Make them pay - a different way?

The “Make them pay” campaign focuses on taxing the super-rich.  Rather than focusing on taxing individuals wouldn’t it be better to tax the source of their wealth, in an ongoing fashion?

The super-rich are all owners of multi-national companies, companies that are able to move their profits to low tax countries claiming money owed for things like licencing.  This is just a way of moving money around to avoid tax.  There are two obvious consequences of this behaviour:    

1. The UK (and other governments) lose out on tax revenue. In the UK this is corporation tax, a 25% tax on company profits. 
2. Companies based purely in the UK that cannot move their profits abroad, so have to pay true corporation tax, cannot compete with multinationals so get squeezed out of business.  Nowhere is this more apparent than Amazon and the impact can be seen in most town shopping centres.

This table of Amazon corporation tax paid, extracted from Ethical Consumer, illustrates the extent of the problem.

So how should we go about changing things?

What we could do is work out tax due as follows:

UK Sales  x Global profit  =  profit from UK sales.
Global Sales

Then tax the profit from UK sales at 25%, with deductions for investment in UK infrastructure, e.g. start-up costs to mitigate against claims we are preventing investment.

Yes, there would be squeals of protest from the super-rich (mostly from the USA) and their tax consultants, but perhaps then we’d breathe some life into our high streets and get some pot holes repaired!  Also we might get some UK based competition going.

The Tax Justice Network is campaigning along these lines but eight countries are blocking UN tax reform, and as you might have guessed, one of them is the UK. This article from the Tax Justice Network World losing half a trillion to tax abuse, largely due to 8 countries blocking UN tax reform, annual report finds - Tax Justice Network outlines the scale of the problem and this article states that eight out of the top ten tax havens are British Overseas Territories. 8 out of the 10 biggest tax havens are British territories.  Why?

In conclusion, rather than taxing the super-rich, let’s just level the playing field and create some fairer competition and press our government to get behind the UN tax reform initiative.