In the last financial year, 2014, Facebook paid less tax than an average UK worker would pay. The social network’s UK operation paid £4,327 in corporation tax. An average UK worker earning £26,500 would pay £5,393, a combination of income tax and national insurance payments.
Meanwhile they spent more than £35m (!) giving their UK-based staff bonuses for doing the jobs they are paid to do, producing a UK pre-tax “loss” of £28.5m, and a tax bill of just a few thousand pounds. Their international headquarters is in Dublin, where corporation tax is about half that of the UK. A company statement says: “We are compliant with UK tax law and in fact all countries where we have employees and offices. We continue to grow our business activities in the UK.” (How do they keep a straight face, these public relations people?) (BBC website)
In a rational world (an Epicurean world) there would be no race to the bottom when it comes to tax rates. Companies should contribute to the economies they operate in. Period. Moreover, if a corporation is a “person”, as defined by the dismal Supreme Court, it ought to pay tax at the same rate as individuals, for the benefit of all. The Chancellor George Osborne is planning a new tax for any company that moves its UK profits overseas, which is good news, if ironic – it is the conservatives who usually go on about low taxes for corporations, and these competing national tax rates are the result.
I know this will provoke accusations of wanting a new world order by some American conspiracy theorists, but we need to insist that all countries collect a certain proportion of their GDP in business taxes. It would then be up to each country to decide how exactly to do that. This would be enforced by the WTO, or an equivalent independent international body. This is the prevent the race to the bottom that you talk about. Trans national corporation are so powerful because they operate on an international basis. Its time our tax and regulatory systems did the same.