What do you think

[T-Bag]

I can't imagine anyone volunteering to pay more tax than they have to. I don't like the thought of companies using seedy tricks to avoid taxes, those tricks should be investigated and where possible closed. But the trial by media is not an acceptable means of investigation.

I believe corporation tax is far too low here, however since a company like Google can pick its European tax base, hiking it up high won't do us any good, they can just pay taxes elsewhere instead legally. The problem is a European one that has to be handled by the group as a whole. Unfortunately there are too many cooks involved in the whole situation and what is a problem for many member states is a lucrative income for others. It's not a quick or easy fix.

A company exists to make profits, Apple force workers to the point of suicide, Nike used child labourers, Oil companies pollute nature reserves and pay the fines when it's cheaper than solving a problem cleanly. It's the way capitalism works. At the end of the day the way the books balance is all that matters. If we lived in a system where fair working hours and benefits were rewarded by tax cuts I'm sure businesses would start offering that level of support. The issue of tax can't just be looked at in isolation, society as a whole worships money above all else. Something will give eventually, but the laws should be guiding us to a better place not just making the most possible cash.

[DrunkenZombiee]

Completely agree with this sentiment.

[TeaLeaf]

From an economics point of view, the general theory is that a lowering of corporation tax actually increases tax revenues and allows the Government of the day to pay for more things.

If you tax more, the wealthy coporations leave (because they can) and you have lower tax revenues.   Look at what Ireland did as an example.   Look at why coffee is whoesaled from Switzerland.......12.5% corporation tax, roughly half our rates.

[T-Bag]

From an economics point of view, the general theory is that a lowering of corporation tax actually increases tax revenues and allows the Government of the day to pay for more things.

If you tax more, the wealthy coporations leave (because they can) and you have lower tax revenues.   Look at what Ireland did as an example.   Look at why coffee is whoesaled from Switzerland.......12.5% corporation tax, roughly half our rates.

From a practical point of view, looking at the figure in the US at least, the highest levels of job creation, and the most balanced budgets have occurred under high levels of corporation tax. That won't work within the EU the way it currently is though because companies will just go to the lowest tax country so higher taxes means less companies.

Though if it were possible for all the countries to agree to raise corporation tax to the same level, or just have a central tax body for the EU distributed to countries according the financial activity of the business, then I imagine there would be a lot of benefits. Companies wouldn't pull out of the EU sector just because of some tax. They might threaten to and moan, but ultimately its still profitable so they'll still get involved. Then in order to avoid as much tax as possible they'll invest in additional staff and R&D, things that grow the company, and hence the shareprice and can be written off against tax. That sounds like a dodge, but having higher employment and more innovation in a region is exactly what is needed. Giving the government money doesn't really solve anything, having more people employed, spending money growing the economy does.

I'm not an economist, I've no idea if what I'm saying in practice would work in Europe, or if there are loopholes that multinational companies would use to avoid it, and you'd just end up stifling local business. What I don't think we should do, is lower corporation rates to try and get more tax. It's a race to the bottom in which everyone ultimately loses.

[TeaLeaf]

From a practical point of view, look at the Ireland or Switzerland mentioned, they seem to show lower tax means higher revenue, Ireland's revenues soared as their historically high corporation tax rates were lowered (and more and more of the Ireland's black economy went legit as rates fell too) and Switzerland is not exactly short of a penny or three.   Then again, we're both right, depending on where on the Laffer curve you sit, we're obviously looking at it from different ends!

The main problem with Laffer (or whatever the current model is called) is that it only looks at one economy and predicts tax revenues for that single economy based on the rate of corporate taxation.  Something like 60% or so was the sweet spot according to Laffer, but you don't find many countries with a 65% tax rate - and there's a reason for this.

So even if Laffer holds true from your perspective, once you take into account the mobility of multinational business you might find that revenues fall as they will make a choice to base themselves in a lower cost jurisdiction.  They might not pull out of the EU, but they'd move to a cheaper part of the EU as often mentioned by IoD.  Why is Amazon based there?   Why did WPP move out of the UK?  Etc.

As neither of us are in charge of the corporation tax rate this might have to remain an interesting intellectual diversion!

[Le Rouge]

Actually, one of our firm's specialties is transfer pricing. Nowadays, tax authorities tend to look where the economic value was created, and not simply where you legally (artificially) locate the IP, for example.

[T-Bag]

From a practical point of view, look at the Ireland or Switzerland mentioned, they seem to show lower tax means higher revenue, Ireland's revenues soared as their historically high corporation tax rates were lowered (and more and more of the Ireland's black economy went legit as rates fell too) and Switzerland is not exactly short of a penny or three.

That's that part that complicates things in Europe. A Company can just pack up and head to another country. Which means any decision needs to be across the whole EU, and the chances of that happening I'd say are slim to none.

If we dropped our rates to Ireland levels, there's nothing stopping them dropping their's too, the cycle would continue and you could quite easily end up with plenty of companies but negligible tax income.

[faust82]

True, companies shift their profits around to keep the tax man away, but since Google and others live from selling services, it's not completely fair to just look at turnover vs paid corporate tax. Remember, there's already been paud VAT on those goods and services. If there hasn't, that's entirely the fault of the host country.

Here in Norway this debate doesn't exist. Why? Because our socialist ways have ensured our government already has more money than it can spend without ****ing up the economy (inflation etc.). This has been done through decades of careful management and responsible planning. Then look at the countries where thus debate occurs. France, Greece and to a certain extent the UK. Countries where irresponsible politicians were allowed to hand over all solid government-owned companies to private investors, and then letting private companies gorge themselves on public money providing services the government should have provided.
Still, politicians never learn. Listening to our conservatives now is scary. They want to do the same things Thatcher did to completely screw the UK economy for years.

When it comes to private companies we didn't hand them the farm years ago, so now we don't have to beg for scraps.
Oh, and keeping the oil in government hands helped as well

[TheDvEight]

So Starbucks decide to pay their tax at last (wish I had that option)

Now they've taken paid meal-break from the staff and stopped paying 1 days sick leave.

The Man usually wins.

Not much different from every where now Blunt Even in the care sector where I have worked you cannot get paid for being of sick for a day (having worked in the NHS & Local Council).