Politicians Bewail The Results Of Their High Taxes
So notes an editorial in the WSJ:
In the crime of the century, Google routed $9.8 billion in revenue through a subsidiary headquartered in Bermuda in 2011. Strike that. What Google did was entirely legal, but you wouldn't know it from the political uproar that has made the search giant the latest target of the higher-tax chorus.Last month, Google, Starbucks and Amazon were hauled in front of a U.K. Parliamentary committee to explain why they don't pay more to Her Majesty's Treasury. And if you are a lawmaker whose job it is to spend other people's money, there's a certain attraction to this logic. The governments of the U.K., the U.S. and most of Europe are deep in the red. Raising taxes on ordinary folk is rarely fun or popular--but getting businesses to pay more is good sport in the halls of Washington and Westminster.
Starbucks's decision earlier this month to fork over £10 million ($16 million) in a voluntary donation to the U.K. Treasury may have bought the coffee purveyor some peace and good press, but it muddied the debate over corporate taxes. Such a donation--don't call it a tax payment--reinforces the impression that multinationals are holding out and could pay plenty more if only they were more public-spirited.
But £10 million given to the government is £10 million that Starbucks won't have to create jobs, or fund expansion, or even give to charities, if it chose to--which might well do more good than giving it to the Chancellor of the Exchequer.
As for Google's Bermuda billions, they are chiefly a testament to the economic insanity of America's corporate-tax system. Under the U.S. tax code, American corporations are liable for tax made on world-wide profits--but only if they repatriate those overseas profits to the U.S.
J.P. Morgan estimates that American companies currently hold a cool $1.7 trillion in profits outside the U.S. They keep them there because if they brought them home, they'd be taxed at 35%.
What Google did was entirely legal
Yet the founders of Google are Team Obama supporters. You got the government that you agitated for, you spent money to get. Now man up and pay your taxes.
You talked the talk, now it is time to walk the walk. And yes, that includes you, Warren Buffet.
I R A Darth Aggie at December 12, 2012 6:37 AM
I read an interesting blog post about company taxes in the UK. The blogger is UK based.
The interesting case he detailed was Amazon.com or some other large US based company...I don't remember for sure. I'll go with Amazon.com. He noted that most of Amazon's business in Europe was handled from one site (Belgium comes to mind) where taxes are lower and warehouse space is also cheaper. Amazon.co.uk (the UK website) is a small company that just runs the website and processes payments. It pays the central site company to deliver the goods...hence that is an expense. So Amazon.co.uk makes little profit by the taxes laws. Amazon.co.eu (or whatever) makes most of the profit and pays tax on that profit in that country. The article the blogger was commenting about said those profits should really be UK profits and taxed there.
In some ways I agree they should be taxed there...the division in the companies is a legal fiction...that aren't really separate companies but legally they are...but that is not the way the laws are written.
The Former Banker at December 12, 2012 11:41 PM
Sources including World bank and IMF have guesstimated that upwards of $32 TRILLION of various countries' money is being squirreled away in offshore tax havens. It may be 'legal' or whatever, but this money represents the lifeblood of the world's national economies-- being sucked dry by vampires. One can only speculate how much we could do with this money, if it were free back into our own hands.
jefe at December 13, 2012 8:05 PM
Maybe that's backwards. Who is to blame, if blame is the word, for money being held out of the hands of pols who demonstrate daily they have no idea what to do but buy votes?
Radwaste at December 13, 2012 8:46 PM
I agree with Darth. It's time for these liberal hypocrites to pay the paper, since they helped to call the tune.
As for our budget problem, I'd basically to back to Reagan-era income tax rates (15/28), no extraterritorial taxation, Bush-era capital gains and dividend rates (15 and 15), a 25 percent corporate tax rate, and massive budget cuts.
(And that's just for starters.)
mpetrie98 at December 14, 2012 11:48 AM
Oh, and NO DEATH TAX OR OBAMACARE!
mpetrie98 at December 14, 2012 11:49 AM
See, I'd go with a flat 20% income tax on all net capital gains, whether it be hourly salary, stocks, expense accounts, whatever, no deductions - 5% to each level of government Fed,State,County,City. No corperate income taxes at all.
If you can afford to run the governemnt on that then you better start cutting progrmas - starting with federal politicians budgets for aides and secretaries and dog walkers
lujlp at December 15, 2012 7:28 AM
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