Don't tax Amazon. Tax Amazon's shareholders

Corporations dodge tax. So go for their owners instead.

Tax avoidance is a problem which stubbornly refuses to be fixed. Even just defining our terms is problematic, with nearly every definition wide-ranging enough to cover all avoidance also including things which nobody finds objectionable.

And even if you could define it well, there's the fact that tax avoidance is, by its nature, legal. While some avoidance is truly, obviously, taking advantage of sloppy phrasing in statutes and judicial rulings, most of it exists in the grey area where it would be impossible to "tighten up" the law without also removing those deductions or exemptions which were supposed to be there in the first place. (For an example of this in action, look no further than the pasty tax debacle.)

The worst tax avoidance is undoubtedly in the corporate sector. While there are terrible examples of avoidance amongst individuals, like the New Yorker's examination of hedge-fund manager Julian Robertson's tax affairs, they are always hampered by the fact that actually offshoring personal income – the most effective form of avoidance, and the hardest to fight with the law – is tricky. People, after all, have a physical location. Some may become the infamous "non-doms", but to do that you have to spend half the year outside the country. That isn't something which can be achieved by just hiring a canny accountant.

While moralising can convince the worst corporate offenders to pay their fair share – as Starbucks finally agreed to do – it can't work every time. Some companies don't care about their image, others manage to hide their avoidance.

And so we come back to patching up the holes in the system. But with offshoring, some holes seem nearly unpatchable. For all the stirling work of campaigners like UK Uncut and Tax Research UK, the world is still no closer to agreeing on the best way to deal with multinationals which engage in creative "tax planning".

But there's one possibility: forget about them.

The reason why involves looking at the concept of tax incidence. If you accept that the only question of tax that matters is which people pay it, then corporation tax becomes a complicated issue. As a tax alters the bottom line of a company, one of two things will happen: either it will pass the costs on, or it won't. If it doesn't, then the actual people hit by the tax are the shareholders of the company, who see its profitability decline. (This is largely the intended outcome of campaigns against tax dodging.)

But if it does past the costs on, then either its customers and employees must bear the brunt, in the form of increased costs or decreased wages, or other businesses (such as suppliers or contractors) do, and the whole equation starts again.

(It is important to point out that the argument that all costs must be levied on a person at some point is not without its critics. After all, businesses have savings, assets, property and rights; who is to say that they can't be counted as people for the purpose of taxation? And the assumption at the heart of the argument is one which must be taken as faith. It's just as easy to argue, using the same logic, that the costs of all personal taxation must be borne at some point by businesses.)

Tax incidence varies business-to-business and over time. In the early 70s, when it was starting up in Washington state, Starbucks' tax incidence was almost certainly mostly upon its shareholders. Labour was expensive, coffee was a niche product, and investors in a small start-up were probably in for the long haul. Now that Starbucks has access to vast pools of low-wage labour and customers willing to pay up to $7 for a cup, it is far more likely that they will bear the brunt of much excess tax. (Although, of course, as John Elledge rightly points out, even then, it's not certain; and if there's anything we've learned from Lisa Pollack's investigation into the matter at the FT, it's that Starbucks' publicity machine holds a lot of sway within the company)

But here's the thing: if we want to tax just the shareholders of a company, we already have a way to do it. We tax dividends, and we tax capital gains. Increasing those taxes hits the people we hope would take the brunt of corporation taxes anyway.

So here's my proposal: scrap corporation tax, and whack up those two to make up the revenue gap.

There would be two big transfers inherent in this change: the first would be from shareholders in companies which pay little tax to shareholders in companies which pay a lot of tax. Since that's just another way to say "cracking down on tax avoidance", it need not upset us too much.

The other is more uncertain. By and large, international companies have international ownership. Those based in Britain with the majority of their shareholders overseas would be better off; those based overseas with the majority of their shareholders in Britain would be worse off. If the logic of the Conservatives, who have already cut corporation tax significantly, holds, we can expect that latter group to move headquarters here to take advantage of the rates; and if it doesn't, then we can expect the shareholders to sell up and buy into British companies.

There's a reason CGT and dividend taxes are so low, of course, which is to encourage investment. But since we would expect pre-tax shareholder income to go up, investment ought to still be compelling. It would just be targeted more effectively at companies which could actually make a profit, rather than those which could only make a profit if they were avoiding tax which their competitors were not.

If we can stop the biggest corporations avoiding tax, we ought to. But if trying to tax aggregations of people which can twist across country borders with ease is permanently difficult, perhaps we ought to stop trying it, and do something better instead.

Photograph: Getty Images

Alex Hern is a technology reporter for the Guardian. He was formerly staff writer at the New Statesman. You should follow Alex on Twitter.

Photo: Will Ireland
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Rock solid-arity: how fans and bands helped save Team Rock's music magazines

“It was purely helping out friends in a time of need.”

A little over 25 years ago, a journalist friend let me in on the secret of publishing success. He cut his teeth in the Sixties as an editor in the Yippie underground press, wrote for Rolling Stone, Associated Press and the Chicago Sun-Times, then went on to teach at one of America’s most prestigious journalism schools.

The big secret, he had concluded, was community. No more, no less. Get to know your community and serve it well.

A quarter of a century on, it’s sometimes hard to remember what community looks like in newspapers and magazines. Carefully crafted pages have been obscured by a haze of clickbait, engineered to sucker everyone and anyone into donating a drive-by page view for ads. Community has given way to commodity.

But occasionally, there are glimpses of hope. Six months ago, TeamRock.com, built around a group of specialist music magazines including Classic Rock, Metal Hammer and Prog, went into administration.

The Christmas closure came brutally quickly. The Scottish Sun reported that stunned staff in the company’s Lanarkshire headquarters were told they had been made redundant “as a joiner changed the locks on their offices”. In total, 73 staff were laid off; nearly 30 in Scotland and more than 40 in London.

At the close of 2016, the future for the Team Rock brand and its stable of magazine titles was bleaker than a Black Sabbath album. But last month, in an extraordinary reversal of fortunes, TeamRock.com was named the most influential rock music website in the world.

Bargain-basement buy back

Just a fortnight after its shock closure, the brand was bought by former owners Future Plc. In a no-brainer deal, the Bath-based publisher re-acquired the three magazines it had sold to Team Rock’s founders in 2013. It bought back assets sold for £10m at the knockdown price of £800,000 with the bonus of TeamRock.com and Team Rock Radio. The deal rescued large parts of the Team Rock operation – but its soul was saved by the rock and metal community.

Oblivious to any discussions going on to rescue the magazines, readers, music fans and bands came together in a stunning display of loyalty. Hearing that Team Rock staff wouldn’t be getting paid their Christmas wage they took to social media to pledge their support and raised almost £90,000 for redundant staff.

Ben Ward, the organiser of the crowdfunding campaign and frontman for heavy metal band Orange Goblin said he started the appeal with no thought for the business. “It was purely helping out friends in a time of need,” he explained.

He had read all three Team Rock magazines for years, socialised with their staff and promoted his own and other bands in their pages. “To think of a world without any of those magazines – it was devastating,” he said.

The response to the campaign brought him some cheer, with members of bands such as Queen, Rush and Avenged Sevenfold all posting about it on their social media pages. He added: “The whole Christmas period, my phone just wouldn't stop beeping with notifications for another donation.”

Show of solidarity

Though the fundraiser blew up all Ward's expectations, beating his initial target by more than 400 per cent, he didn't seem completely surprised by the scale of the response.

“Heavy metal and hard rock, people that are into that sort of music, we've always been sort of looked down upon. We know it's not commercially the done thing, we know it's not the norm to walk around with long hair and tattoos and dirty leather jackets. But when you see a fellow metal head in the supermarket, you always give them an approving nod. There's a kind of solidarity.”

While favourable capitalist arithmetic has kept the presses rolling – and the online servers going – for Team Rock, it was the music community – empowered by social media – who delivered the real resurrection. With a combined Facebook following of more than 3.5million and a total social media audience of almost five million, it was no surprise TeamRock.com was soon number one in its field.

“What's brilliant about this is that it's based on what music fans share with each other,” explains editor-in-chief Scott Rowley.

TeamRock.com became the most influential rock site based on social media sharing, and came fifth in the top 100 sites across all music genres. The site above it is a hip-hop title, again featured for the strength of its community, according to Rowley. “Those people really know what they're talking about, they want very specific content, and they're not getting served it elsewhere,” he said. “When they get it, they love it and they share it and talk about it and that's their world.”

Responsiblity

Following the outpouring of support for the rock magazines, Rowley now feels a heightened sense of responsibility to do “the right thing” and steer clear of cynical decisions to get clicks or put certain bands on the cover just to sell copies. He believes future success will come down to trust. “Sometimes that feels precarious, but equally I think we're in good hands,” he explains. “We're a business, we've got to make money, but we know what smells fake and where the limits are.”

Zillah Byng-Thorne, CEO of owner Future, recognises the need to balance the realities of running a listed company with the authenticity needed to maintain trust. “What Future is interested in is the passion that underpins specialist media,” she says. “I don't really mind what your passion is, what's important is that it's a passion.”

“No one is sitting around thinking, 'I wonder what bands sound like Thin Lizzy?',” says Rowley. “We're much more a part of their lifestyle, interrupting their day to tell them someone’s just released an album or announced a tour.”

“But it doesn't have to always be about fishing for clicks,” he adds. “I remember [Classic Rock online editor] Fraser Lewry saying, 'Sometimes on social we should just be being social'.”

Being social. Listening. Contributing to the conversation. Sharing the passion. That old-fashioned notion of serving the community. It seems Ward would agree, as he offers the new owners of the magazines he helped to save some advice: “Don't make the same mistakes, investing in things that weren't really necessary from the magazine’s point of view. I'm in no position to tell anyone how to run their business, but on behalf of the rock and metal community…keep it interesting, keep it relevant.”