“Let Me Tell You How It Will Be/There’s One for You, Nineteen for Me …”
David Cameron apparently thinks that the Beatles celebrated the taxman:
The world’s most powerful leaders must mount a concerted effort to prevent multinational companies such as Starbucks and Amazon legally avoid large corporation tax bills, David Cameron will urge in his role as president of the G8.
The Prime Minister vowed to make “damn sure” that multinational firms paid their fair share of tax on their UK operations.
He is to use Britain’s presidency of the G8 group of the most industrialised nations, which began this week, to discuss ways of stopping global companies moving their money through different jurisdictions to minimise tax payments.
HM Revenue & Customs has been accused of being “too lenient” towards big businesses that indulge in aggressive tax planning. The credibility of HMRC and the tax system rests on it becoming “more aggressive and assertive in confronting corporate tax avoidance”, the chair of the Public Accounts Committee, Margaret Hodge, said last month.
Mr Cameron says a crackdown can only be effective if countries around the world act collectively to tackle abuses. Britain, along with Germany and France, has asked the Organisation for Economic Cooperation and Development to investigate whether tax loopholes can be closed.
He signalled his determination to confront global corporations during an appearance in Lancashire before business leaders and entrepreneurs. Asked why “Starbucks and Amazon” were allowed to avoid paying large corporation tax bills despite their extensive British presence, he replied: “We have got to crack that, you’re absolutely right.
I’m sure that this kind of bluster makes Britons happy, but a smart government would look at the efforts being expended by large companies to avoid paying corporation taxes and wonder whether perhaps that kind of behavior is a sign that corporation taxes are too high. A smart government might consider lowering corporation taxes so as to remove incentives for companies to go through Rube Goldbergesque machinations in order to lessen their tax liabilities, thus possibly attracting the presence of more companies—and coincidentally, more jobs—into the country being governed by that smart government. A smart government might be struck by the idea that lowering corporation taxes could make it less necessary for that government to spend so much time, money and resources in enforcing the tax laws, because if taxes are lowered to a reasonable level, companies will find it easier and cheaper to pay the taxes instead of trying to find ways around the tax laws.
Can companies abuse tax laws? Certainly. Should pro-free market governments be instinctively pro-corporation/company/big business? Of course not; we don’t want government to enable corporate subsidies and rent-seeking on the part of business. But that doesn’t lessen the burden on Cameron’s government—and on other governments for that matter *coughObamaadministrationcough*—to be smart in how they craft and implement tax laws.
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Comments:
Apr '12
Re: “Let Me Tell You How It Will Be/There’s One for You, Nineteen for Me …”
I’m sure that this kind of bluster makes Britons happy,
· · 43 minutes ago
Not me. And there's also the insane capriciousness of the new General Anti-Avoidance Rule (GAAR) which is intended to catch persons who don't comply with the spirit, as opposed to the letter, of tax laws. Surprise surprise, no one is absolutely sure of the line between ‘reasonable tax planning’ and ‘unacceptable tax avoidance’.
Oct '10
Re: “Let Me Tell You How It Will Be/There’s One for You, Nineteen for Me …”
Eamonn Butler.
May '12
Re: “Let Me Tell You How It Will Be/There’s One for You, Nineteen for Me …”
David Cameron is what passes for conservative in the UK. I think the majority of our republican party isn't far behind.
Oct '10
Re: “Let Me Tell You How It Will Be/There’s One for You, Nineteen for Me …”
Indeed. Cameron is what you get when you focus on 'brand' and 'electability'...
Jun '10
Re: “Let Me Tell You How It Will Be/There’s One for You, Nineteen for Me …”
Why would anyone wonder that corporations or anyone else would want to avoid taxes?
Corporations are "people" (I'll believe THAT when Texas executes one) and have a natural aversion to robber...er...taxes.
It is the nature of governments to "control" everything in can and steal as much as it can. It is the nature of people to resist. If Britain is so successful in taxing Amazon and Starbucks to the point of unprofitability, those corporations will no longer do business there and Britain will lose every pound they hoped to collect. It would be a good lesson for them (and others) if that happened, although the ordinary Briton would probably miss Amazon. (I can't see how anyone would miss Starbucks; a cup of coffee should never cost more than a quarter. *harumph*)
Jul '10
Re: “Let Me Tell You How It Will Be/There’s One for You, Nineteen for Me …”
"Smart Government" is an oxymoron.
Jan '11
Re: “Let Me Tell You How It Will Be/There’s One for You, Nineteen for Me …”
Don't worry.
This is the ultimate free-rider problem. The only way to make sure that individuals don't leave one country for a better tax environment in another is if all countries agree to collectively support each others' tax policies ... even to their own individual detriment.
Which means, it won't happen.
What do you get in exchange for letting Britain keep its millionaires in Britain? If you were smart, you'd agree to Britain's deal only in exchange for a price. But since every other country has the same opportunity, it would only start a tax war.
Oct '10
Re: “Let Me Tell You How It Will Be/There’s One for You, Nineteen for Me …”
Or the high-tax countries bully the low-tax countries into compromising their own approach to tax in the name of 'fairness' - see e.g. everyone including the US vs. Switzerland.
Aug '10
Re: “Let Me Tell You How It Will Be/There’s One for You, Nineteen for Me …”
Even if a country lowers its corporate tax rates, corporations will still move assets around to avoid paying. After all, what's better, lower taxes or no taxes?
That being said, lowering the corporate tax rate does reduce the amount of jiggery-pokery going on.
As such, methinks a two-pronged approach is best: 1) Lower corporate tax rates and 2) crack down on any tax-evading hold-outs.
Along with being economically-sensible, it would also be politically expedient. The government in question can say, "hey, we lowered tax rates. Therefore, any company that's STILL evading the tax man is CLEARLY evil, and fully deserving of our enmity."
Mar '11
Re: “Let Me Tell You How It Will Be/There’s One for You, Nineteen for Me …”
Well, yes, and no.
Corporate taxes should be ZERO. Corporations spends FAR more on tax avoidance than they pay in tax, which means that something like 3x the corporate tax revenue would go straight back into the economy (jobs, investment, products) if corporate tax was eliminated.
Corporations should neither give nor receive. Which means there should be no taxpayer dollars going to corporations in the form of grants, subsidies, and the like.
If our government actually wanted to generate jobs, eliminating corporation tax would go a LONG way. And it would keep many companies from fleeing these shores for better business environments.
Mar '11
Re: “Let Me Tell You How It Will Be/There’s One for You, Nineteen for Me …”
Misthiocracy:
As such, methinks a two-pronged approach is best: 1) Lower corporate tax rates and2) crack down on any tax-evading hold-outs.
The UK is upset about entirely legal transfer payments from one company entity to another. The only way to "close loopholes" or "crack down" will be to nationalize the company in question. This would be done by second-guessing every single contract signed, which is the only way to do what Cameron wants to do.
Mar '11
Re: “Let Me Tell You How It Will Be/There’s One for You, Nineteen for Me …”
There is a basic fallacy at work: that a system can eliminate loopholes.
Idiots think that making tax code more complex eliminates loopholes. All it does is create more loopholes.
Every. Single. Time.
May '12
Re: “Let Me Tell You How It Will Be/There’s One for You, Nineteen for Me …”
genferei
Indeed. Cameron is what you get when you focus on 'brand' and 'electability'... · 2 hours ago
I think there are more than a few people that would do well to read and understand your comment.
May '10
Re: “Let Me Tell You How It Will Be/There’s One for You, Nineteen for Me …”
Hmm. We want business. We want economic entrepreneurial activity. We want jobs.
Er, that's just fluff. We really want government revenue, for as long as you suckers pay out.
Re: “Let Me Tell You How It Will Be/There’s One for You, Nineteen for Me …”
It should not have to be. We want government to be both small and smart; they are not opposing values.
Jul '10
Re: “Let Me Tell You How It Will Be/There’s One for You, Nineteen for Me …”
Pejman Yousefzadeh: It should not have to be. We want government to be both small and smart; they are not opposing values. · 17 hours ago
I OTOH would state that they ARE opposing values, and only by significantly limiting what they do will you get anything approaching rational government. It is, after all, pretty much the defining concept in the original view of government that our FF's had.
There is an attitude question. But recollect that the FF's claimed that our form of government would only suffice for men of virtue. That virtue allows them to think for the good of all citizens, and not of their own political ambitions. Mitch Daniels came to Indians to fix it, did, indeed, fix it, and now has left to other pursuits. ?Can you imagine Chuck Schumer ever doing such a thing.