Tax Revenues

The UK announces 2\% levy on revenues and US lawmakers and officials have expressed concern about the tax. The president of the US Chamber of Commerce, Tom Donohue, said that the tax would "improperly target large American technology companies" and "set a dangerous precedent". Taxing revenues is not new, has been discussed widely in Europe. The European countries generally have good welfare systems, which require significant government expenditures. However, those profitable multinational companies hardly pay taxes, because of their tax efficiency schemes. There were several hearings in the UK asking those technology giants about their tax payments. During one of the hearings, I remember one MP said it was a moral issue rather than a legal issue. Therefore, taxing revenues becomes one of the potential solutions.

Taxing revenues is a profitable strategy for governments, especially when it comes to taxing the multinational companies. The multinational companies are operating all around the world, so they can transfer their profits from countries which have high tax rates to countries which have low tax rates. However, countries cannot tax all companies based on their revenues. Because for some medium and small businesses, they do not generate enough profits after paying their revenue-based taxes, it is not good for these companies to generate sustainable growth. Therefore, the revenue-based tax system only targets large multinational companies, Donohue was right about the tax would "target large American technology companies", whether the tax is improper or not is still an arguable question.

Of course, the US government does not see such tax. The US government wants these large American companies to pay taxes at home, that is why they cut taxes for the companies. Once many European countries start to tax companies based on their revenues, the US would lose significant amounts of tax incomes from its large companies. Also, other "tax heaven" countries are not happy to see such tax system either.