Starbucks, Google and Amazon: the tax crash of Monday afternoon

http://www.taxresearch.org.uk/Blog/2012/11/13/starbucks-google-and-amazon-the-tax-crash-of-monday-afternoon/

by Cbasedlifeform • 14 years ago

143 197 14 years ago

taxresearch.org.uk

Nursie24• 14 years ago

The 'Hollywood Accounting' that goes on in these multinationals is quite spectacular. Moving cash around between their various subsidiaries and national companies in such a way as to pay the least possible tax and to make strategic losses where convenient, all the while announcing record profits.

I can see why you would try it on, the sums involved have to be huge, but it is fundamentally immoral to operate like that.

easytiger6• 14 years ago

> fundamentally immoral to operate like that.

err. no it isn't.

Nursie24• 14 years ago

It is in my moral code - Availing yourself of a market and using the facilities and workforce of the UK, without chipping in your fair share (as decided by the people of that country). Sounds immoral to me.

mtrimpe2• 14 years ago

It's not fundamentally immoral; it's more of a tragedy of the commons.

All these loopholes are perfectly legal and companies actually need to exploit them to remain competitive.If they didn't then any competitor could decide to do this and could earn 30% less and still make a bigger profit.

It would of course have been great if the representatives had been self-aware enough to agree that they might not be taxed effectively in a global market and that they would be willing to co-operate with aligning global tax incentives in a way that leaves it a level playing field for all competitors; but that's probably a bit much to ask ;)

Nursie24• 14 years ago

Whether it's a tragedy of the commons or not is orthogonal (IMHO) to a question of morality. Same with legality.

I don't disagree with what you're saying otherwise.

damian2000• 14 years ago

At least in Google's and Amazon's case, I'm sure you can add an additional 10% tax on profits without making a dent on the company's competitiveness. They are both extremely profitable businesses, in dominant market positions.

smoyer6• 14 years ago

"Fundamentally immoral"

In the US a corporation's legal responsibilities are to it's shareholders ... it might be fundamentally immoral but it would be unethical to operate the company against the interests of the shareholders too.

It's the laws that need to be changed rather than blaming the companies for being good at accounting.

Nursie24• 14 years ago

It's an interesting conflict, and clearly they do have a duty to investors to maximise their profit. If it was a privately owned company it might be more clear cut.

Absolutely agree the laws need to be changed. I, personally, would be looking to stop the 'convenient' reporting of losses in markets that are actually highly profitable but not tax efficient. There's an interesting comment on the Starbucks press release that coves it quite nicely -

"How can Starbucks tell Companies House and HMRC that its UK business is loss-making but tell analysts in SEC-regulated calls that the UK business is profit-making, without either making misleading financial statements or filing false accounts?"

morsch3• 14 years ago

I don't follow that line of reasoning. Assuming it's fundamentally immoral, it remains fundamentally immoral for a company.

If a person did it, we'd call it immoral. When it's a group of persons doing it, we'd call it immoral. But when it's one group of persons doing it -- the employees -- in the name of another group -- the owners -- it's suddenly unethical not to do it? I don't get that.

I guess it'd be unethical for the employees to act one way when they know the owners want them to act another way. But if the owners willingly let the company act immorally, then they are themselves acting immorally. Which is, of course, the case.

dabeeeenster3• 14 years ago

How is paying taxes not in the interests of shareholders?

I think this attitude is at the heart of the problem.

edderly• 14 years ago

No, more accurately a corporation is an autonomous legal 'person'.

http://hbr.org/2010/04/the-myth-of-shareholder-capitalism/ar...

"Shareholders do not own the corporation, which is an autonomous legal person. What’s more, when directors go against shareholder wishes—even when a loss in value is documented—courts side with directors the vast majority of the time. Shareholders seem to get this. They’ve tried to unseat directors through lawsuits just 24 times in large corporations over the past 20 years; they’ve succeeded only eight times. In short, directors are to a great extent autonomous."

appleflaxen• 14 years ago

The question of immorality is irrelevant unless it is also illegal. It is the government's fault for putting so many loopholes in the tax code. They knew exactly what they were doing when they put them there, and have just as much culpability as Amazon, Google, and Starbucks.

buro92• 14 years ago

I'm not sure the law cares about morals.

I do think though, that US law dictates that they must work for shareholder value.

It's hard to see how we wouldn't end up here if they aren't actually breaking any laws on their way to this destination.

_delirium• 14 years ago

That's actually a bit of a myth; companies don't have any explicit legal obligation to maximize shareholder value. In addition, courts tend to defer to their judgment on things such as intangibles; if a company says they're doing X because it's good for the company's image even though it loses money in the short term, a court will generally not second-guess that decision, especially since the shareholders have alternate means to reverse it if they disagree, such as voting out the board. To the extent the shareholders keep the board in place, they're presumed to agree with their decisions on where to take the company. The material that makes for a successful shareholder lawsuit tends to be more about things like favoring one class of shareholders over another, or executives making decisions for their personal gain.

Earlier HN discussion: http://news.ycombinator.com/item?id=3227980

brudgers2• 14 years ago

Businesses are neither immoral nor moral.

They are amoral.

Nursie24• 14 years ago

They are. I don't think this is good though.

Companies are made up of people, and these people are the ones taking the actions.

bmelton• 14 years ago

I would think of it more like 'couponing' than cheating the system.

The companies in question are availing themselves of the laws available to them to get discounts on their tax obligation, just as an individual might claim their children as tax exemptions, and use charity contributions as write-offs.

As you indicated elsewhere, morals and law do not necessarily align, and you are trying to attach morality to a legal obligation here. That companies do the same thing as everybody else does shouldn't be counted against them, especially as it is legal.

smoyer6• 14 years ago

I don't want to hear the author crying about how bad tax avoidance is ... it's the tax laws that allow companies to behave that way in the first place. How about simplifying the tax code so it's neither profitable nor legal to manipulate the books.

I'm guessing the UK would love to have the 12% taxes that are currently paid to the Swiss ... There's an easy solution! Set the tax rate to something reasonable. Start a tax war and set your corporate tax rate to 11%. Eleven percent of everything is going to be way more money than 30% of a loss right? I live in the US and would love to see the same thing happen here as our tax code is atrocious.

Nursie24• 14 years ago

Oh yes, lets race to the bottom! That always turns out well!

smoyer6• 14 years ago

I think it would be a race to some balancing point rather than a race to the bottom. Why shouldn't governments maximize their tax incomes in the same way companies maximize their profits? I think here that balancing point becomes the maximum taxes gathered when weighed against competing tax bases.

And the bottom has been reached if the profits are being parked in Bermuda ... that's an effective tax rate of 0% for the company and an effective income of 0 for the government too.

lucian19002• 14 years ago

That would mean encouraging, in the long term, offloading more taxes to people rather than corporations.

It makes sense to try enforcement instead.

Ntrails• 14 years ago

There is no sense in frantically racing to charge as little tax as possible. That is not a viable solution unless you really want to see what budget cuts look like.

mgkimsal• 14 years ago

lowering tax rates while simplifying tax code to reduce/remove loopholes would, in theory, increase revenue. in an ideal world, simpler tax code would reduce the need for accountants as well, further reducing costs.

jmedwards2• 14 years ago

I think it is wrong to simplify it in this way. It isn't just a question of a country's tax code and tax rates or corporation tax piracy, but a combination of them: http://en.wikipedia.org/wiki/Double_Irish_arrangement#Dutch_...

(That said, I'd love to see the world's longest tax code, the UK's, simplified).

A multinational's access to resources and ability to exploit tax systems internationally is at the least unfair to smaller national businesses, and you could say to nations as a whole. Either we need to admit that corporation tax is dead and we need to tax end points like transactions or consumers, or we need to admit that unilateral taxation is dead and we need to collaborate internationally.

Centuries old thinking about business and tax does not apply in globalised business - and that includes your own, which would just provide a race to the bottom and would achieve little.

drcongo2• 14 years ago

If the UK set its corporation tax level down to match Switzerland's, then Switzerland would just lower theirs. Eventually you'd have a whole planet that doesn't require huge multinational corporations to pay any tax at all. How is this a good thing?

lvh2• 14 years ago

Yes, when has free market competition ever lead to good things?

Furthermore, I think you are making the unwarranted assumption that it's a race to zero, as opposed to some balance point greater than zero where the companies actually have some reason to pay that tax. If we're all paying taxes for the common good, then presumably there's some common good in it for them, too? Or are corporations only things that we extract money from?

Marazan2• 14 years ago

You need to read more by the author. He's in favour of massively simplifying the tax code through a General Anti-Avoidance Rule.

Jabbles2• 14 years ago

I'm not angry with companies that avoid tax legally. It's in their nature to maximise profits! Of course they'll do that if you give them the opportunity. I'm angry at our government for making it legal, by allowing loopholes and flawed laws to exist in the first place.

mtrimpe2• 14 years ago

The thing is that to address this tax strategies would need to be aligned on a global scale.

Accounting like this is very much like (grey-hat?) hacking; you have a very large and complicated system and you simply need to find the weakest spot.

Defending against that can't really be done when you only have control over a single component of that system.

buro92• 14 years ago

I'm pro-European, but I would argue that pulling out of Europe to force accounting for UK sales to occur in the UK legal domain might be a very good start.

At least this way each country would be incentivised to enforce tax locally in a controllable and predictable way. And I'm sure that whilst some companies might wish to pull out, most would stay.

a profit is a profit, it may be less than before but if you're still creating profit you wouldn't give it up.

sseveran• 14 years ago

Nothing about it is grey hat. The techniques for a global business to shift taxes into a low tax country is well known in an global tax planning group.

lucian19002• 14 years ago

Tax laws are needlessly complicated almost everywhere (the UK being a particularly horrid example). That's part of the reason loopholes are so easy to find.

jefffoster• 14 years ago

I saw a good analogy of the tax system to computer code. The inland revenue express their intent of the tax system in code (or at least legalese). It's the job of accountants to exploit bugs in the tax system.

To misuse a famous quote:

"There are two ways of constructing a tax system. One way is to make it so simple that there are obviously no deficiencies. And the other way is to make it so complicated that there are no obvious deficiencies."

Jabbles2• 14 years ago

"no obvious deficiencies"

I would argue there is something obviously wrong. And I blame the government for not fixing it quickly. And the people for not being loud enough.

raverbashing• 14 years ago

No law is perfect

The more rules and regulations there are the more easy it is to game the system

The simplest tax is the most effective, but of course bureaucratic behemoths are too stupid to realize that.

danmaz742• 14 years ago

These big corporations are playing divide et impera with European countries. It's very easy when each country has veto power on any important choice in the EU.

tonyedgecombe• 14 years ago

Corporation tax rates have plummeted in the UK over the last 30 years, perhaps we should bite the bullet and eliminate them completely.

At the moment profits in a business are taxed, then when a shareholder receives those profits as a dividend they are taxed again but with some kludges to undo the double taxation. We would be better off dropping it and focussing on purchase and income taxes.

bruceboughton4• 14 years ago

Surely the problem is that corporations are fundamentally difficult to tax as they do not reside anywhere. Individuals have an interest in living in the UK vs Ireland/Bermuda/Netherlands/etc. -- their family, their job, their lifestyle, their worldview, etc.

On the other hand, corporations, especially multi-nationals, are an abstract concept. They do not have a need to reside in any one place or another, except for maximising profit.

It makes little sense to try to locally tax entities that have no afinity to a location.

Finally, at some point a corporation's taxes are distributed to people, via wages, dividends, etc. and these are taxed. This is also the easiest place to tax.

Nursie24• 14 years ago

Starbucks runs coffee shops, they are most definitely tied to location. They are most definitely operating a business within the UK and should be subject to UK tax laws.

It makes little sense to me to allow multinationals a huge advantage over local business by letting them whisk away their profits.

These profits are indeed distributed to other people, in other places, not subject to UK taxes. It's not only (IMHO as I said below) immoral, it also distorts the market.

bruceboughton4• 14 years ago

Why question is why do we tax company's incomes at all? Direct taxes on companies such as PAYE (payroll), VAT (sales) and business rates (premises) are easier to enforce and scale fairly.

Instead of taxing corporations' profits, why not tax individuals more and re-coup the taxes from the owners and employees instead of the corporations?

jacques_chester19• 14 years ago

"No man in the country is under the smallest obligation, moral or other, so to arrange his legal relations to his business or property as to enable the Inland Revenue to put the largest possible shovel in his stores. The Inland Revenue is not slow, and quite rightly, to take every advantage which is open to it under the Taxing Statutes for the purposes of depleting the taxpayer's pocket. And the taxpayer is in like manner entitled to be astute to prevent, so far as he honestly can, the depletion of his means by the Inland Revenue"

Ayrshire Pullman Motor Services v Inland Revenue [1929] 141 Tax Case 754.

"Anyone may arrange his affairs so that his taxes shall be as low as possible; he is not bound to choose that pattern which best pays the treasury. There is not even a patriotic duty to increase one's taxes. Over and over again the Courts have said that there is nothing sinister in so arranging affairs as to keep taxes as low as possible. Everyone does it, rich and poor alike and all do right, for nobody owes any public duty to pay more than the law demands."

Gregory v. Helvering 69 F.2d 809, 810 (2d Cir. 1934), aff'd, 293 U.S. 465, 55 S.Ct. 266, 79 L.Ed. 596 (1935)

dabeeeenster3• 14 years ago

I don't think anyone is arguing against these sentiments, it's more a question of upholding the spirit rather than the letter of the law.

I doubt much 1930's money was being filtered through Bermudan or Lichtensteinien shell companies.

jacques_chester19• 14 years ago

International commerce is not new, and the common law principle that the taxpayer is not obliged to maximise their tax bill is exactly the same and has been upheld consistently for centuries.

Countries who want to make money via a territorial nexus usually use VAT or GST ... which the UK already does.

arethuza3• 14 years ago

The Vestey brothers pioneered using offshore trusts for tax evasion in the 1920s:

http://en.wikipedia.org/wiki/William_Vestey,_1st_Baron_Veste...

r3m6• 14 years ago

First, I wonder if you would quote the same sources if Amazon, Google,Starbucks would move the money from the USA to Europe and not the other way around.

Second, everyone knows that this "sorry, we have to pay royalties" thing is most likely legal, but a very grey area. It certainly is against the spirit of the law. A company whose main product is "we make you feel good" should not use such tactics in their own interest.

bruceboughton4• 14 years ago

He quoted US case law as well as UK precedent. Of course he would argue the same thing the other way round.

jacques_chester19• 14 years ago

> It certainly is against the spirit of the law.

No judge will ever make a ruling on the basis of "the spirit of the law". They may try to divine the intent of Parliament or Congress according to agreed interpretive rules.

But it's still about rules. Predictable, and precise.

Even the law of Equity, which is the closest to being the law that is about the "spirit" of the law ... relies on rules.

Otherwise you no longer have a government of law, you have a government of men. Those don't work very well.

mfringel2• 14 years ago

Seeing the Judge Learned Hand quote taken out of context is a pet peeve, mostly because it happens so damn often.

Your latter quote is actually from Helvering v. Gregory, which was the 2nd Circuit case.

Here's a quote from the case actually named Gregory v. Helvering, which was the SCOTUS case[1]:

"In these circumstances, the facts speak for themselves, and are susceptible of but one interpretation. The whole undertaking, though conducted according to the terms of subdivision (B), was in fact an elaborate and devious form of conveyance masquerading as a corporate reorganization, and nothing else. The rule which excludes from consideration the motive of tax avoidance is not pertinent to the situation, because the transaction, upon its face, lies outside the plain intent of the statute. To hold otherwise would be to exalt artifice above reality and to deprive the statutory provision in question of all serious purpose.

Judgment affirmed."

In short, business transactions must have a business purpose, and the substance of the transaction is much more important than the form.

[1] http://supreme.justia.com/cases/federal/us/293/465/case.html

jacques_chester19• 14 years ago

It's quoted "out of context" because it is generally considered to be a persuasive obiter dictum.

And that's how law quotes work. Sometimes the facts of the case bear on obiter dicta. Sometimes they don't. That doesn't change their degree of persuasiveness.

shardling5• 14 years ago

I'd say that you do have a moral obligation to pay taxes, regardless of the legal facts.

jacques_chester19• 14 years ago

Why?

tomjen32• 14 years ago

And I say you have a moral obligation to pay as little in taxes as possible, since the government is too big.

gadders3• 14 years ago

Absolutely. It just annoys me that in the same way as the UK Police target the mostly-law abiding (motorists, for instance) as they're easier to prosecute. HMRC is scared to tackle large companies but is ruthless when it comes to small ones.

kriro• 14 years ago

I don't want to start a political debate but I think a decent argument could be made that companies should not pay any taxes outside of direct use taxes for infrastructure and so forth.

Providing jobs and products people want is already quite the social contract contribution.

At the very least a tax code that people can actually understand would be a decent start. I think it's pretty silly to point your finger at other countries for making "shady deals" with companies. Pretty much every nation does it, that's one of the reasons why tax codes are so complicated in the first place.

danmaz742• 14 years ago

So, for example, Starbucks should pay taxes based on how many km of roads they consume?

jules• 14 years ago

Exactly. Via a tax on fuel for example. This is much easier to enforce, and sets better incentives than taxing income.

dabeeeenster3• 14 years ago

Don't be evil.

digitalengineer• 14 years ago

Nothing new here. Even bands like U2 and Rolling Stones operate like this. As a citizen of a tax-haven (The Netherlands) I can tell you we the citizens are not able to use these tactics, only international corporations can.

bobsy• 14 years ago

I am angry with Amazon and Starbucks. I feel both of these have a large presence in the UK. They employ thousands of people. Amazon has done a large amount of damage to the UK high street. Starbucks has pushed out a number of independent coffee shops. The fact they are paying almost zero tax while being here I find abhorrent.

I want Amazon and Starbucks here. However I feel both are taking the piss when it comes to taxes. Amazon say they run a distribution network or something and so only have to pay minimal taxes. I feel the fact that these companies failed to justify why they pay the tax they do prove that they are doing something wrong - even if its not illegal.

As for Google I feel it is less of a problem. They mainly deal in digital goods. They don't have a big presence in the UK. They just offer their online service's here. As most of the tech work is done in the US or Ireland I don't think they have much to justify with their tax situation. I work for a website-as-a-service company and we have thousands of clients scattered around the world. Around 500 are based in the UK. I don't really see how we could accurately be charged tax based on geographical location of Sales.

jonknee2• 14 years ago

> The fact they are paying almost zero tax while being here I find abhorrent.

Almost zero for one tax, but they certainly pay lots of other taxes. Mom and pop coffee shops aren't known to be large tax payers either, they probably weren't paying much more than Starbucks is now.

DanBC8• 14 years ago

But mom and pop coffee shops are not making gazillions in profit and syphoning that off in weird accounting schemes to other territories.

It's not avoiding a reasonable amount of tax that is annoying to most people. It is the transparent exploitation of loopholes to evade tax that is annoying.

Eg: Starbucks has to pay starbucks to use the brand starbucks, which means starbucks pays less corporation tax here, but more in the country where they've registered the company that owns the starbucks brand. (Which just happens to be an office in a building in a country with a low corporation tax rate.)

jmedwards2• 14 years ago

> Amazon has done a large amount of damage to the UK high street

Contentious - damage, or consumer choice and therefore progress?

> However I feel both are taking the piss when it comes to taxes

While I have zero doubt these companies and others will be taking 101% advantage of the situation, don't forget that the situation has been created by our own governments and an unwillingness to modernise in the face of a globalised world.

For example, it surprises most people to learn that this 'brand value' Starbucks charges itself for (or the fact that these companies charge themselves between entities in the first place) is in many ways a requirement of the corporation to abide by transfer pricing rules.

aes2563• 14 years ago

> Contentious - damage, or consumer choice and therefore progress?

It's a matter of whether there is a level playing field. I was shocked to hear the representative from Amazon admit yesterday that they only pay 3% tax on ebook sales through an agreement with Luxembourg.

That's absurd.

epscylonb• 14 years ago

> While I have zero doubt these companies and others will be taking 101% advantage of the situation, don't forget that the situation has been created by our own governments and an unwillingness to modernise in the face of a globalised world.

Ultimately it is the fault of the voters, and as another poster pointed out, this is about a level playing field, not "punishing" big multi nationals.

What we have seen since the 80's is a corporate oligarchy being created, if you can get into it you are set for life.

These people are Nixonian in their attitude, "it's not morally wrong when I avoid taxes". This also stems from the amorality of Ayn Rand's writings, in Randian thinking it is acceptable to expect others to follow a moral code which you yourself break and it's acceptable to admonish others for breaking it.

Big companies don't actually create a lot of jobs, most companies over their lifespan shed workers as they become more efficient. For a healthy free market to operate, it is vitally important that the percentage tax burden is the same for small companies and large companies, governments should not be giving tax advantages to anyone. This economic cherry picking causes "too big to fail" syndrome.

As a UK voter, if a political party said they would simplify the tax code and make all companies who operate in the UK pay taxes on their business here I would probably vote for them.

tolmasky• 14 years ago

> I am angry with Amazon and Starbucks. I feel both of these have a large presence in the UK. They employ thousands of people.

> As for Google I feel it is less of a problem... They don't have a big presence in the UK.

So let me get this straight, you are OK with Google not paying taxes because... they don't provide jobs to the UK? My apologies if I honestly misunderstood your post, but it seems really strange that you let Google "off the hook" since they ONLY remove money from your economy and don't even create jobs there. The way your post is worded its as if you are offended that Amazon and Starbucks provide thousands of jobs.

If Amazon and Starbucks figured out a way to provide the exact same services they do today, minus all those pesky UK employees, would you feel less angry with them?

toyg4• 14 years ago

I think it's mostly about resource usage.

Google services don't really benefit much from UK infrastructure (except digital infrastructure, which is privately owned for the most part at this point in time).

Amazon and Starbucks simply would not be in business without UK roads, UK police and other UK services; so Amazon and Starbucks are benefitting from taxpayer-funded services while not contributing their fair share to their maintenance.

EDIT: sorry, I wasn't clear -- I'm not arguing that Google should be treated differently, I was just suggesting a justification for the difference in perception.

lmm3• 14 years ago

Starbucks' UK employees benefit from UK public services (e.g. healthcare) funded by UK tax. As a result, Starbucks can pay them less than they would in a country with poorer public services (e.g. the US). So yes, Starbucks should be paying the UK for the people it employs from here, not the other way around. If they could run their stores remotely from the US I'd have no problem with them paying no corporation tax in the UK (they'd still have to pay VAT, which they do), because they wouldn't then be benefiting from the UK's tax-funded services.

SideburnsOfDoom• 14 years ago

> you are OK with Google not paying taxes because... they don't provide jobs to the UK?

Google have a main office in London http://www.google.co.uk/about/jobs/locations/london/ , and also the campus startup/co-working space at http://www.campuslondon.com/, so clearly they do provide jobs to the UK.

If that's a significant percentage of their worldwide operation, I can only guess. Given that they say about the London office "We’re one of Google’s largest engineering operations in Europe", probably yes.

aes2563• 14 years ago

> As for Google I feel it is less of a problem. They mainly deal in digital goods. They don't have a big presence in the UK. They just offer their online service's here.

I don't buy this. It's absurd that a UK business can pay to place ads on the Google UK website, presenting them solely to UK consumers, and yet the money involved in this transaction never touches the UK.

It goes straight to Ireland, then the Netherlands, to Bermuda.

lmm3• 14 years ago

That's a business-to-business transaction, there wouldn't be any tax on it even if both companies were in the UK.

There would be taxes on the profits of a UK company, which IMO is the wrong way to go about it; just tax the income made by UK investors who own shares in a company (wherever that company happens to be based). The money can bounce around through as many shell companies as you like, but at some point it becomes an individual's income; tax it there.

ekianjo7• 14 years ago

I am angry with my Government and the Parliament. I feel both of these have a large presence in my country. They employ thousands of people, well actually millions of people. The Government has done of huge amount of damage to the High Street through increasing taxes and regulations. It has pushed a number of independent companies out of business. The fact that they are have no responsibility to tax payers, while being here, I find Abhorrent.

Maybe you should consider what is really hurting the Economy. The fact that your government is borrowing 5 billions every two weeks on the markets to keep functioning because its damn broke and cannot handle a budget, or the fact that Google did not pay (while absolutely legal) a few hundred millions in last year. If you apply the 80/20 rule, I think your attention is well misguided.

jwoah12• 14 years ago

I really dislike this kind of logic. Just because a greater problem exists, does not mean nobody should be allowed to focus on anything else. Should I not be allowed to volunteer or donate money to Hurricate Sandy relief efforts in the NYC area because more people die of cancer?

Tyrannosaurs7• 14 years ago

So if you ever run into financial trouble and I owe you money, when you come to me and ask for the money back I can tell you that I'm not paying it back because you need to get your affairs in order first?

The two things aren't linked, the fact that we need to get our house in order is surely a reason to make sure we're ensuring we can get in whatever revenue we can?

youngtaff• 14 years ago

>Amazon has done a large amount of damage to the UK high street

To blame Amazon is to only look at one side of the argument...

What about the high levels of rent on the high street, and the costs of parking etc.?

Councils, landlords and others all have played their part in the damage to the high street too.

Shivetya• 14 years ago

Why should they pay ANY tax?

No corporation pays taxes, they simply collect taxes for whichever government entity has its hands out. The reason why this works so well is that in general people are ignorant. It also helps that many are selfish, thinking that since they don't buy from X they aren't subject to the tax somehow.

So yeah, its annoying some companies are not paying into the local coffers but that is only the real issue being buried by those who like the populace clueless in tax matters.

In the states, I am not sure how the UK works, we have withholding tax where taxes are deducted from our pay before we see it. It helps hide the burden of government. So does taxing corporations.

Think about it, if every purchase you made had a line entry for "THIS IS THE EMBEDDED TAX" what do you think people would do?

stitchy• 14 years ago

As I read the article, I kept wanting to write "citation" in the margins for nearly every assertion that the author made. He is clearly passionate about the subject. I applaud the attempt to hold multi-national companies responsible for their actions. However, this read more like opinion and gut feeling than a well researched article. I want to know what the law says. Exactly what laws are being broken? What is the wording? Justify the statement that "each of the companies made such a mess of this event" with quotes and counter quotes. Don't just tell me your opinion.

antiterra• 14 years ago

I don't live in the UK, and when I'm there I generally avoid both Costa and Starbucks. Yet, from what I have read, it seems Costa has dropped the whole "fair trade" thing, while Starbucks continues to promote it. Does anyone have any idea if this difference incurs much in the way of cost?

I know that Starbucks is convenient and consistent, but there are reasons other than their ethics to drink elsewhere. In London, at least, there's no shortage of UK coffee shops that make a product superior to both Costa and Starbucks. Prufrock Coffee and Department of Coffee are notable examples.

tehwalrus• 14 years ago

quick point 1: Murphy is a crazy left winger, seriously, try following him on twitter and not exploding.

quick point 2: Seriously, income & profit generated from a country should be subject to the tax of that country. I don't know why this isn't obvious to everyone, especially HMRC/the Treasury when they write the rules.

final point: I'm not sure companies should be taxed at all. Just make it law that anything accounted for as "profit" must be paid as dividends, and charge people income tax on the dividends. Do this at source, like PAYE, for all dividend payments leaving UK-active companies, even the ones headed to foreign citizens. (this would mean companies could re-invest in growth for free, but that that growth would have to take place in the UK.) Subject all "brand value" payments, and indeed all other transfers abroad, to scrutiny / valuation (should be easy for big companies, as there's only one brand.) This would work anywhere, not just in the UK.

gadders3• 14 years ago

The fact is not that Amazon, Starbucks etc are paying so little, it's that small businesses are taxed so much in comparison.

AFAIK none of these tax avoidance methods are available to small, single country companies. HMRC are happy to sue small companies, whilst cutting sweetheart deals with multinationals with deep pockets for lawyers.

//edit//It seems like Laffer Curve applies to companies as much as it does people.

monochromatic• 14 years ago

Moral high ground? The only moral directive of a corporation is to maximize shareholder value.

The writer here sounds laughably out of touch.

tomjen32• 14 years ago

Why has anybody linked to this kind of whiny shit?

Of course corporations try to pay as little as possible to the tax man and of course they shop around for the best deal. They do so for paper, why not for tax?

Starbucks, Google and Amazon: the tax crash of Monday afternoon

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