Author: Matthew G. Saroff

4 January 2015, 8:40 PM

The Battle over Tax Avoidance in the EU Begins

The EU is instituting major changes in the taxation of digital items in EU.

It makes changes in the Value Added Tax (VAT), both in rates and how it is assessed:

Europe’s tax showdown could be headed straight to people’s wallets.

With the new year, a change in fiscal rules in the European Union is increasing the tax on many purchases of digital content like e-books and smartphone applications.

Under the new rules, first approved in 2008, the tax rate on digital services like cloud storage and movie streaming will be determined by where consumers live, and not where the company selling the product has its European headquarters. Tax experts say Europe’s revamped rules could add up to an extra $1 billion in annual tax revenue for European governments.

The bit about having the VAT assessed based on the location of the purchaser (technically it works this way in the US, but this rule is rarely followed).

This this is all about the predatory tax policies of places like Luxemburg and Ireland:

The changes to Europe’s so-called value-added tax — a tax on goods and services similar to sales taxes in the United States — are part of a continuing push by lawmakers to tax the region’s digital economy more heavily. Companies like Apple and Amazon have been roundly criticized for housing their European operations in low-tax countries like Ireland and Luxembourg. The companies say they operate there legally.

Many of the world’s largest tech companies selling digital products, like Amazon and Microsoft, now house their European digital businesses in Luxembourg, where the V.A.T. rate is as low as 3 percent for e-book purchases. In contrast, countries like Britain charge companies a 20 percent sales tax for selling e-books. Analysts say the current rules provide an advantage to global companies that have the financial muscle to shop around for the lowest tax rate.

………

One of the European countries most affected by the tax change will be Luxembourg. The small country’s low value-added tax rates have enticed Apple to set up its international iTunes business there, and Microsoft’s digital download operation is also based there.

Luxembourg’s corporate tax system is being challenged by several European investigations into whether politicians gave preferential treatment to the likes of Amazon and a financing unit of Fiat, the Italian carmaker. And Jean-Claude Juncker, Luxembourg’s former prime minister, who now runs the executive arm of the European Union responsible for the continuing investigations, has been criticized for his role in promoting the country’s low-tax policies.

For the longest time, the EU thought that the status of tax haven EU members was considered a feature, and not a bug, but with the current fetish for austerity, this attitude appears to changed.

In any case, it is about to really suck for Luxemburg and Ireland, whose economies are largely built on being tax evasion.

4 January 2015, 7:59 PM

This is Repulsive

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In the 2^nd World War, the perfidy of the Vichy government was in many ways unique unique, because it sent Jews to the death camps without the Nazis ever making such a request.

Well, they mayor of the town (commune) of Champlan has proven to be a worthy heir to this horrid bit of history:

A Roma baby girl has been denied a burial space by a French mayor, sparking outrage among activists.

The girl, who died on 26 December, reportedly of sudden infant death syndrome, was refused burial in Champlan, south of Paris.

The mayor said priority had to be given to taxpayers.

The mayor of nearby Wissous, Richard Trinquier, described that decision as “incomprehensible” and said that he would offer a grave.

The girl’s family lived in a camp in Champlan.

The mayor of Champlan, Christian Leclerc, was quoted by Le Parisien newspaper as justifying the decision by saying that his town was running out of burial space and that “priority is given to those who pay local taxes”.

This is repulsive on so many levels.

Rather unsurprisingly, the mayor is a member of the right-wing Divers Droite (DVD) party, a rather motley assortment of otherwise unaffiliated conservatives.

Sounds rather like a French Tea Party.

Also, I have to say that the echos of the rise of Fascism in Europe are profoundly disturbing.

3 January 2015, 11:43 PM

String Theory Taken to Its Logical Conclusion

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Proponents of the controversial theory have taken to arguing that their theory is so elegant that it should require no experimental verification:

This year, debates in physics circles took a worrying turn. Faced with difficulties in applying fundamental theories to the observed Universe, some researchers called for a change in how theoretical physics is done. They began to argue — explicitly — that if a theory is sufficiently elegant and explanatory, it need not be tested experimentally, breaking with centuries of philosophical tradition of defining scientific knowledge as empirical. We disagree. As the philosopher of science Karl Popper argued: a theory must be falsifiable to be scientific.

I agree wholeheartedly.

BTW, that sound you hear is Richard Feynman spinning in his grave.

Chief among the ‘elegance will suffice’ advocates are some string theorists. Because string theory is supposedly the ‘only game in town’ capable of unifying the four fundamental forces, they believe that it must contain a grain of truth even though it relies on extra dimensions that we can never observe. Some cosmologists, too, are seeking to abandon experimental verification of grand hypotheses that invoke imperceptible domains such as the kaleidoscopic multiverse (comprising myriad universes), the ‘many worlds’ version of quantum reality (in which observations spawn parallel branches of reality) and pre-Big Bang concepts.

These unprovable hypotheses are quite different from those that relate directly to the real world and that are testable through observations — such as the standard model of particle physics and the existence of dark matter and dark energy. As we see it, theoretical physics risks becoming a no-man’s-land between mathematics, physics and philosophy that does not truly meet the requirements of any.

My knowledge of string theory is minimal, coming from my (PhD in physics) brother who mocks it for its lack ability to make meaningful predictions. (There’s also the representation in pop culture in Big Bang Theory, but I do not take my lead from such)

On the other hand, I know bullsh%$ when I hear it, and the idea that an unprovable theory should be accepted on the basis of its aesthetics is definitely bovine scatology.

This is an indictment of those string theorists who are calling for its acceptance on pure faith, but it is more than that: It is a searing indictment of string theory by those who are its greatest proponents.