> This gives you an unfair advantage over, say, a brick-and-mortar store or a physical ad agency in Paris that's trying to compete online.
Are you sure it's "an unfair advantage" and not just "an advantage"? Doesn't your position presume that the brick-and-mortar business model deserves special protection? If so, why? If not, what then is unfair about "jurisdiction arbitrage".
> Taxes are not just about revenue, they are often about changing incentives
What is the implied incentive in this case? It seems like it's just incentivizing a brick and mortar business model, but it's not clear why this is inherently virtuous.
> This addresses an additional edge Amazon has versus local retailers.
Doesn't this all point to a fundamental problem with "corporate tax"? Wouldn't it be better (fairer) to reduce or remove corporate tax and raise sales tax or similar, such that it doesn't matter whether the business has a presence in the country in question? I'm not very knowledgable about the topic, so I'm hoping someone can set me straight.
Because it employs more people and pays taxes locally. It's perfectly valid for the government to ignore that and focus solely on the consumer side (i.e. minimize prices), but it's also perfectly valid (and economically sound) to do what France is doing.
>What is the implied incentive in this case? It seems like it's just incentivizing a brick and mortar business model
No, it is not incentivizing it. It levels the playing field a bit by applying more consistent taxation.
>Doesn't this all point to a fundamental problem with "corporate tax"? Wouldn't it be better (fairer) to reduce or remove corporate tax and raise sales tax or similar, such that it doesn't matter whether the business has a presence in the country in question?
I can be persuaded by that argument (economists do love consumption taxes for a reason, after all), but either way it's not for Amazon to decide. In France, it is for the French people to decide, via their representatives. Whatever positive or negative consequences arise are also theirs to bear.
Well, now you run into the problem of progressive vs regressive taxation. Since consumption taxes, as the name implies, tax consumption, and the poor have a marginal propensity to consume of almost 1.0 while the wealthy can have an extremely low marginal propensity to consume, it's reasonable to conclude that consumption taxes are taxing the people who are least able to pay and who would already be spending that money anyways. You're taking away money that would already have stimulated the economy elsewhere.
Taxing the poor runs into these kind of zero-sum problems much more quickly. The rich tend to save or are more able to engage in activities which produce products of much more questionable economic value (i.e., bitcoin farms, copyright trolls, rent-seeking, etc.). Obviously investment has value, but in economic terms it may or may not generate a commensurate amount of wealth.
Having the option to not comply with laws, is an unfair advantage.
>reduce or remove corporate tax and raise sales tax or similar
VAT is a sales tax, effectively, but even that is managed away fairly easy. It's an efficient tax, but when it comes to B2B activity it's effectively unpaid. Amazon, though is a retailer, has a very large amount of B2B business.
All parties in this scenario are legally compliant.
> VAT is a sales tax, effectively, but even that is managed away fairly easy. It's an efficient tax, but when it comes to B2B activity it's effectively unpaid. Amazon, though is a retailer, has a very large amount of B2B business.
How does its B2B business help Amazon evade taxes? When I think about AWS, the billing doesn’t seem to lend itself to any obvious sales tax evasion schemes...
They were complaint with the letter of the law, but the law makers decided that the companies were not complaint with the original spirit of the law. So they introduced a new law so that all parties can also be complaint with the spirit.
In software engineering terms, the written down code was not producing intended behavior. So new code has been written to deal with this bug.
Good question. I thought there may be some kind of legal definition for this but it seems quite fuzzy.
You could take the view that these companies were paying all required taxes, so this would be fair. Or you could take the view that direct competitors were having to pay taxes that they were able to avoid, which would make it unfair?
I suppose ultimately its a moral judgement, so there isn't really a right answer.
There's nothing arbitrary here, in fact they're attempting to partially address a perverse incentive to take all your business online and do some jurisdiction arbitrage to minimize corporate taxes. This gives you an unfair advantage over, say, a brick-and-mortar store or a physical ad agency in Paris that's trying to compete online.
Taxes are not just about revenue, they are often about changing incentives (for the better if used well, for the worse if used without regard for unintended consequences).
>Much of the edge Amazon has versus local retailers is that it is more efficient.
Much, but not all. This addresses an additional edge Amazon has versus local retailers.