Masterful, entirely glorious, hypocrisy. Just absolutely fucking perfect

From Richard Murphy:

David Axelrod’s tax
Posted on April 16 2015

The Telegraph has reported that:

Ed Miliband’s most senior adviser pays no tax on his reported £300,000 earnings in Britain, The Telegraph has learned.

David Axelrod, a former adviser to Barack Obama, admitted that he is not resident for tax purposes in the UK.

I am all in favour of debate on tax and tax abuse but this is ridiculous.

I can also say that the Telegraph knows this because one of the two journalists who wrote this story called me yesterday. I said three things.

The first was that David Axelrod was, as far as I know, US resident so paid tax there on his worldwide income. And if, as was likely, he used a US corporation many of these are what are called ‘tax transparent’ so do not save the individual tax, unlike here.

Second, as far as I knew he did not spend much time here and so was unlikely to be UK resident.

And third, therefore, tax could not be due in the UK. I explained that his services were imported into the UK and imported services do not make the supplier tax resident in the country to which they supply their expertise.

I explained this using a personal example: I have supplied services paid for by the EU on a number of occasions but that has never once made me Belgian resident and it would be absurd to suggest it did, or that I should pay tax in Belgium as a result.

This though was ignored by the Telegraph and the demand has been made that a supply of services should make people taxable in the state to which they supply them. This would, apparently, be ethical in their view.

Now that should be fun for the UK. We survive solely on the supply of invisible export earnings i.e. from the sale of export services, all of which should make those doing the exporting taxable in the destination country using the Telegraph’s logic. That will slash the UK’s tax yield overnight, especially from the City.

Those writing this stuff really need to engage their brains before doing so.

Note, especially, this:

And third, therefore, tax could not be due in the UK. I explained that his services were imported into the UK and imported services do not make the supplier tax resident in the country to which they supply their expertise.

Google imports it’s services into the UK but this hypocritical fucker insists that it is tax abuse that it doesn’t pay UK tax. Rather, it pays tax in the country in which it is resident. As do Amazon, Facebook and all the rest of them.

He’s actually both arrogant and stupid enough to think that no one will notice.

22 thoughts on “Masterful, entirely glorious, hypocrisy. Just absolutely fucking perfect”

  1. well I see your point but rather obvious argument to be made that Axelrod really is a resident of another country just over here for a short while to flog is wares, so the law is being used as it ought, whereas Amazon and others really are operating in this country flogging their wares on an ongoing basis and their overseas residency is legal fiction that allows them to get out of paying taxes they ought to, they ought to be classified as having permanent establishment here or whatever, and in this case the law obscures the reality of what’s really going on. Or some variant of this argument.

    but yes his shock that newspapers ignore inconvenient details when they think they have a tasty scoop (see Guardian coverage of tax avoidance ad nauseam) is hilarious.

  2. I thought foreigners who interfered in our politics but didn’t pay tax here were the most evil thing EVER, but it seems I was mistaken.

  3. A better analogy with Google etc. would be if Ed Miliband paid Axelrod LLC £300,000 for consulting services. Mr Axelrod owns the company, but he employs his wife as a consultant on the minimum wage. She gets sent to the UK for a year to deliver the services to Miliband, paying all her legally-due income tax (i.e. nothing, since she’s on minimum wage). Back in the USA, the company declares a dividend payable to sole owner Mr Axelrod. He can then slide half the money back to his wife, since transfers between husband and wife are tax-free.

    Yes it’s tax avoidance, but there’s not a lot you can do about it without screwing up millions of other non-avoiding arrangements.

  4. @Luis Enrique

    Except, no, Amazon Eurl is not here in the UK is it. And Murphy can whine all he likes about how the law OUGHT to be but it isn’t. Amazon Eurl is a different legal entity to Amazon Limited.

    meanwhile Google argue that they don’t sign contracts in the UK so don’t have a permanent establishment here. They might be lying about that and if so all it would take is for a whistle blower or a tax investigation and they would be truly fucked so i doubt they are lying. Again, that’s the law as it is at the moment.

    Murphy’s a cunt.

    Sorry, back to the topic in hand. Murphy’s a hypocritical cunt.

  5. Murphy’s guide to political advisors.

    Lynton Crosby = Tory = dubious tax morality

    David Axlerod = Labour = fine tax compliant chap.

  6. AndyC of course it’s the law at the moment, and if course if you think that the law has become a vehicle for allowing firms to avoid taxes then campaigning for laws to change is the thing to do (although maybe complaining about companies exploiting opportunities offered by the law is also part of a sensible response, campaigning tactics not my strong suit).

    For example what constitutes a permanent establishment in the digital economy could be completely rethought.

  7. Amazon is a poor example for ‘tax avoidance’ (which is normally called ‘tax dodging’ by the noisies as it makes it sound like its illegal, which it isn’t).

    Amazon makes a loss.

  8. @Louis Enrique

    So when you say that Amazon and others are really here, you accept that they are not really here.

    But they would be if the law was changed.

    Just as if the law were changed to make me the king, I would be the king. In the meantime though, it is not a “legal fiction” that I am not the king just as it is not a “legal fiction” that Amazon Eurl is not here in the UK.

  9. Andy C, the idea Amazon is “importing” its services into the UK from Luxumberg in the same sense that whisky is imported from Scotland sounds more like fiction than reality to me, even if the law as constituted says that’s what’s going on (the fact it is currently loss-making notwithstanding). Ideas based around physical location may be less relevant in the digital economy – we don’t have to base taxes on where offices are located.

  10. The Meissen Bison

    Luis Enrique: we don’t have to base taxes on where offices are located.

    But it is quite handy if those offices are in our jurisdiction so that our law enforcement bods can beat the doors down and arrest folk who are breaking our laws.

    I also think that the Scotch whisky analogy doesn’t entirely work if I understand you correctly, in the sense that there has to be an importer whom one can move against while the exporter may always remain outwith one’s grasp.

  11. I think you’ll find that when you order, you pay Amazon in LUX, and the shipment goes out of a warehouse in the UK in accordance with the letter and spirit of the 1968 double-taxation treaty.

  12. @ Louis Enrique “Andy C, the idea Amazon is “importing” its services into the UK from Luxumberg in the same sense that whisky is imported from Scotland sounds more like fiction than reality to me”

    Amazon do not supply services, they supply goods. Imagine it’s the 1980s, before the internet. I phone up a book shop in Luxembourg and order a book. The shop posts me the book here in the UK. Where would you say the shopkeeper should pay tax on his profit? Say the bookshop opens a storage facility solely for the purposes of delivering goods to customers here in the UK. DT treaty says such a place is not a PE.

    Fast-forward to today and I’m still not the king and Amazon Sarl still do not have a PE in the UK.

    You feel this is somehow wrong, as do I about not being king.

  13. I have never purchased fr0m amaz0n uk c0mpany. Have spent quite a bit and still d0 with an EU c0mpany called Amaz0n.
    Just the media want t0 charge them a sales tax, a tax we d0 n0t have.

  14. If Axelrod is earning money in the Uk shouldn’t he pay tax on it in the Ul and offset that against his tax liability to the USA under the double-taxation treaty?
    Does the self-styled “tax expert” not understand double-taxation treaties?

  15. @John

    Well, no actually. If Axelrod stays in the US and just shouts his advice across the Atlantic, he is earning his money in the US. Just happens that his customer is in the UK.

    Even the occasional trip over here wouldn’t matter if he was trading in his own or a company’s name. He’d be covered by article 7 of the tax treaty and as long as there was no PE he’d be OK. JUST THE SAME AS AMAZON AND GOOGLE YOU FAT FUCK MURPHY.

    (Murphy basically maintains that Google and Amazon are lying.)

    Might start to get a bit tricky if Axelrod comes to the UK and there’s any hint that Labour are employing him. Article 14. there’d be a UK liability as the costs are being met here in the UK.

  16. Luis

    First, expressing yourself in such measured terms makes it very hard to throw all our toys at you; you’re not playing the game !

    The point here (once again) is Murphy’s double standards. It is one thing to have a semi – abstract discussion.on the international rules as they stand and to advocate change. It is quite another to condemn those who are playing by the rules, to speak of “the spirit ” of the law to make your case and demand your target “do the right thing”. And it is another thing again to then respond to a similar or same fact pattern and fall back on those rules as a defence. That s just dirty.

  17. @ AndyC
    There have been media reports of Axelrod’s presence in the UK. As you say, that may not be enough to establish tax residency, but they gave the impression that he was working in the UK for the Labour Party.

  18. In other words, it’s amazing how Ritchie can bring himself to understand when it’s politically convenient, nay *necessary* for him to do so. And how he can resolutely refuse to understand when it’s both politically convenient and lucrative for him not to.

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