“So the Sunday papers tell us, adding to the stream of stories about how Starbucks ain’t payin’ enough tax, Google ain’t, Apple isn’t and… well, we’re being taken to the cleaners as a nation, aren’t we? We provide this lovely country for them to do business in and we don’t get a modest cut of the profits from the bastards,” Tim Worstall writes for The Register.
“The only problem with this narrative is that it’s entirely false: indeed, we’re being fed this nonsense by those who may have no clue at all about how taxation works – with, if I’m allowed my own little bit of prejudice, a decent assist from a pressure group,” Worstall writes. “I think we’ve all read enough of these newspaper pieces to know what the accusations are.”
“Various tech companies sell into the UK from outside the UK. They book their revenue outside the UK, make their profits outside and thus no money is levied to pay for essentials like diversity advisers and duck houses inside the UK,” Worstall writes. “We are then told that this is tax avoidance and that they’re all very naughty boys. Apple sells the iTunes stuff in from Luxembourg, eBay channels PayPal from there, Facebook and Google both sell in their adverts from Ireland and so on.”
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Worstall writes, “However, this is not tax avoidance (and it’s most certainly not tax evasion, the illegal stuff). It is in fact tax compliance, this is exactly what the EU wants… To allow, indeed tempt, corporations to shift stuff around so as to reduce their corporation tax bills. This, in turn, forces governments to keep their corporation tax rates low: for it’s a very bad tax, d’ye see?”
Read more in the full article here.
Related articles:
So how much did Apple really pay in taxes? – November 1, 2012
Apple’s showdown with the U.S. government over taxes on offshore cash – July 13, 2012
Apple‘s $74 billion tops list of U.S. tech companies’ overseas cash – July 9, 2012
Apple’s dividend move puts spotlight on foreign cash holdings, repatriation tax reform – March 20, 2012
Apple: Good start; and what about the overseas cash? – March 19, 2012
Apple’s foreign cash hoard piles up: $54 billion and rapidly growing – January 11, 2012
Senator John McCain eyes Apple’s $54 billion overseas cash pile – November 3, 2011
Google joins Apple in push for U.S. repatriation tax holiday – October 3, 2011
Apple lobbies Obama for tax holiday, wants to bring overseas bounty home – August 24, 2011
U.S Senate Democrat Schumer allies with Apple, other multinationals on repatriation tax talks – June 21, 2011
U.S. companies push for tax break on foreign cash – June 20, 2011
Apple, Oracle, Duke Energy, others organize lobbying blitz for tax holiday – February 17, 2011
The headline of this posting is off a bit, as the posting is about double taxation between jurisdictions, not the wisdom of corporate taxation in general.
“Corporations are people, my friend!” Mitt Romney, Iowa State Fair, August 11, 2011.
Then lets pick one that has deliberately caused the death of real people and execute it. Tobacco companies come immediately to mind.
For LEGAL purposes, a corporation is a person, which is why the leaders aren’t held responsible.
As for people paying taxes… didn’t they already try to raise taxes on the wealthy? Didn’t work too well.
The Preamble to the Constitution begins “We, the People of the United States”, no mention of persons. I locked in on Mr RawMoneys assertion that “Corporations are PEOPLE”, not persons. Apparently if you are a people, you can be executed for killing other people, but if you are a person, you just pay a fine.
What is your point?
As far as leaders of corporations not being held responsible, only in America, for now.
Corporations ARE people. Laws created by the tyrants in the District of Corruption say so. If you don’t like it, vote them out. Otherwise, accept the fact that 99 percent of the people who vote are responsible for putting people like Boehner, Reed, Graham, Pelosi and the rest of the imbeciles in office.
He lost chimpbrain.
You can stop with the playground insults now.
Yes, we did dodge that one. But, I didn’t quote him as if he had some valid point to make, I just gave his statement some context.
Companies don’t pay taxes. They pass all costs— labor, taxes, materials — on to the consumer. You want to “stick it to the corporations”? You are the one that ends up paying. Fact.
Exactly. It’s true in the real world, but these days there are things that are not “politically true.”
We shall see how it plays out.
No, it’s neither fact, nor true; it’s simply a convenient fiction. A company *may choose* to pass on all the costs, or it *may choose* to reduce profit a little to keep sales up, thereby taking the cost of the tax only from owners. Economics doesn’t break down into simplistic slogans.
Sorry, but yours is a simplistic slogan as well.
Who says the money had come from profit or just passed on?
It come come from workers salaries or benefits, R&D, upgrades, diversified investments in other aspects of the company, and hedge savings for slow quarters.
The fact is investors look at profits as a reason to invest. Less profit could result in less investment, and the chain reaction starts.
Just because a reality is simplistic doesn’t make it ‘simple’. Added cost hit the consumers in one way or the other.
Of course, the government could always take that tax revenue and subsidize the related cost to avoid any chance of “too big to fail”…..
And who says it will hurt something positive, maybe it will cut corporate waste or spurn them to enter some new area in pursuit of higher margins that will befefir mankind.
The reality is we faought a war for over a decade that we just recently started including in our budgets and we have to pay for it somehow. If that causes corporate profits to go down or I have to make my laptop last an extra year… So be it.
The war was paid for at the time by a bustling economy.
We didn’t have that at the outbreak of WWII.
The reason is was just added to the budget was for the sake of
The Democrats. It was always known the war would eventually end and the amount not spent in later years. Now that it has been added to the budget, they will ALWAYS spend that much, even when the war is over.
This why Conservatives are so against raising taxes. Not that we don’t want the debt paid, but because it ALWAYS adds new debt.
The reason the defict exploded uder Obama is that Bush didn’t include the costs of the war in the budget. He tacked it on the end as emergency spending. I won’t even bother reading the rest of your drivel.
Then you will never understand about baseline budgeting.
Your loss, not mine.
And BTW, it is the FannieMae, FreddieMac debacle and ObamaCare that are(will be) eating our taxes up, not the war.
Anyhow, this thread wasn’t about politics, you just brought that up.
It’s not even whether corporations should pay or not, just the fact that in the end, it WILL affect consumers, directly or indirectly.
And the fact that you refuse to read anything that doesn’t go in line with your belief of what reality is explains why you have no grasp of it…..
Here is the data of US federal total outlays (spending) from 1994 (Clinton’s first budget, remember that the federal fiscal year is October to October so Clintons first budget would start Oct 1993 – Oct 1994) to the estimates for 2012 and 2013 in millions of dollars (1,000,000 = 1 trillion)
Clinton
1994 1,461,753
1995 1,515,742
1996 1,560,484
1997 1,601,116
1998 1,652,458
1999 1,701,842
2000 1,788,950
2001 1,862,846
Bush
2002 2,010,894
2003 2,159,899
2004 2,292,841
2005 2,471,957
2006 2,655,050
2007 2,728,686
2008 2,982,544
2009 3,517,677
Obama
2010 3,456,213
2011 3,603,061
2012 estimate 3,795,547
2013 estimate 3,803,364
As can be seen, spending went up by 0.61 trillion during first 4 fiscal years (fy 2005 – fy 2001) and 1.05 trillion during the second 4 fiscal years (fy 2009 – fy 2005) of the Bush administration. In contrast, it is estimated that spending will increase under the Obama administration first 4 fiscal years (fy 2013 estimated – fy 2009) by 0.28 trillion dollars. I’ll leave it to the reader to decide under which administration federal government spending exploded.
John, it’s not just spending that matters, but deficit spending.
Obama is spending more and bringing in less.
And raising taxes is like using a Band-aid when a tourniquet is needed.
In the Bubble!
The Hell they don’t, especially if you don’t have 30 to 40 percent margins. Speaking for myself two things happened that were “passed along”. One was the users discount that my business receives when doing the states government’s work of collecting taxes. Wasting my time collecting the governments ST-9 Sales and Use tax and filling out the form, stroking a check of the monies I collected for the State’s behalf and mailing it to them. During Obama’s so called economic recovery, the discount was reduced because Heaven knows the State can never do with anything less! So depending on sales for the month that could be several hundred dollars discounted back to me that, in turn, would be used for new equipment, supplies and such. Now since the government sees fit to offer a lesser discount, I “passed along” their ‘tax’ by holding on to my equipment a little longer and using my supplies at a minimum. Second, Obama’s war on fossil fuels and the higher gas prices that have ensued, caused one local vendor to apply a fuel surcharge on deliveries to me… three bucks per delivery… that, you guessed it, was all passed along to the consumer! I’m not taking a hit for the likes of Obama or the State that’s for damn sure! Why the Hell should I reduce MY profits?! And I don’t need criticism from the likes of those that say I should pay my fair share and we’re all in this together BS when the grubby, little sticky fingers of politicians that nickel and dimed me to death are living high off the hog and the Obama’s take two jets for vacations and Harry Reid stays at the Ritz!
You along with others dont understand and are fooled. Corporations are tax collectors for the government. The government, by making corporation “evil” divert attention away from the real evil which is the government.
Inexplicably, corporations always choose to pass on the cost of taxation to consumers in the form of higher prices and its workers through lower incomes and/or reduced benefits. It’s not like the federal government that can print money, borrow from China, or take what it wants through theft by decree.
The trouble is of course, that the corporations can lock out competitors by doing this. How can independent retailers who must comply with local tax laws build up a business to compete with the likes of Amazon, when Amazon can offer much lower prices due to their cheaper internationally obtained tax rates?
If you follow it through, we end up with a small cartel of multinationals pretty much dominating every industry sector. Is that really what we want?
The whole “pass it on to comsumers” idea is only partially true… And usually not mostly true. It’s usually put forward by somone who’s never studied economics. As prices go up, there is less demand. Companies have to decide which senario will coat them more: they will lose revenues (affecting profits) when raising prices becuase of lost sales OR they will lose profits by asbsorbing the additional costs. You can’t just assume you’ll still have a consumer when you try to pass along costs… And smart business people don’t.
And you can’t assume that those are the only scenarios, but as a student of economics, I’m sure you know that a company will spread out its loses not out of profits (completely) but out of research, upgrades, workers benefits, charities, bonuses, investments, savings and other departments.
But then again, you know this, and understand the ramifications to the consumer, worker, and investor.
Surely you know that there’s a formula for figuring the optimum price that will yield maximum profits and sales (the Demand Curve):
http://ingrimayne.com/econ/elasticity/RevEtDemand.html
And that most businesses are already charging whatever the traffic will bear. They can’t pass along increased taxes (costs) without reducing demand, and therefor, profits.
And after 4 years of economic woe, I doubt if they have much more they can cut to streamline production.
At some point, prices will rise or some aspect of service will be cut.
Your advice seems to be: bend over and take it and trust corporation to be gentle. You didn’t happen to lose the MO Senate race? Lmao
And yours is to trust the government?
Both should be held accountable.
Only one can be punished….
They can both be punished. One at the ballot box and the other at the cash register. You conservatives are so dramatic.
Really? Can you vote the TSA out?
Can you vote less power to the IRS?
Can you vote out negligence that results in death?
Just how far can you get in suing the government?
You can only vote out the politicians, not the bureaucrats.
Dramatic? You must lead a very boring life if THIS is dramatic!
By the same logic: Why should there be a sales tax? The same money was already taxed when people received it as a salary.
Apparently, you have learned something. Now go call your Representatives and tell them to rescind the sales tax or the income tax, take your pick.
Corporations want to be and are “people” when it comes to legal issues…. But they don’t want to be”people” when it comes to taxation… They want their cake and eat it too…. My personal feeling as CEO of 2 corporations is that we cannot only be considered people when it serves our interests …. But then corporate responsibility is something I believe in….
> Various tech companies sell into the UK from outside the
> UK. They book their revenue outside the UK, make their
> profits outside
Bullshit. They make this profit from selling in the UK. I hate it when someone thinks readers are complete fools.
Absolutely!
“Let me tell you how it will be, there’s one for you, nineteen for me.” – George Harrison
For any who are sincerely looking for a real solution, I urge you to check out fairtax.org
The FairTax, like all taxes, will end up being manipulated by politicians. What starts out as 23% tax will eventually become 25%, then 28%, then 30%, then 33%…
Estonia has the best taxation system in the world.
If business is the engine of the economy, corporate tax is like trying to move forward while riding the brake.
Here is the thing, yes higher taxes will be by in large absorbed by consumers. But what’s the problem with that? A successful multinational though consumers will generate the badly needed tax revenue. We can’t get any money from the poor or barely making middle class directly through taxes, but we get it indirectly from consumers that can afford and want these products. So it’s a win-win and the “corporations will only pass it along” argument really is empty.
“We can’t get any money from the poor or barely making middle class directly through taxes, but we get it indirectly from consumers that can afford and want these products.”
A tax is a tax is a tax, directly or indirectly.
If they can afford it, fine.
VAT anyone? That is where this is heading.
Which begs the question, why not just raise the income tax level, since it is the same people who will pay it?
It’s all a game, where one side gets to say ‘yeah, we really stood up for the little guy by sticking it to those faceless corporations!’
(never mind that, when it is all said and done, the faceless corps STILL don’t actually pay the tax, the ‘little guy’ does)
Definitely, I agree a tax is a tax. I support consumption tax on non-essential products. Why play games, why even try and squeeze those that can barely pay rent. It becomes optional for those that WANT an iPad or a iPod touch or a drink from Starbucks and I will gladly pay it. Pay what? An additional couple of cents for a cup of coffee to support the nation. Why not?
So now the corporate rate is fixed depending on what that company produces and toward what market it is aimed?
I can see the headlines
“New tax Keeps ‘The Little Guy’ From Enjoying Coffee While Listening To iPod”
Pull quote “Only the 1%ers can buy those now!’ (never mind the reality….)
The BEST idea to generate revenue is for the economy to be booming.
The BEST way for the economy to succeed is to remove as much uncertainty as possible.
The BEST way to do that is be realistic about what we as a nation can afford and what we want to pay in taxes.
Too much social engineering has removed certainty in the markets as well as the desire to pay more in taxes, because most of us know it will end up being wasted NO MATTER HOW HIGH THEY RAISE THE RATE!!!!!
It’s called reality. It’s calling you. Anyone who want a fancy coffee can get one. A few cents isn’t going to affect anyone and certainly no one is going to make such ridiculous claims other than partisans who make money as paid partisans. I’m not talking about you, but you know who I am talking about.
Yes, I do, and they successfully changed reality via the media.
That is how I know they will NOT allow a reduction in spending, or will mask it as useful spread out over ten years, which never occurs, but the tax rates go up immediately!
It’s an old Democrat trick, and Republicans allow it.
And therein lies the beauty of taxation on corporations. It’s only the “consumers” pay the additional costs incurred by corporate taxation.
If you raise taxes on the people and reduce taxes on corporations, then EVERYONE pays for the reduced prices on goods.
VAT is based on the principle of making people who consume more, pay more. It’s a more “FAIR” tax than increased taxation on income. The US would be wise to adopt a national sales tax and a corresponding reduction in income tax.
You want MORE, you pay MORE.
Why does everything we do benefit the consumers and not the fiscally responsible?
“Why does everything we do benefit the consumers and not the fiscally responsible?”
Because that’s how votes are bought. More benefits for less work.
Also, if a VAT is implemented, it will be in ADDITION to a high income tax rate.
What are you smoking….?
😉
Corporations choose where to pay tax. The average guy or gal cannot do that if employed because of PAYE and if self-employed would need a high income to be admitted.
Throught the Euro Union corporations are in the process of moving their HQ,s to Switzerland for two reasons: To be near their customers HQ,s and to be able to pay less corporation tax. So the Swiss will collect the lions share of multi -national corporation tax generated in the EEC even though Switzerland is not a member state of the EEC. Meanwhile sales taxes are likely to rise as a result. In the UK Value Added Tax was originally 8% it went to 15% then 17.5% and now it’s 20%. Tax relief of your home loan was abolished some time back. Pension pots were raided too because politicians and the ruling elites won’t get a grip on direct taxation and the numerous loopholes that exist.
Funny how corporations are all American when it comes time to get trade protection, security support from the US Navy (reflagged Oil Tankers under Bush the Elder), bidding for contracts and marketing. When it comes time to pay taxes the line is “well we are really a multinational corporation”.
If corporations want to be persons in the legal sense we should shackle their azz just like any citizen. We are subject to double taxation when we work as expatriates- why should they be any different?
Corporations should be stripped of legal personhood and put under restricted time charters like they were originally. They had to prove their worth to be rechartered and could not exist beyond the lifetime of a human.
Totally DISAGREE!!!!!
Apple and all the rest knew what the laws were before they started bankrolling millions and billions in overseas profits, and should pay taxes if they want to use the money here in the USA.
Likewise.. they wouldn’t have all that profit, save for underpaid foreign workers putting all those parts together.
Assuming Apple does pay, it would interesting to see what the difference would be to have paid US workers a fair wage to do the same job. They could still keep the COST of iDevices close to the same, but the profit margin on each would be less…. OFFSET, of course, by having to pay a lot less in taxes on overseas profits.
I can see the logic in this. It starts with overturning Citizens United; regardless of what SCOTUS has ruled, corporations simply and obviously are not people.
With this understanding, every person employed by a corporation is earning taxable income. A new tax code could possibly eliminate “redundant” corporate taxes, close ALL loopholes and establish a new, more equitable set of tables. Defining “equitable” to everyone’s satisfaction will likely continue to be a challenge.