[flexie]

The devil is in the details but the principle of taxing money where it is made is sound.

Taxing revenue instead of profits could be a solution for example by shifting all the tax to the VAT (and then having a single VAT rate in the EU). Then Apple and Google would start paying back on the property rights, patent rights, copyrights, trademark rights, infrastructure, rule of law and well educated consumers they enjoy in Europe.

[netcan]

This might sound reasonable on paper but in reality it's a pretty big deal. Taxing corporate profit (however ineffectively) is very different from taxing consumption like VAT does.

Inasmuch as the tax gets passed on to companies, it can push teetering companies out of business. A company with no profits 9for real) pay no corporate tax. Second, corporate taxes are more or less like capital gains tax, in many cases a capital gains tax on foreign citizens that own shares in that company. Taxing the rich is hard. Taxing the poor is relatively fruitless and morally questionable. This is why a lot of the burden (as a percentage of income) falls on the middle class, who are easiest to tax. A VAT is a "flat" or moderately regressive tax. To replace corporate tax revenues with more VAT, poor and middle class people would have to pick up the share currently paid by rich people and foreigners.

The current tax systems with the various types of taxes are evolved to maximize tax revenue, and to a certain extent GDP. A fairer system that "costs" the tax office 5-10% of their revenue is off the table. Most kinds of taxes are maxed to the point where raising them would either (1) not actual produce more taxes^ (2) produce immediate political reactions (3) harm the overall economy too much.

When you are super-optimzed for one thing, its' hard to optimize for something else, like fairness.

^EG, if the high marginal income tax is 50%, increasing to 70% will not realist in a 40% increase in revenues from that tax bracket because the incentive to earn (declared) income goes down.

[jiggy2011]

A single EU VAT rate would be very harmful because no gov would be able to boost consumption by reducing VAT rate, it would also force small business to collect VAT as soon as they sell their first product.

[ajross]

What exactly would be the argument for allowing individual small governments to play with their economies like that? The risk analysis gets completely skewed by the fact that the EU implicitly backs the economy anyway. That just sounds like a recipe for another Greece.

[jiggy2011]

The EU implicitly backs Eurozone countries because it has to, the UK is not a Eurozone country. The UK should definitely be able to control it's own taxes, the only alternative is fiscal union.

[ajross]

Sorry, I heard "Single EU VAT" and assumed you were talking about the Eurozone. Unifying taxation in the absence of unified monentary policy makes no sense to me anyway, so sure: I agree then. :)

[sokoloff]

Respecting the concept of sovereignty would be my primary argument.

[Silhouette]

I'm not sure how your conclusion follows. Why would having a single shared VAT rate imply that you couldn't have a minimum threshold before VAT registration is required?

If anything about VAT is going to cause grief for small B2C tech businesses in Europe, it seems more likely to be the changes affecting them from 1 January 2015 precisely because the VAT rates in different European countries are different.

[pcrh]

VAT is explicitly a tax on consumers, not corporations.