The author is confused between tax avoidance and tax evasion. Tax evasion is illegal; tax avoidance is not. Rather than blaming companies for shifting profit offshore and just hike up the tax rate, maybe look at ways to improve the complicated tax system in the US.
As the article states, this goes beyond the tax system in the US when global companies choose to book their profits elsewhere. If the US is charging x but Ireland offers <x, then a resourceful company will book their profits there. This is a problem because the tax burden is then shifted to the middle class.
And the argument that the tax system in the US is too complex for trillion dollar companies to navigate is laughable. That's arguably very true for individual taxpayers but Apple isn't parking billions in Ireland through a Double Irish Dutch sandwich because the American tax system is too complex.
Yes and the author is recommending to hike the tax rate to 25%. How does that prevent corporations from continuing to shift profits to Ireland? It doesn’t.
The global minimum tax rate is only 15%. As you said yourself, as long as other countries offer less tax rate, they will continue to shift profits elsewhere.
Providing a simpler tax system might not stop Apple from shifting profits, but it definitely increases the incentive to do so.
> Providing a simpler tax system might not stop Apple from shifting profits, but it definitely increases the incentive to do so.
I don't think it does. As parent said, they don't do it because of complex tax system, but because of lower taxes. Why would they choose to pay higher taxes if they don't have to? What is the incentive?
Perhaps changing from the high frequency tax period of every 12 months, to every 24 months, would cut tax overheads by 50% for individuals and small business. and the compound growth of a business over 2 years than 1 year, and then being taxed, would allow businesses to grow faster, and collects more tax revenue. recuing tax frequency further to once every 4, 8 years, cuts costs, allows for more compound growth before the assets are scythed.
Governments have tools at thier disposal, not available to individuals and business who are required to create value to remain solvent, such as printing money, bonds, etc. The governments should look at using these tools, the way a government has national research, education, healthcare or defence, using its privelaged / monopoly posistion to provide those services, it should provide a tax service to its people, so the citizens can create value and grow it exponentially without the annual fuedal taking the kings share of the crop routine we have as default.
I have always wondered what the implications would be if a country decided to tax based on Revenue, say 5-15% of Revenue, rather than Profit.
Yes, it means that companies that make a loss would still owe tax. But there will always be companies that end up in the red and eventually fail.
Yes it will mean that some companies cannot expand as quickly, but the companies that are re-investing 100% of their profit into growth and expansion at the moment are effectively doing so with tax money that should be going to their government.
If you look at app stores, etsy, amazon, etc. they all take a 5-30% cut of revenue before any costs and expenses are considered, and it seems to work for them.
Taxing revenues means that outsourcing any aspect of a business automatically incurs an e.g. 5-15% fee over doing it in-house. That would artificially incentivize vertical monopolization, removing some of the natural benefits of specialization, and could destroy low-margin businesses altogether.
Europe's value-added tax approach seems like a better alternative, though I'm sure it too has drawbacks.
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[ 151 ms ] story [ 1138 ms ] threadAnd the argument that the tax system in the US is too complex for trillion dollar companies to navigate is laughable. That's arguably very true for individual taxpayers but Apple isn't parking billions in Ireland through a Double Irish Dutch sandwich because the American tax system is too complex.
The global minimum tax rate is only 15%. As you said yourself, as long as other countries offer less tax rate, they will continue to shift profits elsewhere.
Providing a simpler tax system might not stop Apple from shifting profits, but it definitely increases the incentive to do so.
I don't think it does. As parent said, they don't do it because of complex tax system, but because of lower taxes. Why would they choose to pay higher taxes if they don't have to? What is the incentive?
If you look at app stores, etsy, amazon, etc. they all take a 5-30% cut of revenue before any costs and expenses are considered, and it seems to work for them.
Europe's value-added tax approach seems like a better alternative, though I'm sure it too has drawbacks.