France to hit Apple, other tech giants with new digital tax in January

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Comments

  • Reply 41 of 78
    gatorguygatorguy Posts: 20,294member
    nht said:
    gatorguy said:
    nht said:
    gatorguy said:
    jbdragon said:
    Corporations don't pay taxes, YOU DO!!! So you tax them more, they will just raise prices and YOU are the one that's actually paying.
    If they raise prices then wouldn't that obligate them to even more taxes since they'll make even more profit?

    Besides that how do you raise prices after the sale occurred? Corporate taxes are paid on profits, which can only be determined after a sales period has closed.  How would you know how much to add in advance? I have zero doubt that Apple has already computed the optimal prices for their products, right to the final dollar to maximize its profits. Raising them more because France wants a bit of what they are paying as a corporation to end up in French accounts for French use rather than Irish ones would be counter to that. 

    If I'm off-base maybe you can explain.

    EDIT: It seems after doing a bit'o reading that the claim companies simply raise prices is more a FUD-ism than fact. I guess it gets repeated so much that some folks just accept that it must be true. 
    https://economix.blogs.nytimes.com/2013/02/19/who-pays-the-corporate-income-tax/
    "Probably most people assume that the corporate income tax is largely paid by consumers of its products or services. That is, they assume that although the tax is nominally levied on the corporation as a whole, in fact the burden of the tax is shifted onto customers in the form of higher prices.

    All economists reject that idea. They point out that prices are set by market forces and the suppliers of goods and services aren’t only C-corporations, which pay taxes on the corporate tax schedule, but also sole proprietorships, partnerships and S-corporations that are taxed under the individual income tax. Other suppliers include foreign corporations and nonprofits."

    Explain to me which "sole proprietorships, partnerships and S-corporations" competes with Apple, Google, etc?  None.  There are also no foreign corporation that are in the same league as the targeted US companies.

    If French taxes are higher then these companies can and will charge French consumers more than for other consumers for these services.  Since the tax is levied against all providers then unless demand is very elastic there isn't anything to keep that from happening.

    This is a tax on "digital services" AFAICT. Depending on the details this might have negligible to zero impact on companies like Samsung and Huawei or force a price increase in their handsets. Apple's ability to simply raise their iPhone prices and pass their French taxes on without also pricing themselves further away from competitors may be limited.

    Wait for details to see who this actually affects but the acronym for the tax is pretty telling : GAFA, named after Google, Apple, Facebook and Amazon 
    And what competitors to GAFA would not be taxed and therefore able to take Digital Services consumers from GAFA?  None. 

    So who prevents GAFA from raising prices of movies, music, etc in France to cover the tax?  Samsung and phone prices are simply you trying to muddy the waters since they aren't competing with GAFA in digital services.  So not them.

    So who are the competitors in your "pricing themselves further away from competitors" statement?  

    As I said, unless demand is very elastic for digital services there's not a whole lot to prevent GAFA from pushing the costs onto the French consumer.  It's just another tariff. 

    What's the impact of $200B worth of tariffs against Chinese goods is pushed completely onto the American consumer?  About $60 a year.

    https://www.nytimes.com/interactive/2018/07/12/upshot/trade-war-cost-families.html

    Maybe there would a few French consumers that would reduce spending but not likely very many if the French economy is stable.  

    Further, some of the consumers of some of the GAFA companies are advertisers and not citizens.  Do you think they're really going to be that price sensitive and who are the competitors they will move to to reach the same demographics?
    I'm not going to even attempt to argue economics when actual economists (perhaps you too are one, I'm not) have already commented on whether product prices are increased equally by the corporate tax expense incurred. As far as I can tell those professionals "trained in the art" in general say no. 
    edited December 2018
  • Reply 42 of 78
    I’ll quote (actually requote since I did this over on 9to5mac) this comment from Malcolm Owen

    “taking advantage of the general unrest as an excuse to loot the store”

    It was in reference to the Yellow Vest looters in the Bordeaux Apple Store but it seems to apply here as well.
    radarthekat
  • Reply 43 of 78
    nhtnht Posts: 4,429member
    gatorguy said:
    nht said:
    gatorguy said:
    nht said:
    gatorguy said:
    jbdragon said:
    Corporations don't pay taxes, YOU DO!!! So you tax them more, they will just raise prices and YOU are the one that's actually paying.
    If they raise prices then wouldn't that obligate them to even more taxes since they'll make even more profit?

    Besides that how do you raise prices after the sale occurred? Corporate taxes are paid on profits, which can only be determined after a sales period has closed.  How would you know how much to add in advance? I have zero doubt that Apple has already computed the optimal prices for their products, right to the final dollar to maximize its profits. Raising them more because France wants a bit of what they are paying as a corporation to end up in French accounts for French use rather than Irish ones would be counter to that. 

    If I'm off-base maybe you can explain.

    EDIT: It seems after doing a bit'o reading that the claim companies simply raise prices is more a FUD-ism than fact. I guess it gets repeated so much that some folks just accept that it must be true. 
    https://economix.blogs.nytimes.com/2013/02/19/who-pays-the-corporate-income-tax/
    "Probably most people assume that the corporate income tax is largely paid by consumers of its products or services. That is, they assume that although the tax is nominally levied on the corporation as a whole, in fact the burden of the tax is shifted onto customers in the form of higher prices.

    All economists reject that idea. They point out that prices are set by market forces and the suppliers of goods and services aren’t only C-corporations, which pay taxes on the corporate tax schedule, but also sole proprietorships, partnerships and S-corporations that are taxed under the individual income tax. Other suppliers include foreign corporations and nonprofits."

    Explain to me which "sole proprietorships, partnerships and S-corporations" competes with Apple, Google, etc?  None.  There are also no foreign corporation that are in the same league as the targeted US companies.

    If French taxes are higher then these companies can and will charge French consumers more than for other consumers for these services.  Since the tax is levied against all providers then unless demand is very elastic there isn't anything to keep that from happening.

    This is a tax on "digital services" AFAICT. Depending on the details this might have negligible to zero impact on companies like Samsung and Huawei or force a price increase in their handsets. Apple's ability to simply raise their iPhone prices and pass their French taxes on without also pricing themselves further away from competitors may be limited.

    Wait for details to see who this actually affects but the acronym for the tax is pretty telling : GAFA, named after Google, Apple, Facebook and Amazon 
    And what competitors to GAFA would not be taxed and therefore able to take Digital Services consumers from GAFA?  None. 

    So who prevents GAFA from raising prices of movies, music, etc in France to cover the tax?  Samsung and phone prices are simply you trying to muddy the waters since they aren't competing with GAFA in digital services.  So not them.

    So who are the competitors in your "pricing themselves further away from competitors" statement?  

    As I said, unless demand is very elastic for digital services there's not a whole lot to prevent GAFA from pushing the costs onto the French consumer.  It's just another tariff. 

    What's the impact of $200B worth of tariffs against Chinese goods is pushed completely onto the American consumer?  About $60 a year.

    https://www.nytimes.com/interactive/2018/07/12/upshot/trade-war-cost-families.html

    Maybe there would a few French consumers that would reduce spending but not likely very many if the French economy is stable.  

    Further, some of the consumers of some of the GAFA companies are advertisers and not citizens.  Do you think they're really going to be that price sensitive and who are the competitors they will move to to reach the same demographics?
    I'm not going to even attempt to argue economics when actual economists (perhaps you too are one, I'm not) have already commented on whether product prices are increased equally by the corporate tax expense incurred. As far as I can tell those professionals "trained in the art" in general say no. 
    Actual economists who aren't peddling something agree that there is disagreement as to whom pays the majority of the corporate tax burden.  Economists, for the most part, agree that the majority of the burden is generally not paid by the stockholders/owners but by the workers or consumers.  Which pays most varies based on situation but as noted in the GAFA the group with the weakest bargaining position is the French consumer.

    By requiring that the product price increase equally by the tax incurred is simply not arguing in good faith which is par for the course when discussing anything with you.  
    radarthekat
  • Reply 44 of 78
    gatorguygatorguy Posts: 20,294member
    nht said:
    gatorguy said:
    nht said:
    gatorguy said:
    nht said:
    gatorguy said:
    jbdragon said:
    Corporations don't pay taxes, YOU DO!!! So you tax them more, they will just raise prices and YOU are the one that's actually paying.
    If they raise prices then wouldn't that obligate them to even more taxes since they'll make even more profit?

    Besides that how do you raise prices after the sale occurred? Corporate taxes are paid on profits, which can only be determined after a sales period has closed.  How would you know how much to add in advance? I have zero doubt that Apple has already computed the optimal prices for their products, right to the final dollar to maximize its profits. Raising them more because France wants a bit of what they are paying as a corporation to end up in French accounts for French use rather than Irish ones would be counter to that. 

    If I'm off-base maybe you can explain.

    EDIT: It seems after doing a bit'o reading that the claim companies simply raise prices is more a FUD-ism than fact. I guess it gets repeated so much that some folks just accept that it must be true. 
    https://economix.blogs.nytimes.com/2013/02/19/who-pays-the-corporate-income-tax/
    "Probably most people assume that the corporate income tax is largely paid by consumers of its products or services. That is, they assume that although the tax is nominally levied on the corporation as a whole, in fact the burden of the tax is shifted onto customers in the form of higher prices.

    All economists reject that idea. They point out that prices are set by market forces and the suppliers of goods and services aren’t only C-corporations, which pay taxes on the corporate tax schedule, but also sole proprietorships, partnerships and S-corporations that are taxed under the individual income tax. Other suppliers include foreign corporations and nonprofits."

    Explain to me which "sole proprietorships, partnerships and S-corporations" competes with Apple, Google, etc?  None.  There are also no foreign corporation that are in the same league as the targeted US companies.

    If French taxes are higher then these companies can and will charge French consumers more than for other consumers for these services.  Since the tax is levied against all providers then unless demand is very elastic there isn't anything to keep that from happening.

    This is a tax on "digital services" AFAICT. Depending on the details this might have negligible to zero impact on companies like Samsung and Huawei or force a price increase in their handsets. Apple's ability to simply raise their iPhone prices and pass their French taxes on without also pricing themselves further away from competitors may be limited.

    Wait for details to see who this actually affects but the acronym for the tax is pretty telling : GAFA, named after Google, Apple, Facebook and Amazon 
    And what competitors to GAFA would not be taxed and therefore able to take Digital Services consumers from GAFA?  None. 

    So who prevents GAFA from raising prices of movies, music, etc in France to cover the tax?  Samsung and phone prices are simply you trying to muddy the waters since they aren't competing with GAFA in digital services.  So not them.

    So who are the competitors in your "pricing themselves further away from competitors" statement?  

    As I said, unless demand is very elastic for digital services there's not a whole lot to prevent GAFA from pushing the costs onto the French consumer.  It's just another tariff. 

    What's the impact of $200B worth of tariffs against Chinese goods is pushed completely onto the American consumer?  About $60 a year.

    https://www.nytimes.com/interactive/2018/07/12/upshot/trade-war-cost-families.html

    Maybe there would a few French consumers that would reduce spending but not likely very many if the French economy is stable.  

    Further, some of the consumers of some of the GAFA companies are advertisers and not citizens.  Do you think they're really going to be that price sensitive and who are the competitors they will move to to reach the same demographics?
    I'm not going to even attempt to argue economics when actual economists (perhaps you too are one, I'm not) have already commented on whether product prices are increased equally by the corporate tax expense incurred. As far as I can tell those professionals "trained in the art" in general say no. 
    Actual economists who aren't peddling something agree that there is disagreement as to whom pays the majority of the corporate tax burden.  Economists, for the most part, agree that the majority of the burden is generally not paid by the stockholders/owners but by the workers or consumers.  Which pays most varies based on situation but as noted in the GAFA the group with the weakest bargaining position is the French consumer.

    By requiring that the product price increase equally by the tax incurred is simply not arguing in good faith which is par for the course when discussing anything with you.  
    This is the comment that began the discussion:
    "Corporations don't pay taxes, YOU DO!!! So you tax them more, they will just raise prices and YOU are the one that's actually paying."

    How would you interpret that statement if not the same as I did:  Corporate taxes paid are passed thru in their entirety to consumers in the way of product price increases. 

    If your takeaway of the posters meaning is the same as mine would you consider the comment accurate? Everything I've read today on the topic says owners/stockholders pay some (sometimes most) of it, workers might also be "paying" some of it (sometimes a LOT of it), and consumers might of course pay some of it. Maybe a little, maybe none at all, maybe a lot. 

    Claiming that the amount of corporate taxes paid are automatically passed thru in the way of price increases for that company's products and thus directly paid by the consumer doesn't appear to be true AFAICT. Agree or disagree? Will I get silence now or will you too argue in good faith as you expect me to? As far as I can tell I was not dishonestly misconstruing what he said. 
    edited December 2018
  • Reply 45 of 78
    radarthekatradarthekat Posts: 3,012moderator
    These companies must have expected that this tax was the only long term outcome of their tax avoidance schemes. Countries need tax income to function and if the economic parties operating in their borders legally avoid paying taxes then the laws will change. Google, for example, could take money from a French company to advertise their products in a French media outlet to French eyeballs and yet because they bank the cheques in Ireland, they think they didn't need to pay French tax. If they want to benefit from revenue from a developed society like France, they need to contribute to that society. 
    An idealistic point of view that I don’t disagree with.  However, companies also have a fiduciary responsibility to shareholders and are in competition with other firms, if not directly on a product or service basis, at least in competition for a finite pool of consumer dollars/euros, et al.   These facts put pressure on companies to seek optimal marketing, R&D, sales, production, and yes, tax strategies.  They hire multitudes of accountants to review the convoluted tax laws that, as one previous poster stated, are put in place typically to favor some constituency favored by the lawmakers, and then exploit that strategy for their own benefit.  

    Who, in the end, is to blame?  It’s the lawmakers who burdened the corporations with the legal obligation to maximize shareholder returns (shareholders can and have sued when they have evidence a corporation has not acted in their interests) and with convoluted tax law designed to favor some over the majority.  

    It’s great press to villianize the big profitable corporations, but they make their money through fair exchange with willing consumers.  That’s a bit different from the force applied by government when taxing first our income, then again each time we spend it.  
    edited December 2018 SpamSandwich
  • Reply 46 of 78
    jbdragon said:
    Corporations don't pay taxes, YOU DO!!! So you tax them more, they will just raise prices and YOU are the one that's actually paying. It's just a round about way in taxing YOU while making the politician look good. Oh look, he's getting those evil corporations who aren't paying taxes. Which is already a flat out lie. They want more money. In this case France and their failed policy's. Nothing like stealing more money from American company's as they sure can't seem to generate enough of their own.
    gatorguy said:
    jbdragon said:
    Corporations don't pay taxes, YOU DO!!! So you tax them more, they will just raise prices and YOU are the one that's actually paying.
    If they raise prices then wouldn't that obligate them to even more taxes?

    Besides that how do you raise prices after the sale occurred? Corporate taxes are paid on profits, which can only be determined after a sales period has closed.  How would you know how much to add in advance?

    If I'm off-base maybe you can explain.
    It's called "math".  You plug in the percentages and magnitude of the taxes, fees, tariffs, excise, "because we said so" payments, manufacturing costs, etc, decide how much profit you want, then voila the magic of math gives you the answer as to what price to charge.

    Taxes will always be passed on to the consumer, no matter what form they might take.

    Yeah, corporations don't exist but by the creation of humans and they only act at the direction of humans. They aren't really things acting on their own for their own purposes and benefit. They are either, depending on how one chooses to conceive them, associations of humans or things which humans use.

    So whatever taxes they pay are, effectively paid by humans. But who those humans effectively paying the taxes are - i.e. what their relationship to a given corporation is - depends on the nature of the taxes in question. Many taxes are effectively paid by consumers, people buying from corporations. Others are effectively paid for by owners, shareholders of corporations.

    Corporate income taxes are, for the most part, effectively paid by the owners of corporations. What is left to distribute to them is reduced by corporate income taxation. Then they, in most cases, pay taxes again on what is distributed to them. Because of how income taxes function, they can't really be passed on to consumers. To think that they are is to presume something that doesn't make much sense: That corporations choose to only make a set amount of profit. Even though they could make more, even though they believe different business decisions would create more profit (without long-term effects they wouldn't accept), they target an amount and make decisions that limit their profits to that amount.

    If corporate income taxes are raised from, e.g., 25% to 30%, the way to maximize after-tax profit is the same as it was before: Maximize pre-tax profit. If X is greater than Y, then 75% of X is greater than 75% of Y as surely as 70% of X is greater than 70% of Y. Say a company is making $100 million a year before incomes taxes and $75 million a year after taxes. Income taxes are raised from 25% to 30%. So to make that same after-tax $75 million, it needs $107 million in pre-tax profit. If it thinks that raising prices would increase its pre-tax profits to $107 million (e.g., because it wouldn't hurt demand that much), then why wouldn't it raise prices regardless of the tax increase? Then, without the tax increase, it could make $80 million a year after taxes instead of $75 million. (This is overly-simplified to make the point. For instance, raising prices can have effects beyond effects on short-term profitability. But that's the case regardless of whether income taxes are raised; it's part of the consideration in any case.)

    Some taxes on corporations are passed on to consumers. Some taxes on corporations are withheld from shareholders. It depends on how the taxes function.
    gatorguyspice-boy
  • Reply 47 of 78
    JanNL said:
    So in the EU it’s not allowed to lower unilaterally/for one company taxes (Ireland), but raising taxes unilaterally (France) ís  allowed?
    The EU Ireland action was brought and is being decided on the basis of the tax arrangement being argued as a prohibited subsidy. A tax increase is the very opposite of a government subsidy to a company. 
  • Reply 48 of 78
    spice-boy said:
    Good for France and other "woke" nations. For those that are crying on Apple's behalf each nation has rules for those that live and earn income within that country. Apple and other tech giants have reaped massive amounts of money and by exploiting loopholes in the tax laws have managed to avoid paying what other business' are already paying.

    Yes Spam there is such a thing as "fair share" it is what the tax laws say is fair and not what a fan boy says it is for poor, little Apple. 

    Perhaps someday you will move out of mom’s house and pay taxes of your own. At that point you will try and use “loopholes” to reduce your tax burden, just like everyone else on the planet Earth. Good luck. 
    SpamSandwich
  • Reply 49 of 78
    gatorguygatorguy Posts: 20,294member
    hexclock said:
    spice-boy said:
    Good for France and other "woke" nations. For those that are crying on Apple's behalf each nation has rules for those that live and earn income within that country. Apple and other tech giants have reaped massive amounts of money and by exploiting loopholes in the tax laws have managed to avoid paying what other business' are already paying.

    Yes Spam there is such a thing as "fair share" it is what the tax laws say is fair and not what a fan boy says it is for poor, little Apple. 

    Perhaps someday you will move out of mom’s house and pay taxes of your own. At that point you will try and use “loopholes” to reduce your tax burden, just like everyone else on the planet Earth. Good luck. 
    ...and every once in awhile if you tread too close to the edge the loophole you think you discovered may not actually be legal and you'll find yourself paying taxes/penalties you thought you crafted a way to avoid.
    edited December 2018
  • Reply 50 of 78
    gatorguygatorguy Posts: 20,294member
    bb-15 said:
    These taxes, only targeted at companies from one nation, are a type of tariff. Several countries have extra tariffs/fees for Apple products.
    These cost barriers are a trade war tactic. They slow down trade and overall will eventually cause a weaker economy with the countries involved.

    I don't think the intent is to target only US companies. It's the business model rather than the country a company calls home. 
  • Reply 51 of 78
    nhtnht Posts: 4,429member
    gatorguy said:
    nht said:
    gatorguy said:
    nht said:
    gatorguy said:
    nht said:
    gatorguy said:
    jbdragon said:
    Corporations don't pay taxes, YOU DO!!! So you tax them more, they will just raise prices and YOU are the one that's actually paying.
    If they raise prices then wouldn't that obligate them to even more taxes since they'll make even more profit?

    Besides that how do you raise prices after the sale occurred? Corporate taxes are paid on profits, which can only be determined after a sales period has closed.  How would you know how much to add in advance? I have zero doubt that Apple has already computed the optimal prices for their products, right to the final dollar to maximize its profits. Raising them more because France wants a bit of what they are paying as a corporation to end up in French accounts for French use rather than Irish ones would be counter to that. 

    If I'm off-base maybe you can explain.

    EDIT: It seems after doing a bit'o reading that the claim companies simply raise prices is more a FUD-ism than fact. I guess it gets repeated so much that some folks just accept that it must be true. 
    https://economix.blogs.nytimes.com/2013/02/19/who-pays-the-corporate-income-tax/
    "Probably most people assume that the corporate income tax is largely paid by consumers of its products or services. That is, they assume that although the tax is nominally levied on the corporation as a whole, in fact the burden of the tax is shifted onto customers in the form of higher prices.

    All economists reject that idea. They point out that prices are set by market forces and the suppliers of goods and services aren’t only C-corporations, which pay taxes on the corporate tax schedule, but also sole proprietorships, partnerships and S-corporations that are taxed under the individual income tax. Other suppliers include foreign corporations and nonprofits."

    Explain to me which "sole proprietorships, partnerships and S-corporations" competes with Apple, Google, etc?  None.  There are also no foreign corporation that are in the same league as the targeted US companies.

    If French taxes are higher then these companies can and will charge French consumers more than for other consumers for these services.  Since the tax is levied against all providers then unless demand is very elastic there isn't anything to keep that from happening.

    This is a tax on "digital services" AFAICT. Depending on the details this might have negligible to zero impact on companies like Samsung and Huawei or force a price increase in their handsets. Apple's ability to simply raise their iPhone prices and pass their French taxes on without also pricing themselves further away from competitors may be limited.

    Wait for details to see who this actually affects but the acronym for the tax is pretty telling : GAFA, named after Google, Apple, Facebook and Amazon 
    And what competitors to GAFA would not be taxed and therefore able to take Digital Services consumers from GAFA?  None. 

    So who prevents GAFA from raising prices of movies, music, etc in France to cover the tax?  Samsung and phone prices are simply you trying to muddy the waters since they aren't competing with GAFA in digital services.  So not them.

    So who are the competitors in your "pricing themselves further away from competitors" statement?  

    As I said, unless demand is very elastic for digital services there's not a whole lot to prevent GAFA from pushing the costs onto the French consumer.  It's just another tariff. 

    What's the impact of $200B worth of tariffs against Chinese goods is pushed completely onto the American consumer?  About $60 a year.

    https://www.nytimes.com/interactive/2018/07/12/upshot/trade-war-cost-families.html

    Maybe there would a few French consumers that would reduce spending but not likely very many if the French economy is stable.  

    Further, some of the consumers of some of the GAFA companies are advertisers and not citizens.  Do you think they're really going to be that price sensitive and who are the competitors they will move to to reach the same demographics?
    I'm not going to even attempt to argue economics when actual economists (perhaps you too are one, I'm not) have already commented on whether product prices are increased equally by the corporate tax expense incurred. As far as I can tell those professionals "trained in the art" in general say no. 
    Actual economists who aren't peddling something agree that there is disagreement as to whom pays the majority of the corporate tax burden.  Economists, for the most part, agree that the majority of the burden is generally not paid by the stockholders/owners but by the workers or consumers.  Which pays most varies based on situation but as noted in the GAFA the group with the weakest bargaining position is the French consumer.

    By requiring that the product price increase equally by the tax incurred is simply not arguing in good faith which is par for the course when discussing anything with you.  
    This is the comment that began the discussion:
    "Corporations don't pay taxes, YOU DO!!! So you tax them more, they will just raise prices and YOU are the one that's actually paying."

    How would you interpret that statement if not the same as I did:  Corporate taxes paid are passed thru in their entirety to consumers in the way of product price increases. 

    If your takeaway of the posters meaning is the same as mine would you consider the comment accurate? Everything I've read today on the topic says owners/stockholders pay some (sometimes most) of it, workers might also be "paying" some of it (sometimes a LOT of it), and consumers might of course pay some of it. Maybe a little, maybe none at all, maybe a lot. 

    Claiming that the amount of corporate taxes paid are automatically passed thru in the way of price increases for that company's products and thus directly paid by the consumer doesn't appear to be true AFAICT. Agree or disagree? Will I get silence now or will you too argue in good faith as you expect me to? As far as I can tell I was not dishonestly misconstruing what he said. 
    "Corporations don't pay taxes, YOU DO!!!"  This part is true.  

    "So you tax them more, they will just raise prices and YOU are the one that's actually paying.". This part is partially true.

    In tax incidence analysis only individuals can carry the burden of taxes and not entities.  The classic economic theory on corporate taxes by Harberger (1962) assigned the tax burden completely on the owners of capital.  This is largely the position of the articles you cited and parrot so therefore we can assume that you agree.

    However Harberger assumes (that your sources don't provide) that there is both production elasticity (ie competition) and consumer elasticity (ie demand and/substitution of products).  

    In the cases of targeted taxes against a sector controlled by a small group of multinationals the first of these assumptions are untrue.  Since there are no significant non-corporate producers so the tax applies to all of the production capability.  The smaller players don't matter because they hold such a small percentage of the market share.  Even when they do exist, empirical analysis showed that the much smaller losses from differential taxation (ie between corporate and non-corporate producers) than the what the 1989 Gravelle and Kotlikoff paper suggested.

    Which means the second assumption is suspect...there is no consumer elasticity from substitution since switching from Google to Amazon doesn't help you avoid the cost of the new tax.

    That data further shows that the assumption of perfect competition is incorrect...an assumption loudly proclaimed by you and others against "YOU Pay!" that corporations are already maximizing profits.  In the analysis of actual results Krzyzaniak and Musgrave (1963) came to the conclusion that after tax profits rose in the short run in response to increases in the tax rate.  The impact of this finding is that competition is not perfect (ie the price is already the max the market can bear) and that corporations often over responds to this new cost stimulus by restricting output (or accepts fewer sales) and raising prices beyond the increase in cost of the tax.  Otherwise you would see a reduction in profits and not an increase.

    I suggest that if you want to argue using articles you dive deeper than Huffpo and then attempt argument by authority using such questionable sources and understanding.

    tl;dr:  Yes, you the consumer do usually pay the larger burden of corporate taxes when there is an imperfect market...say when there is a monopoly or oligopoly.

    Which is what you have in the digital services sector and US technology multinationals.

    If you want to be a pendant and claim that since not 100% of the cost is borne by the consumer (because it never will 100% anything in such a complex subject), again, you aren't arguing in good faith.  Especially when the counter-arguments you present are shown to be simplistic with the wrong assumptions and come from biased sources trying to sell you on increased corporate taxation.  You don't have to be an economist to read more substantive papers from a variety of viewpoints in order to draw your own conclusions...or at least understand the limitations of the position you feel is most likely.

    I'm not for or against corporate taxes in general...corporate taxation has pluses and minuses depending on your goals.  As a progressive tax often it doesn't seem to work that well because of the ability to shift the tax burden when the relationship between corporations, workers and consumers are often vastly unequal. 

    For France, it will increase federal income from taxes.  Goal met.  
    edited December 2018 randominternetperson
  • Reply 52 of 78
    gatorguygatorguy Posts: 20,294member
    nht said:
    gatorguy said:
    nht said:
    gatorguy said:
    nht said:
    gatorguy said:
    nht said:
    gatorguy said:
    jbdragon said:
    Corporations don't pay taxes, YOU DO!!! So you tax them more, they will just raise prices and YOU are the one that's actually paying.
    If they raise prices then wouldn't that obligate them to even more taxes since they'll make even more profit?

    Besides that how do you raise prices after the sale occurred? Corporate taxes are paid on profits, which can only be determined after a sales period has closed.  How would you know how much to add in advance? I have zero doubt that Apple has already computed the optimal prices for their products, right to the final dollar to maximize its profits. Raising them more because France wants a bit of what they are paying as a corporation to end up in French accounts for French use rather than Irish ones would be counter to that. 

    If I'm off-base maybe you can explain.

    EDIT: It seems after doing a bit'o reading that the claim companies simply raise prices is more a FUD-ism than fact. I guess it gets repeated so much that some folks just accept that it must be true. 
    https://economix.blogs.nytimes.com/2013/02/19/who-pays-the-corporate-income-tax/
    "Probably most people assume that the corporate income tax is largely paid by consumers of its products or services. That is, they assume that although the tax is nominally levied on the corporation as a whole, in fact the burden of the tax is shifted onto customers in the form of higher prices.

    All economists reject that idea. They point out that prices are set by market forces and the suppliers of goods and services aren’t only C-corporations, which pay taxes on the corporate tax schedule, but also sole proprietorships, partnerships and S-corporations that are taxed under the individual income tax. Other suppliers include foreign corporations and nonprofits."

    Explain to me which "sole proprietorships, partnerships and S-corporations" competes with Apple, Google, etc?  None.  There are also no foreign corporation that are in the same league as the targeted US companies.

    If French taxes are higher then these companies can and will charge French consumers more than for other consumers for these services.  Since the tax is levied against all providers then unless demand is very elastic there isn't anything to keep that from happening.

    This is a tax on "digital services" AFAICT. Depending on the details this might have negligible to zero impact on companies like Samsung and Huawei or force a price increase in their handsets. Apple's ability to simply raise their iPhone prices and pass their French taxes on without also pricing themselves further away from competitors may be limited.

    Wait for details to see who this actually affects but the acronym for the tax is pretty telling : GAFA, named after Google, Apple, Facebook and Amazon 
    And what competitors to GAFA would not be taxed and therefore able to take Digital Services consumers from GAFA?  None. 

    So who prevents GAFA from raising prices of movies, music, etc in France to cover the tax?  Samsung and phone prices are simply you trying to muddy the waters since they aren't competing with GAFA in digital services.  So not them.

    So who are the competitors in your "pricing themselves further away from competitors" statement?  

    As I said, unless demand is very elastic for digital services there's not a whole lot to prevent GAFA from pushing the costs onto the French consumer.  It's just another tariff. 

    What's the impact of $200B worth of tariffs against Chinese goods is pushed completely onto the American consumer?  About $60 a year.

    https://www.nytimes.com/interactive/2018/07/12/upshot/trade-war-cost-families.html

    Maybe there would a few French consumers that would reduce spending but not likely very many if the French economy is stable.  

    Further, some of the consumers of some of the GAFA companies are advertisers and not citizens.  Do you think they're really going to be that price sensitive and who are the competitors they will move to to reach the same demographics?
    I'm not going to even attempt to argue economics when actual economists (perhaps you too are one, I'm not) have already commented on whether product prices are increased equally by the corporate tax expense incurred. As far as I can tell those professionals "trained in the art" in general say no. 
    Actual economists who aren't peddling something agree that there is disagreement as to whom pays the majority of the corporate tax burden.  Economists, for the most part, agree that the majority of the burden is generally not paid by the stockholders/owners but by the workers or consumers.  Which pays most varies based on situation but as noted in the GAFA the group with the weakest bargaining position is the French consumer.

    By requiring that the product price increase equally by the tax incurred is simply not arguing in good faith which is par for the course when discussing anything with you.  
    This is the comment that began the discussion:
    "Corporations don't pay taxes, YOU DO!!! So you tax them more, they will just raise prices and YOU are the one that's actually paying."

    How would you interpret that statement if not the same as I did:  Corporate taxes paid are passed thru in their entirety to consumers in the way of product price increases. 

    If your takeaway of the posters meaning is the same as mine would you consider the comment accurate? Everything I've read today on the topic says owners/stockholders pay some (sometimes most) of it, workers might also be "paying" some of it (sometimes a LOT of it), and consumers might of course pay some of it. Maybe a little, maybe none at all, maybe a lot. 

    Claiming that the amount of corporate taxes paid are automatically passed thru in the way of price increases for that company's products and thus directly paid by the consumer doesn't appear to be true AFAICT. Agree or disagree? Will I get silence now or will you too argue in good faith as you expect me to? As far as I can tell I was not dishonestly misconstruing what he said. 
    "Corporations don't pay taxes, YOU DO!!!"  This part is true.  

    "So you tax them more, they will just raise prices and YOU are the one that's actually paying.". This part is partially true, *and therefore also partially wrong.* 

    tl;dr:  Yes, you the consumer do usually pay the larger burden of corporate taxes when there is an imperfect market...say when there is a monopoly or oligopoly.
    Huh, only partially right in your opinion...

    @carnegie made a very good post just above yours (#46), including this excellent point:
    "...Corporate income taxes are raised from, e.g., 25% to 30%, the way to maximize after-tax profit is the same as it was before: Maximize pre-tax profit. If X is greater than Y, then 75% of X is greater than 75% of Y as surely as 70% of X is greater than 70% of Y. Say a company is making $100 million a year before incomes taxes and $75 million a year after taxes. Income taxes are raised from 25% to 30%. So to make that same after-tax $75 million, it needs $107 million in pre-tax profit. If it thinks that raising prices would increase its pre-tax profits to $107 million (e.g., because it wouldn't hurt demand that much), then why wouldn't it raise prices regardless of the tax increase? Then, without the tax increase, it could make $80 million a year after taxes instead of $75 million."

    Be that as it may, and in order to clarify your position: You believe that when the French law taxing digital services above a certain threshold goes into effect that Apple will simply raise the price of Apple Music specifically for France so that its users are the ones paying? Seems as tho that would assist Spotify, Deezer, Napster and others assuming they stay under the threshold where the tax kicks in. And if Apple thought they could raise the price without reducing their profits why don't they already do so? What about Apple Pay, how will Apple pass thru the tax on the profits from that? Similar questions could be asked about Google services such as Cloud and ads passing thru the tax as a price increase for French citizens. 

    Perhaps you'' get lucky tho. There's another proposal on the table to tax digital advertising 3%. Apple only has a little finger dipped in those waters, so that one is targeting Google and Facebook. 


    edited December 2018
  • Reply 53 of 78
    carnegie said:
    jbdragon said:
    Corporations don't pay taxes, YOU DO!!! So you tax them more, they will just raise prices and YOU are the one that's actually paying. It's just a round about way in taxing YOU while making the politician look good. Oh look, he's getting those evil corporations who aren't paying taxes. Which is already a flat out lie. They want more money. In this case France and their failed policy's. Nothing like stealing more money from American company's as they sure can't seem to generate enough of their own.
    gatorguy said:
    jbdragon said:
    Corporations don't pay taxes, YOU DO!!! So you tax them more, they will just raise prices and YOU are the one that's actually paying.
    If they raise prices then wouldn't that obligate them to even more taxes?

    Besides that how do you raise prices after the sale occurred? Corporate taxes are paid on profits, which can only be determined after a sales period has closed.  How would you know how much to add in advance?

    If I'm off-base maybe you can explain.
    It's called "math".  You plug in the percentages and magnitude of the taxes, fees, tariffs, excise, "because we said so" payments, manufacturing costs, etc, decide how much profit you want, then voila the magic of math gives you the answer as to what price to charge.

    Taxes will always be passed on to the consumer, no matter what form they might take.

    Yeah, corporations don't exist but by the creation of humans and they only act at the direction of humans. They aren't really things acting on their own for their own purposes and benefit. They are either, depending on how one chooses to conceive them, associations of humans or things which humans use.

    So whatever taxes they pay are, effectively paid by humans. But who those humans effectively paying the taxes are - i.e. what their relationship to a given corporation is - depends on the nature of the taxes in question. Many taxes are effectively paid by consumers, people buying from corporations. Others are effectively paid for by owners, shareholders of corporations.

    Corporate income taxes are, for the most part, effectively paid by the owners of corporations. What is left to distribute to them is reduced by corporate income taxation. Then they, in most cases, pay taxes again on what is distributed to them. Because of how income taxes function, they can't really be passed on to consumers. To think that they are is to presume something that doesn't make much sense: That corporations choose to only make a set amount of profit. Even though they could make more, even though they believe different business decisions would create more profit (without long-term effects they wouldn't accept), they target an amount and make decisions that limit their profits to that amount.

    If corporate income taxes are raised from, e.g., 25% to 30%, the way to maximize after-tax profit is the same as it was before: Maximize pre-tax profit. If X is greater than Y, then 75% of X is greater than 75% of Y as surely as 70% of X is greater than 70% of Y. Say a company is making $100 million a year before incomes taxes and $75 million a year after taxes. Income taxes are raised from 25% to 30%. So to make that same after-tax $75 million, it needs $107 million in pre-tax profit. If it thinks that raising prices would increase its pre-tax profits to $107 million (e.g., because it wouldn't hurt demand that much), then why wouldn't it raise prices regardless of the tax increase? Then, without the tax increase, it could make $80 million a year after taxes instead of $75 million. (This is overly-simplified to make the point. For instance, raising prices can have effects beyond effects on short-term profitability. But that's the case regardless of whether income taxes are raised; it's part of the consideration in any case.)

    Some taxes on corporations are passed on to consumers. Some taxes on corporations are withheld from shareholders. It depends on how the taxes function.
    Thanks for that, let's see if the people who don't like facts will read it. 
  • Reply 54 of 78
    spice-boy said:
    Good for France and other "woke" nations. For those that are crying on Apple's behalf each nation has rules for those that live and earn income within that country. Apple and other tech giants have reaped massive amounts of money and by exploiting loopholes in the tax laws have managed to avoid paying what other business' are already paying.

    Yes Spam there is such a thing as "fair share" it is what the tax laws say is fair and not what a fan boy says it is for poor, little Apple. 

    Not Apple's fault that the loopholes exist.  I would take advantage of them too
    you would take advantage of those loophole but do you still support their existence? 
  • Reply 55 of 78
    These companies must have expected that this tax was the only long term outcome of their tax avoidance schemes. Countries need tax income to function and if the economic parties operating in their borders legally avoid paying taxes then the laws will change. Google, for example, could take money from a French company to advertise their products in a French media outlet to French eyeballs and yet because they bank the cheques in Ireland, they think they didn't need to pay French tax. If they want to benefit from revenue from a developed society like France, they need to contribute to that society. 
    An idealistic point of view that I don’t disagree with.  However, companies also have a fiduciary responsibility to shareholders and are in competition with other firms, if not directly on a product or service basis, at least in competition for a finite pool of consumer dollars/euros, et al.   These facts put pressure on companies to seek optimal marketing, R&D, sales, production, and yes, tax strategies.  They hire multitudes of accountants to review the convoluted tax laws that, as one previous poster stated, are put in place typically to favor some constituency favored by the lawmakers, and then exploit that strategy for their own benefit.  

    Who, in the end, is to blame?  It’s the lawmakers who burdened the corporations with the legal obligation to maximize shareholder returns (shareholders can and have sued when they have evidence a corporation has not acted in their interests) and with convoluted tax law designed to favor some over the majority.  

    It’s great press to villianize the big profitable corporations, but they make their money through fair exchange with willing consumers.  That’s a bit different from the force applied by government when taxing first our income, then again each time we spend it.  
    Companies do not have a fiduciary responsibility to structure themselves to profit and avoid paying tax above all else. An example could be these tech companies spending money on environmentally friendly policies that they could say is their responsibility to the world or they could justify by saying these initiatives pay for themselves with customer good will. Paying tax could be justified in exactly the same way. Anyway, even if you are right, and I'm ok to assume that for the sake of argument that corporations will inevitably find loop holes to minimise their tax bills, at the same time, it makes sense that governments will respond by changing tax laws. That was the point of my post. This is a perfectly rational response by France that these tech companies could easily have predicted.
  • Reply 56 of 78
    spice-boy said:
    Good for France and other "woke" nations. For those that are crying on Apple's behalf each nation has rules for those that live and earn income within that country. Apple and other tech giants have reaped massive amounts of money and by exploiting loopholes in the tax laws have managed to avoid paying what other business' are already paying.

    Yes Spam there is such a thing as "fair share" it is what the tax laws say is fair and not what a fan boy says it is for poor, little Apple. 

    You conveniently left out that Apple is the LARGEST TAXPAYER IN THE WORLD.
  • Reply 57 of 78
    dasanman69dasanman69 Posts: 12,976member
    steven n. said:
    Eventually, they will run out of other people's money.
    Dumbest quote ever, it's always other people's money. 
  • Reply 58 of 78
    dasanman69dasanman69 Posts: 12,976member
    JanNL said:
    So in the EU it’s not allowed to lower unilaterally/for one company taxes (Ireland), but raising taxes unilaterally (France) ís  allowed?
    What France is doing is confined to their borders, what Ireland did went beyond theirs  
  • Reply 59 of 78
    gatorguygatorguy Posts: 20,294member
    Notsofast said:
    spice-boy said:
    Good for France and other "woke" nations. For those that are crying on Apple's behalf each nation has rules for those that live and earn income within that country. Apple and other tech giants have reaped massive amounts of money and by exploiting loopholes in the tax laws have managed to avoid paying what other business' are already paying.

    Yes Spam there is such a thing as "fair share" it is what the tax laws say is fair and not what a fan boy says it is for poor, little Apple. 

    You conveniently left out that Apple is the LARGEST TAXPAYER IN THE WORLD.
    Where did you find that? I know Maestri said something to that effect, but lacking in details as to what time period he was referring to. All the taxes due to the Irish from past years might be lumped into last year for instance. Be that as it may I think they also are the richest so paying the most would not be out-of-line. 
    edited December 2018
  • Reply 60 of 78
    gatorguy said:
    nht said:
    gatorguy said:
    nht said:
    gatorguy said:
    nht said:
    gatorguy said:
    nht said:
    gatorguy said:
    jbdragon said:
    Corporations don't pay taxes, YOU DO!!! So you tax them more, they will just raise prices and YOU are the one that's actually paying.
    If they raise prices then wouldn't that obligate them to even more taxes since they'll make even more profit?

    Besides that how do you raise prices after the sale occurred? Corporate taxes are paid on profits, which can only be determined after a sales period has closed.  How would you know how much to add in advance? I have zero doubt that Apple has already computed the optimal prices for their products, right to the final dollar to maximize its profits. Raising them more because France wants a bit of what they are paying as a corporation to end up in French accounts for French use rather than Irish ones would be counter to that. 

    If I'm off-base maybe you can explain.

    EDIT: It seems after doing a bit'o reading that the claim companies simply raise prices is more a FUD-ism than fact. I guess it gets repeated so much that some folks just accept that it must be true. 
    https://economix.blogs.nytimes.com/2013/02/19/who-pays-the-corporate-income-tax/
    "Probably most people assume that the corporate income tax is largely paid by consumers of its products or services. That is, they assume that although the tax is nominally levied on the corporation as a whole, in fact the burden of the tax is shifted onto customers in the form of higher prices.

    All economists reject that idea. They point out that prices are set by market forces and the suppliers of goods and services aren’t only C-corporations, which pay taxes on the corporate tax schedule, but also sole proprietorships, partnerships and S-corporations that are taxed under the individual income tax. Other suppliers include foreign corporations and nonprofits."

    Explain to me which "sole proprietorships, partnerships and S-corporations" competes with Apple, Google, etc?  None.  There are also no foreign corporation that are in the same league as the targeted US companies.

    If French taxes are higher then these companies can and will charge French consumers more than for other consumers for these services.  Since the tax is levied against all providers then unless demand is very elastic there isn't anything to keep that from happening.

    This is a tax on "digital services" AFAICT. Depending on the details this might have negligible to zero impact on companies like Samsung and Huawei or force a price increase in their handsets. Apple's ability to simply raise their iPhone prices and pass their French taxes on without also pricing themselves further away from competitors may be limited.

    Wait for details to see who this actually affects but the acronym for the tax is pretty telling : GAFA, named after Google, Apple, Facebook and Amazon 
    And what competitors to GAFA would not be taxed and therefore able to take Digital Services consumers from GAFA?  None. 

    So who prevents GAFA from raising prices of movies, music, etc in France to cover the tax?  Samsung and phone prices are simply you trying to muddy the waters since they aren't competing with GAFA in digital services.  So not them.

    So who are the competitors in your "pricing themselves further away from competitors" statement?  

    As I said, unless demand is very elastic for digital services there's not a whole lot to prevent GAFA from pushing the costs onto the French consumer.  It's just another tariff. 

    What's the impact of $200B worth of tariffs against Chinese goods is pushed completely onto the American consumer?  About $60 a year.

    https://www.nytimes.com/interactive/2018/07/12/upshot/trade-war-cost-families.html

    Maybe there would a few French consumers that would reduce spending but not likely very many if the French economy is stable.  

    Further, some of the consumers of some of the GAFA companies are advertisers and not citizens.  Do you think they're really going to be that price sensitive and who are the competitors they will move to to reach the same demographics?
    I'm not going to even attempt to argue economics when actual economists (perhaps you too are one, I'm not) have already commented on whether product prices are increased equally by the corporate tax expense incurred. As far as I can tell those professionals "trained in the art" in general say no. 
    Actual economists who aren't peddling something agree that there is disagreement as to whom pays the majority of the corporate tax burden.  Economists, for the most part, agree that the majority of the burden is generally not paid by the stockholders/owners but by the workers or consumers.  Which pays most varies based on situation but as noted in the GAFA the group with the weakest bargaining position is the French consumer.

    By requiring that the product price increase equally by the tax incurred is simply not arguing in good faith which is par for the course when discussing anything with you.  
    This is the comment that began the discussion:
    "Corporations don't pay taxes, YOU DO!!! So you tax them more, they will just raise prices and YOU are the one that's actually paying."

    How would you interpret that statement if not the same as I did:  Corporate taxes paid are passed thru in their entirety to consumers in the way of product price increases. 

    If your takeaway of the posters meaning is the same as mine would you consider the comment accurate? Everything I've read today on the topic says owners/stockholders pay some (sometimes most) of it, workers might also be "paying" some of it (sometimes a LOT of it), and consumers might of course pay some of it. Maybe a little, maybe none at all, maybe a lot. 

    Claiming that the amount of corporate taxes paid are automatically passed thru in the way of price increases for that company's products and thus directly paid by the consumer doesn't appear to be true AFAICT. Agree or disagree? Will I get silence now or will you too argue in good faith as you expect me to? As far as I can tell I was not dishonestly misconstruing what he said. 
    "Corporations don't pay taxes, YOU DO!!!"  This part is true.  

    "So you tax them more, they will just raise prices and YOU are the one that's actually paying.". This part is partially true, *and therefore also partially wrong.* 

    tl;dr:  Yes, you the consumer do usually pay the larger burden of corporate taxes when there is an imperfect market...say when there is a monopoly or oligopoly.
    Huh, only partially right in your opinion...

    @carnegie made a very good post just above yours (#46), including this excellent point:
    "...Corporate income taxes are raised from, e.g., 25% to 30%, the way to maximize after-tax profit is the same as it was before: Maximize pre-tax profit. If X is greater than Y, then 75% of X is greater than 75% of Y as surely as 70% of X is greater than 70% of Y. Say a company is making $100 million a year before incomes taxes and $75 million a year after taxes. Income taxes are raised from 25% to 30%. So to make that same after-tax $75 million, it needs $107 million in pre-tax profit. If it thinks that raising prices would increase its pre-tax profits to $107 million (e.g., because it wouldn't hurt demand that much), then why wouldn't it raise prices regardless of the tax increase? Then, without the tax increase, it could make $80 million a year after taxes instead of $75 million."

    Be that as it may, and in order to clarify your position: You believe that when the French law taxing digital services above a certain threshold goes into effect that Apple will simply raise the price of Apple Music specifically for France so that its users are the ones paying? Seems as tho that would assist Spotify, Deezer, Napster and others assuming they stay under the threshold where the tax kicks in. And if Apple thought they could raise the price without reducing their profits why don't they already do so? What about Apple Pay, how will Apple pass thru the tax on the profits from that? Similar questions could be asked about Google services such as Cloud and ads passing thru the tax as a price increase for French citizens. 

    Perhaps you'' get lucky tho. There's another proposal on the table to tax digital advertising 3%. Apple only has a little finger dipped in those waters, so that one is targeting Google and Facebook. 


    You're missing the point.  Let's try this again.  Corporations don't bear the burden of taxes, people do.  Those people might not be "YOU," but they are people.  The cost of every tax is borne by some combination of consumers, employees, and investors.  The devil is in the details.  Yes, as you suggestion, if the tax is strictly a tax on corporate profits, then they are less likely to be passed on to consumers.  But if it's implemented like a sales tax or VAT, you can bet your bottom euro that at least part of that will be passed on in terms of higher prices.
    SpamSandwich
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