« on: August 31, 2016, 01:30:27 pm »
SOURCE;
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http://www.telegraph.co.uk/business/2016/08/30/the-apple-fiasco-shows-why-corporation-tax-is-an-outdated-anachr/BY: Allister Heath
Silicon Valley has always loved the EU, or at least imagined it to be a benign, pro-market force. I was reminded of this recently when I visited the San Francisco Bay Area: many tech executives were baffled by our decision to vote Brexit.
I suspect at least some senior people in Cupertino, Mountain View and Palo Alto are questioning their beliefs today; ironically, the supposedly pro-EU Obama administration itself is angry at the way Brussels is trying to grab a slice of cash piles being kept overseas by US firms.
With the collapse of the TTIP trade deal, a new bout of US-EU tension is on the cards, a development which helps nobody. Once again, it’s a case of liberals (in the American sense) being mugged by the grubby reality of Brussels.
A €13bn (£11bn) fine is non-trivial, even for a company sitting on a massive cash pile like Apple; it ought to be clear by now to the company that there are costs as well as advantages to the EU’s existence (and why people such as myself believe that for the UK at least the former are greater than the latter).
There are several lessons.
First, corporation tax and the entire way governments collect money from companies is broken. Levying profits in a fair and efficient way is unworkable in a modern, global and digital economy. Time and again, we see how one stream of profits is taxed differently to another, depending on a host of circumstances, corporate structures or endless other factors. Cracking down on “avoidance” – in fact the use of legal loopholes that politicians are entirely to blame for – merely replaces one arbitrary structure with another.
All of these taxes need to be abolished and replaced by an entirely new way of raising money. GDP is generated by capital and labour. Both of these sources of income should be taxed in the same, low and simple way, making sure that each pound of national income generated in the economy is treated in exactly the same way. This would do away with the huge tax-inspired distortions that so cripple our economy.
My own pet scheme – described in “The Single Income Tax, the final Report of the 2020 Tax Commission” which I chaired a few years ago – would be to abolish all existing business taxes and replace them by a new one on cash outflows from all corporate vehicles.
This would be levied at source, like PAYE, at one simple flat rate. It would catch dividend payments, share buybacks and interest, as well as cash transfers. The rate would be the same as an equally flat, simple tax levied on labour income (wages, bonuses and benefits).
For the system to work properly and fully, it would need to be agreed internationally; rules would still have to be found to treat intra-company payments properly and deal with issues such as intellectual capital. But the structure would nevertheless be drastically simpler and cheaper to operate than anything we have today.
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« Last Edit: August 31, 2016, 01:38:45 pm by SirLinksALot »
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