5 ms·

Shod google not be taxed twice in this example? Once on the income made in the USA when they sold the actual thing, and once in Ireland when the Irish branch so

Shod google not be taxed twice in this example? Once on the income made in the USA when they sold the actual thing, and once in Ireland when the Irish branch sold the thing to the USA branch? Not to mention sales tax....

H12 5y ago
Google USA made zero profit on those sales due to the 100% licensing fee with Google Ireland, so there's no income to be taxed. Revenue and expenses are exactly equal. As for sales tax, I don't really know how it works in this situation.
reader_mode 5y ago
You aren't paying taxes on revenue, you pay tax on profit
- ncallaway 5y ago
  That’s a choice, and one we could change. My company is taxed on revenue (under the Washington State B&O tax scheme, and similar local tax schemes). Taxing based on revenue is viable, it just needs to be done with a little more care up front.
  - unreal37 5y ago
    Tax on revenue is just a sales tax on the consumer of that product or service. You might as just increase sales taxes and remove corporate taxes entirely.
    - ncallaway 5y ago
      In WA sales tax only applies to retail sales. Which means a revenue tax and a retail sales tax are not equivalent. For example, if a home builder is buying lumber directly from a wholesaler, they aren’t paying a sales tax. Whereas the revenue tax does catch a portion of that income. Maybe you mean we should broaden the concept of sales tax, and apply it to all transactions? That would be closer to equivalent to a revenue based tax structure, and would probably end up looking very similar to the VAT tax structure in Europe. I’m fine with a VAT tax, if we want to structure things that way. Honestly it’s a lot more paperwork to manage that way instead of revenue, but either works for me. Assuming arguendo that a sales and revenue tax were equivalent, a revenue tax would be the much simpler way to manage tax collection. Why would you ever prefer a structure that creates a tax event for every transaction, to an equivalent one that creates a single tax event per business entity?
      - throwawayboise 5y ago
        Yes, conventional sales taxes apply to the final retail sale. But in your example, a home builder buying lumber does pay sales taxes, since there is no sales tax on the sale of the finished home (at least not in my state).
    - throwawayboise 5y ago
      All taxes are ultimately paid by the consumer. In that regard, I agree just impose a national sales tax, get rid of everything else, and be done with it. Gets rid of all the complexity and games played with income taxes. Give everyone an automatic refund of $X to make it non-regressive. This could be done as a monthly payment, an "advance refundable tax credit" like the stimulous payments.
  - reader_mode 5y ago
    Taxing revenue would kill small margin high input businesses, lead to double taxation, encourage vertical integration. Makes no sense outside of small business where they get a heavily discounted rate since it's usually there to save them the hassle of keeping expenses.
    - alasdair_ 5y ago
      > lead to double taxation I’m not sure why double taxation matters so much. If I get a salary then use some of that salary to get a haircut, the money is taxed twice but we think of this as normal. Human W2 taxpayers are not able to write off expenses such as driving to work (or even a home office), yet these are clearly costs of doing business. Why should corporations get additional rights that aren’t afforded to humans?
      - imtringued 5y ago
        Double taxation only matters because it complicates the tax code, there is no other justification against double taxation. For example, if you have one tax there is only one way to optimize it, if you have two taxes there are two ways to optimize it. As you add more taxes you are adding more room for loopholes. Solving the problem by taxing profit by country is just adding more room for loop holes.
      - reader_mode 5y ago
        Because if I'm Apple and sitting on billions of dollars I get to buy out my supply chain and I pay 0 tax for all components and transitions in the chain - and your random manufacturer X has to pay Qualcomm and gets taxed, who pays TSMC and gets taxed, who pay their suppliers and get taxed, etc. Then multiply this by every component at every step. This is a terrible incentive system for breeding huge vertically integrated monopolies even faster than we currently do.
AmericanChopper 5y ago
What you’re proposing is a tax on revenue, rather than a tax on profits. That is what a sales tax is.
- ipaddr 5y ago
  If a tax on revenue was used the outcome would be companies would try to increase profits but reduce revenue so high margin products would be the goal which would mean higher prices / fewer sales. I think the solution should be market based. Whatever rate google US gets from google Ireland should be available to any company and google Ireland should be forced to sell any services/ip to any company who requests it at that rate. Doing anything else means the cost of the IP google Ireland charges to google US is made up.
  - boolemancer 5y ago
    The problem in this case is that no other company would agree to pay 100% of revenue to Google Ireland for their services. Google Ireland is overcharging, not undercharging.
    - alasdair_ 5y ago
      I would pay 100% revenue. I’d then just give it all away for free so my revenue was zero.
  - salawat 5y ago
    Congratulations, by forcing a company to sell to everyone indiscriminately, you've effectively seized their assets. I don't really see the whole "let's unmake ownership and property rights" thing being feasible, but I've been wrong before.
    - ipaddr 5y ago
      If you wish to use this tax credit you can choose this path.
yomly 5y ago
https://en.m.wikipedia.org/wiki/Double_Irish_arrangement https://en.m.wikipedia.org/wiki/Double_Irish_arrangement
seoaeu 5y ago
If the US branch bought a widget for $90 and sold it for $100, they'd pay tax only on the $10 of profit. If it actually cost the Irish branch $90 to make those widgets then that would be entirely fair and the right way to assign the tax burden. However, if the widget is actually free to "make" and yet the US branch is changed $100 for them we get the current situation.

H12 5y ago

Google USA made zero profit on those sales due to the 100% licensing fee with Google Ireland, so there's no income to be taxed. Revenue and expenses are exactly equal. As for sales tax, I don't really know how it works in this situation.

reader_mode 5y ago

You aren't paying taxes on revenue, you pay tax on profit

ncallaway 5y ago
That’s a choice, and one we could change. My company is taxed on revenue (under the Washington State B&O tax scheme, and similar local tax schemes). Taxing based on revenue is viable, it just needs to be done with a little more care up front.
- unreal37 5y ago
  Tax on revenue is just a sales tax on the consumer of that product or service. You might as just increase sales taxes and remove corporate taxes entirely.
  - ncallaway 5y ago
    In WA sales tax only applies to retail sales. Which means a revenue tax and a retail sales tax are not equivalent. For example, if a home builder is buying lumber directly from a wholesaler, they aren’t paying a sales tax. Whereas the revenue tax does catch a portion of that income. Maybe you mean we should broaden the concept of sales tax, and apply it to all transactions? That would be closer to equivalent to a revenue based tax structure, and would probably end up looking very similar to the VAT tax structure in Europe. I’m fine with a VAT tax, if we want to structure things that way. Honestly it’s a lot more paperwork to manage that way instead of revenue, but either works for me. Assuming arguendo that a sales and revenue tax were equivalent, a revenue tax would be the much simpler way to manage tax collection. Why would you ever prefer a structure that creates a tax event for every transaction, to an equivalent one that creates a single tax event per business entity?
    - throwawayboise 5y ago
      Yes, conventional sales taxes apply to the final retail sale. But in your example, a home builder buying lumber does pay sales taxes, since there is no sales tax on the sale of the finished home (at least not in my state).
  - throwawayboise 5y ago
    All taxes are ultimately paid by the consumer. In that regard, I agree just impose a national sales tax, get rid of everything else, and be done with it. Gets rid of all the complexity and games played with income taxes. Give everyone an automatic refund of $X to make it non-regressive. This could be done as a monthly payment, an "advance refundable tax credit" like the stimulous payments.
- reader_mode 5y ago
  Taxing revenue would kill small margin high input businesses, lead to double taxation, encourage vertical integration. Makes no sense outside of small business where they get a heavily discounted rate since it's usually there to save them the hassle of keeping expenses.
  - alasdair_ 5y ago
    > lead to double taxation I’m not sure why double taxation matters so much. If I get a salary then use some of that salary to get a haircut, the money is taxed twice but we think of this as normal. Human W2 taxpayers are not able to write off expenses such as driving to work (or even a home office), yet these are clearly costs of doing business. Why should corporations get additional rights that aren’t afforded to humans?
    - imtringued 5y ago
      Double taxation only matters because it complicates the tax code, there is no other justification against double taxation. For example, if you have one tax there is only one way to optimize it, if you have two taxes there are two ways to optimize it. As you add more taxes you are adding more room for loopholes. Solving the problem by taxing profit by country is just adding more room for loop holes.
    - reader_mode 5y ago
      Because if I'm Apple and sitting on billions of dollars I get to buy out my supply chain and I pay 0 tax for all components and transitions in the chain - and your random manufacturer X has to pay Qualcomm and gets taxed, who pays TSMC and gets taxed, who pay their suppliers and get taxed, etc. Then multiply this by every component at every step. This is a terrible incentive system for breeding huge vertically integrated monopolies even faster than we currently do.

AmericanChopper 5y ago

What you’re proposing is a tax on revenue, rather than a tax on profits. That is what a sales tax is.

ipaddr 5y ago
If a tax on revenue was used the outcome would be companies would try to increase profits but reduce revenue so high margin products would be the goal which would mean higher prices / fewer sales. I think the solution should be market based. Whatever rate google US gets from google Ireland should be available to any company and google Ireland should be forced to sell any services/ip to any company who requests it at that rate. Doing anything else means the cost of the IP google Ireland charges to google US is made up.
- boolemancer 5y ago
  The problem in this case is that no other company would agree to pay 100% of revenue to Google Ireland for their services. Google Ireland is overcharging, not undercharging.
  - alasdair_ 5y ago
    I would pay 100% revenue. I’d then just give it all away for free so my revenue was zero.
- salawat 5y ago
  Congratulations, by forcing a company to sell to everyone indiscriminately, you've effectively seized their assets. I don't really see the whole "let's unmake ownership and property rights" thing being feasible, but I've been wrong before.
  - ipaddr 5y ago
    If you wish to use this tax credit you can choose this path.

yomly 5y ago

https://en.m.wikipedia.org/wiki/Double_Irish_arrangement https://en.m.wikipedia.org/wiki/Double_Irish_arrangement

seoaeu 5y ago

If the US branch bought a widget for $90 and sold it for $100, they'd pay tax only on the $10 of profit. If it actually cost the Irish branch $90 to make those widgets then that would be entirely fair and the right way to assign the tax burden. However, if the widget is actually free to "make" and yet the US branch is changed $100 for them we get the current situation.