Without a fair tax on tech, it could be the end of the state as we know it
This is the title of an interesting article by John Harris in today’s “Guardian” newspaper.
He highlights two connected questions:
“The first is obvious: what do we do about the corporations that are driving huge social and economic change, but have so far proved reluctant to pay anything approaching their fair share of tax? From that follows the second, even graver conundrum: if things stay as they are, what could happen to just about everything that depends on government funding?”
He points out:
“According to analysis by the financial services company Standard and Poor’s, between 2007 and 2015 the average effective rate of tax paid in the US by the country’s 500 highest-valued firms was put at 27%. By contrast, over the same period, Apple paid 17% of its US profits in tax, Alphabet (Google’s parent) paid 16%, Amazon paid 13%, and Facebook paid just 3.8 %. In 2017, Amazon’s US profits were more than $5.6bn, yet it paid almost no federal income taxes, partly thanks to “excess stock-based compensation deductions””
.His solution?
“The beginnings of an answer might lie in what economists call a unitary tax. In this model, firms would be obliged to give the tax authorities of any country in which they operate both a set of accounts for their global activities and information about their physical assets, workforce, sales and profits for the territory in question. Tax would then be decided using a formula based on these factors. Some state taxes in the US work on a comparable basis, and the European commission has made supportive noises about the concept.”
You can read the John Harris column here.