times it was tried.
    - louthy 9y ago
      > Countries will compete, and that's good for the world. Sounds like opinion rather than fact. It’ll just be a race to the bottom of countries cutting corporation tax, etc. Which means less revenue for the governments and therefore less societal services for the residents of those countries. Society is predicated on the notion that if we all chip in a percentage of our gains from work performed then the really difficult stuff (that corporations won’t and individuals can’t achieve) can be done by a central authority - it minimises risk and provides stability. If external corporations syphon off 100% of that value then society suffers. Why should countries compete? What’s the point? What benefits does it bring to their residents? Countries are not corporations trying to vie for a place in some Global Index, they’re places with people in who want a certain level of service for the work that they do. Local tax rates are what they are because the people living in those regions think it’s an acceptable level. What rights does an external corporation have to just ignore their wishes? You don’t have to be a socialist to understand this concept. We all need governments for the tough stuff. The current system can’t continue because it’s anti-competitive and anti-society. Those corporations need to pay their fair share toward the societies that they’re profitting from. I don’t blame them for gaming the rules: the rules must change to stop this from happening.
      - 9y ago
- matthewmacleod 9y ago
  It is a terrible idea, because it tends to favor companies that have their cost base in the country. I'm not completely sure why that would be the case – wouldn't it result in a relatively level playing field?