Leaked Documents Expose Global Companies’ Secret Tax Deals in Luxembourg(icij.org)
icij.org
Leaked Documents Expose Global Companies’ Secret Tax Deals in Luxembourg
http://www.icij.org/project/luxembourg-leaks/leaked-documents-expose-global-companies-secret-tax-deals-luxembourg
10 comments
The image you are talking about appears to be: http://www.flickr.com/photos/25012939@N03/4196459317 on that image it says: "Some rights reserved" and when you click through you are taken to https://creativecommons.org/licenses/by-sa/2.0/
So, it appears you have the photograph available on the Attribution-ShareAlike 2.0 Generic Creative Commons license. The original story using your picture is attributing it to you. So it appears to me that they've done nothing wrong.
If you want to ask them not to use it then there's a contact page: http://www.euractiv.com/contact
So, it appears you have the photograph available on the Attribution-ShareAlike 2.0 Generic Creative Commons license. The original story using your picture is attributing it to you. So it appears to me that they've done nothing wrong.
If you want to ask them not to use it then there's a contact page: http://www.euractiv.com/contact
It's not necessarily that simple.
The European Convention on Human Rights, Article 8 grants a right to privacy.
It is not clear whether or not the right under copyright law to copy an image is always sufficient to give you a right to publish the image. That depends on jurisdiction.
In the UK, for example, it does not, as a result of the way ECHR has been implemented in local law through the Human Rights Act 1998, though courts have to weigh Article 8 against Article 10 (freedom of expression) so it's not clear cut.
EDIT: The EU Data Protection Directive, and it's member state implementations (so in the UK the Data Protection Act, for example) also comes into play.
Consider e.g. that Google Street View was met with threats of lawsuits in many European countries until the blurred out faces - while Google had the right to take the pictures, and have the copyright to the images, privacy laws and human right laws in many European countries did not give them automatic right to publish those images.
The European Convention on Human Rights, Article 8 grants a right to privacy.
It is not clear whether or not the right under copyright law to copy an image is always sufficient to give you a right to publish the image. That depends on jurisdiction.
In the UK, for example, it does not, as a result of the way ECHR has been implemented in local law through the Human Rights Act 1998, though courts have to weigh Article 8 against Article 10 (freedom of expression) so it's not clear cut.
EDIT: The EU Data Protection Directive, and it's member state implementations (so in the UK the Data Protection Act, for example) also comes into play.
Consider e.g. that Google Street View was met with threats of lawsuits in many European countries until the blurred out faces - while Google had the right to take the pictures, and have the copyright to the images, privacy laws and human right laws in many European countries did not give them automatic right to publish those images.
He published the image online, publicly, himself. It's kind-a hard for him to claim it's violating his privacy.
EU privacy laws does not work that way.
EDIT: To expand slightly: That you have published something yourself, in one context, does not automatically imply that publication in others contexts is ok. It may be sufficient in this case, because the article is hardly all that controversial, but you can not automatically assume that publication implies consent for publication elsewhere.
EDIT: To expand slightly: That you have published something yourself, in one context, does not automatically imply that publication in others contexts is ok. It may be sufficient in this case, because the article is hardly all that controversial, but you can not automatically assume that publication implies consent for publication elsewhere.
> you can not automatically assume that publication implies consent for publication elsewhere.
I'm not automatically assuming that - the guy explicitly licensed his photo as CC-By-Sa - I don't think any reasonable person would assume that means "don't republish" or "republish, but only where I approve"!
I'm not automatically assuming that - the guy explicitly licensed his photo as CC-By-Sa - I don't think any reasonable person would assume that means "don't republish" or "republish, but only where I approve"!
First of all, I was responding to your statement that publication in one context is sufficient to imply that there's no privacy issue. It is not that clear cut - privacy is not binary.
The recent controversy over the "right to be forgotten" is a good illustration: The "right to be forgotten" is not something that is explicitly part of law, but the result of an interpretation of EU privacy rights and the interplay with freedom of expression. The outcome of which was a judgement to allow people to reduce the level of exposure of information even when that information was already out there, and despite deciding that removing the information from the source in that case was going too far.
Secondly, copyright is by no means the only law that governs your ability to publish something, and in Europe "any reasonable person" ought to at least consider that depending on their specific country and specific circumstances they may run afoul of one or more other laws if they republish without checking with the photographer and subjects in the case of photographs that includes people.
The license only governs the rights to reproduce the image, but depending on other laws and situations, privacy rights, moral rights (droit d'auteur/authors rights) and portrait rights may all come into play (moral rights belong to the author (photographer); portrait rights lie with the subject - both are usually non-transferrable in the countries that recognise them; basic moral rights are explicitly recognised by the Berne convention).
The recent controversy over the "right to be forgotten" is a good illustration: The "right to be forgotten" is not something that is explicitly part of law, but the result of an interpretation of EU privacy rights and the interplay with freedom of expression. The outcome of which was a judgement to allow people to reduce the level of exposure of information even when that information was already out there, and despite deciding that removing the information from the source in that case was going too far.
Secondly, copyright is by no means the only law that governs your ability to publish something, and in Europe "any reasonable person" ought to at least consider that depending on their specific country and specific circumstances they may run afoul of one or more other laws if they republish without checking with the photographer and subjects in the case of photographs that includes people.
The license only governs the rights to reproduce the image, but depending on other laws and situations, privacy rights, moral rights (droit d'auteur/authors rights) and portrait rights may all come into play (moral rights belong to the author (photographer); portrait rights lie with the subject - both are usually non-transferrable in the countries that recognise them; basic moral rights are explicitly recognised by the Berne convention).
Actually, Berne Convention and thus copyright covers this under the description Moral rights (https://en.wikipedia.org/wiki/Moral_rights).
In the US, slander and libel is mostly used to cover this. For example, the publishers are liable if they cause harm to the reputation of the photographer or anyone in the pictures.
In the US, slander and libel is mostly used to cover this. For example, the publishers are liable if they cause harm to the reputation of the photographer or anyone in the pictures.
I wish people would give more consideration to this (whether they are legally required to or not).
It was more difficult than I thought it would be to counter your argument, as there hasn't been a judgement on the exact same circumstances, so I think downvoting you is unjustified. But I still think your legal reasoning is flawed.
First, "It is not clear whether or not the right under copyright law to copy an image is always sufficient to give you a right to publish the image" is misleading - yes copyright does cover the right to publish, what you're getting at is the special protection of the publication of people's images.
Secondly, looking at it from this angle, the Von Hannover judgements of the ECHR provide a number of criteria for judging the lawfullness of publication. One of them is the earlier behaviour of the person in consideration, from which (given the circumstances of him publishing the picture himself) it is easily derived that this publishing cannot reasonably be considered unlawful. Also the other criteria (is the publication harmful, circumstances the picture were taken etc) don't point at anything that would indicate that whoever published this picture, did so unlawfully. When you look at previous judgements of the ECHR, it is highly unlikely that a case would even be admitted because it seems self-evident that the person depicted didn't think through the effects of putting his picture online and/or doesn't like who is re-publishing his picture. Which is not a valid legal argument.
FWIW yes I have a law degree but have never practiced.
First, "It is not clear whether or not the right under copyright law to copy an image is always sufficient to give you a right to publish the image" is misleading - yes copyright does cover the right to publish, what you're getting at is the special protection of the publication of people's images.
Secondly, looking at it from this angle, the Von Hannover judgements of the ECHR provide a number of criteria for judging the lawfullness of publication. One of them is the earlier behaviour of the person in consideration, from which (given the circumstances of him publishing the picture himself) it is easily derived that this publishing cannot reasonably be considered unlawful. Also the other criteria (is the publication harmful, circumstances the picture were taken etc) don't point at anything that would indicate that whoever published this picture, did so unlawfully. When you look at previous judgements of the ECHR, it is highly unlikely that a case would even be admitted because it seems self-evident that the person depicted didn't think through the effects of putting his picture online and/or doesn't like who is re-publishing his picture. Which is not a valid legal argument.
FWIW yes I have a law degree but have never practiced.
> But I still think your legal reasoning is flawed.
I did not make a legal reasoning. I pointed out that the issue is not clear.
> Secondly, looking at it from this angle, the Von Hannover judgements of the ECHR provide a number of criteria for judging the lawfullness of publication.
You can't only look at the ECHR, as the ECHR is not itself law and the national laws implementing it in each state subject to it differ greatly. The ECHR is relevant because it is the source of most of this legislation, but as long as the national laws implementing the principles are not in conflict with the ECHR, the can - and often does - add additional restrictions. Which is why I pointed out that the issue is not clear and that simply pointing to the license is insufficient.
As I pointed out, in the UK (which I used as an example only because I live here) it is clear that copyright is insufficient to control your right to publish. In fact, in addition to the Human Rights Act, the Data Protection Act and the Copyright, Design and Patents Act both add additional restrictions that may prevent or limit publication beyond copyright. I don't know the extent of legal restrictions in the rest of Europe.
I did not make a legal reasoning. I pointed out that the issue is not clear.
> Secondly, looking at it from this angle, the Von Hannover judgements of the ECHR provide a number of criteria for judging the lawfullness of publication.
You can't only look at the ECHR, as the ECHR is not itself law and the national laws implementing it in each state subject to it differ greatly. The ECHR is relevant because it is the source of most of this legislation, but as long as the national laws implementing the principles are not in conflict with the ECHR, the can - and often does - add additional restrictions. Which is why I pointed out that the issue is not clear and that simply pointing to the license is insufficient.
As I pointed out, in the UK (which I used as an example only because I live here) it is clear that copyright is insufficient to control your right to publish. In fact, in addition to the Human Rights Act, the Data Protection Act and the Copyright, Design and Patents Act both add additional restrictions that may prevent or limit publication beyond copyright. I don't know the extent of legal restrictions in the rest of Europe.
I'm not sure what we're arguing any more - if it's 'is in abstract terms copyright the only legal protection of content distribution' then the answer is an unsurprising and boring 'of course not'.
But if we're talking about this specific case, there is a) copyright, and b) the additional rights of those depicted in a (potentially) copyrighted work, which in terms of the ECHR boils down to art 8 vs art 10. (privacy vs freedom of speech). Which, as I argued before, when measured against the criteria the ECHR laid out for the application and interpretation of the European Convention on Human Rights, can only be reasonably explained one way in the current case.
More specifically, I do not see how national legislation can, in this case, give the GP any right to ask the website that uses his picture to take it down while still be within the bounds that the Court laid out in previous rulings.
Of course I'm just typing here between compiles with a quick Google left and right to roughly check the general validity of what I'm saying, so I did not do an extensive study on the implementations of various relevant laws in all signatories to the ECHR. So if you have any national legislation that you think would give the GP a case, and that would hold up when brought before the ECHR would be held in compliance with the Convention, then we can proceed from there.
But if we're talking about this specific case, there is a) copyright, and b) the additional rights of those depicted in a (potentially) copyrighted work, which in terms of the ECHR boils down to art 8 vs art 10. (privacy vs freedom of speech). Which, as I argued before, when measured against the criteria the ECHR laid out for the application and interpretation of the European Convention on Human Rights, can only be reasonably explained one way in the current case.
More specifically, I do not see how national legislation can, in this case, give the GP any right to ask the website that uses his picture to take it down while still be within the bounds that the Court laid out in previous rulings.
Of course I'm just typing here between compiles with a quick Google left and right to roughly check the general validity of what I'm saying, so I did not do an extensive study on the implementations of various relevant laws in all signatories to the ECHR. So if you have any national legislation that you think would give the GP a case, and that would hold up when brought before the ECHR would be held in compliance with the Convention, then we can proceed from there.
You seem to be talking about something totally different.
How am I talking about something totally different?
Your comment implied that simply looking at the license was sufficient to determine whether or not there is a right to publish, and that is not always the case. All I did was point out that other rights also comes into play.
Your comment implied that simply looking at the license was sufficient to determine whether or not there is a right to publish, and that is not always the case. All I did was point out that other rights also comes into play.
> The European Convention on Human Rights, Article 8 grants a right to privacy.
The Fourth Amendment grants "the right of the people to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures", except that it doesn't, as evidenced by "Aggressive police take hundreds of millions of dollars from motorists not charged with crimes": http://www.washingtonpost.com/sf/investigative/2014/09/06/st...
The moral of the story here is that laws don't actually grant any rights. The rights we have are not bestowed upon us by governments, but are inherent to all of us by virtue of being human.
Laws don't apply to the ruling class and their cronies and enforcers. You need to see that there's no room for doubting that claim anymore. Not after zero Wall Street bigwigs have gone to jail for wrecking the world's economy, and not when police officers are actively just plain looting people.
Words on a piece of paper somewhere don't magically prevent people with political power from abusing you in the here and now.
EDIT: Downvoters? Care to tell me how I'm wrong?
The Fourth Amendment grants "the right of the people to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures", except that it doesn't, as evidenced by "Aggressive police take hundreds of millions of dollars from motorists not charged with crimes": http://www.washingtonpost.com/sf/investigative/2014/09/06/st...
The moral of the story here is that laws don't actually grant any rights. The rights we have are not bestowed upon us by governments, but are inherent to all of us by virtue of being human.
Laws don't apply to the ruling class and their cronies and enforcers. You need to see that there's no room for doubting that claim anymore. Not after zero Wall Street bigwigs have gone to jail for wrecking the world's economy, and not when police officers are actively just plain looting people.
Words on a piece of paper somewhere don't magically prevent people with political power from abusing you in the here and now.
EDIT: Downvoters? Care to tell me how I'm wrong?
Presumably you were downvoted because the comment completely derails from what was under discussion. (EDIT: For what it's worth, I didn't downvote you, but I did think it was a bit of a weird digression)
And while I agree with you in theory that "laws don't "actually grant any rights", that's a matter of ideology. For all practical intents, they do.
E.g. in the specific case of the European Convention on Human Rights, it has the effect of granting rights by preventing signatories that have subordinated themselves to it from enforcing laws that try to take those rights away. The UK for example, have had parts of terror legislation struct down as a result, and have complied.
And while I agree with you in theory that "laws don't "actually grant any rights", that's a matter of ideology. For all practical intents, they do.
E.g. in the specific case of the European Convention on Human Rights, it has the effect of granting rights by preventing signatories that have subordinated themselves to it from enforcing laws that try to take those rights away. The UK for example, have had parts of terror legislation struct down as a result, and have complied.
Sure, it was a bit of a weird digression. But I figured it would be useful to you.
> And while I agree with you in theory that "laws don't "actually grant any rights", that's a matter of ideology. For all practical intents, they do.
Practical intents? Well, here's a practical example: if laws actually affected/defined rights, then the government could just pass a law that says "it's alright to kill innocent bystanders", and people would have no problem with it.
But we both know people would consider such a law illegitimate (and insane), exactly because passing a law that says it's alright to kill people doesn't actually make it moral to do so. In other words, rights are not defined by laws, even in practice.
> it has the effect of granting rights by preventing signatories that have subordinated themselves to it from enforcing laws that try to take those rights away
So once a government signs a paper that says X, it can't sign another paper that says not-X? Or alternatively, if a government promises it'll be good, it can't then be bad?
If government A promises to be good, but is bad, will governments B, C and D then invade A to force it to be good? Or will they go give A a stern talking to? Or will they perhaps impose economic sanctions that hurt their own economies too?
You see, signing a law that says a government will be good is nothing but PR, in practice.
> And while I agree with you in theory that "laws don't "actually grant any rights", that's a matter of ideology. For all practical intents, they do.
Practical intents? Well, here's a practical example: if laws actually affected/defined rights, then the government could just pass a law that says "it's alright to kill innocent bystanders", and people would have no problem with it.
But we both know people would consider such a law illegitimate (and insane), exactly because passing a law that says it's alright to kill people doesn't actually make it moral to do so. In other words, rights are not defined by laws, even in practice.
> it has the effect of granting rights by preventing signatories that have subordinated themselves to it from enforcing laws that try to take those rights away
So once a government signs a paper that says X, it can't sign another paper that says not-X? Or alternatively, if a government promises it'll be good, it can't then be bad?
If government A promises to be good, but is bad, will governments B, C and D then invade A to force it to be good? Or will they go give A a stern talking to? Or will they perhaps impose economic sanctions that hurt their own economies too?
You see, signing a law that says a government will be good is nothing but PR, in practice.
I don't really see how people have down-voted you other than the fact that they don't agree with your opinion and I really don't think that should be an excuse to just grey out someone's opinion unless it is downright stupid/misinformed/ or extremely offensive.
Is it not better to have the opinion visible and actually have a constructive argument about that vs down-voting it to the point at it is barely readable.
Is it not better to have the opinion visible and actually have a constructive argument about that vs down-voting it to the point at it is barely readable.
+1 for you, Good Sir :)
Actually, wouldn't the story have to be licensed under the same license to satisfy the terms? Is it?
No, including an image that is licensed in this way is not going to force that relicensing. I don't believe that this type of use is a 'derivative work' and so the ShareAlike clause would not mean the overall story had to be licensed in the same way.
Huh, you're right! See http://mollykleinman.com/2008/08/29/cc-howto-share-alike/
That is not how I expected it to work.
That is not how I expected it to work.
[deleted]
You must be thinking GPL licensing?
The "share alike" variant of the cc license that was used here does seem to have similar copy left clauses.
What license did you choose for your photographs on Flickr? If you chose a Creative Commons Attribution license without further restrictions, you don't really have any grounds to complain, though of course you can still ask nicely to have it removed.
If they are actually violating the license terms, the best idea is still to first ask nicely. If they don't comply, you can sue.
"compensation for damage" you can pretty much forget about unless you can prove actual damages.
If they are actually violating the license terms, the best idea is still to first ask nicely. If they don't comply, you can sue.
"compensation for damage" you can pretty much forget about unless you can prove actual damages.
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EDIT: Interesting that people are downvoting a simple "talk to them, here's how" comment. Before going all litigious and looking up the specifics of fair use for various licenses, what exactly is wrong with asking them nicely?
EDIT: Interesting that people are downvoting a simple "talk to them, here's how" comment. Before going all litigious and looking up the specifics of fair use for various licenses, what exactly is wrong with asking them nicely?
> Before going all litigious and looking up the specifics of fair use for various licenses, what exactly is wrong with asking them nicely?
I agree. Most likely they've just done a quick search and don't particularly care what photo they used.
I agree. Most likely they've just done a quick search and don't particularly care what photo they used.
Well, it looks someone has covered the CC by-sa license already so it sure looks fine to use, they're missing citation of the license though.
Also missing "a copyright notice, ... a disclaimer notice, and a link to the material."
[deleted]
Creative Commons license covers copyright, but doesn't cover model release. You may have something actionable there.
Streisand effect, do you know about it?
This is common knowledge for ages, good to see it properly proven.
However, it seems there's something else at play here when you realize Juncker has just started his term as European Comission president, and the TTIP deals going on. It seems fishy that this only appears now and with such fanfare.
However, it seems there's something else at play here when you realize Juncker has just started his term as European Comission president, and the TTIP deals going on. It seems fishy that this only appears now and with such fanfare.
Well, now is the best time then. It's good to see on what ground the modern european leaders are built.
Dont forget that germany officially punished Cyprus for doing similar things.
And lets not forget he is not an elected President
Dont forget that germany officially punished Cyprus for doing similar things.
And lets not forget he is not an elected President
European Union is a union in a UN sense rather than USA sense. There is no European value or identity to defend, so neither Cyprus nor Luxembourg is doing anything wrong really, just playing their card and do the best for their citizen first and foremost.
Cyprus found itself in a hole with no good geopolitical bargaining chips so they got screwed. All the argumentation that followed was to make the pill easier to swallow for other EU citizen. Like "Look we are screwing them up and it is scary but they are bad guys, so don't worry, that won't happen here."
Nobody is unhappy with Luxembourg right now, so nothing will happen. At best politician in other countries will moan and complain about the various companies involved and maybe build up public outrage to justify extra local taxation.
Cyprus found itself in a hole with no good geopolitical bargaining chips so they got screwed. All the argumentation that followed was to make the pill easier to swallow for other EU citizen. Like "Look we are screwing them up and it is scary but they are bad guys, so don't worry, that won't happen here."
Nobody is unhappy with Luxembourg right now, so nothing will happen. At best politician in other countries will moan and complain about the various companies involved and maybe build up public outrage to justify extra local taxation.
>European Union is a union in a UN sense rather than USA sense
Are you from the EU? You do know that EU law supersedes national law, right? Or that a number of southern european countries don't have control of their finances for 5+years now?
It's not an inconsequential union.
Also, if they are not doing nothing wrong, then i don't know if the word "wrong" has any uses anymore.
Are you from the EU? You do know that EU law supersedes national law, right? Or that a number of southern european countries don't have control of their finances for 5+years now?
It's not an inconsequential union.
Also, if they are not doing nothing wrong, then i don't know if the word "wrong" has any uses anymore.
EU law functions via directives, which are implemented by governments into local law. It's a little different to the US federal system.
Those southern European countries do have direct control of their own finances. They could declare bankruptcy and start over if they wanted to. When people say they are 'controlled' by Germany or whatever, those people are in a lazy and misleading way saying that those countries preferred to get loans from other countries and submit to those lenders requirements rather than immediately make their spending match their tax revenues ... because borrowing is easier, politically. But that's still a free choice they made.
WRT wrongness, you seem to believe that any country which charges a lower tax rate than any other country is somehow immoral? You want a global government that sets a single tax rate for every person and company on earth? That's one way to avoid people playing jurisdictional arbitrage, but I don't see anyone arguing for that.
Those southern European countries do have direct control of their own finances. They could declare bankruptcy and start over if they wanted to. When people say they are 'controlled' by Germany or whatever, those people are in a lazy and misleading way saying that those countries preferred to get loans from other countries and submit to those lenders requirements rather than immediately make their spending match their tax revenues ... because borrowing is easier, politically. But that's still a free choice they made.
WRT wrongness, you seem to believe that any country which charges a lower tax rate than any other country is somehow immoral? You want a global government that sets a single tax rate for every person and company on earth? That's one way to avoid people playing jurisdictional arbitrage, but I don't see anyone arguing for that.
So in any case, EU is something a lot deeper than the UN.
Wrt to wrongness, yes, it is wrong that a small country takes advantage of the openness and loopholes of global economies to funnel money in their direction. There is a simple asymmetry at the core that thei exploit: a big democratic country will never be able to lower corporate taxes because the citizens/wealth generators will protest. A tiny dictatorship or otherwise tiny country with no other resources will be able to convince its citizens that a sustainable future can be built by leeching off funneled money made in other countries. To me that is immoral
Or are you suggesting that any of these countries could survive financially with such low tax rates without the foreign money?
PS. With respect to the amount of control over indebted countries government, consider the case of Greece. Yes they could have opted out by voting in a referendum, but when the prime minister proposed to do that he was deposed overnight.
Wrt to wrongness, yes, it is wrong that a small country takes advantage of the openness and loopholes of global economies to funnel money in their direction. There is a simple asymmetry at the core that thei exploit: a big democratic country will never be able to lower corporate taxes because the citizens/wealth generators will protest. A tiny dictatorship or otherwise tiny country with no other resources will be able to convince its citizens that a sustainable future can be built by leeching off funneled money made in other countries. To me that is immoral
Or are you suggesting that any of these countries could survive financially with such low tax rates without the foreign money?
PS. With respect to the amount of control over indebted countries government, consider the case of Greece. Yes they could have opted out by voting in a referendum, but when the prime minister proposed to do that he was deposed overnight.
Yes, the Greek people really really didn't want to see the Drachma come back. They know that their corrupt and inefficient government would inflate away their currency at a prodigious rate if they went back to having their own currency and the rules imposed by the foreign lenders are really the best way to reform their governments. Kind of messed up, but there it is.
Do you seriously think Luxembourg is actually some kind of third world state that is only doing well because it has low corporation taxes? I think you should review the economies of countries painted as tax havens before concluding that. And of course big democratic countries can lower corporation taxes. If the citizens prefer not to do that, OK, that's their choice, but companies leaving is the expected outcome of that. It's not some kind of immorality on the behalf of other citizens of other countries to exploit that. Unless you're going to paint all Irish people as immoral, for example, which is absurd.
Do you seriously think Luxembourg is actually some kind of third world state that is only doing well because it has low corporation taxes? I think you should review the economies of countries painted as tax havens before concluding that. And of course big democratic countries can lower corporation taxes. If the citizens prefer not to do that, OK, that's their choice, but companies leaving is the expected outcome of that. It's not some kind of immorality on the behalf of other citizens of other countries to exploit that. Unless you're going to paint all Irish people as immoral, for example, which is absurd.
You are mixing up two persons: Jean-Claude Juncker is starting his term as the European Comission president. Jean-Claude Trichet was president of the ECB.
Yes of course, that's what I meant. I edited the original post.
Common knowledge that Jean-Claude Juncker has just begun his term as European Commission President.
Anyone got any ideas on how governments could effectively clamp down on this?
In Australia, IKEA paid 1%* tax over the last 12 years, even as sales surged 500%:
http://www.theguardian.com/world/2014/nov/06/luxembourg-tax-...
(The Guardian article has since removed the 1% reference, though it was in there when I first read the article.)
In Australia, IKEA paid 1%* tax over the last 12 years, even as sales surged 500%:
http://www.theguardian.com/world/2014/nov/06/luxembourg-tax-...
(The Guardian article has since removed the 1% reference, though it was in there when I first read the article.)
I'm not saying I condone it (I especially don't like the part of routing all of your profits made in other countries through a single country with lower taxes, and don't think it's fair) - but maybe there's an argument to be made about low income tax for corporations, if that actually leads to much higher sales (on which consumers pay VAT, so tax money still goes to the government)?
Lower tax rates, and simpler tax rules, often lead to higher revenues. Make it easy to comply with the rules, set reasonable rates, and companies may find it easier to deal with than setting up shell offices in another country and employing teams of accountants and lawyers and bankers to shuffle the money around.
The quesution is.... and what about small businesses? Why should they be treated differently than corps?
Or, no income tax at all and just a sales/use tax across the board.
Tax the sale of the item to the end buyer and do away with all corporate taxes? That would be easiest method but psychologically it may cause angst amount the populace when they realize just how much tax they pay on everyday purchases.
going back to other stories, if and when space tourism takes off, whats to stop someone from relocating to orbit and avoiding excessive and at times abusive taxation?
going back to other stories, if and when space tourism takes off, whats to stop someone from relocating to orbit and avoiding excessive and at times abusive taxation?
I personally like the idea of dropping income taxes and switching to just sales/use tax. Compliance is simplified, tax codes are simplified, and tax avoidance is reduced. There are many practical aspect that would need to be resolved, like how do you apply this to imports and such, but those are solvable problems.
Most countries use VAT rather than sales tax, which is generally agreed by people who specialise in tax incidence to be better, but comes with its own interesting forms of evasion (see "carousel fraud").
Phasing out corporation tax entirely would be impossible for most countries to do quickly because such a huge part of their budgets come from that. In the UK it's about 25% I believe and the government there is still spending far, far more than it takes in via tax, so losing 25% of that revenue is a non-starter, and making it up with higher personal income taxes would be politically impossible: even if you could prove mathematically it was equivalent or better to do that, people feel very strongly that there exists an "us vs them" relationship between people and companies, where "us" often includes the government. This is despite that most people work for companies, and there's lots of evidence governments should sometimes be in the "them" bucket.
I don't really know where societies go from here with corporation tax - there are so many good arguments against it, but it's sort of like trying to give up smoking. You can argue all you want but lots of countries just aren't going to do it.
The first step would be to get western state finances more balanced though. Once governments aren't ballooning their debt, more complex arguments about taxation become possible to make. Whilst they're all spiralling the drain it's too hard.
Phasing out corporation tax entirely would be impossible for most countries to do quickly because such a huge part of their budgets come from that. In the UK it's about 25% I believe and the government there is still spending far, far more than it takes in via tax, so losing 25% of that revenue is a non-starter, and making it up with higher personal income taxes would be politically impossible: even if you could prove mathematically it was equivalent or better to do that, people feel very strongly that there exists an "us vs them" relationship between people and companies, where "us" often includes the government. This is despite that most people work for companies, and there's lots of evidence governments should sometimes be in the "them" bucket.
I don't really know where societies go from here with corporation tax - there are so many good arguments against it, but it's sort of like trying to give up smoking. You can argue all you want but lots of countries just aren't going to do it.
The first step would be to get western state finances more balanced though. Once governments aren't ballooning their debt, more complex arguments about taxation become possible to make. Whilst they're all spiralling the drain it's too hard.
I would understand how small countries would have a hard time dealing with big corps but could not a big country just tell them to close shop and go elsewhere if it deems them to be evading taxes? Probably some kind of FTA forbids his but in principle it should work, shouldn't it? After all countries are supposed to be sovereign entities.
Problem is, in regard of European laws, you can't tell them to fuck off if they are not doing anything unlawful.
And here it is the case, they exploit a hole in the law which allows to create subsidiaries in Luxembourg through which the French/German/whatever company is paying the products it sells.
The hole in the law is not really a hole, it's designed to work like that.
The EU single market was created to simplify trade across borders in Europe, because that makes everyone wealthier. Imagine if every country had to make everything itself!
Tax is a big part of what makes trade complicated. If you had to file taxes in dozens of different languages, dozens of times, each year to every EU country, it'd be much harder to sell across the single market. So the EU does not require that, you can incorporate once and sell to the whole market. That means, you get to pick where in the EU you incorporate, and as different regions have different levels of taxation .... well, it's no different to freedom of movement for individuals. They can go live somewhere with lower taxes if they want to. The places they didn't choose to live might not like that, but you can't have both simplicity and every government getting to tax everyone else.
The EU single market was created to simplify trade across borders in Europe, because that makes everyone wealthier. Imagine if every country had to make everything itself!
Tax is a big part of what makes trade complicated. If you had to file taxes in dozens of different languages, dozens of times, each year to every EU country, it'd be much harder to sell across the single market. So the EU does not require that, you can incorporate once and sell to the whole market. That means, you get to pick where in the EU you incorporate, and as different regions have different levels of taxation .... well, it's no different to freedom of movement for individuals. They can go live somewhere with lower taxes if they want to. The places they didn't choose to live might not like that, but you can't have both simplicity and every government getting to tax everyone else.
First you need to communicate this to the public and show that the problem is only going to get worse, as globalization allows more and more elaborate schemes like this. This will justify lowering corporate taxes, or establishing official authorities that will negotiate special tax deals with companies. In short, what luxembourg is doing, all big countries will be doing soon as well.
There is only one correct solution - abolish all taxation based on profits.
Does anyone else read these articles and feel a tinge of jealousy? I'm hoping that someday one of my businesses will generate the kind of money that would make tax-hiding worthwhile.
As an aside, it's kind of nice to see the government's over-complicated tax code used against them.
As an aside, it's kind of nice to see the government's over-complicated tax code used against them.
To the extent these types of activities are legal, I still hope we'll see the media and customers increasingly--and visibly--questioning corporate/managerial patriotism in situations like this.
Love this. Would love to see similar stuff from Switzerland, Singapore, Channel islands, UAE etc.
I can totally see some CFO getting fired over this. For being NOT on the list.
I for one hope the countries in question will patch the tax holes, but not as much as to make the companies evade to other countries. The national economies would be vastly improved, at the expense of shareholder dividend.
Well, this problem is fundamental to trying to tax entities that don't have any specific location. Taxing people is quite simple because you can't split a person up - just count the days they reside in a particular tax jurisdiction and once it goes over a certain number of days per year, you say "you are resident here, benefiting from our services, so pay us tax" and as long as that number of days per year is reasonable, it all sort of works. And it feels fair(ish) because people can vote, so they get to control what their tax money is spent on, modulo lots of handwaving about how we all use insufficiently good voting systems.
A company though, can be split up and spread around, and many modern companies operate almost everywhere and yet nowhere in particular. That's very true of internet companies that don't need any local presence to operate in a country. Additionally they are seen as ideal tax targets by politicians because they can't vote, and are often perceived as "foreign" even if the reality is rather more complex, and people perceive tax on corporations to be free as the price increases that it (theoretically) results in can't be distinguished from general price rises due to inflation.
So we end up in a messy situation that suits nobody. Big companies exploit their trans-national nature to try and get taxed in places that don't really need the money like Luxembourg. Big countries try and exploit their size to extract as much money as possible from the evil foreign capitalists, regardless of where they may actually be based. Companies get taxed without representation and we just sort of ignore this because we feel they can already buy too much influence with politicians anyway, even without them actually getting to vote on anything.
And in the end, governments still don't have enough money.
Economists who study this problem sometimes conclude that the best rate to set corporation tax at is zero; they argue that "dead weight costs" of corporation taxes are very high compared to most taxes and besides, ultimately the costs get passed on to consumers. Of course this ignores the fact that business is global but taxation and voting is still very local. What might make theoretical sense in a textbook rarely seems sensible to the man on the street.
A company though, can be split up and spread around, and many modern companies operate almost everywhere and yet nowhere in particular. That's very true of internet companies that don't need any local presence to operate in a country. Additionally they are seen as ideal tax targets by politicians because they can't vote, and are often perceived as "foreign" even if the reality is rather more complex, and people perceive tax on corporations to be free as the price increases that it (theoretically) results in can't be distinguished from general price rises due to inflation.
So we end up in a messy situation that suits nobody. Big companies exploit their trans-national nature to try and get taxed in places that don't really need the money like Luxembourg. Big countries try and exploit their size to extract as much money as possible from the evil foreign capitalists, regardless of where they may actually be based. Companies get taxed without representation and we just sort of ignore this because we feel they can already buy too much influence with politicians anyway, even without them actually getting to vote on anything.
And in the end, governments still don't have enough money.
Economists who study this problem sometimes conclude that the best rate to set corporation tax at is zero; they argue that "dead weight costs" of corporation taxes are very high compared to most taxes and besides, ultimately the costs get passed on to consumers. Of course this ignores the fact that business is global but taxation and voting is still very local. What might make theoretical sense in a textbook rarely seems sensible to the man on the street.
> Companies get taxed without representation
Equating companies with actual people seems to be a uniquely american view (also, complaining about "double taxation" of corporate profits). Personally, I don't think those who pay the tax are those who "deserve" to vote or be represented by politicians/laws. In my view, companies (and their investors) have the privilege of being able to profit by providing services to citizens, and they should pay (be taxed) for this privilege.
Equating companies with actual people seems to be a uniquely american view (also, complaining about "double taxation" of corporate profits). Personally, I don't think those who pay the tax are those who "deserve" to vote or be represented by politicians/laws. In my view, companies (and their investors) have the privilege of being able to profit by providing services to citizens, and they should pay (be taxed) for this privilege.
I'm not American and don't live in America, so I guess you need to rethink that bit. Companies are clearly not people. If they were, they wouldn't be able to go jurisdictional shopping so easily.
Taxation without representation is pretty widely recognised as problematic though. Not for nothing did it help trigger the war of independence against in the colonies against the British. Think about it: if you can't influence politicians in any way, what stops them taxing 100% of your labour? The only thing that stops governments doing this at the moment is the fear of consequences from their citizens: either at the ballot box in democracies or at the hands of the mob in dictatorships. Companies can't vote and they can't rebel, so there has to be some kind of pressure that pushes back against ever higher taxation. Usually this is indirect: countries fear that if they tax companies too much, they'll go bust, people will lose their jobs, and then those people will vote.
But when companies are largely distributed and a government doesn't feel any real exposure via their own population, the natural tendency is to say "if you want to sell to our citizens, you have to pay us lots of tax" and there's not much a company can do about it except simply deny an entire population their services, which is about as useful a response as a person deciding the best way to lower their tax bill is to throw themselves off a bridge. Nobody wins in this situation!
> In my view, companies (and their investors) have the privilege of being able to profit by providing services to citizens, and they should pay (be taxed) for this privilege.
Since when is the ability to make a profit by engaging in trade a "privilege"? People were doing that in the earliest tribes and farming settlements where the closest thing to a government was the local alpha male. The privilege of taxation is one people grant to governments in return for the stability and ability to make long term plans that they provide; but that privilege can be revoked and has been throughout history.
Taxation without representation is pretty widely recognised as problematic though. Not for nothing did it help trigger the war of independence against in the colonies against the British. Think about it: if you can't influence politicians in any way, what stops them taxing 100% of your labour? The only thing that stops governments doing this at the moment is the fear of consequences from their citizens: either at the ballot box in democracies or at the hands of the mob in dictatorships. Companies can't vote and they can't rebel, so there has to be some kind of pressure that pushes back against ever higher taxation. Usually this is indirect: countries fear that if they tax companies too much, they'll go bust, people will lose their jobs, and then those people will vote.
But when companies are largely distributed and a government doesn't feel any real exposure via their own population, the natural tendency is to say "if you want to sell to our citizens, you have to pay us lots of tax" and there's not much a company can do about it except simply deny an entire population their services, which is about as useful a response as a person deciding the best way to lower their tax bill is to throw themselves off a bridge. Nobody wins in this situation!
> In my view, companies (and their investors) have the privilege of being able to profit by providing services to citizens, and they should pay (be taxed) for this privilege.
Since when is the ability to make a profit by engaging in trade a "privilege"? People were doing that in the earliest tribes and farming settlements where the closest thing to a government was the local alpha male. The privilege of taxation is one people grant to governments in return for the stability and ability to make long term plans that they provide; but that privilege can be revoked and has been throughout history.
> Taxation without representation is pretty widely recognised as problematic though.
Obviously, but here we're talking about people having no representation - not companies.
> "if you want to sell to our citizens, you have to pay us lots of tax"
No country that I know of demands "lots of tax". Usually, they just want to receive their "fair" share of tax - e.g. 20% on the profits on the products sold in the country/to the citizens. That's not outrageous, and companies still increase their profits by serving the market. Of course, companies and governments might disagree on what is a "fair" tax, but basically, this just means "as much as local companies are paying" (otherwise, being foreign amounts to having an unfair competitive advantage).
> Since when is the ability to make a profit by engaging in trade a "privilege"? People were doing that
People engaging in trade is not a privilege. Companies, however, is! There are many benefits of forming a company, if nothing else the legal structure (profits can be legally distributed in predetermined ways), liability protection, and (probably the most important of all) immortality.
Obviously, but here we're talking about people having no representation - not companies.
> "if you want to sell to our citizens, you have to pay us lots of tax"
No country that I know of demands "lots of tax". Usually, they just want to receive their "fair" share of tax - e.g. 20% on the profits on the products sold in the country/to the citizens. That's not outrageous, and companies still increase their profits by serving the market. Of course, companies and governments might disagree on what is a "fair" tax, but basically, this just means "as much as local companies are paying" (otherwise, being foreign amounts to having an unfair competitive advantage).
> Since when is the ability to make a profit by engaging in trade a "privilege"? People were doing that
People engaging in trade is not a privilege. Companies, however, is! There are many benefits of forming a company, if nothing else the legal structure (profits can be legally distributed in predetermined ways), liability protection, and (probably the most important of all) immortality.
I don't see such a huge distinction between people and companies as you do. Companies are just groups of people working together. They aren't totally alien things.
Governments always claim that their tax is "fair", that doesn't mean anything. We have to evaluate fairness ourselves. In this case, what does "fair" mean? People tolerate taxation because they get something back from it. That's it - that's the only reason. It's not because politicians or governments have some natural right to exist, it's because the benefits outweigh the costs (again, in theory, ignoring that no government is even close to perfectly representative).
But what benefits do companies get from the tax they pay? The answer is, very few and nothing on the scale as what people get. Companies don't use roads or schools or hospitals, their employees use those and they already pay tax. Companies can use the courts, but they usually have to pay for that at the point of use, they don't qualify for legal aid or anything like that. They can also benefit from things like copyrights or patents, except these days at least in the tech sector patents seem more of a cost than a benefit. I'd happily opt my company out of that "benefit" if I could. They certainly are not immortal, companies go bust all the time.
Meanwhile, people that can't afford to play the game and make deals with Luxembourg can easily lose out badly in your so-called fair world. A few people form a company and start selling some products. 20% of the sale price goes to the government where the customer was based. But then, in the absence of double taxation treaties, the government where the company is based (if there is a single such place) would take another 20%. Then when the company actually pays the people who did the work, those governments might take another 20-40%.
0.8 * 0.8 * 0.7 (let's say 30% personal income tax) == 0.448, in other words you ended up losing most of the money you earned just to corporation and personal income tax. That's before including things like employment taxes, taxes on property and so on.
This provides a powerful incentive to simply not sell to other countries at all, and this makes everyone poorer. Which is why there are double taxation treaties. But once you have those, you have to accept that other countries will have different opinions about tax and different needs, and trying to slice up the cake will inevitably result in big fights and compromises.
Governments always claim that their tax is "fair", that doesn't mean anything. We have to evaluate fairness ourselves. In this case, what does "fair" mean? People tolerate taxation because they get something back from it. That's it - that's the only reason. It's not because politicians or governments have some natural right to exist, it's because the benefits outweigh the costs (again, in theory, ignoring that no government is even close to perfectly representative).
But what benefits do companies get from the tax they pay? The answer is, very few and nothing on the scale as what people get. Companies don't use roads or schools or hospitals, their employees use those and they already pay tax. Companies can use the courts, but they usually have to pay for that at the point of use, they don't qualify for legal aid or anything like that. They can also benefit from things like copyrights or patents, except these days at least in the tech sector patents seem more of a cost than a benefit. I'd happily opt my company out of that "benefit" if I could. They certainly are not immortal, companies go bust all the time.
Meanwhile, people that can't afford to play the game and make deals with Luxembourg can easily lose out badly in your so-called fair world. A few people form a company and start selling some products. 20% of the sale price goes to the government where the customer was based. But then, in the absence of double taxation treaties, the government where the company is based (if there is a single such place) would take another 20%. Then when the company actually pays the people who did the work, those governments might take another 20-40%.
0.8 * 0.8 * 0.7 (let's say 30% personal income tax) == 0.448, in other words you ended up losing most of the money you earned just to corporation and personal income tax. That's before including things like employment taxes, taxes on property and so on.
This provides a powerful incentive to simply not sell to other countries at all, and this makes everyone poorer. Which is why there are double taxation treaties. But once you have those, you have to accept that other countries will have different opinions about tax and different needs, and trying to slice up the cake will inevitably result in big fights and compromises.
Hm... again, I think we disagree fundamentally about why taxes are the way they are. Let me explain the way I see it.
A government, its taxes and the public services it offers (firefighters, courts&police, mandatory vaccination, schooling, etc) are a great solution to a prisoner's dilemma that people face: "Why should I contribute for the fire department, when my neighbors will?" Then, a house somewhere caches fire and the whole city burns down, because no one was willing to pay for a single fire truck.
Then, the question is not, "how much does a single person benefit from a specific service", but more "how much does the society benefit" - everybody benefits a lot - less revolutions, less famine, less epidemic illnesses, less crime. How should we finance this? The answer almost all countries converge to is progressive taxation; it makes sense, really, as those who have the most also have the most to loose. What should we tax? Most countries tax income, sales (VAT), and profits/dividends; also specific goods (e.g. tobacco), capital gains/interest, and property. Most of these are IMO good - sales tax is very progressive (those who have more -> consume more -> pay more tax), tobacco tax discourages smoking (a lot of external costs, especially in countries with public health system), property tax promotes effective use of land and is progressive as well, as are capital gains/interests taxes. Personally, I would reduce income tax, and raise profits/dividend tax (as those who work tend to be poor, those who own tend to be rich), but that's just me.
AFAIK, taxes don't work the way you think they do - sales tax is really VAT, so you don't pay 20% (you only pay 20% of the added value you create, which for most businesses is a much lower percentage of revenue) - also, income tax is applied before tax on profits (employee salary is a cost to the business), and for most people it's quite a bit lower than 30% (i.e. for the poor, those who spend most of their paychecks on basic goods). Tax on profits is in many jurisdictions completely optional - the owners could very easily elect to pay no tax on profits (only tax on dividends, which is in line with income tax), but then they would have unlimited liability. Tax on profits is basically the price of buying limited liability.
I'm not saying there should be no double tax treaties - there should be, of course, but companies should not be able pay less tax on the profits generated within one country, just because taxes in the other country are lower.
A government, its taxes and the public services it offers (firefighters, courts&police, mandatory vaccination, schooling, etc) are a great solution to a prisoner's dilemma that people face: "Why should I contribute for the fire department, when my neighbors will?" Then, a house somewhere caches fire and the whole city burns down, because no one was willing to pay for a single fire truck.
Then, the question is not, "how much does a single person benefit from a specific service", but more "how much does the society benefit" - everybody benefits a lot - less revolutions, less famine, less epidemic illnesses, less crime. How should we finance this? The answer almost all countries converge to is progressive taxation; it makes sense, really, as those who have the most also have the most to loose. What should we tax? Most countries tax income, sales (VAT), and profits/dividends; also specific goods (e.g. tobacco), capital gains/interest, and property. Most of these are IMO good - sales tax is very progressive (those who have more -> consume more -> pay more tax), tobacco tax discourages smoking (a lot of external costs, especially in countries with public health system), property tax promotes effective use of land and is progressive as well, as are capital gains/interests taxes. Personally, I would reduce income tax, and raise profits/dividend tax (as those who work tend to be poor, those who own tend to be rich), but that's just me.
AFAIK, taxes don't work the way you think they do - sales tax is really VAT, so you don't pay 20% (you only pay 20% of the added value you create, which for most businesses is a much lower percentage of revenue) - also, income tax is applied before tax on profits (employee salary is a cost to the business), and for most people it's quite a bit lower than 30% (i.e. for the poor, those who spend most of their paychecks on basic goods). Tax on profits is in many jurisdictions completely optional - the owners could very easily elect to pay no tax on profits (only tax on dividends, which is in line with income tax), but then they would have unlimited liability. Tax on profits is basically the price of buying limited liability.
I'm not saying there should be no double tax treaties - there should be, of course, but companies should not be able pay less tax on the profits generated within one country, just because taxes in the other country are lower.
Then, a house somewhere caches fire and the whole city burns down, because no one was willing to pay for a single fire truck.
Yes tax is often to used to pay for public goods, though fire isn't a perfect example because in some parts of the world actually fire protection is considered a product that you buy from the government and you actually can opt out of it. In that case if your home catches fire the fire fighters will turn up and do only as much work as needed to stop it spreading, but they won't bother trying to save your home:
http://www.huffingtonpost.com/2010/10/04/firefighters-watch-...
That story is pretty brutal, especially if they really did forget to pay the fee and not merely decide to opt out, though it's hard to know after the fact of course. But it is possible and it does happen.
Still, there are lots of other examples of public goods funded via taxation and vaccination is a good one.
One point of terminology confusion here: sales tax and VAT are not the same thing. Sales taxes usually only apply when goods are sold to a consumer at retail. VATs apply at all parts of the supply chain and have rules in place to charge tax only on the value delta. America uses sales tax, I think most other places (and certainly Europe) use VAT. It's very confusing to claim they are the same thing. Additionally sales taxes are not normally described as progressive - it's the opposite, they are considered regressive:
http://en.wikipedia.org/wiki/Sales_tax
(see the "effects" section)
... because the rate is the same no matter what your income is. Rich people don't necessarily consume more: they can choose to consume the same amount as poorer people and often do just because many goods are pretty uniform. I.e. rich people tend to use the same smartphones as middle or even lower income people. They don't use smartphones that cost 10,000x as much even if that's how much more they earn.
I'm not saying there should be no double tax treaties - there should be, of course, but companies should not be able pay less tax on the profits generated within one country, just because taxes in the other country are lower.
Companies don't generate profits within a country, they generate sales, and they already pay the local rates of sales tax or VAT. Attempting to bodge this arrangement is why politicians are always screaming about how unfair profit-shifting is, but it's fundamental - how do you define where a profit is made? Deciding where a sale is made is not too hard because you can identify the location of the person who bought the good or service, or where the business is headquartered, but when you add up all the profits from these sales which country gets to help themselves? Consider Google. Is their profit made in California because that's where they were founded and where the brains of the search engine are made? Or Ireland, because that's where the sales people were made? Or Switzerland because there's an office there that contributed a nifty feature that increased profits? How much does each country contribute towards a companies profit? Trying to figure this out is a mugs game, it's entirely arbitrary, which is why companies can game it so easily by having subsidiaries license IP from each other and so on - who can really say what arrangement is correct?
In theory, in the EU, it's simple: profit is booked where the company is headquartered. Same thing for the USA, hence all the companies registered in Delaware, a notorious tax haven. Sometimes you can't arrange things in this way because you need / want to operate outside that trading bloc, this is when you start getting subsidiaries that pay their parent companies huge licensing costs for IP or the brand, but really it's just about moving profits to where the company wants them to be.
Yes tax is often to used to pay for public goods, though fire isn't a perfect example because in some parts of the world actually fire protection is considered a product that you buy from the government and you actually can opt out of it. In that case if your home catches fire the fire fighters will turn up and do only as much work as needed to stop it spreading, but they won't bother trying to save your home:
http://www.huffingtonpost.com/2010/10/04/firefighters-watch-...
That story is pretty brutal, especially if they really did forget to pay the fee and not merely decide to opt out, though it's hard to know after the fact of course. But it is possible and it does happen.
Still, there are lots of other examples of public goods funded via taxation and vaccination is a good one.
One point of terminology confusion here: sales tax and VAT are not the same thing. Sales taxes usually only apply when goods are sold to a consumer at retail. VATs apply at all parts of the supply chain and have rules in place to charge tax only on the value delta. America uses sales tax, I think most other places (and certainly Europe) use VAT. It's very confusing to claim they are the same thing. Additionally sales taxes are not normally described as progressive - it's the opposite, they are considered regressive:
http://en.wikipedia.org/wiki/Sales_tax
(see the "effects" section)
... because the rate is the same no matter what your income is. Rich people don't necessarily consume more: they can choose to consume the same amount as poorer people and often do just because many goods are pretty uniform. I.e. rich people tend to use the same smartphones as middle or even lower income people. They don't use smartphones that cost 10,000x as much even if that's how much more they earn.
I'm not saying there should be no double tax treaties - there should be, of course, but companies should not be able pay less tax on the profits generated within one country, just because taxes in the other country are lower.
Companies don't generate profits within a country, they generate sales, and they already pay the local rates of sales tax or VAT. Attempting to bodge this arrangement is why politicians are always screaming about how unfair profit-shifting is, but it's fundamental - how do you define where a profit is made? Deciding where a sale is made is not too hard because you can identify the location of the person who bought the good or service, or where the business is headquartered, but when you add up all the profits from these sales which country gets to help themselves? Consider Google. Is their profit made in California because that's where they were founded and where the brains of the search engine are made? Or Ireland, because that's where the sales people were made? Or Switzerland because there's an office there that contributed a nifty feature that increased profits? How much does each country contribute towards a companies profit? Trying to figure this out is a mugs game, it's entirely arbitrary, which is why companies can game it so easily by having subsidiaries license IP from each other and so on - who can really say what arrangement is correct?
In theory, in the EU, it's simple: profit is booked where the company is headquartered. Same thing for the USA, hence all the companies registered in Delaware, a notorious tax haven. Sometimes you can't arrange things in this way because you need / want to operate outside that trading bloc, this is when you start getting subsidiaries that pay their parent companies huge licensing costs for IP or the brand, but really it's just about moving profits to where the company wants them to be.
Taxing companies is actually very European and it dates back to the era of big trading companies such as the East Indian..
Taxing companies makes zero sense in the current market and it is not only double but triple taxation.
Companies profits are taxes, however if they are not taxed any direct benefit from these profits will be taxed any how(usually at much higher rates), outside of operational expenses companies can't do much with their money which will not be taxed as releasing the profits as dividends to the share holders or owners will incur either capital gain taxes or income tax. Investing that money will incur a capitals gain tax. The only thing that a straight corporate tax does is forcing companies to operate at operational losses in order to avoid paying tax.
Not having to pay tax on operational income means that the company can grow faster, hire more, divide the profits across is share holders and invest it in the market generating greater wealth.
All of the above benefit the people much more than the taxes the companies pay in corporate tax.
And yes abolishing the income tax in favor of a sales tax(not VAT which is a horrible solution) is much better. Sales tax means makes it much easier to reduce the tax burden on lower classes, especially in times of crisis.
The economy is in the shit? reduce sale taxes on diapers and base food products.. Need more money? increase sales taxes on luxury items. Need to help young couples attaining a home reduce the sales tax on properties for people under 30.
All these are much easier to adjust than income tax, allowances, and mortgages they also can be managed on the local level when others require a huge political effort to change.
Also a direct sales tax is far superior to VAT, VAT is utter nonsense, sales tax is charged at every sale of the product which means that the car you bought will generate revenue for the state every time its sold. And more importantly sales tax affects everyone including companies/self employed which are exempt of VAT. Why does Google have to pay 20% less for it's care fleet or desks than you?
I must admit I agree with you, regarding corporate tax. Although I think it would need to be offset by a significant increase in capital gains/dividends tax, which might be hard to achieve politically.
Regarding sales tax, I don't see why VAT couldn't be manipulated in the same way. I don't know about other countries, but in Slovenia, books and food/non-alcoholic drinks have a lower VAT, and e.g. expensive cars (actually, those that have low mileage) have extra tax. The only advantage that I see of sales tax is that resale is taxed as well. Which would only obviously apply to big items (houses, cars), but people would avoid it by simply having their companies own these items.
If sales tax were to apply to companies as well (i.e. companies selling stuff to companies), I would oppose it, because it effectively penalizes a long supply chain and encourages monolithic, vertically-integrated companies.
Regarding sales tax, I don't see why VAT couldn't be manipulated in the same way. I don't know about other countries, but in Slovenia, books and food/non-alcoholic drinks have a lower VAT, and e.g. expensive cars (actually, those that have low mileage) have extra tax. The only advantage that I see of sales tax is that resale is taxed as well. Which would only obviously apply to big items (houses, cars), but people would avoid it by simply having their companies own these items.
If sales tax were to apply to companies as well (i.e. companies selling stuff to companies), I would oppose it, because it effectively penalizes a long supply chain and encourages monolithic, vertically-integrated companies.
Because VAT is only "created" when a business sells you something, it's an archaic method that is collected by the government from the business only once. This is why VAT is usually about 10 times higher than sales tax.
VAT made sense when you could not collect tax from individual easily, today with PayPal, bank transfer, Payment Cards and heck even BitCoins it doesn't make sense any more. VAT means that the first consumer gets screwed the most this also means that consumers that buy mostly perishable goods or cannot afford to buy goods in a quick cycle get the highest tax burden.
If you are from a low income family which means that most of your expenses go on food means that you pay an unreasonably higher tax rate than people spend most of their money on buying new Ipads.
This also means that if you cannot buy an new Ipad every year and can only afford to buy one say every 3-4 years you get stuck with the entire burden from VAT vs some one who buys a new one and sells their old one every year rolls the VAT price on the person who bought the old one.
What sales tax is is a small tax added to each transaction doesn't matter if you are buying a new product or not, it also means that every time you sell the product to some one else it keeps generating capital to the state.
Also companies can't avoid paying sales TAX unlike VAT, and if your company owns a car and gives you it as a perk you have to pay value tax for it, basically it means that the taxable amount of your salary increases by a certain amount even tho you actual salary doesn't.
On the supply chain, well first long supply chains are not good for the end consumer while monopolies are not good either you should not pay for the middle man, especially not for 50 of them. That said the sales tax is only paid for goods that are intend to be used. This means that if i buy nails from you as a vendor i do not pay sales tax because I'm not the end consumer, if i buy nails to make a furniture i pay it because I'm consuming it. The fact that the EU still uses VAT while pretending to spearhead the evolution of human society is still mind boggling.
Also companies can't avoid paying sales TAX unlike VAT, and if your company owns a car and gives you it as a perk you have to pay value tax for it, basically it means that the taxable amount of your salary increases by a certain amount even tho you actual salary doesn't.
On the supply chain, well first long supply chains are not good for the end consumer while monopolies are not good either you should not pay for the middle man, especially not for 50 of them. That said the sales tax is only paid for goods that are intend to be used. This means that if i buy nails from you as a vendor i do not pay sales tax because I'm not the end consumer, if i buy nails to make a furniture i pay it because I'm consuming it. The fact that the EU still uses VAT while pretending to spearhead the evolution of human society is still mind boggling.
link to the docs? Probably an interesting read.
This is the original article from the International Consortium of Investigative Journalism, which uncovered the secret tax deals.
The only reason I think is because it was taken in front of the Amazon office in Luxembourg.
Any suggestion on how to ask for removal, and possibly compensation for damage?