[fauigerzigerk]

I see a couple of issues with this solution:

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.

[rayiner]

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.

[tomatocracy]

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.

[fauigerzigerk]

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.

[tomatocracy]

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.

[Mirioron]

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.

[fauigerzigerk]

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.

[fauigerzigerk]

>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.

[magduf]

>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.

[yostrovs]

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.

[magduf]

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).

Nebraska isn't exactly third-world either.