If only most wealthy people are like Warren Buffet

From -  Reuters  - http://www.reuters.com/article/2012/11/26/us-buffett-tax-idUSBRE8AP0LY20121126?feedType=RSS&feedName=topNews&utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+reuters%2FtopNews+%28News+%2F+US+%2F+Top+News%29&utm_content=Google+Feedfetcher

"Warren Buffett, the legendary investor who changed the debate about U.S. tax reform in 2011 with a call for the rich to pay more, is now calling for minimum tax rates for millionaires.

In a New York Times editorial printed on Monday, Buffett suggested Congress move immediately to implement minimum taxes of 30 percent on incomes of $1 million to $10 million and 35 percent above that.

"A plain and simple rule like that will block the efforts of lobbyists, lawyers and contribution-hungry legislators to keep the ultra rich paying rates well below those incurred by people with income just a tiny fraction of ours," Buffett wrote.

"Only a minimum tax on very high incomes will prevent the stated tax rate from being eviscerated by these warriors for the wealthy," he added.

The new push is in keeping with the one he made in the same newspaper in August 2011, in which he decried the "coddling" of the super-rich. He used himself and his secretary as an example, noting that her tax rate was much higher than his even though her income was just a tiny fraction of what he made.

"Warren Buffett's secretary" became a political meme following that editorial, and the said secretary, Debbie Bosanek, was ultimately a guest of President Barack Obama at this year's State of the Union address.

The 2011 editorial spurred Obama to seek the implementation of what he called the "Buffett Rule," which set a 30 percent tax rate on millionaires. Opponents said it would stifle spending by the job-creating well-to-do, a notion Buffett ridiculed in the new editorial.

"So let's forget about the rich and ultra rich going on strike and stuffing their ample funds under their mattresses if — gasp — capital gains rates and ordinary income rates are increased," he said. "The ultra rich, including me, will forever pursue investment opportunities."

Buffett, whom Forbes ranks as the world's third-richest person, is the chief executive officer of Berkshire Hathaway Inc, the ice-cream-to-insurance conglomerate that employs more than a quarter-million people around the world.

He acknowledged in Monday's editorial that some people like him might stop investing as they wait for Congress to act.

"In the meantime, maybe you'll run into someone with a terrific investment idea, who won't go forward with it because of the tax he would owe when it succeeds," Buffett said. "Send him my way. Let me unburden him.""

Citizens arise! Give up your lattes and Kindles

Now we're talking sense. If the government cannot or will not act or is too slow in acting, 'citizen power' is the next best thing.

From - http://www.thetimes.co.uk/tto/opinion/columnists/alicethomson/article3599302.ece#:

"If Starbucks and Amazon wriggle out of paying tax here, customers must take a stand

They track you down if you’re a small business; hound you for every last penny. They’re utterly ruthless, the men from HMRC.

A friend set up the Crazy Baker café in Kensal Rise, West London, three years ago. Every morning she wakes at 4am to knead her sour dough spelt, often working 20-hour days, harder than any CEO, to produce amazing scones, cakes and brioche. She employs a full-time bookkeeper and an accountant, but is still terrified of getting her figures wrong and the taxman’s knock on the door.

Yet down the road are two Starbucks that don’t pay a penny of corporation tax. My complaint is not about their lattes, which are adequate, or their chocolate muffins, which are passable, but about their tax arrangements, which aren’t. Of course small cafés have to compete with the big boys, but then why should they be so disadvantaged?

This week Troy Alstead, the Global Chief Financial Officer of Starbucks, went in front of the Public Accounts Committee to explain why this poor multinational simply cannot pay any corporation tax. It doesn’t make any money in the UK, he said, not a bean for its beans. He wrung his hands, then smirked as he explained the company faces “profitability challenges”.

Although Starbucks has 790 UK stores, second only to McDonald’s in the restaurant trade, it has made a profit just once in 15 years in Britain. When asked how Costa Coffee, a smaller chain, managed to make £49.5 million profit last year and paid £15.5 million in taxes, he simply said: “It’s a failing.”

The MPs of the PAC couldn’t believe it. I listened to three hours of the siege of Troy but you only have to hear five minutes to get the gist that the way Starbucks manages its affairs through Amsterdam is, in the words of one MP, “specifically designed to avoid tax”.

Amazon and Google were grilled too. The man from Amazon insisted that although customers pay in pounds for its products, which are delivered from UK centres through the Royal Mail with a British stamp, it’s a Luxembourg company. At least Matt Brittin, the chief executive officer of Google UK, admitted that the company operates from Ireland and Bermuda because of their low corporation tax rates.

Starbucks tries to sound like the caring corporate. I’ve visited the original shop in Seattle, named after the first mate in Moby-Dick. It’s cosy with its “handcrafted beverages”. Its website says “businesses can and should have a positive impact on the communities they serve”. How does paying virtually no tax fit into this ethos? But you can’t blame Troy; executives have a duty to maximise shareholder return and if they can find a legitimate way not to pay tax, of course they will.

One of Bill Clinton’s most successful TV ads in the 1992 election was: “This is the $825 billion question. That’s how much foreign corporations operating in the US took in one year. But 72 per cent of them didn’t pay a dime in tax. Not one dime.” Ed Miliband could easily borrow the same tactics.

The Government is acting — slowly. George Osborne should demand that these giants are more transparent about their operations and the Revenue should establish a ranking of companies — the good taxpayer’s guide. The Chancellor is trying to clamp down on foreign tax havens and is talking to the Germans about a plan that could see companies taxed on the sales they make in each country.

But all that will take a long time, so now it’s up to us, the consumer. Costa pays tax, so go there or to other small businesses like the Crazy Baker. Or buy McDonald’s: at least it paid £80 million in corporation tax last year. Margaret Hodge, who chairs the PAC, said she felt so incensed by Amazon that she’s given up her Kindle.

Christmas will be tricky without Amazon. But we should boycott companies that don’t pay their fair share of tax. All multinationals are vulnerable to public opinion if they have a product to sell directly to us. If consumers put pressure on them, their executives will think: if we don’t start acting responsibly, our brand will be damaged.

It may be only the “little people” who pay taxes but they also drink coffee. Starbucks should not underestimate the power of this latte lobby."

Amazon receives $252 million back tax claim

It's about time all major countries suffering from tax avoidance by major international corporations followed France's lead. In all probability, Amazon will get away with a fraction of the bill, as they probably have more lawyers than the French goveernment.  But a strong message is being shouted from the rooftops.

Once again, as we have said before, why don't major countries charge a % of turnover/revenue as tax rather than as a % of profit for all companies doing more than, say, £100m pa.  If they claim they are not making a profit, then the top management should be fired by their shareholders!

From -  http://news.yahoo.com/amazon-receives-252-million-back-tax-claim-171904647--sector.html:

"Internet retailer Amazon said it had received a $252 million demand from the French tax authorities for back taxes, interest and penalties in relation to "the allocation of income between foreign jurisdictions".

The claim comes as European countries step up efforts to clamp down on U.S. companies which minimize their tax bills in the continent by channeling profits through low-tax regimes.

Amazon said it would fight the tax claim, in court if necessary, and that the demand related to the calendar years 2006 through 2010.

"We disagree with the proposed assessment and intend to vigorously contest it," the company said in its third quarter results filed last month.

An Amazon official referred to the tax demand, which had not been previously widely reported, at a UK parliamentary committee hearing.

Amazon minimizes its tax bill in France and other European countries by channeling sales through Luxembourg, which offers tax breaks to foreign companies which base themselves there.

Amazon said it received a proposed tax assessment from the tax authority in September but that it was still awaiting a final assessment.

Internet group Google is also under audit by the French tax authority regarding its structure, which channels sales through Ireland, but the company denied a newspaper report last month that it had received a back tax claim for 1 billion euros."

Starbucks, Amazon and Google to face UK lawmakers over tax

As you see in the last para, we've been advocating tax based on revenue rather than on profit for some time: http://what-is-wrong-with-world-economy.blogspot.co.uk/2012/10/starbucks-doesnt-pay-bean-in-uk-tax.html
                                                 
From Reuters: http://www.reuters.com/article/2012/11/12/us-britain-tax-idUSBRE8AB0B520121112?feedType=RSS&feedName=topNews&utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+reuters%2FtopNews+%28News+%2F+US+%2F+Top+News%29&utm_content=Google+Feedfetcher

"UK lawmakers will quiz executives of Starbucks, Google and Amazon on Monday about how they have managed to pay only small amounts of tax in Britain while racking up billions of dollars worth of sales here.

The Public Accounts Committee (PAC), which is charged with monitoring government financial affairs, has invited the companies to give evidence amid mounting public and political concern about tax avoidance by big international companies.

"It is hard for the ordinary person to believe it's fair," said Margaret Hodge, a member of parliament for the opposition Labour party and chairman of PAC.

"It makes people incredibly angry in the current fiscal climate," she added, in reference to the austerity measures which large budget deficits have forced on the UK, and other countries.

Britain and Germany last week announced plans to push the Group of 20 economic powers to make multinational companies pay their "fair share" of taxes following reports of large firms exploiting loopholes to avoid taxes.

A Reuters report last month showed that Starbucks had paid no corporation, or income, tax in the UK in the past three years.

The world's biggest coffee chain paid only 8.6 million pounds ($13.74 million) in total UK tax over 13 years during which it recorded sales of 3.1 billion pounds.

Campaign group UK Uncut, which is opposed to government austerity measures, and which has organized protests against British telecoms operator Vodafone and pharmacist Boots over their tax practices, said in a statement on Monday that they planned to target Starbucks.

Starbucks said it followed the tax rules in every country where it operates and sought to pay its fair share of taxes.

"We are committed to being transparent on this issue and look forward to appearing before this committee," a spokeswoman said.

Starbucks Chief Financial Officer Troy Alstead will give evidence to the committee, as will Matt Brittin, Chief Executive Officer of Google UK, and Andrew Cecil, Brussels-based Director of Public Policy for Amazon, a PAC spokesman said.

Google's filings show it had $4 billion of sales in the UK last year, but despite having a group-wide profit margin of 33 percent, its main UK unit had a tax charge of just 3.4 million pounds in 2011.

The company avoids UK tax by channeling non-U.S. sales via an Irish unit, an arrangement that allowed it to pay taxes at a rate of 3.2 percent on non-U.S. profits. Amazon's main UK unit paid less than 1 million pounds in income tax last year. The company had UK sales worth $5.3-7.2 billion, filings show.

Amazon avoids UK taxes by reporting European sales through a Luxembourg-based unit. This structure allowed it to pay a tax rate of 11 percent on foreign profits last year - less than half the average corporate income tax rate in its major markets.

Google declined to comment. Amazon did not respond to requests for comment.

Hodge and former financial services minister Paul Myners told the Sunday Telegraph newspaper that the government should consider a new revenue-based tax to ensure profits from UK sales didn't go offshore."

Do any large companies pay UK tax?

Water companies pay little or no tax on huge profits

Thames Water and Anglian among companies paying little or no corporation tax while executives pocket huge bonuses

From - http://www.guardian.co.uk/business/2012/nov/10/water-companies-tax -

"Three of Britain's biggest water companies paid little or no tax on their profits last year while generously rewarding their executives and investors, the Observer can reveal. Thames Water and Anglian Water paid no corporation tax on the profits made from their utility businesses while Yorkshire Water kept its payments to the Revenue in the low millions.

All the companies made hundreds of millions of pounds in operating profits and some have rewarded their senior executives with performance-related bonuses and investors with huge dividends. Martin Baggs, the chief executive of Thames Water, which enjoyed a £76m tax rebate in 2012, was given a bonus of £420,000 on top of his £425,000 salary and is in line for a further windfall of £1m based on company performance through to 2015.

The controversy follows a series of revelations that major companies, including multinationals such as Starbucks, Google and Amazon, have used complex financial manoeuvres to avoid tax, while generating huge profits and rewards for their owners.

The figures will be particularly galling for taxpayers because the water companies implement price rises every year linked to the retail price index by the regulator Ofwat and in effect have a monopoly in their areas. Last night the water companies were accused of "highly questionable" financial arrangements by the deputy leader of the Liberal Democrats, Simon Hughes, who has written to the parliamentary authorities to demand an investigation. He said: "The government should use its powers of licensing to make sure the companies behave in a responsible way to their customers and to society, which includes paying their taxes.""

G20 leaders call for clampdown on multinational tax avoidance

It's about time that the major nations got on top of the so-far all-powerful multinational corporations who seem to behave as if they do not owe taxes to anyone and can pay as much (or as little) as they feel like.  Hopefully, these days will be ending and the world will be better for it.


From - The Times - http://www.thetimes.co.uk/tto/money/tax/article3591278.ece

George Osborne has recruited the world’s largest economies in a drive for tighter global rules to prevent multinational companies avoiding tax.

Finance ministers from the G20 countries called last night for proposals on how to stop big corporations shifting their profits around the world to minimise their tax bills.

They have asked the OECD to accelerate plans to strengthen tax standards and to report in February. The call came after Mr Osborne and his German counterpart, Wolfgang Schäuble, used the G20 summit in Mexico to call for tougher international tax standards and:

• A Tory MP used parliamentary privilege to reveal that Google, Amazon, Starbucks and Pfizer pay between 0 and 2.5 per cent tax in the UK;

• It emerged that more than 1,000 tax evaders who hid millions of pounds in Swiss bank accounts struck deals with Revenue & Customs to avoid prosecution and to stay anonymous;

• MPs accused the Revenue of failing to target multinationals while harassing ordinary taxpayers for small amounts.

The G20 intervention also comes amid mounting anger at the comparatively low rates of tax paid to the Treasury by US multinationals.