ppietra

davidw said:

ppietra said:

davidw said:

ppietra said:

Digital stores should be taxed like any retail store... but that can only be feasible if stores don’t divert their profits to some other country, and the problem is stores divert profits to another country... So I think it is quite understandable that there are countries that feel that these companies are not paying enough taxes...

I don't think you understand how this tax works.

The tax imposed are to "stores" that are not in their country to begin with, so there is no diverting of profits to other countries. The country collects a sales tax or VAT from the buyers in their country, on these sales. If the "digital stores" were in the country, like a retail store, then the digital store would be paying a tax on their profits to the country they are located in. And if the products sold were not digital in nature and "imported" over the internet, the country would collect a tariff  to import the products that are sold in the retail stores in their country. 

Put simply on how this tax is levied, with an example using a retail store in the US. If a person in CA bought an iMac on sale from a retail store in NY, the NY store will collect the CA 9.5% sales tax on the sale and remit it to CA. But the profit they make on the sale is taxed in NY because that''s where the store (and the iMac) are located. But with this tax, it would be like if CA also taxed the NY store a certain percentage of the sale because the store in NY is profiting from a sale made in CA. Even though the iMac was never in CA, until it was shipped to the person that bought it.   

And here's the problem with the tax. The tech companies in the US (or whatever country they are located), from where the sales are made, will deduct this tax from their net revenue as a cost of doing business. So the country where they are located will end up collecting less corporate tax on the profit. Which the US will make up by increasing the tariff on products from those countries imposing this tax. 

Or developers getting less from each sale. So developers like Epic would not only have to pay 30% to the various app stores for in-app sales, they would also have to pay the UK a small percent of the in-app sales made by Fortnight players in the UK. Spotify and Apple would have to pay the UK a tax to stream music to UK subscribers. So would Netflix with streaming movies. Google would have to pay a tax to the UK, on how much they make placing ads in Google Map for the UK. And so on with any sales involving digital goods. Which will ultimately get passes on to their customers the form of higher cost for their products. 

I am not talking about how this tax works, I am talking about why these countries felt the need too create a new tax - because the stores haven’t been paying enough corporate taxes locally...
And actually the stores are in their countries, there are legal entities in the UK, Spain, etc that represent the digital stores, and they operate in those countries under a local legal framework, which for most countries in Europe is stipulated at the EU level. The actual payment processing is the thing that is done in another country (in Europe something like Luxembourg), while the actual profits end up in yet another country (in Europe something like Ireland), where they pay corporate taxes. Since it is hard change that legal framework, because it envolves international agreements, they instead opted to create new taxes, so that this economic activity can be taxed in their countries. It is delusional to think that US companies don’t pay corporate taxes in other countries.

But that is the EU fault, not the corporations. The countries in the EU are set up like the States in the US. To do business in the EU, you only need to set up your corporate headquarter in any one of the countries that makes up the EU. A corporation whose HQ is in Ireland can do business in all the other EU countries and only have to pay corporate tax in Ireland. That is how it's set up. Just like in the US, where corporations do not have to pay corporate taxes in every State they do business in, just the ones where they have their HQ. Many will set up their US HQ in (and now many are moving to) States with the lowest corporate tax rate. So corporations do not have to set up a HQ in every country of the EU, if they want to sell their products in any EU country. 

You are still confusing a "digital store" with a physical brick and mortar store. Anyone with the internet do not need to visit a physical store to buy digital goods. Do Epic have a physical store from which Fortnight players can purchase their virtual digital outfits and fancy looking pick-axes? Well, this tax wants to tax Epic on those sales. Apple is already saying that they will collect this tax from iOS developers on in-app purchases, if they have to. Do large developers using app stores over the internet, have a physical store in these countries that are levying taxes on digital goods bought from stores on the internet? And yet, this tax will affect large developers selling digital goods and services. 

What this tax is most like is an "internet tax", that our government kept  mentioning since the internet boom in the 90's, but kept burying, due to its unpopularity here in the US. Until 2016 where it was buried for good.  With an "internet tax", anyone using the internet to sell or buy goods will have to pay an "internet tax" levied by the Federal government. This has absolutely nothing to do with retail stores and how they might be diverting their profits to other countries. 

https://en.wikipedia.org/wiki/Internet_tax ;

http://www.dslreports.com/shownews/Congress-Passes-Permanent-Ban-on-Broadband-Taxes-136284

lkrupp said:

chasm said:

Developers will just get less money from the sales of digital goods and services, so they will raise prices accordingly.

This is a factor that the taxers ignore. The current administration wants to raise corporate tax rates to pay for it’s multi-trillion dollar infrastructure project. What’s so hard to understand that those tax increases will be passed on to the consumer in the form of higher prices? That’s the problem with the ‘tax the rich’ argument sold to the masses. The masses wind up paying for it anyway. Taxes will, in effect, will be raised on the middle class as they always are, just through the back door of the corporate tax rate.