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Friday, July 12, 2019

Leashing the tech giants

I did a Darkstream just last night on France enacting a new tax on the big tech companies to prevent them from accounting their way out of taxes. Now the UK has followed suit:
Britain is on a collision course with Donald Trump today after unveiling a 'digital services tax' to grab £400million-a-year more from global tech firms such as Amazon, Google, Apple and Facebook. The UK is pushing ahead with plans for a proposed two per cent levy on sales starting next April targeting online giants with global sales of more than £500million and at least £25million in UK revenue.

Amazon, Google, Apple and Facebook would pay an extra £300million-a-year to the Treasury based on their current revenues, MailOnline has calculated, with up to 30 companies set to be hit.

Britain wants more cash from major search engines, social networks and online marketplaces who use legal loopholes to ensure their UK profits are taxed in countries such as Ireland, Luxembourg and the Netherlands at a lower rate than in London.
These revenue-based taxes are an absolutely necessity given the global nature of these businesses. There is no reason global corporations should be permitted to be active in a jurisdiction if they're not going to pay any taxes there. And before you get all libertarian-indignant about this, remember, corporations are a) even less accountable to the nations in which they are not based than the national government and b) they are literally government agents themselves.

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55 Comments:

Blogger Brett baker July 12, 2019 6:05 AM  

Someone needs to explain to the God-Emperor that this is a good thing. Defending the FAAGs makes him sound like the "Consumer Uber Alles" idiots.

Blogger SciVo July 12, 2019 6:24 AM  

I approve of anything that hurts the enemies of self-rule. Tax the evil bastards!

Blogger maniacprovost July 12, 2019 6:42 AM  

It's a good thing for London and France, not for us.

The problem with tacking on these sales / revenue taxes is that when different jurisdictions have different tax domains, it creates loopholes. We saw this with the double Irish whatever loophole.

It's also arbitrary to a degree to tax digital services this way. It makes sense but there will be blind spots and overlaps.

If everyone went to a system of taxing money that is consumed or flows out of the country, and not taxing profit or income, it would work better for corporate efficiency and for national interests.

Blogger SciVo July 12, 2019 6:47 AM  

maniacprovost wrote:If everyone went to a system of taxing money that is consumed or flows out of the country, and not taxing profit or income, it would work better for corporate efficiency and for national interests.

If only we had self-rule, then people might care. But I am curious, how is that different from a VAT?

Blogger Steb July 12, 2019 6:49 AM  

"It's a good thing for London and France, not for us."

What do you mean 'us', white man?

Blogger VD July 12, 2019 6:58 AM  

It's a good thing for London and France, not for us.

You're wrong. Anything that reduces the resources of those who have declared themselves the enemies of the American people is good for us.

Blogger Mark Stoval July 12, 2019 7:07 AM  

"... And before you get all libertarian-indignant about this"

Right wing libertarians have had a problem with corporations for a long time. So add a 3rd reason to your perceptive list.

The corporation should not have protection for its investors past what a partnership or single owner gets. No limited liability at all.

In other words, the corporation is an evil creature of the government and should be stripped of ALL legal protections that go beyond the single shop owner.

Blogger wahr01 July 12, 2019 7:09 AM  

Trump had the right people to his "summit" this week.

Let's see if that translates into either proper policy or lawfare aimed at the suggestions these people have been making.

Blogger Doktor Jeep July 12, 2019 7:11 AM  

There was once a time when I would have been against this. But then I realized the libertarian social order is not going to be achieved through libertarianism.

Blogger Sherlock July 12, 2019 7:20 AM  

Bionic Mosquito it's doing a good series on this point now

Blogger basementhomebrewer July 12, 2019 7:22 AM  

I think the tax on the social media companies is too low. Any government working in the interest of it's people would shut down social media companies in their country for spying on it's citizens. Keep in mind that the economic activity they offer is conning businesses out of advertising money based on false statistics. They are a net taker from society.

Blogger Gregory the Great July 12, 2019 7:28 AM  

Great Darkstream, the best thing for me was the sentence: "We never back down" (in relation to Vox and his projects being deplatformed or whatever by the SJW companies)

Blogger Azure Amaranthine July 12, 2019 7:30 AM  

@maniacprovost The only way there can be a loophole is if they're allowed to be taxed in a different jurisdiction in the first place. When they aren't allowed to, loophole goes poof.

Taxing money leaving the country is fine. Taxing outlay -- money "consumed" to purchase materials or services inside the country -- is idiotic. It incentivizes offshoring if anything does.

The key words in your "if everyone went to..." are "if everyone". All it takes is one holdout to eat all the others alive. Heck, all it takes is one lowballer to force all the others to go lower or be eaten.

That's the key difference between taxing profits and taxing expenses. The expenses can be moved elsewhere, unlike the profits which have to follow the consumers of those services.

Blogger VD July 12, 2019 7:33 AM  

Taxing money leaving the country is fine. Taxing outlay -- money "consumed" to purchase materials or services inside the country -- is idiotic. It incentivizes offshoring if anything does.

In these cases, it all leaves the country. The FAAGs can't offshore their revenue-producing activity without losing all the revenue instead of 2 or 3 percent of it.

Blogger Jack July 12, 2019 7:38 AM  

Only 2%?

Blogger wahr01 July 12, 2019 7:45 AM  

"Taxing money leaving the country is fine. Taxing outlay -- money "consumed" to purchase materials or services inside the country -- is idiotic. It incentivizes offshoring if anything does."


That's what TARIFFS are for.

See, in the old days when politicians were still patriotic, corporations that attempted to back-stab the local populace were openly pimp-slapped with punitive fees until they desisted.

Blogger John Henry Eden July 12, 2019 7:48 AM  

Big deal, they'll just pass the costs down to their customers. TPTB are faking "leashing the tech giants." but are just screwing the little guy, as usual.

Blogger maniacprovost July 12, 2019 7:48 AM  


Anything that reduces the resources of those who have declared themselves the enemies of the American people is good for us.

True. In a short term tactical sense it will reduce their resources. Long term, the added regulatory expenses may entrench the inefficient, converged corporations even further and allow them to make more profits and wield more power.

I'll now address the other comments in declining order of merit.

But I am curious, how is that different from a VAT?

A VAT taxes value creation. It doesn't just tax consumption, but also goods that are used for investment and production. Only individual humans actually consume; everything else is investment or waste. Therefore I would have an individual income tax, but allow individuals to deduct investments. The pain this inflicts on the voters is a feature, not a bug.
Other problems with the VAT may include its negative impact on small business cash flow

What do you mean 'us', white man?

Everyone outside of London and France who has a stake in the modern economy.

The only way there can be a loophole is if they're allowed to be taxed in a different jurisdiction in the first place. When they aren't allowed to, loophole goes poof.

...Yes.

The key words in your "if everyone went to..." are "if everyone". All it takes is one holdout to eat all the others alive

I would never advocate a game theoretic losing strategy. If ONLY your nation implements a tax on income and money leaving the country, you win. That is the freaking Trump tariff that everyone here has been applauding.

That's the key difference between taxing profits and taxing expenses. The expenses can be moved elsewhere, unlike the profits which have to follow the consumers of those services.

money leaving the country = profits.

"Not good for us" does not mean "bad for London and France." I think the tax is a dumb idea, not because I identify with France, nor because I oppose a local tax on profits earned locally, but because it is structurally stupid. The global tech titans will merely find a different way to avoid this geographically limited tax.

If only we had self-rule, then people might care.

Obviously someone is making tax policy. I don't see what self rule has to do with it. If we ruled ourselves there would be no taxes.

Blogger Gregory the Great July 12, 2019 7:53 AM  

I would like to address a personal matter directly related to this:

We are currently trying to access the Gmail account of a deceased family member who used to live in the UK and left us with the task of administrating his estate. The most important reason we would like to access the account is some (suspected) contractual fraud from interested parties.

When we wrote to Google about this they told us, yes, it is possible, but only (!!!) with the US court order. A US law firm then told us this might cost hundreds of thousands as we would have to prove to the court that no consumer or data protection laws valid in California and/or the rest of the USA would be violated by disclosing the contents of the Gmail account to us.

Obviously a Gmail account is nowadays in many cases equivalent to what in the past were paper files with contracts and correspondence, photo albums, diaries etc. - all items that normally would have been accessible to the heirs of a person.

Now in their Gmail terms of use for EU customers Google say that depending on the European country you live in the respective jurisdiction would apply to all issues you might have with Google/Gmail.

So my question is this:
As there are tens of thousands of people with Gmail accounts dying every day around the world and hundreds or potentially thousands out of those in the UK, could the heirs or administrators of these people's estates not join in a group litigation against Google quoting the potential disadvantages and information gaps they encounter whilst trying to lawfully reclaim what is left behind by the deceased? Obviously this could set an extremely important precedent in Europe and the world.

Hopefully somebody here will have some informed opinion on this, I will be very grateful for any advice!

Blogger wahr01 July 12, 2019 7:55 AM  

"they'll just pass the costs down to their customers"

And then go out of business, making way for companies that are not openly contemptuous of the locals and their nations.

Blogger basementhomebrewer July 12, 2019 8:01 AM  

"they'll just pass the costs down to their customers"

How much are you paying for Facebook? Google? They will attempt to charge more for advertising to try and offset it but that will make marketing departments take a closer look at the return they are getting on those ads. Many will find it not worth it.

Blogger ZhukovG July 12, 2019 8:01 AM  

If Capitalism strangles the Globalists; I will be a Capitalist.

If Communism strangles the Globalists; I will be a Communist.

Blogger VD July 12, 2019 8:12 AM  

Big deal, they'll just pass the costs down to their customers. TPTB are faking "leashing the tech giants." but are just screwing the little guy, as usual.

They can't. What do you pay for your Facebook account? That's why the tech giants are so outraged about these taxes. It hits them where they are vulnerable. They can't "offshore" because they have to be there in order to bring in the revenue. Remember, the user is the PRODUCT, so they have to have the users in those countries in order to produce revenue from them.

Blogger Gregory the Great July 12, 2019 8:14 AM  

@23 ZhukovG. And when the globalists strangle themselves I will not intervene for "health and safety reasons", meaning my own health and safety, of course, I could get hurt trying to stop them, you know.

Blogger Damelon Brinn July 12, 2019 8:33 AM  

Big deal, they'll just pass the costs down to their customers.

You'll have to do better than that. To the extent that they have "customers," they aren't anyone who deserves sympathy either. If you're thinking of a small businessman who decides to spend $100 on targeted Facebook ads, his type are not their real customers. And those advertising customers are already realizing the returns are always diminishing. When was the last time you clicked on an ad? I think for me it was about 1997.

Blogger Stilicho July 12, 2019 8:40 AM  

Tax them until they stop moving. Then taxtheir shareholders.

Blogger Silent Draco July 12, 2019 8:58 AM  

Gregory the Great, take a look at the legally prescribed duties of the personal representative, executor, or administrator. Their task is to administer the estate, ensure that all affairs are in order, and to make the required distributions to named heirs or recipients. Google is blowing smoke. Letters Patent issued to a personal representative for purposes of administering an estate (executor, representative etc.) ARE court orders authorizing such action. IANAL, but I've executed two estates, am designated for another, and recently updated my own docs.

The online accounts and services such as Google are providing the equivalent of an electronic safe deposit box (except that banks can't look into the box that easily). If an executor is authorized to conclude all affairs related to real and other property, then the electronic records are in the "other property" category. This also includes utilities, phone or Internet service, or anything else paid through electronic means and accessed through an online service, those accounts where the deceased hadn't received physical bills, statements, or other things.

As a side note, for Ilk and others, make sure that your will has a provision directly authorizing your executor or other representative to have access to any and all online accounts and services, and also imparting authority to close out such accounts. Keep a current physical list of passwords for these locked in a secure location.

Blogger Gregory the Great July 12, 2019 9:02 AM  

@27 Silent Draco. Love you for this, it was extremely helpful!!

Blogger Azure Amaranthine July 12, 2019 9:03 AM  

"That's what TARIFFS are for."

No, tariffs are a system of variable walls to punish other countries for abusive systems aimed at our people. What you're talking about is GIVING other countries the advantage and then trying to hold back that tide with tariffs. Why set up opposed pressure systems if you don't have to? One of them must lose eventually.

"...Yes."

So we agree that this system makes the sort of loophole you referred to irrelevant.

"I think the tax is a dumb idea, not because I identify with France, nor because I oppose a local tax on profits earned locally, but because it is structurally stupid. The global tech titans will merely find a different way to avoid this geographically limited tax."

Another way like, what, not operating their services in France? That's a win for France, because it opens up a niche for a France-based service to take over.

"If we ruled ourselves there would be no taxes."

Not unless you're talking about each individual ruling themselves. Any sort of communal project has to either use taxes, charity, or suffer free riders.

Blogger Sargent.matrim July 12, 2019 9:07 AM  

Corporations have gotten so big that all the Libertarian arguments about limited government should be applied to corporations. Massive power grabbers with even less accountability to the people will never co-exist with Liberty long term, or even mid-term.

Blogger Brett baker July 12, 2019 9:13 AM  

Good Samaritans have been sued.

Blogger KPKinSunnyPhiladelphia July 12, 2019 9:16 AM  

VD wrote:Big deal, they'll just pass the costs down to their customers. TPTB are faking "leashing the tech giants." but are just screwing the little guy, as usual.

They can't. What do you pay for your Facebook account? That's why the tech giants are so outraged about these taxes. It hits them where they are vulnerable. They can't "offshore" because they have to be there in order to bring in the revenue. Remember, the user is the PRODUCT, so they have to have the users in those countries in order to produce revenue from them.


Google and Facebook can't, obviously.

But Amazon can, and will. Bezos and his minions will determine the microeconomic curve function, taking into account VAT and real or imagined "frictionless" transaction understanding in the mind of the consumer, and price accordingly.

He's the richest man on the planet for a reason.

Blogger Patrick Kelly July 12, 2019 9:41 AM  

Incorporate and use US dollars, play by US rules. Tax the hell out of em'. No consumer is hurt if FB and Google go out of business or split into smaller pieces. Probably good for consumers in the long run.

I don't worship at the consumer price altar like the npc loonytarians do anyway.

Blogger Kat July 12, 2019 9:52 AM  

I can't see why it's a bad idea to make shopping from Amazon more expensive.

Doesn't anyone here like having local, well stocked stores?

Blogger wahr01 July 12, 2019 9:54 AM  

Azure Amaranthine wrote:"That's what TARIFFS are for."

No, tariffs are a system of variable walls to punish other countries for abusive systems aimed at our people. What you're talking about is GIVING other countries the advantage and then trying to hold back that tide with tariffs. Why set up opposed pressure systems if you don't have to? One of them must lose eventually.


Because governments should serve their nation and people?!

If a given corporation or business model is actively toxic to your nation, I dont' see a problem with pushing it off-shore and fostering a domestic alternative that is not toxic.

If you have a problem with this, you might be a traitor.

Blogger Duke Norfolk July 12, 2019 10:09 AM  

basementhomebrewer wrote:Any government working in the interest of it's people would shut down social media companies in their country for spying on it's citizens.

Not to mention all the negative social, health, mental (and more, I'm sure) affects from these devil's tools. I never thought I'd write something like that, but seriously, the Amish et al. are on to something.

Blogger flyingtiger July 12, 2019 10:10 AM  

Corporations need to be taxed on income not profits. Even a 1% tax on income would probably balance the budget. That is how we common folk are taked.

Blogger pdwalker July 12, 2019 10:29 AM  

in Australia, companies above a certain number of employees suffer additional employee taxes. As a result, a lot of companies structure themselves as a conglomeration or smaller companies to avoid going over the magic number of employees.

i’m reasonably sure that if the taxes were punitive enough, they could find ways to creatively structure their companies to bring any single companies’ income below the magic threshold.

i’m not an accountant, so i could be completely wrong.

Blogger Twisted Root July 12, 2019 10:29 AM  

SciVo wrote:maniacprovost wrote:If everyone went to a system of taxing money that is consumed or flows out of the country, and not taxing profit or income, it would work better for corporate efficiency and for national interests.

If only we had self-rule, then people might care. But I am curious, how is that different from a VAT?


VAT is a end-user tax. Producer, wholesaler and retailer all reclaim VAT on chargeable costs. It could be argued that the consumer will ultimately bear the cost of the proposed tax, bit then it must follow he has also been complicit in the tax evasion of the tech giants in the form of cheaper goods.

Blogger HouellebecqGurl July 12, 2019 11:29 AM  

I'll assume this is sarcasm. The right people, wtf?

Blogger Snidely Whiplash July 12, 2019 11:33 AM  

John Henry Eden wrote:Big deal, they'll just pass the costs down to their customers. TPTB are faking "leashing the tech giants." but are just screwing the little guy, as usual.

So tired of this frankly brain-dead assertion for Lubertarian types.
Are they not yet charging what the market will bear? Do you somehow think that these corporations base their pricing on any standard other than "How much can I milk this for"? That's why they pull in billions of dollars per year.
If their prices are already set at the most they can get without losing revenue, that price point will not change because one of their expenses went up.
Think before you rattle off a Lubertarian shibboleth this stupid.

Blogger HouellebecqGurl July 12, 2019 11:38 AM  

I don't use any of the FAAGs services, ND I'm doing just fine. As for the mass purveyor of cheap Chinese plastic junk made in sweatshops with deplorable conditions, f*ck em.
Raise the prices as high as possible. Make the price of some disposable electronic gadget 5 times as expensive as it is currently.
Sounds fantastic.

Blogger justaguy July 12, 2019 11:51 AM  

A revenue based tax on the revenue streams produced inside of the country for electronic transactions/services is very much like a tariff. Companies have been able to legally subvert the tax systems of the world by varied accounting methods that moved the paper profits to low tax countries, showing the international scope of these services. Since the companies have shown themselves to be international, treat them as such. Treat the services as international so tax them the same-- just like a tariff, without the physical transport across the border.

I am surprised they haven't done this earlier-- the various tax schemes Apple, Google et.al. have used became public knowledge almost two decades ago. I hope that the US soon follows. It is a revenue source so Congress will like it, and it gives a hook to control them-- too much tax and they become unprofitable.

Apple still escapes on their manufacturing tax shelters, but that is another matter.

Blogger Yordan Yordanov July 12, 2019 12:52 PM  

These revenue-based taxes are what Oswald Spengler would call an ever increasing Ceaserianism. It will start with "just the big tax giants" and slowly, but surely income based taxation will be replaced with revenue based taxation as the spiritually depraved masses keep empowering delegating more of what is usually considered adult responsibility to the everexpanding tyrannical power of the state.

Blogger VD July 12, 2019 1:42 PM  

the everexpanding tyrannical power of the state.

The state is less tyrannical than the converged corporations. Do keep that in mind.

Blogger Stilicho July 12, 2019 2:08 PM  

Just for fun, facebook should be taxed on a per capita (ie per user account) basis. It will hilarious to watch zuckerborg filing sworn statements to the effect that the 20 gazillion users he claims when selling ads and personal info is just a lie to scam ad buyers.

Blogger Stilicho July 12, 2019 2:13 PM  

Then tax Google on a per search/per view basis (if it is even possible to track). Just for the lulz.

Then let's move on to taxing wall street on a per trade basis. I can almost hear the trading algorithms screaming as I write this...

Blogger Yordan Yordanov July 12, 2019 2:22 PM  

@45 Both are of their father. But those companies will come and go. I fear that this power consolidation is continuing the historical trend towards civilizational collapse.

Blogger wahsatchmo July 12, 2019 2:24 PM  

The US has begun moving to a revenue based taxation model as well for purposes of state sales taxes. The Wayfair Decision up-ended Quill, so physical presence is no longer a necessary factor for determining whether sales taxes must be collected for a particular state or not. Revenue will be the de facto method for allocating both taxable income and sales taxes to states in the US, like it or not.

Amazon screwed over too many states and cities out of sales tax collection, and it's only because of their size that they got away with it for so long. The Wayfair decision was reaction to overt abuses by "out-of-state" retailers. Amazon quietly negotiated with states to avoid massive back tax collection and threw everybody else under the bus in the process.

The US is also moving to international standards for financial reporting. IFRS is slowly replacing GAAP for financial statements of US public companies, it's only a matter of time before the US embraces an international revenue-based tax model as well.

Blogger Oswald July 12, 2019 4:08 PM  

They should be able to collect taxes for things bought by their citizens from the online giants. Also, America should take control of all BP oil rigs in the Gulf of Mexico. The environment in the Gulf is to important to America to let a foreign corporation control it.

Blogger Azure Amaranthine July 12, 2019 7:15 PM  

"Because governments should serve their nation and people?!

If a given corporation or business model is actively toxic to your nation, I dont' see a problem with pushing it off-shore and fostering a domestic alternative that is not toxic.

If you have a problem with this, you might be a traitor."


You are incompetent in this area. Tell me more about traitors when you develop the ability to not do exactly the opposite of what you want to do.

I will repeat. If you're taxing money moving out of the country, you ARE taxing profits, but not all of them. This is good.

If you are taxing consumption within the country, for entities that function both in and out of the country, this is both bad and stupid in and of itself. The better alternative is taxing profit made in the country period, even if not moved out of the country.

Taxing consumption of extra-state entities within the country is both bad and stupid because, existing in other countries, they don't have to consume in this one. Making a profit on services inside this country, on the other hand, absolutely has to be done in this one.

Let's run a quick scenario since you aren't getting it. Corp A provides service or product B in country C. Country D neighbors country C, and is where Corp A is incorporated. If you tax Corp A's consumption in country C, they'll simply start purchasing their materials in country D where the tax is lower or nonexistent, then move those materials across the border into country C. Worse yet, they'll eventually move their industrial bases into country D, because it's cheaper to operate them there. They will then ship their product across the border into country C, and sell it for untaxed profit there, and will live there themselves, never moving profit across the border. Most of the money moving back across the border is neither profit nor consumption, but expenses to continue operating their industry in country D.

Conversely, if you tax profit... They never offshore their industry in the first place, and thus they can't get large amounts of money out of the country without it being taxed.

Blogger Azure Amaranthine July 12, 2019 7:22 PM  

^This is taxing gross profit of course, not the black figure at the bottom line.

If you want to get really clever, you tax out of state employees providing in-state products and services based on the value of services they provide.

Blogger Azure Amaranthine July 12, 2019 7:27 PM  

Fostering an alternative within your nation is exactly what I said is a beneficial goal. What you are defending does the opposite.

Blogger Kristophr July 12, 2019 7:46 PM  

As a former libertarian, I have a better answer to corporations.

They are an artificial government construct, used to shield the owner(s) of the corp from liability for their actions.

Get rid of them. If your company does evil, you must answer for that evil.

Blogger Paul M July 13, 2019 10:27 PM  

b) they are literally government agents themselves.

The same people that don't get this also often don't get that the military is a government department. All this veneration of the armed services is merely worship of the state.

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