Quotulatiousness

September 7, 2014

Amazon and the taxman

Filed under: Britain, Business — Tags: , — Nicholas @ 11:52

Tim Worstall discusses how Amazon structures its business to meet various efficiency targets, a major one being the need to be as tax-efficient as possible. This upsets many political commentators, who all seem to believe that businesses should structure their activities to pay as much tax as possible:

… it’s exactly the tax laws that create one of those synergies that keeps Amazon as the one single company (even if with many different divisions and P&L centres). Because if it were a series of separate companies then those mature businesses, the ones making profits, could not simply switch their profits over to the subsidisation of those newer businesses. Instead, they would have to declare those profits, 35% would float off towards Uncle Sam and thus there would be less of that free cash flow to invest in those newer businesses.

The way the tax laws work are what keeps Amazon from splitting out those profitable businesses from those ones not yet mature enough to be making a profit.

Which brings me to the second point, one more about British political economy. We have a prolific commentator over here who insists on two separate points. I’ll not name him in order to spare his blushes but he’s often referred to as the UK’s leading tax expert. The first thing he insists upon is that Amazon doesn’t pay very much corporation tax (entirely true) but also that it ought to. The second is that many companies have vast amounts of cash, profits they have made in the past, which they don’t know what to do with. Those cash reserves should therefore be taxed away so that they can be spent on what our tax expert thinks are good uses for other peoples’ money. What I enjoy so much about this is that he manages to believe both things together. A company like Amazon, which obviously does know what to do with its free cash flow, should be taxed more. And companies that don’t know what to do with their free cash flow should also be taxed more.

It’s as if the only answer to anything ever is higher tax rates. Rather like if all you’ve got is a hammer then everything gets treated as a nail. I can’t help thinking that the views of a leading expert in anything, let alone tax, ought to be a little more subtle than that.

ISIS and its local and regional enemies

Filed under: Middle East, Religion — Tags: , , , , , — Nicholas @ 11:27

Strategy Page looks at the various forces and factions opposed to the rise of the Caliphate of ISIS:

In the Middle East Islamic radicalism, and its murderous offshoot Islamic terrorism, comes in many different flavors. Most groups are mutually antagonistic and will often kill each other as eagerly as they go after kaffirs (non-Moslems.) Nearly all these radical movements now condemn ISIL (al Qaeda in Iraq and the Levant) and condemn ISIL for being too extreme. To the West these seems absurd, and many Moslems agree. But radical Islam is what Islam began as and to this day there are always Moslems who embrace the concept of extreme Islamic radicalism and Islamic terrorism as being the ultimate form of Islam. Thus while Saudi Arabia bans all other religions in its territories and regularly beheads people accused of sorcery and other religious offenses, the Saudis condemn ISIL. One reason for this is that ISIL considers the Saudi government weak and not Islamic enough and worthy of being replaced (after a righteous bloodbath of the current Saudi royal family) by someone more suitable (like ISIL). Al Qaeda also condemns ISIL, initially for not ignoring al Qaeda orders to tone down the barbaric treatment (mass murder and torture) of the enemy because al Qaeda realized that this eventually triggers a backlash from other Moslems. Iran condemns ISIL because all Shia (meaning all Iranians) are heretics and deserving of summary execution. Iran-backed Hezbollah is now using that ISIL threat to justify Hezbollah grabbing more power in Lebanon, where Shia are a third of the population but far more powerful politically because Iranian cash, weapons and training have made Hezbollah too strong for the elected Lebanese government to suppress or even oppose. In Syria, the minority (more Shia) Assad government, fighting a Sunni rebellion since 2011, now calls on their current Sunni enemies (Saudi Arabia and other Gulf Arabs, plus the Sunni majority in Syria) to join with them in destroying ISIL.

Whatever else ISIL has done it has united many other Sunni faction and the Shia in the region into an uneasy anti-ISIL coalition. But even after ISIL is gone, Islamic radicalism will still be there. For most Moslems this radicalism is like the weather; every Moslem talks about but Moslems cannot seem to do anything to eliminate or even control it.

Islamic terrorism has long been trapped in a self-destructive cycle of its own making. It works like this. Islamic radicals obtain their popularity and power by proclaiming that they are defending Islam from non-believers and sinners (within Islam, often local Moslem dictators). In order to maintain this moral superiority, the Islamic radicals must be better Moslems, and insist that others do as they do. Since Islam is a religion that dictates how one lives, in considerable detail, as well as how one plays, this business of being a “good Moslem” can get tricky. And it is. There’s a race underway by Islamic radicals, and the clergy that provide theological support, to issue, and enforce, more and more rules on how a good Moslem should live.

Hong Kong’s chief executive – you can vote for anyone we nominate

Filed under: China — Tags: , , — Nicholas @ 11:20

Sara Hsu reports on the Chinese government’s plans for how Hong Kong’s chief executive will be elected:

Hong Kong is at a political crossroads, as the National People’s Congress (NPC) in Mainland China has proposed to allow universal suffrage in final selection of the Chief Executive, as long as a nominating committee chooses candidates approved by the Communist Party. The proposal is to be voted upon by the Legislative Council; if rejected, the 2017 will be by committee, as in the last election (of Chun-ying Leung). Mainland China’s involvement in Hong Kong’s elections has reduced the ability of Hong Kong residents to freely run for and elect a candidate of their choice for the most powerful government position of this Special Administrative Region. Does this constraint negatively or positively impact the economy?

Hong Kong’s market economy is to be maintained at least through 2047 according to the Basic Law. China and Hong Kong have strong interests in upholding their mutual economies, as Hong Kong is the largest source of inward investment for Mainland China, and also the largest recipient of foreign direct investment from the Mainland. The economies are intricately intertwined through trade and investment, so in these respects, interests are intertwined.

Nor has the movement against Beijing political involvement gained widespread popularity from an economic perspective. Hong Kong’s pro-democracy movement, Occupy Central with Love and Peace, has in fact been accused by some of putting Hong Kong’s economy at risk. Even though the movement has had little direct impact on the economy thus far, pro-Beijing groups worry that the pro-democracy movement will give rise to political instability and jeopardize the economic well-being of Hong Kong residents.

Combat situation in Ukraine

Filed under: Europe, Military, Russia — Tags: — Nicholas @ 11:13

Current situation map released on Twitter by the Ministry of Foreign Affairs of Ukraine:

Ukraine situation 20140907

QotD: Love in later life

Filed under: Humour, Quotations — Tags: , , — Nicholas @ 00:01

It is my conviction that no normal man ever fell in love, within the ordinary meaning of the word, after the age of thirty. He may, at forty, pursue the female of his species with great assiduity, and he may, at fifty, sixty or even seventy, “woo” and marry a more or less fair one in due form of law, but the impulse that moves him in these follies at such ages is never the complex of outlandish illusions and hallucinations that poets describe as love. This complex is quite natural to all males between adolescence and the age of, say, twenty-five, when the kidneys begin to disintegrate. For a youth to reach twenty-one without having fallen in love in an abject and preposterous manner would be for doubts to be raised as to his normalcy. But if he does it after his wisdom teeth are cut, it is no more than a sign that they have been cut in vain — that he is still in his teens, whatever his biological and legal age. Love, so-called, is based upon a view of women that is impossible to any man who has any experience of them. Such a man may, to the end of his life, enjoy the charm of their society, and even respect them and admire them, but, however much he respects and admires them, he nevertheless sees them more or less clearly, and seeing them clearly is fatal to true romance. Find a man of forty-five who heaves and moans over a woman, however amiable and lovely, in the manner of a poet and you will behold either a man who ceased to develop intellectually at twenty-four or thereabout, or a fraud who has his eye on the lands, tenements and hereditaments of the lady’s deceased first husband. Or upon her talents as nurse, or cook, amanuesis and audience. This, no doubt, is what George Bernard Shaw meant when he said that every man over forty is a scoundrel.

H.L. Mencken, “The Nature of Faith”, Prejudices, Fourth Series, 1924.

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