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Interesting Links for 10-04-2012
Illuminati
andrewducker

Original post on Dreamwidth - there are comment count unavailable comments there.

Did you catch that thing the other day about how Amazon pays virtually no UK tax? I noticed just last night that Ebay is registered in Luxumburg too, so two of the very biggest UK retailers, not paying any UK tax.

No wonder the high street is in collapse, not only can they not compete with the internet, the internet companies also aren't paying any tax.

Which is to say, yep, apparently not only are the rich avoiding tax, but the companies are too. Be interesting to know exactly who pays how much in this country.

Amazon, Ebay etc. are paying corporation tax, they are just paying it in Luxembourg where the rate is just under 22%. Here is was 28% until the budget when it went down to 25%. I guess nations within the EU could start cutting their tax rates to compete for the likes of Amazon's business, but Luxembourg being so small loses far less income from its existing tax base if it cuts tax rates then a bigger country would so there is only going to be one winner of that battle.

This is where the idea of tax incidence comes in.

I think the argument is that only indivduals pay tax. Organisations, like companies that appear to pay tax are only convenient places to apply a tax.

If you lower the rate of corporation tax you leave more profit to be distributed by the company. This will distributed between customers, suppliers, various groups of employees, lenders and owners depending on their relative bargaining positions.

So, if the UK and Luxembourg had a tit for tat attempt to under cut each other on corporation tax in order to attract Amazon to have its head office in one or the t’other you would expect the corporation tax Amazon pays to fall to zero leaving lots of money to be haggled over by the other stakeholders in Amazon.

How they end up dividing that used-to-be-corporation-tax cake is anyone’s guess? How and which government is gets to tax that additional income is also moot.

Basically, the idea is that if you cut Amazon’s corporation tax to zero you could increase income tax by a corresponding amount leaving Amazon to decide on its European HQ based mainly on operation considerers e.g. which city its MD wanted to live in, rather than tax rates.

It makes sense that there is no such thing as corporation tax, far easier to tax the profits when they are taken out of the company as income. The problem is that, then there will be no taxation income for anyone in the EU as Amazon is not a European country, just a subsidary of a US one.

I'm guessing that whether you permit profits made within the EU to simply be withdrawn to the US is another whole argument for accountants and tax lawyers.

No, it doesn't make sense. Corporations are artifical people: they can enter into contracts, hold assets and liabilities over time, sue and be sued. To say that for taxation purposes (but no other purposes) corporations should magically vanish into thin air is ridiculous.

In the UK, money is taxed when it changes hands, but with specific reliefs. This definition covers income tax, VAT, sin taxes, stamp duty, and corporate tax (which has a great big relief for "business expenses"). Tighten up on the reliefs available, subject to EU law, but corporate tax should stay and is staying.

Amazon is a US company in that it is based in the US. That doesn’t tell you much about where the ultimate shareholders live and where they would be subject to income tax.

A point well missed by President Obama when he went after BP, which is about one third owned by US pensioners.

It also doesn’t tell you how able EU citizens who work for Amazon would be to negotiate better pay if Amazon didn’t have to pay EU corporation taxes.


Transfer pricing for tax purposes is an interesting field but not one I have gotten much involved in.

Maybe the UK, France, Germany, Italy and Spain should just invade Luxembourg for being free riders. And also the Channel Islands, Monaco, etc.

We can't. We can't afford it. Luxembourg has got all the money.

By annual GDP, Luxembourg is a $40 billion economy. The UK is a $2 trillion GDP economy and currently enjoys near-record-low costs of borrowing. Why would we invade when we could just buy out the ducal family on the never-never?

What are the captial gains tax implications of a pure invasion compared to buying out a going concern?

Accelerated depreciation on all deployed materiel, extending to a complete write-off of expended ordnance?

That...

... and a significant write of goodwill upon acquisition.

Even though politicians average older than the general population, the internet has been around long enough that politicians should have some understanding of the net just by having used it.

Quasi-quote: People party when they drink alcohol. With coffee, they stay sober and plot revolution.

Edited at 2012-04-10 12:40 pm (UTC)

I’m not convinced that politicians don’t understand the internet (nor that entertainers don’t understand the entertainment business). Certainly, the linked to article offers no evidence that they don’t understand it except that they are trying to do things that are unpopular in certain communities.

(I notice that I am not convinced by lots of things today – I am having a sceptical day.)

I've seen plenty of evidence that they mostly don't engage with it on any level beyond "You can buy stuff there, and read the newspapers". They don't seem to grasp the technology behind it, and I've seen precious little evidence that many of them use it socially.

I've seen a load of interviews where politicians say really stupid things about the internet that indicate that they have heard of the internet, because their aides have mentioned it in passing, but it's something Other People Do.

That's evidence from a source I trust.

I am now less unconvinced.

Just to qualify, there are definitely MPs out there who use the internet. But so far as I can tell there are no MPs that used to be IT professionals, and the kinds of people who end up as MPs don't tend to be the same people that spent lots of time faffing about on bulletin boards or engaged in Wikipedia edit wars.

I would _love_ to see a Myers-Briggs or Big Five personality breakdown on our sitting politicians, because I suspect there would be some fascinating clustering.

There *was* a MP with a professional IT background, Nick Palmer, but he lost his seat in 2010. Hoping to return in 2015 though. (He's also a gamer.)

Aaah, that's good to know. Thanks!

Our MP (Julian Hupper, LD, Cambridge) is/was a physicist before getting elected. He's constantly tweeting stuff... I think he probably gets the internet more than a lot of people do.

I'm not sure what sort of proportion of non-MPs understand the internet as something other than a way of buying stuff, reading the newspapers, and playing farmville (that is - I'm not sure MPs are atypical in this regard, although maybe they play farmville less). I think the extremely IT-literate crowd I hang out with is probably atypical.

It would be fascinating.

Someone said something (here I think) about politicians learning to pass the test which resonated with me.

Keep changing the test.

"Text From Dog. This made me laugh a lot."

LOL.

"The rise of Eastercon: the SF/fantasy convention with community spirit"

Although I was just reading an article by an acquiantance, lamenting the low level of awareness of any culture or country outside standard western anglophone culture (http://www.alexdallymacfarlane.com/2012/04/eastercon-it-was-fun-but/). I think it's a case of a culture improving a lot, but still having a long way to go towards how it would ideally be, which tends to polarise people into those pleased at how inclusive it is already, and those resentful at how it's comparatively crappy for lots of people.

Danaerys Targaryan[sic]

Argh! Daenerys Targaryen.

Money != military power?

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