Friday, May 31, 2013

IT tax mess - the carbon tax solution

There is plenty of discussion about the tax rates for IT companies. Since the Congressional Inquiry on May 21, 2013 when Apple boss Tim Cook acknowledged the company's $100 billion untaxable money pot to US Senators, there's plenty to think about for American innovators. 

Here are notes on Senator Carl Levin according to The New York Times blogger:

Mr. Cook repeats that all profits made in United States are taxed in the United States. But Senator Levin says Apple made a decision and signed an agreement in 2008 and 2009 to shift most of its profit so that it was not taxed. The result is most of the profit is in Ireland. Senator Levin says “in order to change it, we need to understand it, not deny it.” He says the committee needs to recognize that what is going on is “a huge loss of revenue.”  Senate hearing blog - record     

The tax rate in Ireland for the sweetheart IT deals is anywhere from 1% to 12.5%. See The Guardian story for some excellent journalism - Apple's low tax hub: Knocknaheeny, Ireland Inside Ireland

Chris Farrell on Bloomberg (On Tax Reform: It's Time To Change the Debate) has come up with a fantastic idea: a carbon tax. For this to work it would need to be made the equivalent of the Universal Declaration of Human Rights! Why not some UN action on this idea?

I would like to see the carbon tax for Information and Communication Technologies attached to my Cultural Digital Facilitation for telecommunication firms so there are no loop holes and it is applied across the board by all nations - no exceptions, a universal human preservation code. (ACDF post)

Add an International Court of Carbon Justice...

Here is Chris Farrell, May 24, Bloomberg Business Week.

The second strategy is far more ambitious and intriguing: Change the terms of debate. Drive the corporate tax rate down to single digits with dramatic simplification. Then, to avoid starving the U.S. Treasury of money, substitute a carbon tax. The corporate rate should be low enough that loopholes would no longer be worth spending political capital defending. The substitution of a carbon tax would also ensure that the federal government isn’t in need of revenue, the pitfall of supply-side calls for simply cutting corporate income taxes. Federal fiscal conservatism is a critical long-term budgeting goal. Why not raise government revenue by taxing something we agree isn’t good—environmental damage—and tax less something we like, corporate profits? Worth a try, no?

Absolutely.