eBay don't pay all their taxes? Good!

Here's an interesting but controversial thought experiment.

In response to this article in the Guardian claiming that eBay has avoided some £50m in taxes, a friend of mine was asking around to see if there was any alternative she could use because she wanted to boycott them.

I asked her to expand on her reasons why, because I thought that the government would only spend the money on wars, corporate welfare, paying off the bankers and their cronies anyway, so what was the point?... She kindly responded:

"It would mean less of an excuse for austerity measures; if they're seen to be collecting the funds, and still cutting the welfare state. The government is very good at shifting the blame - but if places like Starbucks, IKEA, and eBay actually paid taxes, then the government has nowhere to hide."

My thought was that while those propositions may hold true in a socialist utopia, they are actually based on a basic misapprehension of economics which is quite common, particularly on the left, which is that it is actually possible for corporations to pay taxes. In truth, as the (very liberal) Senator, Mike Gravel, put in his book Citizen Power a Mandate for Change (2008) under the chapter which advocates for tax reform (in line the Fair Tax proposals):

"Liberals bristle at the thought of relieving corporations of income taxes. Unfortunately... fooled into thinking that by taxing corporations they shift the cost of government from the people to corporations. Corporations do not pay taxes; they merely collect taxes from their consumers for the government, In fact, a corporate tax is a disguised retail sales tax....

...they simply take the tax into account as an added cost of production… and adjust their prices accordingly... close examination of the tangled corporate tax structure shows it only serves to inflate the cost of goods and services to consumers... Obviously, if we eliminated all corporate taxes and subsidies, the ordinary tax payer would come out far ahead."

These words are not from a reactionary Republican or Thatcherite, but from one of the most liberal senators in the American political system, who became nationally known for his forceful but unsuccessful attempts to end the draft during the Vietnam War and for putting the Pentagon Papers into the public record in 1971 at risk to himself, and then throughout his career campaigned for direct democracy, an end to war, transparency in government, universal healthcare, social security, and all the other trappings of a left-of-centre Democrat.

That might be pretty hard to apprehend because it arouses our sense of injustice that the big boys can get around paying while small business owners and the rest of us tax cattle have to put in for stuff we don’t agree with (like the wars) but perhaps once we realise that this tax money is not being extracted from the bank accounts of rich CEOs, but us independent eBay users the case may becomes clear. We foot the bill.

Rich people don’t pay income tax the same way we do. They have these handy things called corporations. Private individuals earn, get taxed and live off what is left. Corporations earn, spend, and are taxed on what it’s left, check out this handy diagram from Rich Dad, Poor Dad (2000) Robert T. Kiyosaki:

Remember, the status of “Corporation” is a privilege granted to certain companies by the state rather than the free market. If you wanted to tax the receipts of "greedy capitalists" the option would be to place tax on share dividends, although perhaps even those could craftily be passed on to the consumer.

The truth is, if eBay were forced to pay their taxes, all that would likely happen is that they’d raise the price of listing products. The cost will be passed on to the consumer and be borne by buyers and sellers. It's certainly very unlikely to do any good in the world.

eBay is one of the biggest employers in the world, allowing around 350,000 people to work from home and have more leisure time. It facilitates recycling and ends wastage by putting people who want second hand products in touch with people who have those products and no longer need them. It even has a feedback system which allows people to indicate who is trust worthy to exchange with and who is not. There are punitive consequences for not honouring your word, much unlike in the political realm where those who don't keep campaign promises escape unscathed, and those guilty of far greater crimes and misdemeanours under the guise of foreign policy (or even domestic policy) seem to walk above the law.

eBay enriches the lives of millions of people, allowing them to afford things they couldn't otherwise or make a bit of money on the side instead of chucking things out.

To clarify the point, if we are talking about McDonald's who, we’ve been told, cut down the rainforest, or Coca Cola who are said to monopolise, discriminate and poison, or British Gas who are part of a state-granted cartel of the energy industry which continues to increase prices while enjoying higher profits, to the detriment of elderly customers who may freeze to death this winter... If such a company is dodging taxes, by all means go ahead, boycott them. I'd boycott them anyway on a moral principle, perhaps it will make them less competitive.

But eBay? eBay isn't only harmless, it's is a credit to society.

The state, on the other hand, is a non-voluntary institution which institutes corporate monopolies by regulating into place barriers to entry. It makes war, kills more people than all private individuals and corporations put together, provides corporate welfare to the rich, makes nuclear weapons, sells arms to foreign dictators and subsidises nuclear and unsustainable energy despite the risks. It forces people at gun point to pay for indoctrination camps where their children are forced to do what they are told when they are told, habituating them to living in a hierarchical society before they ever enter the work place, and then after 11-13 years of this state-led ‘education’ most come out with so few skills that are economically valuable that they cannot even find minimum wage job. It puts people in cages with violent criminals and rapists if they happen to have the wrong kind of vegetation in their pocket, and at great expense to the tax payer, despite all the reason and evidence showing that drug prohibition has never worked, does not work, will never work - that addiction should be treated as a public health issue rather than a criminal one - and that those countries who have moved in the direction of legalisation or even decriminalisation have had the most positive outcomes. The state spent the younger generation into 1 trillion pounds of debt before they were even born by the act of buying votes from the older generation by giving them public services that they were not paying for themselves with their own tax money, and by printing money which inflated and devalued the currency to the benefit of the elite and detriment of the poor. And then on top of all that, as though that were not enough, they had the cheek to sell the tax payer further down the river by bailing out the bankers who were largely responsible for the economic crisis to the tune of £500 billion pounds in 2008.

The government has the power to force you to pay for all these immoral things whether you agree with them or not. Whether you like them or not. You are bound to by law.
On the other hand, eBay can't force you to pay for a single thing your conscience disagrees with. Literally nothing. Ever.

And I’m supposed to believe that eBay dodging their taxes is the larger social issue at stake here?

Supposing one of us were put in charge of a real life award of fifty million pounds.

We were told that the other judges had narrowed down the decision to two anonymous candidates, and that they needed us to pick one of the two choices as a tie breaker.

All we were given to base our decision on was a brief summary of what each of these bodies had done, say, since eBay's inception in 1995. Those would include, on one side, the wars and expenses scandals for example, and on the other side a charge of infringing on patents (2000) and accusations of fleecing clients with an increase in charges (2008) to name a couple. Could either of us honestly say, given all the information in an essentially unbiased way - a way uncontaminated by the social-bias which says paying taxes is virtuous by its very nature, while avoiding them is necessarily vicious - that we would give the award to the more violent party?

I'm pretty sure I know who I'd give the money to, if I happened to have the choice, and it wouldn't be the institution that had all the guns.