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| ▲ | throwaw12 4 hours ago | parent | next [-] | | I would have enforced different laws if necessary for such companies to tax them properly, because they are getting rich using my populations money, they should contribute back accordingly. If you threaten to leave the UK, sure go ahead, your market will be filled quickly. Same for Palantir. | |
| ▲ | bko 4 hours ago | parent | prev | next [-] | | This seems entirely reasonable. Suppose you're a company and you lost $100m over the last few years, so naturally you have a sizable tax deduction from future earnings. Even if you're profitable now, over the life of your business you've lost money so it makes sense you don't pay taxes until you make back that $100m you lost. If you begin selling in a different tax jurisdiction, that would be unfair that you have to start paying corporate taxes despite being unprofitable. It's not a brand new company and you're using the resources you built in the other country so royalty and licensing fee make sense. In other words, Starbucks brand name and operational efficiencies are assets that were developed in the US, so the US subsidiary should receive revenue from the service to the UK branch | | |
| ▲ | Nursie 4 hours ago | parent | next [-] | | In a convenient amount that somehow just always exceeds the profits it makes, in perpetuity? Pull the other one mate, it's got bells on. | | |
| ▲ | bko 4 hours ago | parent [-] | | How is it convenient that they lost a lot of money in the past and it pays it's employees in stock? Yes, any company can pay 0 taxes by taking all the money that they made and setting it on fire, in perpetuity. | | |
| ▲ | Nursie 4 hours ago | parent [-] | | They could, but that's not what they're doing, they're moving the profit to a lower tax situation to avoid paying. Pure and simple. |
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| ▲ | sevenzero 4 hours ago | parent | prev [-] | | >so it makes sense you don't pay taxes until you make back that $100m you lost LOL. You losing money with your business is no excuse to not pay taxes on profits you make after losing money. Just because you lost money doesn't mean you dont make profits until you earned back that money. Taxes should be paid every time you make money in the country your business operates in. Simple as that. Everybody benefits off of tax money. | | |
| ▲ | Leif24 3 hours ago | parent | next [-] | | > Just because you lost money doesn't mean you dont make profits until you earned back that money. Taxes should be paid every time you make money in the country your business operates in. Over what timescale? For instance, if the first month I operate my business I have a loss of $50,000 (have to buy initial supplies and equipment, hire employees, etc.), but in the second month sales start taking off and I net $20,000 do I (a) have a total loss of $30,000 and pay no tax or (b) owe taxes on the $20,000 in month two? This can be extended, e.g. profit and loss can be calculated on a weekly, daily, or even hourly basis. In the extreme case, this is no longer a tax on profit but on revenue (which essentially runs any business that has a smaller margin than the tax rate out of business since every dollar of revenue coming in results in more tax liability than the business actually nets). Before you say "obviously profit and loss should be calculated in a yearly cadence" I would note that the choice of a year is fairly arbitrary and this taxation scheme would greatly disincentive any sort of capital allocations that would take more than a year to payoff (as a small example, would incentive leasing equipment annually vs. buying outright). | | |
| ▲ | sevenzero 3 hours ago | parent [-] | | Timescale has nothing to do with this though. You're Starbucks, you sell me a cup of coffee, you make profit from that cup of coffee, you pay taxes on that singular profit. What your companies bank account states is not what I care about as tax collector. The profits you make have nothing to do with the equipment you bought earlier to even start the business. Otherwise you could simply: Buy expensive stuff -> even out with profits, buy expensive stuff again, even out with profits and never pay taxes. | | |
| ▲ | Leif24 3 hours ago | parent [-] | | What do you mean by "make profit from that cup of coffee"? A cup of coffee is hot bean water in a cup - is profit simply the price Starbucks charges minus the cost of (water + bean + cup)? What about the cost of energy to heat the water? What about the fractional cost of the machine that actually puts the water and beans together to brew the coffee (you could do some sort of analysis based on purchase price / total number of coffees made over useful lifetime)? What about the small fraction of time the barista spends making and handing the coffee to you? What about the wear and tear on the machine (e.g. it breaks down X% of the time and costs $Y on average to fix) - does that factor into this "profit" you keep talking about? What about the rent on the building? If none of that matters, then you should spin up a competitor where you simply stand on a street corner hand your customers a cup, cold water, and some raw beans - I don't think you'll take too many of Starbucks customers. All of these factors, and many more play into the "profit" of an operation like Starbucks, so how do you determine what the real true profit of that one cup of coffee is? It is much simpler to simply say "Hey, just hand over x% of profits at the end of the year" with some reasonable guidelines as to how accounting should be done (see stuff like GAP for example) than to sit down and determine what the individual "profit" is for every single individual cup of coffee sold at every single Starbucks location. >Otherwise you could simply: Buy expensive stuff -> even out with profits, buy expensive stuff again, even out with profits and never pay taxes. Yep, you could do this. Only problem is, uh, you never make any money. If you're running a hobby or something, that's fine, but most people owning business want to realize some profit... If course there are still shenanigans you can pull between different tax districts, but someone somewhere needs to realize a profit at some point - otherwise they are running a jobs program and not a business. | | |
| ▲ | sevenzero 3 hours ago | parent [-] | | Everything you named should be included in the price you charge for a cup of coffee. So the money you extract from it, minus the cost you named is your profit. If you dont make profit on that sale, I have bad news for your business idea. >Yep, you could do this. Only problem is, uh, you never make any money. If you're running a hobby or something, that's fine, but most people owning business want to realize some profit... Debt is technically profit in that sense, as long as you can pay it back. | | |
| ▲ | Leif24 3 hours ago | parent | next [-] | | Ok, fair enough. To focus on one line item I mentioned ("What about the fractional cost of the machine that actually puts the water and beans together to brew the coffee (you could do some sort of analysis based on purchase price / total number of coffees made over useful lifetime)") - my understanding is a capital expense like this is typically handled by amortizing it from revenue over the course of a few years (super easy, just cost of machine / useful lifespan). Just need to rework the formula to solve for fractional cost per coffee brewed instead of per year. The same process can be used for, say, the "royalty and license fees" Starbucks UK was paying. Just convert from fee per year to fee per coffee. So, the net effect of your big change is just reworking all the accounting from "per year" figures to "per coffee" figures? How does that improve anything about the world (other than giving accountants some more work that they will charge handsomely to do)? | |
| ▲ | bluecalm 2 hours ago | parent | prev [-] | | >>Everything you named should be included in the price you charge for a cup of coffee. So the money you extract from it, minus the cost you named is your profit. When you first invest 100k and then sell something for 2$ you don't make a profit for a while. You may be arguing for some other tax but it's ridiculous to argue income tax should be paid until revenue > costs. >>If you dont make profit on that sale, I have bad news for your business idea. When doing business you often don't know if you will make profit or not. In the coffee example you don't know how many you are going to sell so it's impossible to "include costs in the cup of coffee" because that depends on how many you are going to sell and that's unknown.
Your whole line of reasoning makes 0 sense. | | |
| ▲ | sevenzero 43 minutes ago | parent [-] | | My whole line of reasoning makes perfect sense given I worked in trades doing exactly what I talk about in a country with one of the most complicated tax systems there is.
Prices are calculated by adding your costs into the base price which is common sense. If you do that you can actually calculate the amount of coffees you need to sell to turn a profit and if the business even makes sense in the first place. Every unit of coffee you sell should turn a profit. Which in turn should be taxed. Even cigarettes that probably only turn micro cents profit should be taxed by per unit sold. They even are, given their sales are heavily regulated. No company is giving out "free" products without making a profit just to go even on their initial investment. |
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| ▲ | greyw 4 hours ago | parent | prev [-] | | I dont know a single country that doesnt allow losses to be offset from future profits. Not a single one! It discourages investments in your country. | | |
| ▲ | sevenzero 4 hours ago | parent [-] | | So I'll expect not having to pay VAT next time I buy from a franchised business operating in my country given that all of them usually make little to no profits officially. | | |
| ▲ | greyw 4 hours ago | parent | next [-] | | The equivalent would be not having to pay taxes if you dont earn money (or lie about it which the franchise business might be doing legally or illegally). Fortunately its quite rare to have a job that results in negative income. Unfortunately, VAT is a consumption tax that has little to do with the company. Your gov thinks you need to pay it because you consume. Are you paying a consumption tax on investments? No that would be really dumb | |
| ▲ | bluecalm 2 hours ago | parent | prev [-] | | VAT and income tax are completely different taxes.
One is a tax on income. The other is a consumption tax - like a sale tax but with additional accounting steps. |
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| ▲ | Havoc 4 hours ago | parent | prev | next [-] | | Delivering work is a bit more defensible that the IP based transfers that big tech loves so much | |
| ▲ | Nursie 4 hours ago | parent | prev [-] | | There's a coal mine here in Australia (NT I think) run by a company called Adani. When it was being proposed they did the usual "but think of all the taxes!" song and dance to get it approved. It's never posted a profit despite about a billion in annual revenue, and so never paid a penny of corp tax. Personally I think the tax authorities ought to take the line that a company posting losses like this is clearly not a viable, ongoing concern and ought to be wound up. If Starbucks UK is a loss-making venture, they should have some explaining to do when they're opening new branches. | | |
| ▲ | perpetuallunch 3 hours ago | parent | next [-] | | Carmichael coal mine in Queensland. Queensland has a payroll tax, I don’t believe this is can be offset against losses, see here for more info https://qro.qld.gov.au/payroll-tax/ GST is payable on goods they use and services they consume. Mineral royalties are in Queensland https://qro.qld.gov.au/royalty/calculate-mineral/rates/ Employees of said company are required to pay income tax on their earnings. So while it may be completely factual that a resource extraction company paid no tax on its corporate profits, it is not factually complete as there is tax revenue generated by the operation of the company. A company that manages to generate no taxable profit isn’t necessarily committing tax evasion, that’s a crime. It is most likely practicing tax avoidance, which any economically rational actor ought to do. Note, I’m not making a value judgement here. There’s plenty of good arguments to be made that Australia’s taxation system is in need of reform, and many that I’m in favour but are beyond the scope of this discussion. | | |
| ▲ | Nursie 37 minutes ago | parent [-] | | I think it's very easy to make a value judgement here. In this case, at the time they were proposing the project, Adani promised around $22 billion in taxes and royalties, and the industry body talked about enough money to fund schools, hospitals and other infrastructure for near to a century. The royalties they pay are in the order of a few tens of million per annum, and they pay no corporation tax because of the accounting games they play. The company outright lied about the benefits it would deliver when it was trying to win permission for the project and is actively trying not to fulfil those promises. Now, does this all point to a need for better legislation? 100%, but good luck with that when so many politicians walk into 'consultancy' jobs in the sector when they leave office. (Also the whole "Oh but they pay income tax for their employees" is such weasel-worded nonsense. Sure they do, it's a cost of doing business. So does everyone else. They should also be paying significant royalties and corporation tax, and be slapped with hefty fines for the games they're playing with profit hiding) |
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| ▲ | bko 4 hours ago | parent | prev | next [-] | | > Personally I think the tax authorities ought to take the line that a company posting serial losses like this is clearly not a viable, ongoing concern and ought to be wound up. Tax authorities don't need to do this. Investors will. Where will the money come from? If there's no future prospects, it will cease operations. > If Starbucks UK is a loss-making venture, they should have some explaining to do when they're opening new branches. I like how discussion of taxes turned everyone into a fierce defender of profit maximization. Nothing about adding back to the community, paying decent wages, etc. | | |
| ▲ | Swenrekcah 3 hours ago | parent | next [-] | | > I like how discussion of taxes turned everyone into a fierce defender of profit maximization. Nothing about adding back to the community, paying decent wages, etc. You are fundamentally missing the issue. What most of these multinationals do is to extract value from the places they operate but then move all the profit (in the books) to another tax jurisdiction, thereby not contributing to the community where they operate.
Furthermore this undercuts local businesses, further impoverishing the area. Global commerce and cooperation unlocks some truly great opportunities but the finance people can really bring ruin if allowed free reign. | | |
| ▲ | perpetuallunch 3 hours ago | parent | next [-] | | The only sane argument to be made against this practice is that governments should make their tax systems more favourable to companies operating in their jurisdiction so they have no reason to move their profits to a more favourable jurisdiction. Australia has, if I understand correctly, the highest corporate profit tax rate in the OECD. Higher than New Zealand, the US, Canada, the UK, Ireland, Japan, Turkey, China, Greece, Belgium, Denmark, Sweden, Iran, Zimbabwe, Iceland, Finland, Ukraine, Hungary, Qatar, Iceland, anyway… Why wouldn’t you expatriate your profits and retain your loses as a multinational operating in Australia? Australia is increasingly and rapidly driving itself toward a future where higher taxes result in lower tax revenues as individuals, business, and corporations pick up their capital and leave for jurisdictions with more favourable regulations and taxation. Governments shouldn’t aim to maximise taxation, that always kills innovation and the entrepreneurial spirit. They should aim to optimise taxation to a point where businesses flourish and infrastructure is built and maintained, and otherwise generally not be heard from much at all. | |
| ▲ | bko 3 hours ago | parent | prev [-] | | What value do they extract? They provide a good or service to denizens. Unless of course you believe in a serf model of government in which people are an asset of the state and everything should serve the states goals. | | |
| ▲ | perpetuallunch 3 hours ago | parent [-] | | This is increasingly, and worryingly, becoming an ideology people are being swept up by. It doesn’t help that there are Card Carrying Socialist activists in our public school system in Australia, indoctrinating kids in to a politically and economically bent out of shape ideology. I don’t believe many Australians are aware of just how dangerously few steps away from the mouldy bread and rotting fish head soup lines version of “equality” we really are. Since when has government, of any sort, been a reliable arbiter of truth or wisdom? P.J. O’Rourke would be turning in his grave. Giving money and power to government is like giving whiskey and car keys to teenage boys. Socialists in Schools: https://www.victoriansocialists.org.au/campaigns/socialists-... |
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| ▲ | Nursie 4 hours ago | parent | prev [-] | | > If there's no future prospects, it will cease operations. That's the point, there are plenty of future prospects, but the company is playing accounting games to hide the profits. > I like how discussion of taxes turned everyone into a fierce defender of profit maximization. No, we're just calling bullshit on the whole thing because we're tired of wealthy multinationals dodging taxes in our countries. That's how they should be contributing. | | |
| ▲ | perpetuallunch 3 hours ago | parent [-] | | There are counties that have zero percent corporate profits tax. Be like them and the corporations won’t have a need to offshore their profit. The alternative is One World Government, which, in its lesser form, empire, has a nasty habit rapidly turning quite sour. | | |
| ▲ | Nursie 38 minutes ago | parent [-] | | This has to be one of the most ludicrous, cartoonishly libertarian things I've ever read. No thanks! I'd rather have a functioning society! |
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| ▲ | Swenrekcah 4 hours ago | parent | prev [-] | | The worst part is that local competitors can’t use structuring like this to evade/avoid taxes, so eventually they go out of business. | | |
| ▲ | Nursie 3 hours ago | parent [-] | | Yep, that's definitely one of the worse negatives here, they use this stuff to outcompete small businesses. The tax games directly fuel the enshittification of the British high street into a Starbucks/Costa wasteland. |
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