Germany calls on EU to ban certain corporate tax breaks

“Germany’s finance minister on Tuesday called for a ban on the so-called ‘patent box’ tax break offered by Britain, Netherlands and some other bloc members which he says results in unfair competition for foreign investment,” Annika Breidthardt reports for Reuters.

“Wolfgang Schaeuble told reporters he wanted European Union finance ministers to review the levying of lower corporate tax rates on profit related to innovations and exploiting patents,” Breidthardt reports. “Corporate tax avoidance has become a hot political topic with austerity-weary voters across Europe angered by revelations of tax avoidance by companies including Starbucks, Google and Apple in the past year.”

Breidthardt reports, “Schaeuble said ‘patent box’ schemes were at odds with EU rules designed to deter discriminatory tax rules. ‘We have to look at this practice and discuss it in Europe,’ he said. ‘That’s no European spirit. You could get the idea they are doing it just to attract companies.'”

MacDailyNews Take: Nooo, really? (dripping sarcasm)

“Governments which offer them say they encourage innovation and high-value jobs in research and development. Critics see the scheme as government-sanctioned tax avoidance,” Breidthardt reports. “Countries offering patent box-type regimes include Belgium, France, Hungary, the Netherlands and Spain, according to tax advisers Deloitte.”

Read more in the full article here.

MacDailyNews Take: The benefits of having a large corporation in your country or state go far, far beyond corporate taxes or even a total lack thereof. Those employees, who would not exist in your state otherwise, pay taxes – income, energy, property, etc., etc., etc. – and buy everything from food to furniture to vehicles in the local economy (each one of those purchases very likely taxed as well).

Those who whine about “corporate taxes” cannot see the forest for the trees.

40 Comments

  1. I think the idea is that the countries ought to be playing on a level playing field. If they were, then the companies would go where they go for other reasons than tax avoidance which might, maybe, bring in more revenues for these struggling economies. Then again, it might not. Let’s not forget unintended consequences.

  2. “Corporate tax avoidance has become a hot political topic with austerity-weary voters”

    The fallacy, perpetrated by the liberal concept that the means of production should pay all taxes, is that those means (corporations) get the money they pay taxes with, comes from their customers (the individual).

    Eliminating corporate taxes makes products produced domestically less expensive when exported. That’s why you see VAT and national sales taxes everywhere except the US, and why US manufacturing is leading the charge to go offshore. The lower wages are nice, but not as big a deal as avoiding the highest corporate tax rates IN THE WORLD.

    1. Actually raising corporate taxes increases spending and growth. As a small businessman myself, if I were taxed 100% of my profit (exaggerating) then I would rather hire people and invest every dime rather than pay the tax. Any risk is a good risk compared to 100% If my tax were exactly zero, then I may as well put the money in the bank. Why take a risk? I am guaranteed to keep all my profit.

      What would you do if you were a small businessman? As the taxes on profits went up, wouldn’t you invest more?

    1. Thanks SO much for your insightful contribution. Your thinking is like a laser, cutting to the heart of the matter, illuminating the issues like a veritable ray of wisdom. I’m sure everyone has been persuaded by the devastating logic.

  3. This has nothing to do with Apple, as it’s “tax avoidance” method is not related to patents.

    What Apple does is making sales through Ireland, where there is low corporate tax level. They sell goods from Ireland to other European countries for prices that are as high as possible so almost only expenses of the receiving buying affiliates would be covered with almost no profits.

    Thus Apple’s affiliates from countries with high taxes buy expensive Apple goods from Ireland, where taxes are low.

    This is totally legal and reasonable way to handle business, and a lot of companies have Ireland distribution centres with bulk profits left there with with very low profits in other countries’ affiliates.

    1. Er DeRS, as I understand it, Apple pays sales taxes in the countries where they are due. Ireland is just a place to put the money after taxes are paid where you do not get taxed just for having money.

      Check out Foss. The man is very smart.

      1. Of course Apple pays its taxes where they are due. This is why I wrote that this is perfectly legal.

        Apple’s method, however, is this:

        Apple Ireland has actual cost of goods, lets say, EUR100. Then it sells the goods to Apple France, for example, for EUR130. Then Apple France sells the goods further for EUR140.

        Since Ireland’s corporate tax is just 12%, Apple pays 12.5% from: “130 – 100 – expenses”.

        France’s corporate tax is much bigger, 33.3%, but Apple can only possibly pay it from “140 – 130 – expenses” base.

        Thus Apple shifts the profits from France, UK and all the places to Ireland, where the tax is lower. It is perfectly legal and most of companies do it this way.

      2. Wrong. Only VAT (Value Added Tax) stays in the country. However, VAT is entirely paid by the local customer. All profits are generated in Ireland, where foreign companies made a tax deal with the government. Can’t blame Apple, can blame the Irish Government.

  4. Before you claim people are getting weary from austerity, how about trying some actual austerity first?

    We don’t have a revenue problem, we have a spending problem.

          1. My understanding was that the trip was not a vacation, but a work-related business trip. Apparently, he never once visited sub-saharan Africa during his first term (other than a short stop-over in Ghana), one of the very few modern presidents that failed to make a trip there. Bush made two separate week-long trips (one for each term of office), visiting several countries.

            And Obama failed to visit his father’s homeland (Kenya), and will likely not go there during his presidency. I’m curious how much did Bush’s trips to Africa cost the US taxpayers…

            1. ???

              Let me simplify. When George W. Bush was the American President, he made two trips to sub-Saharan Africa, at the expense of American taxpayers. First one was in his first term in office (sometime in 2003, I believe), and the second one was in his second term in office (early 2008).

              I wonder how much did those two trips cost the American taxpayers? I would venture, more than Obama’s. After all, Bush took his family (wife and both daughters) on a safari (massive security presence), while Obama’s trip won’t include such an extravagance. I can’t understand why the “Weekly Standard” didn’t report on that…

            2. I do not understand how you defend the current criminal president’s wrongdoing by citing the previous criminal president’s wrongdoing. He is long gone, he got away with it..therefore, by your reasoning, the current and any future criminal president’s wrongdoing is justified. That’s fucking nuts.

            3. I’m not quite sure what is criminal about American presidents traveling overseas. Every single one of them has done that; it is part of the job, necessary to solidify political alliances, make new agreements and often results in some healthy windfall for American business (in the form of American exports to those countries). Pretty much every head of every state in the world does this.

            4. “…your implied point was that Messiah’s rape of the American taxpayer is okay because Dubya did the same thing.”

              Not only is your almost constant vitriol tiresome, but you even use YOUR interpretation as an excuse for spouting off again. That was NOT his implied point at all, not even close. Take your meds and do try to be rational.

            5. Seamus seems to be paying attention.

              Your one message was “Obama’s family trip to Africa cost $$$millions!”, it’s good to be the king.

              My response was that he wasn’t vacationing, but it was a business trip, no different than business trips of other presidents, American or foreign.

              Where in either of these two messages was there anything implied that this particular action was criminal, I can’t possibly see.

            6. In addition, Judicial Watch just released detailed expenditures for first daughter Malia Obama’s trip to Mexico last spring. The teen and some of her Sidwell Friends schoolmates were accompanied by 25 Secret Service personnel in March, courtesy of American taxpayers. The information obtained from the U.S. Secret Service through the Freedom of Information Act comes right before the Obama’s scheduled vacation to Hawaii. The breakdown of the $115,500.87 tab shows the biggest chunk going to flying the rich kids to Mexico.
              Ground transportation: $23,964.81
              Lodging: $21,682.92
              Airfare: $47,767.34
              “Vouchers”: $21,636.14 (not itemized)
              Support Charges: $449.66 (travel for one from Mexico City to Oaxaca, not itemized)
              Here’s a partial list of the 16 vacations the Obamas have already taken on the taxpayer’s dime.
              February 2012, Michelle Obama’s trip to Aspen, Colorado: $83,182.99.
              August 2010, Michelle Obama’s trip to Spain: $467,585.00.
              Secret Service records, meanwhile, show that the costs to the agency for the vacation were $254,461.20. This total includes $26,670.61 for a chauffeur tour of Costa del Sol and $50,078.78 for a travel planning company SET P&V, S.L. (George Soros is 50% owner of the travel company.) Taxpayers also paid the bill for separate lodging for a dog and its handler.
              Summer 2011, Michelle Obama’s trip to Africa with entourage of 21 people: $424,142.00. In addition, it reports another $928.44 was spent on providing 192 meals for the 21 people who made the trip.
              December 2011, the First Family’s Hawaii Christmas vacation: $4,113,038.
              December 2012, upcoming 20-day Christmas vacation: $4,000,000.
              These don’t include the three consecutive summer vacations on Martha’s Vineyard the clan enjoyed in 2009, 2010, and 2011. In 2012, an election year, the Obamas skipped a trip to the Vineyard as not politically wise. But as sure as Chavez, the Castro brothers and Kim Jong Un live in luxury while their people live in squalor, we can rest assured the Obamas will not be feeling any pangs of conscience as they jet off to Kailua.
              We’ve already witnessed the Obamas skiing, golfing, and shopping all over the world while awakened Americans wondered what the hell happened to the $787 billion they forked over to this rapacious lot in 2009.
              While Barack and Michelle decry the evil capitalists who don’t pay their fair share they take tens of millions from the middle class and spend it on lavish getaways.

          2. The “Weekly Standard” is right up there with Fox News when it comes to credibility of data. By the way, where is their numbers on the waste resulting from the Bush/Cheney Wars?

            1. Again — that’s not what jimg is saying, I am sure. What I think he is saying is, “Get a little perspective. $115,000 is coffee money compared to the astronomical amount wasted on stupid wars.” (jimg?)

              By the way, congratulations on your recent post to hannahjs — a rare positive event in that it wasn’t exploding with hatred and vitriolic insult.

            2. re “go back to sleep”
              Whew!!! Sure got me there. Bet you used to win Debating Society championships with that sort of incisive retort.

  5. Lets not get all Flag wavy here.. The German industries already have an advantage on us in that Germany has Universal health care and Universal Retirement .. that is a huge tax on US industries. You cannot compare Fruits to Vegetables and claim our system is better when clearly ours is a joke by saddling the employer with your healthcare and retirement ! Then complaining about corporate taxes! Our systems are different and by the way , Germany is the strongest economy in Europe. Has a higher standard of living than the US. Work less hours for more real wages and benefits, and has better education. If you want to point to a system that is a joke look at the US.. We are so afraid of doing things in an efficient manner (Universally) that we saddle ourselves with a crappy insurance system that leaves many without healthcare and retirement, creates low wage service jobs.. invests in nothing for our future anymore…. That is a broken system… we should not be so proud and arrogant about it… Middle class wages have been negative for 3 decades! Upper income wages up 430% We are striving for 3rd world status not the leader of the free market economy anymore.
    I have lived in both Countries and have seen the difference first hand.. we are no longer the model for other countries as we have killed our golden goose for a quick profit and a poor future.

  6. The “Tax Haven” countries don’t attract some massive business investments. All they bring is a small non-descript office with no employees and just a legal physical address in such country, through which it then funnels $30 billion of revenue, without bringing a cent of taxes to the host country (or any other country for that matter).

    So, those “tax haven” countries may be attracting massive corporations for their tax loopholes, but they certainly aren’t doing it for their own benefits, as there are none (at least in the case of Ireland and Apple Operations International.

  7. Weakest MacDailyNews Take for a long time. What are they trying to say? No need to pay taxes as Apple gets jobless persons off the street, or Apple’s three expats strongly support local German economy by buying lederhosen, eating sauerkraut, and drinking beer?

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