It's not small thing to say that tax rate is the only thing keeping the rock from going Greek.
They get the money back from the worker's pockets... personal tax rates are excruciatingly high. Once you sum everything up, including stuff like VAT and Income tax, it's not hard to see 60-70% of what some people earn making its way to the Government coffers through various manners - some of which you may not even be aware of as it goes. A good chunk of *that* goes straight to a few banks, before going on to the continent. In a way, they have found a way to tax the country. But ultimately, it means that unemployment is 'only' 14% and not bouncing off 25% like Greece. It still means something like 25% of people under 30 are on the live register, but at least that's not 50%.
The downside is, such high personal tax rates and taxations cripple the smaller businesses that can't afford to pay enough to make a living wage. Depending on the part of the country you're in, between 10 and 20% of prime retail space is lying idle. So it is a real case of swings and roundabouts. Dropping personal taxes in this situation really isn't possible and it won't be for a long time. We also have a large civil service as there're a number of things that are just economically unviable to run on a for-profit basis, yet are necessary for national stability.
The real catch that makes it work - zero taxation on transfer pricing between subsidiaries - is also the exact same thing keeping the people I work for afloat, as they can buy products from a sister company who gets a better rate from a supplier than we would at cost.
Still, the corporate tax regime is pretty transparent... compared to the mewling morass of loopholes that the US is anyway. 12.5% is the flat rate - there're a few rebates for certain actions. If you hire someone who's been unemployed for more than a year, you don't have to make their social contributions for a year - for example. A good accountant spending time trawling the IRS tax code would easily find a way to knock a US-registered company's tax liabilities down a peg beneath the 35% mark - or even find a way to make the government owe them money. That's not even failing to account for the fact that 2% of several billion means far more to an economy of our size that 35% of several billion means in the US. The cost of paying the taxes for the employees is a negligeable addition to this number.
For an economy as large as the US, I'm not sure it'd work as well however. While the tax take from those 4000 employees means a lot to us.... it won't make much of a dent in the US federal budget. We can run with such low rates precisely because we're a small enough country to be able to afford to do so and make it work. I doubt it'd work in Germany or France either.
It's also pissing off the entire civilised world. Australia hates it. I had great fun watching David Cameron talk himself through loops, complaining about low taxation, while saying it's our right to have lower taxation anyway, but hauling Google before parliament. This is, perhaps, what pleases me most. It's the one thing the EU really tried to kill during the baillout negotiations and the one thing the government has clung on to like a limpet.
________________________________
--m(^0^)m-- Wot, no sig?
They get the money back from the worker's pockets... personal tax rates are excruciatingly high. Once you sum everything up, including stuff like VAT and Income tax, it's not hard to see 60-70% of what some people earn making its way to the Government coffers through various manners - some of which you may not even be aware of as it goes. A good chunk of *that* goes straight to a few banks, before going on to the continent. In a way, they have found a way to tax the country. But ultimately, it means that unemployment is 'only' 14% and not bouncing off 25% like Greece. It still means something like 25% of people under 30 are on the live register, but at least that's not 50%.
The downside is, such high personal tax rates and taxations cripple the smaller businesses that can't afford to pay enough to make a living wage. Depending on the part of the country you're in, between 10 and 20% of prime retail space is lying idle. So it is a real case of swings and roundabouts. Dropping personal taxes in this situation really isn't possible and it won't be for a long time. We also have a large civil service as there're a number of things that are just economically unviable to run on a for-profit basis, yet are necessary for national stability.
The real catch that makes it work - zero taxation on transfer pricing between subsidiaries - is also the exact same thing keeping the people I work for afloat, as they can buy products from a sister company who gets a better rate from a supplier than we would at cost.
Still, the corporate tax regime is pretty transparent... compared to the mewling morass of loopholes that the US is anyway. 12.5% is the flat rate - there're a few rebates for certain actions. If you hire someone who's been unemployed for more than a year, you don't have to make their social contributions for a year - for example. A good accountant spending time trawling the IRS tax code would easily find a way to knock a US-registered company's tax liabilities down a peg beneath the 35% mark - or even find a way to make the government owe them money. That's not even failing to account for the fact that 2% of several billion means far more to an economy of our size that 35% of several billion means in the US. The cost of paying the taxes for the employees is a negligeable addition to this number.
For an economy as large as the US, I'm not sure it'd work as well however. While the tax take from those 4000 employees means a lot to us.... it won't make much of a dent in the US federal budget. We can run with such low rates precisely because we're a small enough country to be able to afford to do so and make it work. I doubt it'd work in Germany or France either.
It's also pissing off the entire civilised world. Australia hates it. I had great fun watching David Cameron talk himself through loops, complaining about low taxation, while saying it's our right to have lower taxation anyway, but hauling Google before parliament. This is, perhaps, what pleases me most. It's the one thing the EU really tried to kill during the baillout negotiations and the one thing the government has clung on to like a limpet.
________________________________
--m(^0^)m-- Wot, no sig?