Banning tax evasion is easy. Just get rid of corporate income taxes and replace it with a sales tax. It's not like corporations pay taxes anyways; their customers do as tax is built into the cost of products.
Companies don’t put strain in public infrastructure. They’re legal abstractions. People and their activities (employees, shipping, factories) put strain on the public infrastructure, and they can be taxed (income, real estate, and pollution taxes) at that point.
The issue is that when Google shows ads to someone in the UK to monetize a search service used by the UK person, Google uses almost no UK resources.
Exactly. What a lot of governments seem to want is some form of tax on foreign companies for the privilege of gaining access to their local population/market. For physical goods we call that an import duty.
They do indeed want that, but what is it that has changed recently that makes this so much more urgent? People claim that digitisation has changed the equation, but I don't understand why. Google is for the most part a regular US exporter.
It appears to me that the only thing that has changed is that the US has left everyone else in the dust, which causes envy.
What's changed is that the "foreign competition" are winning to the point that "local businesses" are closing. Exactly the same thing that drives calls for protectionism in physical goods industries.
Governments need more tax revenue. Almost every country with social programs is on a timer to figure out ways to raise tax revenue to pay for those programs. Almost every developed country has a fiscal gap.
I get why everyone (me included) wants money. But if every government comes up with its own inconsistent ad hoc scheme to tax foreign corporations then they will unleash the mother of all trade wars.
>The issue is that when Google shows ads to someone in the UK to monetize a search service used by the UK person, Google uses almost no UK resources.
Why is that an argument against moving from corporation tax to VAT though? I don't think it would change much in terms of the UK's (in)ability to tax Google.
>3) The incentive for rich people to move to low tax destinations would be even greater than it already is.
I don't know why people keep harping on this, it simply isn't true at all. If it were, all the rich people would be living in Somalia right now, and they aren't, they're living in high-tax, high-CoL areas.
Very few rich people live in a way that allows them to live anywhere on the planet. Most "rich" people in the US are still working, and have to live someplace that allows them to continue to work. Some millionaire running a business in Silicon Valley can't just relocate to rural Alabama and expect to continue that.
You're conflating all sorts of rich people into a single type and then use that as the universal example. Warren Buffet lives in Nebraska and operates his conglomerate just fine from there. This he was doing before the internet age, something that now allows for even greater freedom of moving and operating from distant places.
Warren Buffet is one of the richest people in the world, on par with Bill Gates. He isn't representative of "rich people", which in America can be said to be 1% of the population (or several million people).
Yup. Tax things which really exist within a country, not accounting fictions (like precisely which arm of a multinational made how much profit).
Although I'd also like everyone to stop using the term "income tax" for this. It's a tax on corporate profits, and has nothing at all to do with personal income tax, a tax on wages.
Not really, people also pay tax on profit not revenue. Expenses related to business activity can generally be deducted in most places no matter whether you are incorporated or not. It's the basis on which business expenses you claim back from your employer are not taxed and the way unincorporated sole traders and bare partnerships are usually taxed. The rules on what types of expenses are tax deductible are pretty similar. If you incur business expenses which are not repaid by your employer you can usually reclaim tax on them.
That wouldn't prevent some of the shenanigans described above. For example, giving my IP away for cheap to a subsidiary in a low tax jurisdiction that actually performs the sale.
1) Companies would not pay most of their taxes where they put the greatest strain in public infrastructure.
2) Moderate differences in VAT rates would create enormous price differnces, which would invite smuggling.
3) The incentive for rich people to move to low tax destinations would be even greater than it already is.
I won't deny that the solution has upsides as well though.