Mr Schmidt will tell BBC Radio 4’s Start the Week: “What we are doing is legal. I’m rather perplexed by this debate, which has been going in the UK for quite some time, because I view taxes as not optional.
“I view that you should pay the taxes that are legally required. It’s not a debate. You pay the taxes.
“If the British system changes the tax laws, then we will comply. If the taxes go up we will pay more, if they go down we will pay less. That is a political decision for the democracy that is the United Kingdom.”
As you know my solution is simple: just abolish corporation tax.
The value to us all, to the \”nation\” or the populace, of a corporation doing business here is the consumer surplus we gain from access to the company\’s products. How much tax they pay on what they receive is an irrelevance. The value of Google to us is that we get to Google and bugger the tax take.
Best answer to the – protection racket tax mafia – that I have heard yet.
I find some aspects of the current tax law wrong, as it was designed for life before the internet, and could reasonably be changed. But the actions of companies like Google are completely legally and morally right. They have a duty to obey the law and generate returns for their shareholders.
He has missed one trick here though.
What he should have said is:
“If tax _rates_ go up, our tax _rate_ might go up, but we might well end up paying less as a result because we will be discouraged from doing business here.
If tax _rates_ go down, the _rate_ we pay will go down, but we might well end up paying more as we do more here.”
Unfortunately, he’s got one difficult message to convey already (“You morons set the tax law and we comply – ball’s in your court”). Adding in the Laffer curve will just make people’s heads explode.
The problem is, you can make the same argument for abolishing any tax. The value of an employee is her surplus, too. Surplus value, Marx, ooer.
The question is whether you want to raise the market price of something (employees, beer, Googles) in return for free health care, or an army, or something like that. Wherever in the transactional cycle you apply the tax, that question remains the same.
Two points
While I agree with the abolition of corporate tax from an economic point of view, there remains the question of who gets the tax. If we’re taxing individuals then (I’m assuming) most of google et.al’s shareholders are in the US , the UK doesnt get a look in. That doesnt bother me particularly, but it will bother those who are making the rules.
Secondly, isnt it amusing that absolutely none of our lords and masters see fit to point out that the situation, at least as regards Ireland and Luxembourg, are the result of EU rules. They’re happy to haul Schmidt & co up, but I haven’t heard any calls for Barrosso and his cronies to come and explain themselves. Nor any suggestion that we should leave the EU to get rid of these rules.
tax problem the result of EU rules
Ian B,
But with corporation tax, you’re dealing with one of the most mobile forms of taxation, and therefore, the most prone to go easily going elsewhere. Labour is quite mobile, but a lot of people don’t want to move country. And last of all is land, which is immobile, and where the wealth is often generated by the state (houses in towns with railway stations typically cost more than those without).
Wouldn’t that be an argument in favour of corporation tax; if the taxpayers can easily shop around regimes for the best rate, that will encourage lower rates. Won’t it?
Ian B,
How many people are going to “shop around” and move countries to get lower tax rates? OK, bankers might, and millionaires like Michael Caine, but most people don’t, because the cost and upheaval of moving are huge.
@jorb
Secondly, isnt it amusing that absolutely none of our lords and masters see fit to point out that the situation, at least as regards Ireland and Luxembourg, are the result of EU rules. They
re happy to haul Schmidt & co up, but I haven’t heard any calls for Barrosso and his cronies to come and explain themselves. Nor any suggestion that we should leave the EU to get rid of these rules.
Which is why, if the UKIP tactical boys want to keep piling up support, they should be making a whole big issue of this. Cut away support from under Labour shills like the TJN. There’s absolutely no reason to go past the concept – these taxes are not collected because of EU regs. – Doesn’t matter whether UKIP is in favour of taxation or not. Not the issue & none of the tax bleaters will read the manifesto small print anyway.
It’s called playing dirty. Those is the rules.
@ Serf
‘I find some aspects of the current tax law wrong, as it was designed for life before the internet, and could reasonably be changed. But the actions of companies like Google are completely legally and morally right.’
Were people happier with Google’s tax arrangements before the internet?
I used to buy mail order before the days of the internet, including from overseas. Much slower process and pretty sure the companies overseas were not paying UK corporation tax on the sales they did in the UK.
@ Martin Davies
Exactly!
Does E bay pay UK Corporation tax? Would the TJN want it to? After all, it is taking advantage of UK buyers.
UK buyers do not buy from a company called ebay. They may buy from Argos, they may buy from my company, but not ebay.