I was reading an overview article the other day in English from the Finnish news which had what they considered a "bold claim" from a highly experienced tax professional at the Finnish Tax Authority;
"Uber will never pay taxes in Finland. They will never make any significant taxable profit in Finland. Not now, nor in the future. This will mean higher income taxes and lower pensions for Finns,"
According to him, platform companies are eroding Finland's tax base. They take out large loans from their own subsidiaries in tax havens and pay high interest rates back to them.
Surprise, surprise.
This is something that I have been harping on about for years here in Finland and globally, where global companies of all kinds (not just digital) are effectively financially raping countries of wealth, with the majority of them being US based. And as I see it, it is this process that allows the same companies to over inflate their earnings, attract investment due to higher ROI, and fund the US capital debt system to keep the US economy the largest in the world. Cut off the wealth-funnelling heads of these hydras, and the US economy is far, far less attractive to invest into, and the demand they can generate lessens significantly.
And it is easy to cut off the heads of the companies that don't actually offer much in country other than digital service, by simply forcing them to pay their entire taxes locally. No loopholes. Unlike manufacturing industries that could invest or pull out of a country based on tax conditions, the digital service providers require customers to use their products in order to make money, whether selling something, or through ad revenue. If they pull out of a country after being forced to pay the fair share of the tax locally, they lose the market and they use any potential ad revenue from the market. And, while they will create a vacuum in the short term, it will quickly be filled by companies who are willing to pay locally, or by local companies themselves, which also hire locally.
Currently, there are a lot of questions around the overvaluation of AI companies, where a bubble exists due to all the hype, without much to back it up yet. However, all of these global platform service companies are also overvalued, because they are able to lower their tax liabilities in some cases to near zero. This means that they are able to offer 20-30 percent higher returns in regards to profits that they pull from governments. But the governments need to make up for the continually growing shortfall, which means increasing debt at the expense of citizens, and increasing taxes at the expense of citizens.
The corporations are returning less to society, but taking more.
As I have stated before, in the past there was an arrangement between government and company where companies would pay lower taxes, but they would also employ people who will pay higher tax percentages. The idea was an incentive to build companies to generate wealth. This also tied in with public education systems, where public taxes would be used to train people to a certain level, so that companies could hire them already trained. It was a pretty effective system, when what the companies were producing not only required many people, but also were products and services that would benefit society in some way. Now, the products and services of many of these platforms actually hold us back, and they take less people to operate, meaning profit is far higher on what harms us, than what helps us. And that process will harm us even further, when they don't even pay their taxes locally, like people in the country are forced to do.
If I am forced to pay taxes locally, they should be too.
While many might disagree with taxes, they are currently part of the economic system. But, they are unevenly used to harm the majority of citizens to generate even more wealth for the already wealthy. There is no way the tax systems are going to disappear overnight, but there can be a changing of them to start shifting the focus away from profit at any cost to an incentive process that empowers people to participate locally, to build and to benefit from their work. Yes, a lot of the companies who are using these loopholes to supercharge their value will lose value, but the value will be redistributed across many more service points, and many local opportunities will open up that didn't exist earlier due to economies of scale from the corporations crowding out local business.
Changes have to happen, because on the current trajectory, countries are going to collapse under the weight of social obligation and needs of citizens, because corporations will increase their economic rape of the countries financial potential. And along this path, society itself will increasingly fail, with communities torn apart, violence increasing, and opportunity for health and wellbeing taken away.
It might seem idealistic, but companies are a function to support humanity, not the other way around. The current economic system has been twisted over the space of several decades to put wealth generation for a few above the wellbeing of everyone else. It is unsustainable, because it will always eat itself, because it isn't providing a renewable food source.
It has to change.
We have to change.
Taraz
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