Posted on 10/15/2012 11:06:06 PM PDT by granada
STARBUCKS was yesterday slammed for “gaming” Britain — as it emerged the coffee king hasn’t paid a bean to the taxman in THREE years.
Experts claimed that, since 1998, the American coffee firm has paid just £8.6 million in income tax here.
Over the same period it has generated more than £3 billion of sales as customers flock to its cafes for cappuccinos and lattes.
The chain — which prides itself on being “ethical” — has been able to cut income tax by paying fees to other parts of its global empire, such as royalty payments for use of the brand and interest on inter-company loans.
This means Starbucks UK effectively makes a LOSS.
The coffee chain has not broken any law and yesterday insisted HM Revenue & Customs did not have a problem with its activities.
But Labour MP and tax campaigner Michael Meacher hit back: “They are trying to play the taxman, game him. It is disgraceful.”
Matthew Sinclair, chief executive of the TaxPayers’ Alliance, added: “Taxes are too complicated.
“It means that companies can exploit loopholes to minimise their bills.
“It also means the public is losing trust in a system that is in need of drastic reform.”
The row comes days after social networking site FACEBOOK was blasted for paying just £238,000 in corporation tax in the UK last year.
A four-month investigation by news agency Reuters revealed yesterday that Starbucks has not declared a profit since 1998.
But bosses have told investors the UK is “profitable” — and in 2007 the UK business was doing so well it was funding growth elsewhere in the world.
In 2008, Seattle-based Starbucks recorded a £52 million loss — yet at the same time founder Howard Schultz was saying he would be applying lessons learned in Britain to its domestic market, the US.
In a statement last night, Starbucks said: “We have paid and will continue to pay our fair share of taxes in full compliance with all UK tax laws, as we always have done.
“There has been no suggestion by any authority that we are anything but compliant and good taxpayers.”
I don’t know the tax system in the UK. None of us does, I venture to say. perhaps you can enlighten us.
In this country it is absurd, it is unjust, it is corrupt, and for that last reason it is impossible to reform - political careers depend on it remaining what it is - absurd, unjust, corrupt. We’ve been talking about the reform for at least 30 years - no can do.
That is why tax evasion (by those who owe taxes, not by the moochers who collect from the gummint!) is considered by many a noble occupation in this country.
I must admit I am unaware if Starbucks has any political inclinations one way or another, but finding out any leftist leaning organisation does not "put its money where its mouth is" is hardly surprising. If you can bear to listen to their propoganda for any length of time, you hear constant references to greedy rich people hoarding wealth, but of course what constitutes "rich" is never defined. "Greedy rich" basically means "other people", which of course accounts for its success with the electorate. Its a variation of the blame game. Its always someone else's fault, and therefore its someone elses responsibility to fix it.
It seems to me that Leftist companies, even very large and obviously wealthy ones, buy into this line of reasoning too, illogical though it is. They support helping "the poor" (another very nebulous term) with government aid, which is financed through higher taxes that someone else will pay! Great isn't it?
Which brings us back to Margaret Thatcher’s salient point. “Socialism works fine until it runs out of other people’s money.” Paraphrased from Memory
I understand where you are coming from with mortgage deduction, but there are some very serious problems with it, as the UK government found out to its cost.
Firstly, it is a form of benefit. By having a mortgage deduction the Government is effectively subsidising people's houses, not directly by giving them money, but indirectly by not taking as much from them. Therefore, the government is making up the shortfall (and it will be a considerable sum) by other means. Probably a higher overall tax rate than it would otherwise charge. In other words, (and these are demonstrative figures - I dont know what the actual rates are) instead of a tax rate of 20% with no mortgage deduction, they are charging you 22% but giving you 4% off for your mortgage. You might think you are "up" by that, but those people who don't have mortgages might not agree with you. They are effectively subsidising your house. Does that seem fair?
But the real problem with mortgage deduction is that it pushes up the price of housing. It pushes up the cost of all housing all the time, but it does it particularly in times or in areas where housing is in short supply. If you go to buy a house you will have a budget for it, based on your savings and your income. But the first thing any realtor will point out (because they are on commission based on the value of the properties they sell) is that because of mortgage deduction you can actually afford a bigger and more expensive house, because taking out a mortgage will mean a reduction in the amount of tax you pay. But of course everybody gets mortgage deduction, so in effect you have more money chasing the same number of houses. And what, basic economics 101, happens to the cost of commodities when there is a surplus of money sloshing around chasing them?
Maggie Thatcher's government in the UK instituted a mortgage deduction scheme for the usual reason - to encourage people to buy their own homes. It worked too. Many people took advantage of the scheme. It was very popular and helped the Conservatives greatly in several elections. However, the cost of housing in the UK sky rocketed as a result. Property where I lived quadrupled in value in five years.. Succeeding Conservative governments realised the error and scaled the deduction down slowly until it was finally abolished, but the damage had been done. It is now impossible for ordinary working people to afford property in certain parts of the country. Like all of London for example.
OK fair enough, but the solution to that is to reduce the spending of the Federal government to its proper proportions, not to flag wave for a large corporation that is wriggling out of paying. Ultimately, it would be better if the overall tax bill was reduced, and that way corporations would lose incentives to dodge tax bills because it simply wouldnt be worth their while. In the meantime, they should pay up the same way everyone else does, not so? Do you think for one moment that Starbucks is doing this because they share your disgust at the abuse of Federal power?
Your memory does not deceive you. It’s quite true as well.
Even though they are effectively taking the money from you?
No, they’re not.
Ok, i can see your point, however starbucks do not make the laws, they just get by with what they can get by with just like any one else, if people in the government are getting money under the table from starbucks we can blame no one but them as they are the ones who are supposed to be working for us, not starbucks.
OK they’re effectively taking it from me then.
How are they not doing that? The government has no other significant form of income but taxation. If someone is paying less than logically someone else must be paying more.
I can understand your frustration. Politics and money are very closely intertwined in the US and that has led to a tortous tax system with innumerable exceptions and add-ons, all no doubt made in the name of "fairness", but which in fact are nothing more than stroking some politicians political base. As you say, it is incredibly difficult to reform such a system, and that leads to people "playing" it, or at least cheering on those who do, as evidenced by some of the comments on this thread. I get the impression that the system encourages people to cheat, much like prohibition made millions of perfectly ordinary americans into criminals. It's not good, but as you say, it's going to be a brave politician who tries to reform it because of all the interest groups that will be threatened.
Uh, no.
And you seem to be assuming that I derive some direct benefit from the Fedgov's expenditure of money. I don't.
In fact, quite the opposite is true. Government activity has made everything I do more expensive and more difficult.
Even those things it is legitimately charged to do have become counter-productive to its real purpose of protecting my rights. Our military adventures have produced no discernible endstate that has resulted in my increased safety; our courts frequently thwart the will of the people as enacted by legislation, all while making rulings that help erode our traditional values.
The government uses money to increase its own power and almost never operates in my interest, and if so, then only by coincidence. I only pay the minimum amount of taxes I can get away with because I am afraid I'd get caught and go to jail. I look at taxes like a mob shakedown.
You apparently see your government as some benefactor, or at least a moderately efficient provider of essential services.
I don't.
Funding government is not a zero-sum equation.
I see my government as a contractor, tasked to perform a certain function for me. If it fails to perform, the contract is broken, and I am no longer under any obligation to pay.
I do see HM government as a moderately efficient provider of essential services, or more specifically, I think that's what it SHOULD be. You clearly dont see your government as that, but what you fail to see is that an attitude like that is contributing to the problem. If everyone only pays grudgingly the very minimal amount they can get away with for fear of punishment, the problem of government grasping and corruption is only going to get worse.
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