149 ms·

We can do this in Europe because we are great at killing innovation through our taxes and regulations. This way we can safely tax innovative tech giants without

We can do this in Europe because we are great at killing innovation through our taxes and regulations. This way we can safely tax innovative tech giants without hurting our own tech giants. Because they don't exist here. We don't like that thing that you do. So we'll just apply taxes and let you continue doing the thing we don't like you to do.

point78 7y ago
As opposed to the billions tech giants dodge taxes
- evanriley 7y ago
  Surely there is a balance between overly taxing and letting them get away without paying them?
  - sasasassy 7y ago
    I'm guessing a 2-7% tax is on the low side of such balance.
    - JumpCrisscross 7y ago
      > 2-7% tax is on the low side of such balance A 7% tax on revenues is a 50% tax on a business with a 14% margin. It's even more damaging when one considers start-ups, who run negative profits in their early years. (Seven percent is thus eleven months of runway in the Czech Republic for every 12 months a German competitor gets.) Seven percent is generally prohibitive to low-gross margin business, e.g. any tech company producing physical devices or doing anything next to retail. It thus compresses an economy's accessible tech sector to enterprise businesses. If these taxes remain confined to ad-driven businesses, that's a fair tradeoff. But given Europe's penchant for over-encroachment, it could very easily be over-applied. TL; DR Top-line taxes transfer wealth to high-margin businesses over low-margin businesses and from start-ups to incumbents.
    - microcolonel 7y ago
      The tax is on revenue, so the thinner your margins, the more extreme the tax. Another reply here says that a 7% revenue tax is a 50% tax on a 14% margin transaction, but it's even worse than that, since the tax is on the whole revenue, including your margins.
  - ShorsHammer 7y ago
    Consumption taxes are very difficult to avoid and often very efficient. Especially online. Income and corporate taxes are so easily manipulated that there's entire industries built around it. Nations should be aiming for efficient taxation sources not ever more complex regulations creating yet another industry sector to simply navigate it.
- apt_criterion 7y ago
  The purpose of taxes is to gather funds for public services.
  - trickstra 7y ago
    too bad it never works that way in the real life
    - point78 7y ago
      Depends on your country
Carpetsmoker 7y ago
You say that like "tech giants" are a good thing. The biggest difference doesn't seem to be taxes, but a predatory attitude focused only on their own growth and "to hell with everyone else". "Tech giants" of the past and present like IBM, AT&T, Microsoft, Facebook, Oracle, Uber, and Amazon are all widely disliked and criticized. Aside from that there are plenty of European tech companies (ASML, Logitech, Skype, Spotify, just to name a few) the attitudes in Europe tend to be different. Attend one of the Silicon Valley conferences where it's all "we're going to change world!" vs. the German CCC where it's "we're not sure if society as a whole benefits from this technology". There are probably other reasons too. Silicon valley and that Chinese city I forgot the name of are powerful "tech hubs" where workers, innovators, and investors meet. Europe lacks such a powerful "hub". I suspect the most important reason for this is that "Europe" isn't a single country but dozens of countries. Even in the EU – where you can legally move to another country at a whim – it's not so easy, as you may not speak the language. This is why the UK probably has more EU immigrants than many other countries, since most people speak some English. And sure, perhaps taxes can be a factor? I'm unsure of it, and I've never seen it proven, but I am willing to be convinced. Either way, it's certainly a lot more complex than "taxes kill innovation".
- bartimus 7y ago
  > You say that like "tech giants" are a good thing. What you see is that - if the Czech Republic would have their own tech giants - they wouldn't propose such an aggressive taxation towards it. It's why Germany was against such taxes because they fear repercussions towards their own industry. > But a predatory attitude focused only on their own growth and "to hell with everyone else". Such a predatory attitude also gets punished through free market forces. A company like Microsoft got severely punished for their predatory behaviors. One of my favorite tech giants is 'Robert Bosch Stiftung' from Germany. > Aside from that there are plenty of European tech companies (ASML, Logitech, Skype, Spotify, just to name a few) ASML is the meager remnant of the once almighty Philips. Logitech is Swiss. Switzerland indeed does a better job providing a healthy climate for innovation. Skype is owned by Microsoft. Spotify is indeed a lovely company (worth protecting for sure). > Europe lacks such a powerful "hub". This is indeed a problem. San Francisco provides an excellent climate that attracts innovation. An important factor was perhaps that there was so much room to grow. The right city at the right time. In Europe most of the land is already accounted or planned for something. China got to grow so quickly exactly because the government decided to embrace free market forces. > This is why the UK probably has more EU immigrants than many other countries Many wealthy people migrated from France to the UK when Hollande proposed his tax plans. https://www.businessinsider.com/small-business-owners-explain-why-france-is-a-nation-in-decline-2014-10 https://www.businessinsider.com/small-business-owners-explai... Now we see France giving all kinds of tax breaks to lure UK companies to France after Brexit.
3xblah 7y ago
The parent comment suggests European countries are killing "innovation" through taxes and regulation. This sounds like a bad idea, so I had a look at the article to see what "innovation" was being taxed. Innovation is a "new idea, creative thoughts, new imaginations in form of device or method". (source: merriam-webster.com) Plugging in our definition of innovation, the question becomes: What is the new idea, creative thoughts, new imaghinations in form of device or method that trigger this new tax in Europe? First the article says the UK gov't wants to tax "companies whose business model requires the active participation of U.K. users in creating content, being targeted with advertising or linked by intermediary platforms." Is collecting user content and serving ads "innovation"? That is what triggers the tax. What if we just collected user content, maybe charged a fee? No ads. Do we get taxed? Second, it says the Czech gov't wants to tax companies with "advertising and personal data sales as the primary base" as well as "sharing economy platforms". The article says the tax "prioritizes targeted ads". Is selling advertising and personal data "innovation"? What if some Czech programmer make an Uber or AirBnB style app but do not sell advertising or data? Do they get taxed? Third, it says the French gov't wants to tax "platforms that put users in touch with each other for a fee". Is putting users in touch with each other for a fee "innovation"? Does that make ad-supported companies that do this exempt? What if a company sells native software that puts users in touch with other, peer-to-peer. Is that a "platform"? If not, do they get taxed? What is their definition of "platform"? Under the Wikipedia definition, the internet itself is a "platform". As always, the devil is in the details. We need to see the text of these tax laws. Finally, the article discusses the merits of the "[t]axing advertising that is based on personal data". Is advertising based on personal data "innovation"? What loss would we, the majority, suffer if this particular innovation were taxed? Is it possible to have "innovation" that does not involve advertising based on personal data? Of course. That is the kind of innovation I prefer. I am using some to write this comment. We will not lose the benefits of personal computer-based innovations simply because we take away the financial incentive to collect personal data and serve ads. That is not the raison d'etre for the type of innovation we seek to encourage. It is the advances in hardware and networking.
- finchisko 7y ago
  Actually I would like to see those questions answered. :) I personally see very little innovation (in terms of greater addition to our society) in sites like facebook, airbnb ... I was kind of fan of Uber in the beginning, but after the scandals it seems they're not different from any other big corp. Just greedy as others.
jankotek 7y ago
Czechia is one of a few countries with local competitors to Google and other tech giants. Why should we care about Google? Seznam actually pays taxes here.

point78 7y ago

As opposed to the billions tech giants dodge taxes

evanriley 7y ago
Surely there is a balance between overly taxing and letting them get away without paying them?
- sasasassy 7y ago
  I'm guessing a 2-7% tax is on the low side of such balance.
  - JumpCrisscross 7y ago
    > 2-7% tax is on the low side of such balance A 7% tax on revenues is a 50% tax on a business with a 14% margin. It's even more damaging when one considers start-ups, who run negative profits in their early years. (Seven percent is thus eleven months of runway in the Czech Republic for every 12 months a German competitor gets.) Seven percent is generally prohibitive to low-gross margin business, e.g. any tech company producing physical devices or doing anything next to retail. It thus compresses an economy's accessible tech sector to enterprise businesses. If these taxes remain confined to ad-driven businesses, that's a fair tradeoff. But given Europe's penchant for over-encroachment, it could very easily be over-applied. TL; DR Top-line taxes transfer wealth to high-margin businesses over low-margin businesses and from start-ups to incumbents.
  - microcolonel 7y ago
    The tax is on revenue, so the thinner your margins, the more extreme the tax. Another reply here says that a 7% revenue tax is a 50% tax on a 14% margin transaction, but it's even worse than that, since the tax is on the whole revenue, including your margins.
- ShorsHammer 7y ago
  Consumption taxes are very difficult to avoid and often very efficient. Especially online. Income and corporate taxes are so easily manipulated that there's entire industries built around it. Nations should be aiming for efficient taxation sources not ever more complex regulations creating yet another industry sector to simply navigate it.
apt_criterion 7y ago
The purpose of taxes is to gather funds for public services.
- trickstra 7y ago
  too bad it never works that way in the real life
  - point78 7y ago
    Depends on your country

Carpetsmoker 7y ago

You say that like "tech giants" are a good thing. The biggest difference doesn't seem to be taxes, but a predatory attitude focused only on their own growth and "to hell with everyone else". "Tech giants" of the past and present like IBM, AT&T, Microsoft, Facebook, Oracle, Uber, and Amazon are all widely disliked and criticized. Aside from that there are plenty of European tech companies (ASML, Logitech, Skype, Spotify, just to name a few) the attitudes in Europe tend to be different. Attend one of the Silicon Valley conferences where it's all "we're going to change world!" vs. the German CCC where it's "we're not sure if society as a whole benefits from this technology". There are probably other reasons too. Silicon valley and that Chinese city I forgot the name of are powerful "tech hubs" where workers, innovators, and investors meet. Europe lacks such a powerful "hub". I suspect the most important reason for this is that "Europe" isn't a single country but dozens of countries. Even in the EU – where you can legally move to another country at a whim – it's not so easy, as you may not speak the language. This is why the UK probably has more EU immigrants than many other countries, since most people speak some English. And sure, perhaps taxes can be a factor? I'm unsure of it, and I've never seen it proven, but I am willing to be convinced. Either way, it's certainly a lot more complex than "taxes kill innovation".

bartimus 7y ago
> You say that like "tech giants" are a good thing. What you see is that - if the Czech Republic would have their own tech giants - they wouldn't propose such an aggressive taxation towards it. It's why Germany was against such taxes because they fear repercussions towards their own industry. > But a predatory attitude focused only on their own growth and "to hell with everyone else". Such a predatory attitude also gets punished through free market forces. A company like Microsoft got severely punished for their predatory behaviors. One of my favorite tech giants is 'Robert Bosch Stiftung' from Germany. > Aside from that there are plenty of European tech companies (ASML, Logitech, Skype, Spotify, just to name a few) ASML is the meager remnant of the once almighty Philips. Logitech is Swiss. Switzerland indeed does a better job providing a healthy climate for innovation. Skype is owned by Microsoft. Spotify is indeed a lovely company (worth protecting for sure). > Europe lacks such a powerful "hub". This is indeed a problem. San Francisco provides an excellent climate that attracts innovation. An important factor was perhaps that there was so much room to grow. The right city at the right time. In Europe most of the land is already accounted or planned for something. China got to grow so quickly exactly because the government decided to embrace free market forces. > This is why the UK probably has more EU immigrants than many other countries Many wealthy people migrated from France to the UK when Hollande proposed his tax plans. https://www.businessinsider.com/small-business-owners-explain-why-france-is-a-nation-in-decline-2014-10 https://www.businessinsider.com/small-business-owners-explai... Now we see France giving all kinds of tax breaks to lure UK companies to France after Brexit.

3xblah 7y ago

The parent comment suggests European countries are killing "innovation" through taxes and regulation. This sounds like a bad idea, so I had a look at the article to see what "innovation" was being taxed. Innovation is a "new idea, creative thoughts, new imaginations in form of device or method". (source: merriam-webster.com) Plugging in our definition of innovation, the question becomes: What is the new idea, creative thoughts, new imaghinations in form of device or method that trigger this new tax in Europe? First the article says the UK gov't wants to tax "companies whose business model requires the active participation of U.K. users in creating content, being targeted with advertising or linked by intermediary platforms." Is collecting user content and serving ads "innovation"? That is what triggers the tax. What if we just collected user content, maybe charged a fee? No ads. Do we get taxed? Second, it says the Czech gov't wants to tax companies with "advertising and personal data sales as the primary base" as well as "sharing economy platforms". The article says the tax "prioritizes targeted ads". Is selling advertising and personal data "innovation"? What if some Czech programmer make an Uber or AirBnB style app but do not sell advertising or data? Do they get taxed? Third, it says the French gov't wants to tax "platforms that put users in touch with each other for a fee". Is putting users in touch with each other for a fee "innovation"? Does that make ad-supported companies that do this exempt? What if a company sells native software that puts users in touch with other, peer-to-peer. Is that a "platform"? If not, do they get taxed? What is their definition of "platform"? Under the Wikipedia definition, the internet itself is a "platform". As always, the devil is in the details. We need to see the text of these tax laws. Finally, the article discusses the merits of the "[t]axing advertising that is based on personal data". Is advertising based on personal data "innovation"? What loss would we, the majority, suffer if this particular innovation were taxed? Is it possible to have "innovation" that does not involve advertising based on personal data? Of course. That is the kind of innovation I prefer. I am using some to write this comment. We will not lose the benefits of personal computer-based innovations simply because we take away the financial incentive to collect personal data and serve ads. That is not the raison d'etre for the type of innovation we seek to encourage. It is the advances in hardware and networking.

finchisko 7y ago
Actually I would like to see those questions answered. :) I personally see very little innovation (in terms of greater addition to our society) in sites like facebook, airbnb ... I was kind of fan of Uber in the beginning, but after the scandals it seems they're not different from any other big corp. Just greedy as others.

jankotek 7y ago

Czechia is one of a few countries with local competitors to Google and other tech giants. Why should we care about Google? Seznam actually pays taxes here.