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Actually it's fine if businesses actually move to Ireland. The problem is not a guy running a machine shop in Antwerp moving it to Dublin. It's Apple claiming t

Actually it's fine if businesses actually move to Ireland. The problem is not a guy running a machine shop in Antwerp moving it to Dublin. It's Apple claiming they should only pay Irish taxes on the profits of selling an iPhone developed in California, manufactured in China and sold in Italy because they have opened an office full of accountants in Ireland.

Mirioron 8y ago
It's fine from your perspective, but put yourself in the shoes of politicians. It's their job to advocate for the best outcome for their constituents, which means that they would like all of the jobs to come to their constituents. >It's Apple claiming they should only pay Irish taxes on the profits of selling an iPhone developed in California, manufactured in China and sold in Italy because they have opened an office full of accountants in Ireland. They're already paying various amounts of taxes in all of those regions. VAT is paid where the person buys the product, for example. Income taxes are paid where the workers are.
- skh 8y ago
  Apple includes the VAT in the selling price of its products. Therefore it isn't correct to view it as Apple paying the VAT. The purchaser pays the VAT. Apple just collects it and passes that payment along to the taxing authority. Apple also doesn't pay the income tax of its employees. What Apple pays its employees are expenses and and therefore are deducted from its income. Apple pays tax on profits and not on its business expenses.
  - leetcrew 8y ago
    it's somewhat pointless to look at who pays taxes at the surface level. depending on market power, the actual burden of the tax can shift dramatically between buyer and seller. it has almost nothing to do with who officially pays the tax. see https://en.wikipedia.org/wiki/Tax_incidence https://en.wikipedia.org/wiki/Tax_incidence
    - skh 8y ago
      I’m not an economist. It seems to me that while the VAT on Apple’s products affect the supply/demand for those products it is best to view the VAT as something paid by the consumer. Do you know if this is wrong? This is my intuition but since I’m not an economist my intuition doens’t count for much.
- eigenvector 8y ago
  It is all well and good for Ireland, or whoever, to try to attract companies to move jobs there. But that is not what is happening. One Infinite Loop isn't in Dublin. What Ireland is doing is allowing companies that have a purely administrative presence in Ireland to claim tax residency in spite of having far more operations and employees in London, Paris, NYC, San Francisco, Hong Kong and numerous other high-tax places. This allows tech companies to have their cake and eat it too by enjoying low tax rates on their entire European income without actually moving their operations to that country. If Google had 50,000 software engineers in Dublin, that would be one thing. But no one can seriously claim that any significant part of the work that produces Google Search goes on in Ireland, yet that is exactly what happens on their financial statements while they open a billion-dollar new engineering office in London. Companies are free to move wherever they wish. They should not be free to claim they are domiciled somewhere that they plainly are not.
  - purple_ducks 8y ago
    > no one can seriously claim that any significant part of the work that produces Google Search goes on in Ireland Hmm. Most of their European SREs who keep the service up and running are in Dublin, alongside most of their European customer support, European accountants, European legal team. Arguably, they contribute quite a lot to the success of the service. If they weren't there, would the service have made as much inroad compared to if they weren't. So, arguably, their presence is _very_ material. Also, you're missing the point of the single EU market. Ultimately, it's a game of assignment and they chose to assign their sales(& IP?) to the country that was most attractive to them.
- perfmode 8y ago
  Income taxes aren’t paid by apple. Those are paid by the employees.
  - AnthonyMouse 8y ago
    So change them so that they're paid by the employer instead, if you think that would make a big difference.
    - perfmode 8y ago
      This glib response is quite naive and ignores second order implications. How would we tax a corporation as the number of employees trends to 0?
      - AnthonyMouse 8y ago
        If they hold property in your jurisdiction then you have property tax. If they sell to your people then you have VAT. And if they have no activities in your country at all, what gives you a right to tax them?
adventured 8y ago
> Actually it's fine if businesses actually move to Ireland. It's really not if you're France, Germany, Britain, Spain, Italy, or any other major EU economy. France has seen zero per capita economic growth, inflation adjusted, since at least 2003. They've had to sit by and watch as Ireland gets richer and richer. Ireland now has a GDP per capita over $70,000, among the highest of any nation. Soon it'll be 100% higher than France, Germany and Britain. There's no way they want to see that continue, it's a humiliation to them while they all struggle to generate any growth at all. In nominal terms, Britain's GDP per capita has seen zero growth since 2004; you can imagine how much worse the inflation adjusted figure is. In that time Ireland went from $47k to $70k per capita. Since 1990, Ireland has gone from a GDP per capita on par with Spain (with France ~50% higher than Ireland), to where Ireland is now 150% higher than Spain and 84% higher than France. In economic terms, that's extraordinary. Here's what that looks like: https://i.imgur.com/q99EtMk.png https://i.imgur.com/q99EtMk.png No chance the other powers in the EU don't want to restrain that.
- eigenvector 8y ago
  Ireland has less than half the population of the Paris metro area, so while the difference in GDP per capita may be stark, the actual amount of money is a pittance relative to the European economy. The Irish economy is less than 2% of the EU total. 100 billion EUR of GDP growth in Ireland is not the cause of stagnation in economies that are 10x it's size. The problem facing other European economies is not that large amounts of actual economic activity is moving to Ireland, it's that Ireland's tax rules let it suck out the tax revenue from work, production and sales that occur across Europe. Ireland isn't getting a £1bn new Google office - London is - but the UK will see no corporate tax revenue from the products those people develop.
  - AnthonyMouse 8y ago
    > The problem facing other European economies is not that large amounts of actual economic activity is moving to Ireland, it's that Ireland's tax rules let it suck out the tax revenue from work, production and sales that occur across Europe. They wouldn't if they would actually tax work, production and sales that occur in their jurisdiction. This whole game works by assigning a jurisdiction to "profit" independent of those things, when profit is an accounting fiction. Unlike customers or employees, it has no physical existence, so it's easy for companies to arrange for it to be wherever it's most advantageous. If you want to tax companies for employing or selling to your people, you can perfectly well have a payroll tax or sales tax.

Mirioron 8y ago

It's fine from your perspective, but put yourself in the shoes of politicians. It's their job to advocate for the best outcome for their constituents, which means that they would like all of the jobs to come to their constituents. >It's Apple claiming they should only pay Irish taxes on the profits of selling an iPhone developed in California, manufactured in China and sold in Italy because they have opened an office full of accountants in Ireland. They're already paying various amounts of taxes in all of those regions. VAT is paid where the person buys the product, for example. Income taxes are paid where the workers are.

skh 8y ago
Apple includes the VAT in the selling price of its products. Therefore it isn't correct to view it as Apple paying the VAT. The purchaser pays the VAT. Apple just collects it and passes that payment along to the taxing authority. Apple also doesn't pay the income tax of its employees. What Apple pays its employees are expenses and and therefore are deducted from its income. Apple pays tax on profits and not on its business expenses.
- leetcrew 8y ago
  it's somewhat pointless to look at who pays taxes at the surface level. depending on market power, the actual burden of the tax can shift dramatically between buyer and seller. it has almost nothing to do with who officially pays the tax. see https://en.wikipedia.org/wiki/Tax_incidence https://en.wikipedia.org/wiki/Tax_incidence
  - skh 8y ago
    I’m not an economist. It seems to me that while the VAT on Apple’s products affect the supply/demand for those products it is best to view the VAT as something paid by the consumer. Do you know if this is wrong? This is my intuition but since I’m not an economist my intuition doens’t count for much.
eigenvector 8y ago
It is all well and good for Ireland, or whoever, to try to attract companies to move jobs there. But that is not what is happening. One Infinite Loop isn't in Dublin. What Ireland is doing is allowing companies that have a purely administrative presence in Ireland to claim tax residency in spite of having far more operations and employees in London, Paris, NYC, San Francisco, Hong Kong and numerous other high-tax places. This allows tech companies to have their cake and eat it too by enjoying low tax rates on their entire European income without actually moving their operations to that country. If Google had 50,000 software engineers in Dublin, that would be one thing. But no one can seriously claim that any significant part of the work that produces Google Search goes on in Ireland, yet that is exactly what happens on their financial statements while they open a billion-dollar new engineering office in London. Companies are free to move wherever they wish. They should not be free to claim they are domiciled somewhere that they plainly are not.
- purple_ducks 8y ago
  > no one can seriously claim that any significant part of the work that produces Google Search goes on in Ireland Hmm. Most of their European SREs who keep the service up and running are in Dublin, alongside most of their European customer support, European accountants, European legal team. Arguably, they contribute quite a lot to the success of the service. If they weren't there, would the service have made as much inroad compared to if they weren't. So, arguably, their presence is _very_ material. Also, you're missing the point of the single EU market. Ultimately, it's a game of assignment and they chose to assign their sales(& IP?) to the country that was most attractive to them.
perfmode 8y ago
Income taxes aren’t paid by apple. Those are paid by the employees.
- AnthonyMouse 8y ago
  So change them so that they're paid by the employer instead, if you think that would make a big difference.
  - perfmode 8y ago
    This glib response is quite naive and ignores second order implications. How would we tax a corporation as the number of employees trends to 0?
    - AnthonyMouse 8y ago
      If they hold property in your jurisdiction then you have property tax. If they sell to your people then you have VAT. And if they have no activities in your country at all, what gives you a right to tax them?

adventured 8y ago

> Actually it's fine if businesses actually move to Ireland. It's really not if you're France, Germany, Britain, Spain, Italy, or any other major EU economy. France has seen zero per capita economic growth, inflation adjusted, since at least 2003. They've had to sit by and watch as Ireland gets richer and richer. Ireland now has a GDP per capita over $70,000, among the highest of any nation. Soon it'll be 100% higher than France, Germany and Britain. There's no way they want to see that continue, it's a humiliation to them while they all struggle to generate any growth at all. In nominal terms, Britain's GDP per capita has seen zero growth since 2004; you can imagine how much worse the inflation adjusted figure is. In that time Ireland went from $47k to $70k per capita. Since 1990, Ireland has gone from a GDP per capita on par with Spain (with France ~50% higher than Ireland), to where Ireland is now 150% higher than Spain and 84% higher than France. In economic terms, that's extraordinary. Here's what that looks like: https://i.imgur.com/q99EtMk.png https://i.imgur.com/q99EtMk.png No chance the other powers in the EU don't want to restrain that.

eigenvector 8y ago
Ireland has less than half the population of the Paris metro area, so while the difference in GDP per capita may be stark, the actual amount of money is a pittance relative to the European economy. The Irish economy is less than 2% of the EU total. 100 billion EUR of GDP growth in Ireland is not the cause of stagnation in economies that are 10x it's size. The problem facing other European economies is not that large amounts of actual economic activity is moving to Ireland, it's that Ireland's tax rules let it suck out the tax revenue from work, production and sales that occur across Europe. Ireland isn't getting a £1bn new Google office - London is - but the UK will see no corporate tax revenue from the products those people develop.
- AnthonyMouse 8y ago
  > The problem facing other European economies is not that large amounts of actual economic activity is moving to Ireland, it's that Ireland's tax rules let it suck out the tax revenue from work, production and sales that occur across Europe. They wouldn't if they would actually tax work, production and sales that occur in their jurisdiction. This whole game works by assigning a jurisdiction to "profit" independent of those things, when profit is an accounting fiction. Unlike customers or employees, it has no physical existence, so it's easy for companies to arrange for it to be wherever it's most advantageous. If you want to tax companies for employing or selling to your people, you can perfectly well have a payroll tax or sales tax.