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> True, in that it would better to fix the underlying problems that allow companies to pretend they have no profit. This is the core problem, but it's also ver
by ProblemFactory 9y ago
> True, in that it would better to fix the underlying problems that allow companies to pretend they have no profit.
This is the core problem, but it's also very difficult to solve.
Google makes money in Europe by selling advertising to European customers. It moves money out tax-free by claiming that much of its income is used to pay for the worldwide tech infrastructure and brand usage to its parent company.
But this is not entirely fictional. To run its business in EU, the local branches do need the infrastructure and Google brand, and paying for it is a valid business expense. The problem is calculating a realistic price for it. How much does Google UK benefit from the "dinosaur game" in Chrome, or how much should the Google Germany share of its development cost be?
Coming up with a fair and loophole-free formula seems impossible. It might be easier to just put a lower tax on revenue than a higher tax on profit.
- Balero 9y agoRemove Their business license if they are continuing to run whilst not "making a profit". If they continue to do this indefinitely, they should be removed from the market, for the good of the ecosystem. They would be pushing out potentially profitable competitors (who would pay tax).
- briandear 9y agoOk. So then what? They simply close offices and fire workers in a specific country — but that doesn’t stop people from visiting Google or clicking on ads. If you suggest governments should block websites, then that’s a dangerous path.
- matthewmacleod 9y agoIt does seems scary because of the implications of it. I'm not sure how to get the balance right, though. We wouldn't be that worried about preventing a company who refused to comply with e.g. product safety regulations from trading.
- lossolo 9y agoIt's not so simple, what if I reinvest for 3 years all my profits ? I have no profits for those 3 years because I am investing in my company long term.
- matthewmacleod 9y agoYeah, I suppose that's the case. It certainly seems like a simple solution, which has its attraction, but it's possible there are other downsides (like unfairly punishing reinvestment or smaller companies) depending on how it is implemented.