Google, Amazon, and Starbucks are being pilloried by the UK public accounts committee for their tax policies in the UK. Is this just? By Max Keiser
At the center of the controversy is a loophole in the tax code that disregards a consumer’s physical presence and allows the company to treat them as if they were physically located in another country when they buy something. In other words, you might think you are standing on a high street in London buying a cup of coffee, but according to how the tax system is gamed, you are actually standing in a different country when you make that purchase.
UK citizens, in other words, are outsourcing their spiritual self to other countries where these companies treat them as having a corporal presence enabling a tax arbitrage that deprives the citizens of Britain with the taxable income necessary to maintain the roads, networks, internet, political stability and access to media outlets they have built up over the decades used by the offending companies to grow sales. But it’s OK to treat a ghost-like representation of these same citizens who are theoretically present in these foreign territories to boost the stock prices in these same companies.
Treating UK citizens like ghosts means they get hit twice. Not only do they lose the tax refunds owed to them by these companies (in the form of a higher overall tax take by the government) but with the decrease in taxes comes fresh government the austerity measures needed to maintain the infrastructure these companies need to continue their parasitical leeching of untaxed revenues from the citizens.
If only British citizens ate and lived like ghosts, all would be fine. But since they are not, real money needs to be spent for real goods and services despite Google, Amazon’s and Starbuck’s tax treatment of them as immaterial.
So you have a situation where Google, Amazon and Starbucks want to use the assets paid for and built by the UK citizens (over generations) but they don’t want to pay for access. They only want your ‘spiritual’ representation to book sales for them in favorable tax territories for virtually nothing in return, except maybe some low wage serf work dispensing lattes to bankers and accountants busy scamming you.
The government must, if it is to be considered legitimate, introduce a tax credit to all UK households equal to the taxes lost when big US companies game the system and treat them like ghosts.
A rough calculation suggests that each British family is due a £10,000 pound annual ‘ghost’ tax credit to compensate them adequately for the abuse of the assets and infrastructure that is being used by foreigners without adequate compensation.
If a British family’s tax liability falls beneath the £10,000 threshold then an outright gift of the difference should be awarded. Any shortfall from the treasury’s ability to pay compensation to British citizens from foreign tax abuse should be financed by the BoE at the same rates they charge these same companies for capital: ½% (or less if you consider Forex arbitrages schemes used by these companies dropping their cost of capital to negative numbers).
The coalition government talks about the need to rebalance the UK economy. This would be a good start. Rebalance the tax code in ways that treat UK citizens as living, breathing contributors to society, not accounting ghosts living in a dreary world of austerity cuts to pay for accounting tricks by foreigners.
Max Keiser, the host of RT’s ‘Keiser Report,’ is a former stockbroker, the inventor of virtual specialist technology and co-founder of the Hollywood Stock Exchange.