7 ms·

Is the UK government too scared of Google, Amazon and Starbucks?

23 points by ytNumbers 14y ago

dizzystar 14y ago
-- Media companies - television, radio and newspapers - have complained for years that Google takes colossal and growing amounts of net advertising revenues, while investing relatively little in the gathering of news or the making of television and radio. I don't get this argument at all. Google uses advertising to gather news content via web search. It sounds like, if they started reporting on news, the media would complain about Google paying 3x what everyone else can afford and stealing all the talent. -- Owners of small independent coffee shops are not exactly huge fans of Starbucks. Studies have shown that Starbucks has actually increased the quantity of viable coffee shops in neighborhoods. Is this something different in England? The Gov't not getting taxes is strictly the fault of the Gov't for allowing the loopholes to exist and be exploited. I'm sure though, that this article isn't claiming that none of the employees of Starbucks doesn't get taxed. I think it would behoove the article writer to study and research what has happened on other parts of the world. Of course, Amazon isn't really good for B&M bookstores and that is a legitimate fear, but the rest are non-issues. I really don't get the Google argument at all.
- lmm 14y ago
  >I don't get this argument at all. The argument, not that I agree with it, is: there is a finite pool of advertising dollars. By taking them and spending them on other stuff, Google is cutting the funding of news/television/radio. It's like pg's suggestion that the invention of the camera may have damaged art by depriving artists of "day job"s painting portraits. >Studies have shown that Starbucks has actually increased the quantity of viable coffee shops in neighborhoods. Is this something different in England? I doubt it. But there are still many owners of small coffee shops who hate Starbucks - mostly the ones who can't compete because their coffee is terrible. >The Gov't not getting taxes is strictly the fault of the Gov't for allowing the loopholes to exist and be exploited. And now the Gov't is taking action to correct that.
  - DominikR 14y ago
    Well, if Google's efficiency is the problem they should consider banning all agricultural machinery. There is untapped job potential for up to 90% of the population! Or we could start building pyramids again - with bare hands!
    - lmm 14y ago
      Please, read and think a little before jumping on your strawmen. The allegation is not that google is being more efficient and thereby reducing employment. The worry is that there will be much less news/television/radio because google has removed its primary source of funding. (If you believe the purpose of all things is economic optimization then this won't concern you, but many consider news/television/radio to be valuable for their own sakes)
      - DominikR 14y ago
        > (If you believe the purpose of all things is economic optimization then this won't concern you, but many consider news/television/radio to be valuable for their own sakes) I do not consider news/television/radio to be inherently valuable - it's creation and distribution of content that I consider to be valuable.
      - AnthonyMouse 14y ago
        I'm not sure I buy the premise. It's not Google (the company), it's the internet as a whole. More competition for news reduces margins. Suppose Google search was a grant-funded nonprofit operation with no ads. How would that improve the condition of news reporters?
        lmm 14y ago
        It's not Google's search so much as adsense. The argument is that companies with ad budgets would no longer be spending them on google ads, so they'd direct a greater amount of money towards buying newspaper ads. So prices for ad space in newspapers would rise, and newspapers would have more money (and there would be more newspapers, as previously unprofitable niches became profitable) and spend that on reporters.
jebberjeb 14y ago
Amazon Prime is like crack. Sure it messes you up, but it just feels so awesome!
gregsq 14y ago
I don't think it's that difficult to get. The UK government has been partly naive, though many would say typically liberal, about corporate activity. In truth, the only reason this is coming up now is because some elected politicians equate legal tax minimisation with avoidance. This from a group who were discovered to be minimising illegally expenses, and where local offshore tax havens like Jersey have been allowed to continue to operate for a very long time. It's politically convenient to blame foreigners while the general population has had their personal wealth diminished through multiple runs of the money printing press. The rationalisation seems to be that because local firms, unless using what would now be seen as avoidance, cannot avoid profits and so corporation tax, then everyone else should jolly well pay it too. Of course, in the days when Britain's large international companies like BP returned taxable profits to the UK, the accumulation of wealth through extra national activities barely mattered ethically. Now of course, the UK is contracting both in real terms and comparatively. It's odd. These rules were set by the very people complaining about them. And from what I've heard from some if the participants in the committee, some haven't the first idea about the Companies Act and its meaning. If Starbucks is willing to reallocate an amount from an expense to profit for the purposes of corporation tax, I have to say, even despite any other consideration, that's its tantamount to a gift. A sensible good will payment, but a gift none the less.
- lmm 14y ago
  >some elected politicians equate legal tax minimisation with avoidance. Isn't that exactly what the term means? >This from a group who were discovered to be minimising illegally expenses Some MPs illegally claimed higher expenses than they incurred. Generally they resigned as soon as this became public. I'm not saying there's no corruption, but UK politicians are held to higher standards than practically anywhere (in no small part by the strong, activist judiciary and a strong, diverse press). >The rationalisation seems to be that because local firms, unless using what would now be seen as avoidance, cannot avoid profits and so corporation tax, then everyone else should jolly well pay it too. How about "companies making profits in the UK should pay taxes on those profits in the UK"? Seems sensible to me. >It's odd. These rules were set by the very people complaining about them. a) Who better to look for weaknesses and improvements? b) A lot of the complaint boils down to: these companies filed fraudulent accounts.
unavoidable 14y ago
Courts in the UK have historically had very narrow interpretations of tax laws. The classic example is a House of Lords case called Commissioners of Inland Revenue v. Duke of Westminster, where one of the judges gave this great judgment: "Every man is entitled if he can to order his affairs so as that the tax attaching under the appropriate Acts is less than it otherwise would be. If he succeeds in ordering them so as to secure this result, then, however unappreciative the Commissioners of Inland Revenue or his fellow taxpayers may be of his ingenuity, he cannot be compelled to pay an increased tax. This so-called doctrine of “the substance” seems to me to be nothing more than an attempt to make a man pay notwithstanding that he has so ordered his affairs that the amount of tax sought from him is not legally claimable." The influence of this case is still strongly felt today in courts, and this leaves the British Parliament with little power to make "strong" tax laws that have no "loopholes". American courts and laws do far more to assert jurisdiction and prevent tax avoidance, but as we know American tax rates are much lower than most countries.
- narcissus 14y ago
  I may be missing something in that quote, but I don't see how it follows from that judge's statement that parliament ends up with little power to make "strong" tax laws that have no "loopholes". I mean the way I see it, the judge is saying "hey, if someone follows the law, you can't complain if they're able to reduce their tax payable". But what I don't see is them saying "and you can't make laws to change that".
  - unavoidable 14y ago
    See the gist of the reply I made to the other commenter. The reason this arises is generally because of the back-and-forth between Parliament and the courts. When a court gives a restrictive meaning to a given provision, it incentivizes Parliament to introduce more laws to capture the activity they wanted to capture in the first place. This has gone on for decades, and as a result, the British tax laws are a mess. When you have a massive number of provisions trying to capture essentially the same thing, then you are bound to run into inconsistencies, which lead to "loopholes".
deleted 14y ago
[deleted]
rohit6223 14y ago
Google afraid of Facebook Amazon afraid of Flipkart (in India) Starbucks:: No idea (?)
gadders 14y ago
Laffer curve, anyone? Reduce the Corporate Tax rates and companies wouldn't have spend mony on all these contortions to avoid paying.
- onetwothreefour 14y ago
  LOL. You do realize the laffer curve is widely discredited? All reducing corporate tax rates does is cause a race to the bottom.
  - gadders 14y ago
    How can it be discredited if it is actually happening? I'd prefer a race to the bottom than the current race to the top.
parenthesis 14y ago
Something that really annoys me about such debates on taxation is that people often say `tax' when they mean `corporation tax' (in the case of companies) or `income tax' (in the case of individuals). In the UK, about the same is paid in national insurance + VAT + council tax as is paid in corporation tax + income tax.
lmg643 14y ago
I have always found it interesting that the tech titans, whose employees seem to overwhelmingly support high-tax blue-state politicians and policies, are also engaged in the most aggressive tax avoidance in the world, and given their wild success, probably the largest in history. We only need to look at Europe to see how widespread tax avoidance plus high government spending creates an unsustainable path that puts the entire economy and country at risk. Since silicon valley seems like such a civic minded place, I'm wondering if we will ever get realistic about what we'd really like to see happen: either support lower government spending across the board to complement the aggressive tax avoidance, or demand that leading companies pay taxes according to the state or country where the revenue is received, and not based on wherever a shell company may reside.
wildranter 14y ago
In the case of media companies vs Google, and Amazon vs everybody else, I think they deserve for not innovating their businesses, and leaving customers in the cold. Now for Starbucks vs traditional cafés, just make better coffee. I doubt Starbucks would thrive in Italy for that reason.

23 points by ytNumbers 14y ago

-- Media companies - television, radio and newspapers - have complained for years that Google takes colossal and growing amounts of net advertising revenues, while investing relatively little in the gathering of news or the making of television and radio. I don't get this argument at all. Google uses advertising to gather news content via web search. It sounds like, if they started reporting on news, the media would complain about Google paying 3x what everyone else can afford and stealing all the talent. -- Owners of small independent coffee shops are not exactly huge fans of Starbucks. Studies have shown that Starbucks has actually increased the quantity of viable coffee shops in neighborhoods. Is this something different in England? The Gov't not getting taxes is strictly the fault of the Gov't for allowing the loopholes to exist and be exploited. I'm sure though, that this article isn't claiming that none of the employees of Starbucks doesn't get taxed. I think it would behoove the article writer to study and research what has happened on other parts of the world. Of course, Amazon isn't really good for B&M bookstores and that is a legitimate fear, but the rest are non-issues. I really don't get the Google argument at all.

lmm 14y ago
>I don't get this argument at all. The argument, not that I agree with it, is: there is a finite pool of advertising dollars. By taking them and spending them on other stuff, Google is cutting the funding of news/television/radio. It's like pg's suggestion that the invention of the camera may have damaged art by depriving artists of "day job"s painting portraits. >Studies have shown that Starbucks has actually increased the quantity of viable coffee shops in neighborhoods. Is this something different in England? I doubt it. But there are still many owners of small coffee shops who hate Starbucks - mostly the ones who can't compete because their coffee is terrible. >The Gov't not getting taxes is strictly the fault of the Gov't for allowing the loopholes to exist and be exploited. And now the Gov't is taking action to correct that.
- DominikR 14y ago
  Well, if Google's efficiency is the problem they should consider banning all agricultural machinery. There is untapped job potential for up to 90% of the population! Or we could start building pyramids again - with bare hands!
  - lmm 14y ago
    Please, read and think a little before jumping on your strawmen. The allegation is not that google is being more efficient and thereby reducing employment. The worry is that there will be much less news/television/radio because google has removed its primary source of funding. (If you believe the purpose of all things is economic optimization then this won't concern you, but many consider news/television/radio to be valuable for their own sakes)
    - DominikR 14y ago
      > (If you believe the purpose of all things is economic optimization then this won't concern you, but many consider news/television/radio to be valuable for their own sakes) I do not consider news/television/radio to be inherently valuable - it's creation and distribution of content that I consider to be valuable.
    - AnthonyMouse 14y ago
      I'm not sure I buy the premise. It's not Google (the company), it's the internet as a whole. More competition for news reduces margins. Suppose Google search was a grant-funded nonprofit operation with no ads. How would that improve the condition of news reporters?
      - lmm 14y ago
        It's not Google's search so much as adsense. The argument is that companies with ad budgets would no longer be spending them on google ads, so they'd direct a greater amount of money towards buying newspaper ads. So prices for ad space in newspapers would rise, and newspapers would have more money (and there would be more newspapers, as previously unprofitable niches became profitable) and spend that on reporters.

jebberjeb 14y ago

Amazon Prime is like crack. Sure it messes you up, but it just feels so awesome!

gregsq 14y ago

I don't think it's that difficult to get. The UK government has been partly naive, though many would say typically liberal, about corporate activity. In truth, the only reason this is coming up now is because some elected politicians equate legal tax minimisation with avoidance. This from a group who were discovered to be minimising illegally expenses, and where local offshore tax havens like Jersey have been allowed to continue to operate for a very long time. It's politically convenient to blame foreigners while the general population has had their personal wealth diminished through multiple runs of the money printing press. The rationalisation seems to be that because local firms, unless using what would now be seen as avoidance, cannot avoid profits and so corporation tax, then everyone else should jolly well pay it too. Of course, in the days when Britain's large international companies like BP returned taxable profits to the UK, the accumulation of wealth through extra national activities barely mattered ethically. Now of course, the UK is contracting both in real terms and comparatively. It's odd. These rules were set by the very people complaining about them. And from what I've heard from some if the participants in the committee, some haven't the first idea about the Companies Act and its meaning. If Starbucks is willing to reallocate an amount from an expense to profit for the purposes of corporation tax, I have to say, even despite any other consideration, that's its tantamount to a gift. A sensible good will payment, but a gift none the less.

lmm 14y ago
>some elected politicians equate legal tax minimisation with avoidance. Isn't that exactly what the term means? >This from a group who were discovered to be minimising illegally expenses Some MPs illegally claimed higher expenses than they incurred. Generally they resigned as soon as this became public. I'm not saying there's no corruption, but UK politicians are held to higher standards than practically anywhere (in no small part by the strong, activist judiciary and a strong, diverse press). >The rationalisation seems to be that because local firms, unless using what would now be seen as avoidance, cannot avoid profits and so corporation tax, then everyone else should jolly well pay it too. How about "companies making profits in the UK should pay taxes on those profits in the UK"? Seems sensible to me. >It's odd. These rules were set by the very people complaining about them. a) Who better to look for weaknesses and improvements? b) A lot of the complaint boils down to: these companies filed fraudulent accounts.

unavoidable 14y ago

Courts in the UK have historically had very narrow interpretations of tax laws. The classic example is a House of Lords case called Commissioners of Inland Revenue v. Duke of Westminster, where one of the judges gave this great judgment: "Every man is entitled if he can to order his affairs so as that the tax attaching under the appropriate Acts is less than it otherwise would be. If he succeeds in ordering them so as to secure this result, then, however unappreciative the Commissioners of Inland Revenue or his fellow taxpayers may be of his ingenuity, he cannot be compelled to pay an increased tax. This so-called doctrine of “the substance” seems to me to be nothing more than an attempt to make a man pay notwithstanding that he has so ordered his affairs that the amount of tax sought from him is not legally claimable." The influence of this case is still strongly felt today in courts, and this leaves the British Parliament with little power to make "strong" tax laws that have no "loopholes". American courts and laws do far more to assert jurisdiction and prevent tax avoidance, but as we know American tax rates are much lower than most countries.

narcissus 14y ago
I may be missing something in that quote, but I don't see how it follows from that judge's statement that parliament ends up with little power to make "strong" tax laws that have no "loopholes". I mean the way I see it, the judge is saying "hey, if someone follows the law, you can't complain if they're able to reduce their tax payable". But what I don't see is them saying "and you can't make laws to change that".
- unavoidable 14y ago
  See the gist of the reply I made to the other commenter. The reason this arises is generally because of the back-and-forth between Parliament and the courts. When a court gives a restrictive meaning to a given provision, it incentivizes Parliament to introduce more laws to capture the activity they wanted to capture in the first place. This has gone on for decades, and as a result, the British tax laws are a mess. When you have a massive number of provisions trying to capture essentially the same thing, then you are bound to run into inconsistencies, which lead to "loopholes".

deleted 14y ago

[deleted]

rohit6223 14y ago

Google afraid of Facebook Amazon afraid of Flipkart (in India) Starbucks:: No idea (?)

gadders 14y ago

Laffer curve, anyone? Reduce the Corporate Tax rates and companies wouldn't have spend mony on all these contortions to avoid paying.

onetwothreefour 14y ago
LOL. You do realize the laffer curve is widely discredited? All reducing corporate tax rates does is cause a race to the bottom.
- gadders 14y ago
  How can it be discredited if it is actually happening? I'd prefer a race to the bottom than the current race to the top.

parenthesis 14y ago

Something that really annoys me about such debates on taxation is that people often say `tax' when they mean `corporation tax' (in the case of companies) or `income tax' (in the case of individuals). In the UK, about the same is paid in national insurance + VAT + council tax as is paid in corporation tax + income tax.

lmg643 14y ago

I have always found it interesting that the tech titans, whose employees seem to overwhelmingly support high-tax blue-state politicians and policies, are also engaged in the most aggressive tax avoidance in the world, and given their wild success, probably the largest in history. We only need to look at Europe to see how widespread tax avoidance plus high government spending creates an unsustainable path that puts the entire economy and country at risk. Since silicon valley seems like such a civic minded place, I'm wondering if we will ever get realistic about what we'd really like to see happen: either support lower government spending across the board to complement the aggressive tax avoidance, or demand that leading companies pay taxes according to the state or country where the revenue is received, and not based on wherever a shell company may reside.

wildranter 14y ago

In the case of media companies vs Google, and Amazon vs everybody else, I think they deserve for not innovating their businesses, and leaving customers in the cold. Now for Starbucks vs traditional cafés, just make better coffee. I doubt Starbucks would thrive in Italy for that reason.