How to tax big tech


#1

Originally published at: https://boingboing.net/2018/11/02/amct.html


#2

Bullshit. Every dollar you earn is taxed again and again. Federal and state income taxes, payroll taxes, where I live we also have local income tax. Then you spend your dollar and pay sales tax, and if you’re buying sinful goods there are excise taxes too. Pay your mortgage and you’re paying real estate tax. Then the shopkeeper pays their employees, and it’s taxed again, and they spend their pay and get taxed again.

Double taxation is only a horror when it is a Republican talking point. Taxation is theft, you see, if corporations pay taxes.


#3

“In addition to ensuring that profits are taxed for all firms, not just small ones, this largely eliminates double taxation, makes profit shifting a pointless exercise, makes tax-havens useless, it creates “tax certainty” and thus stability that shareholders can bank on, it focuses business’s attention on the places where they do business, not where they pay taxes, and creates more transparency into earnings and profits.”

And for all these reasons and more, the idea will be lobbied out of existence.


#4

Double taxation is more specifically the concern that the point is to see that one dollar isn’t taxed twice at the same level. There’s a whole body of US Supreme Court cases that deal with the problems one has in dealing with how income is taxed in different states. I shan’t bore you with the exciting world of Complete Auto Transit v. Brady, but briefly: states typically apportion Company X’s total income as a percentage of its property, payroll, or sales. (California had a 2016 ballot initiative to make it all based on payroll), but the idea is that by taking a fraction of these factors, you could say that Company X does 14% of its business in California and therefore 14% of its income will be taxed in California at California rates.

But if California has a certain view of what constitutes the apportioned factor, and Nevada has another, and Texas another, there’s a risk that you could be paying tax on 100%+ of your income (not a 100% tax, but that more than your total income is being apportioned so you are being double taxed).

As a term of art, double taxation is mostly about something more specific. Sure, I earn a buck after tax, and I can spend it and get nicked by a sales tax if I buy it in one state, or a use tax if I buy it one state and bring it home to another. But if I buy a car in Nevada (state sales = 4.6%) and use it in CA (state sales = 7.25%), I ought not have to pay 11.85% sales tax. I should (as I do) get credit for the sales tax I paid in Nevada, and only owe the balance to CA as a use tax.*

  • But see other tax dodges like the 91-day Yacht Club.

#5

In accounting terms, you’re right, but that’s not how it’s used politically.

Then again, Virginia has personal property tax, which you pay on the same car every year, and that’s in addition to the sales tax you paid in Maryland.


#6

Double taxation is a problem if you are subject to taxation in two territories where the sum of their marginal rates exceeds 100% (as I am: the UK and California). Without tax-treaties that exempt me from double-taxation, I would be paying about 110% of my annual income in tax.


#7

We should shift the full burden of taxation to Corporations, as a trade-off for the liability protection they provide. It would lift a huge burden of bookkeeping and administrative cost from other businesses, and put more money into the economy - which corporations would then earn the lions share of.


#8

This sounds like a good idea, but as @euansmith said will get lobbied out of existence, here. If other countries do it and show some success we have a chance to get corps to pay their fair share here. The only other thing I would love to do is roll all the taxes into the price (some taxes already are) so people are not being constantly reminded they are paying taxes and then we might actually be able to think positively about taxes as the things taxes pay for not you are always paying taxes.


#9

The VAT does some of this since it is based on corporate net income.


#10

That would suck. So start a tiny corporation, have all your income paid into it, and let it buy your steak and toilet paper. Presto! Bonus points if it’s non-profit!


#11

The Cory Doctorow Foundation For People Who Can Write Good? :slight_smile:


#12

If staff gets counted then everyone working tere will suddenly become a contractor.


#13

Or levy a witholding tax on locak income and not allow deductions unless they show the income is resulting in an upstream tax bill somewhere. https://en.m.wikipedia.org/wiki/Withholding_tax


#14

You have to give him that, even if he’s a little fast and loose with the headlines.


#15

That was a good explanation of how double taxation can be a problem. Much better than the usual “I don’t like tax so I double don’t like double tax, and so I think it must be illegal”.

The basic issue causing this “real double taxation” is lack of coordination between different taxing entities (e.g. states). The proposed solution is basically to coordinate the different entities. Which basically dooms the solution to the same problem that caused the double tax in the first place: most countries not only won’t coordinate but have incentives not to coordinate.


#16

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