It is an unfortunate fact of modern life that small businesses suffer most from adversarial tax systems, because most can’t afford to employ armies of tax attorneys to fight their corner, or expend the time necessary to defend themselves.
Indeed, as any small business owner who has been audit will no doubt testify, these procedures can be extremely stressful. The House of Representatives Small Business Committee held a hearing on this very matter last year. It heard how in some cases small firms had shut down as a direct consequence of an audit. As Steve Chabot, the panel’s chariman, observed in his introductory remarks: “I know members of this Committee have heard from constituents who were audited so aggressively by the IRS that they had to close their doors. Others are engaged in protracted audits that seem like vague fishing expeditions, … Read More »
There are many alternative phrases to describe the sharing economy. One of them is the “collaborative” economy. Collaboration seems to be in very short supply, however, when it comes to the taxation of the companies and individuals involved.
It seems that the attitude of many tax authorities when confronted with new ways of doing business in the digital economy is to tax first and ask questions later. Indeed, in many cases, they just tax, and don’t bother with awkward questions.
Uber’s business model seems to be a particularly challenging one for traditional tax regimes. Uber insists that its drivers provide “ride-sourcing” services, rather than traditional “taxi” services. Many governments, on the other hand, beg to differ, which puts Uber drivers and the company itself in a very uncertain position with regards to tax and regulation.
It’s at this point I would like to … Read More »
Problems with outdated tax laws certainly are widespread and the United States is just one example of a place where work patterns have left tax rules well and truly behind – in the haze of a car’s tailpipe or the wake of airplane’s contrail, you could say. Because, unbelievably, we are still in a situation where employees may be legally required to file an income tax return in every state in which they have conducted business, even if they were there for only one day. Surely the costs of administering such absurd rules routinely outweigh the amount of tax – if any – that is collected from mobile employees!
But thankfully sanity may soon prevail. A bill has been reintroduced into Congress to standardize state income tax requirements for employees working out of their state of residence, and the measure has wide bipartisan … Read More »
The German Government deserves much credit for the prudent management of its budget, and of its economic affairs in general, which has resulted in a record post-reunification budget surplus of EUR24bn (USD25.3bn). But I could also mark the country down for its extreme reluctance to share the surplus in the form of tax cuts. And there’s plenty of scope for those. According to Paying Taxes, an average-size company in Germany hands over just under 50 percent of its profits in income, labor, and other taxes. What’s more, individuals face a top rate of 45 percent, plus the solidarity surcharge and social contributions. The counter argument is that some of the best public services in the world must be paid for somehow, and that somehow is inevitably through taxation – a bargain accepted in northern Europe much more than it is anywhere else … Read More »