Taxes Lead Angry Birds Maker Rovio To Consider Move To Ireland 626
jones_supa writes with this news, straight from The Irish Times: "Rovio, the Finnish company behind Angry Birds, is considering moving its headquarters to Ireland, chief executive Mikael Hed has said. Rovio employs approximately 400 people, mostly in Finland, but Rovio is in contact with IDA Ireland about establishing headquarters here. The reason for the move would be corporation tax rate, which in Finland is 24.5%, while Ireland's rate is 12.5%. Companies such as Google and Facebook have also set up European headquarter operations in Dublin for the same reason. Hed said that if the decision was made to move to Ireland, the company would then decide exactly what elements of its operations would move. 'If we did make that decision then it would be a natural thing to do to have some production [in Ireland] also.'"
People do what you incite them to do (Score:0, Insightful)
For better or for worse, betting on self-interest over altruism usually wins.
Same problem here in the US (Score:5, Insightful)
When governments (collective entities) try to act like businesses (competitive entities) it seldom works out. Usually only a few who are able to take advantage of the situation benefit.
I thought all their production was Chinese already (Score:3, Insightful)
Greed (Score:5, Insightful)
They benefited from the system all their lives but when it's their turn to pay in, they leave. For what? A 10% reduction on taxes on profits? Currently, Rovio has a net income of 48 million Euros according to Wikipedia (for how long is anybody's guess, Angry Birds won't stay popular forever and that's the only game for modern phones that they have, the rest appears to be old J2ME games, none of which gained any real popularity), so that means saving about 4 million euros in taxes, while at the same time dealing with both a perception of greed which can certainly hurt them among conscious consumers as well as the costs associated with moving the operation to Ireland.
Re:Same problem here in the US (Score:5, Insightful)
Re:Same problem here in the US (Score:5, Insightful)
Just another race to the bottom. Corporations are going to end up tax-exempt and we're all going to end up living in a Neo-Feudalistic society where instead of an aristocracy we've got C-levels and their retinues while national governments sputter out with less and less tax revenue coming in and become more and more irrelevant.
The saddest thing in all of this is, though, that there will be a sizable number of middle- and lower-class people out there cheering the shit, even as their own well-being is threatened directly by it. When you've got people in trailer parks arguing that taxes do nothing but punish success and cheering on the dismantling of the social programs they're actively using (such as Medicaid, welfare, public schools), you know that we're fucking doomed...
Re:People do what you incite them to do (Score:5, Insightful)
For better or for worse, betting on self-interest over altruism usually wins.
Don't bet on it yet. The government sponsored benefits in Finland are much better than in Ireland. If management (and possibly staff) move to Ireland with their families they'll be giving up things they take for granted at the moment. This could result in higher salaries and benefit costs. It may not rise to the 12.5% they'll be saving on corporate taxes on profits, but it will surely eat into it ... and affect their quality of life.
Don't quite agree (Score:5, Insightful)
The real issue with states giving tax breaks to entice companies to move there isn't simply them "stealing jobs from other states rather than creating them".
The reason such measures usually fail is a state's failure to demand specific goals as part of the deal.
Time and time again, companies took advantage of huge tax breaks only to plunk down some sort of office or warehouse that doesn't actually hire more than a few dozen employees. That, or they may only stay as long as the tax break continues, uprooting the whole operation after the 3 or 5 year deal ends.
IMO, there's nothing inherently wrong with state trying to encourage businesses to set up shop within their borders. Even though we're a group of 50 United States, each one still competes with each other internally, much like corporations with multiple divisions often operate each division so it competes with the others.
The PROBLEM is, states need to get a clue about such deals, ensuring it's beneficial for both parties. (Most likely, corrupt politicians simply don't care, because they're getting some kind of kickback or garnering support they need by making the deals happen, at any cost to the citizenry of the state.) Any such arrangement should include contingencies, such as "You will lose the tax break AND owe back taxes from the time you moved here if you don't consistently keep X number of people employed, at wages no less than $Y per year." and "Moving out of the state for a period of 10 years from the time this tax break expires constitutes breach of contract, and again, is subject to back taxes."
A company who genuinely has a desire to move to the state (with a belief it really benefits them in the long-haul) would still gladly accept such an arrangement, IMO. The ones who complain it's too restrictive were likely just trying to milk the system to the state's detriment anyway.
Re:12.5% Corporate tax? (Score:2, Insightful)
Re:Seems fair to me (Score:5, Insightful)
I don't know where you live, but Finland is not the same as the US. Like in all Nordic countries, the taxes are actually used for something other than military ventures - namely providing education and healthcare for everyone and a stable society with functioning infrastructure. The authors of Angry Birds have benefited from free education at the Helsinki University of Technology, free healthcare all their lives, etc.
Is it not reasonable that when they become successful, they too should pay into the system in order to pay for the education and health of the current generation just as others paid into the system to provide these services to them, providing an educated and healthy workforce for the benefit of among others their own company?
Re:Corporate tax... not sure. (Score:5, Insightful)
Why should that same money be taxed yet again at the corporate level ? Does the Finnish gov't do anything of value with those taxes ? Mine does not (Canada).
Depends what you consider value. Some things that might be worth the extra tax rate: Infrastructure, public healthcare, well educated workforce.
Re:Same problem here in the US (Score:5, Insightful)
It is indeed time for the EU to further level the playing field and make countries like Ireland adjust their taxes to the expenditures they have.
Too little competition is also bad ... (Score:4, Insightful)
I am not sure your tragedy of the commons argument applies here. Some state governments have become terribly inefficient and somewhat parasitic of their traditional industries, California may be an example. Why should some company or industry be forced to stay put to prop up such a mismanaged local government? Implicit in your argument is the "all other things being equal" caveat, but things are not equal. Some states will have an inherent advantage due to access to transportation and distribution systems, access to natural resources, access to energy sources, access to a trained work force, access to universities, an appealing climate, etc.
Good government seems to rely on a system of checks and balances. I think we need to have company mobility to some degree as a check/balance against the mismanagement of local government. A lack of competition between states may be just as bad as too much competition.
Re:What will the complaints be... (Score:3, Insightful)
Except, I dont see the "savings". Hell, when oil goes down on the stock market, it has to be down for 2-3 days before we see the change at the pump.
Trickle down economics in deed...
Re:Seems fair to me (Score:5, Insightful)
Is it not reasonable that when they become successful, they too should pay into the system in order to pay for the education and health of the current generation just as others paid into the system to provide these services to them, providing an educated and healthy workforce for the benefit of among others their own company?
That's only reasonable when your view of the future reaches beyond the quarterly results your bonuses depend on.
Caring for the educating your future employees and consumers is not part of the Anglo-Saxon company moral.
Oops, I used company and moral in one sentence...
Re:Same problem here in the US (Score:3, Insightful)
The problem for you is that you want to tax corporations for no other reason to raise revenue for government tyrants, who then benefit you with their blessings in the form of things you should be willing and have to work for. Government cannot create private sector jobs. Period. They only thing government can do is take from the productive and give it to those that are not productive. And as nice as that sounds, it does nobody any good, other than career politicians who increase the public benefits and raise taxes to keep getting elected. Both the (R) and (D) do this, and I"m sure that other countries have their variations of the same thing.
If I had one opportunity to make a constitutional amendment, it would be to limit politicians to no more than 20 years of elected office, all levels combined (local, county, state, national), for their entire life. Anyone that has 20 years (or more) of elected office, cannot run or hold any elected office, ever. By eliminating career politicians, perhaps we might start looking at statesmen for public elected office.
Taxes are regressive, and politicians use them to curry favor and pay out benefits to keep getting elected.
Rich people are most dependent on government (Score:5, Insightful)
What is it with people that take advantage of the high social development afforded by higher tax rates only to run off to a low tax rate area when they become rich?
We really need to make sure people understand that ALL wealth comes from government. Government makes sure your employees are educated instead of brain-dead religious morons, that roads/trains/airports exist to deliver your products to customers, that the banks holding your money don't have disappearing bank accounts, and on and on.
None of this would have been possible without a government paid for by taxes.
The richer you are, the more dependent you are on government, as a larger portion of your wealth came about because government made it possible for you to be wealthy. You can't be rich in a libertarian paradise like Ireland or Somalia. Does anyone even know any rich Irishman? Do they even exist?
It seems people become libertarian AFTER they become rich, as they have the mistaken belief that they somehow made their wealth themselves. They have no idea the kind of infrastructure and work government put in to get that one dollar to travel into their hands in the first place. No, the wealthy didn't magically conjure up that dollar into their pockets.
Re:Same problem here in the US (Score:5, Insightful)
"Government cannot create private sector jobs" the military industrial complex disrespectfully disagrees.
Re:Too little competition is also bad ... (Score:5, Insightful)
Finland's taxes are high, but then again by most measures it is a country that uses those taxes to fund a very comprehensive social benefits system.
Ireland, on the other hand, is a basket case economy that became attractive in no small part by funding its low corporate taxes by irresponsible borrowing, which now means the rest of the Eurozone has to bail it out.
By most American measures, Finland is an overtaxed Socialist wasteland, and Ireland's low corporate rates make it a responsible government.
Re:What will the complaints be... (Score:5, Insightful)
cost reductions *rarely* result in lower retail prices -- they *always* increase profits, though.
Increased profits result in increased competition.
Increased competition results in lower retail prices.
Re:Same problem here in the US (Score:5, Insightful)
Then be a goddamn citizen and start keeping tabs on your government.
Well, that's why we pay taxes, right? Or are you suggesting something else?
Bullshit. You're saying the only purpose of government is to give money to the lazy?
What about public infrastructure?
Re:People do what you incite them to do (Score:5, Insightful)
Canada has 15% corporate tax rate (http://www.canadabusinesstax.com/corporate-income-tax-rates/), 52 week combined maternity/parental leave, free health care, and federal pension plan.
There is no reason the US cannot provide the same level of benefits except for political bickering and the close to 2 billion *per day* the US spends on its military.
Re:Same problem here in the US (Score:5, Insightful)
Hard to keep tabs on government when the lazy and the idiots keep electing people like Reid, Pilossi, GWB, Obama, and Santorum.
Taxes for infrastructure is such a small number, that I think most people would be willing and happy to pay them, and we already do (fuel taxes etc). I don't have a problem for government doing what private sector cannot, like infrastructure and a standing army. I oppose taxes for social engineering and feel good/do good liberal causes. There was a recent study that showed that of the government programs designed to help people get jobs, the only real jobs those programs actually helped with were for the people running the programs. However it is impossible to cut those worthless programs off, because some liberal somewhere will claim that "the evil _____ doesn't want people to get jobs", so we are left with worthless programs that don't actually do anything. It would be better and easier and less expensive to just give the money to people who needed it.
Government is supposed to be of the people, for the people and by the people. It is supposed to be the glue for society, not fix all societal ills.
Comment removed (Score:2, Insightful)
Re:Rich people are most dependent on government (Score:5, Insightful)
There's a hell of a lot of government in North Korea, why aren't they rich?
All babies come out of females, but why do you never see babies coming out of a convent, or the ladies senior bridge club, or a girl's elementary school.
Greedy bastard (Score:5, Insightful)
like so many others, another asshole who just wants to take and not to give. For the likes of him there should be an island where there are no taxes and consequently nothing what is made possible by taxes - just a bunch of other greedy assholes who all want to get richer by taking the money of the others.
Society would be a better place without people like him.
Re:Same problem here in the US (Score:4, Insightful)
I wholly agree with you in that people who don't work shouldn't get such a large share (if any) of the fruits of labour. This, however rises a question: why do you oppose corporate taxes? It's taxing money going to shareholders, who didn't lift a finger to earn it.
Of course it can. For example, in Finland the government pays for education up to and including university level, so the fact that Rovio was able to hire competent people is entirely due to public investment.
Saying "period" doesn't actually give your argument any extra weight.
Well, I'd be happy to stop bailing out the banks over and over again, but then we'd need a heavily regulated institution for handling money transfers. Since the regulations would limit risk, they'd also limit profit potential, so the whole thing would probably need to be government-backed.
Or, more likely, you'd end up with politicians even more beholden to corporations, since they'd know that their future depend on earning a retirement position.
Well yes, they are. Let's make them progressive instead.
Re:Same problem here in the US (Score:5, Insightful)
Gas taxes are a tiny fraction of the cost of infrastructure for automobiles. We heavily subsidize the costs of our auto-infrastructure through general taxes. We do this because if people paid the real cost of gasoline we would be alarmed and outraged --demanding we lower the price of gasoline.
Gas taxes are also extremely regressive. If you are min wage and need to drive to McDonalds you pay the same or more than the yuppie who drives their Prius to Apple every day. If anything the person picking up a $150k a year check is benefiting *more* from the road access than the McDonalds worker since every mile they drive gets a substantially higher return on investment.
Re:Rich people are most dependent on government (Score:3, Insightful)
Quick question. Where does government get its money from?
Various sources (e.g. taxes, tarifs and debt, for starters). But going back to the parent posting (which I'm surprised why it was modded down, unless the realities of society are too much truth for some to handle), wealth wouldn't be created without a fairly stable society to provide the education, protection and regulatory stability needed to provide a framework for the growth of capital. Anyone wanting to disagree can watch what capital remains now vaporizes in 20 years as our crumbling education system, along with the transportation, police, fire, health care and regulatory systems which are currently being gutted will no longer support the creation of wealth. Demand fuels growth. If people have no education, if they can't drive to work, or be protected at home by police or fire, if they can't afford basic healthcare, they can earn no income. If they have no means to purchase, then there are no means to create growth and wealth.
Re:What will the complaints be... (Score:5, Insightful)
yeah, that worked really good for ma bell.
Let me guess, you're not old enough to actually remember Ma Bell.
I am old enough, and I remember having to rush through long-distance (and even local) calls, so they wouldn't end up costing a fortune. That was when Ma Bell was a legal monopoly and didn't have to worry about competition.
Prices dropped dramatically once competition was allowed in.
Re:Rich people are most dependent on government (Score:5, Insightful)
It seems people become libertarian AFTER they become rich, as they have the mistaken belief that they somehow made their wealth themselves.
No, people become Republican after they become rich, and suddenly believe they got where they are because they "pulled themselves up by their bootstraps" and had no help from others, no privileges of birth, and no other contributing special circumstances, They honestly believe that the most valuable members of society are people who can succeed just by putting in extra effort, and therefore deserve extra protections and rights. They tend to see public corruption as a greater evil than private corruption.
People become Libertarian when they believe the liberal philosophy (in a classic sense) they were taught, and lack either the life experience or practical knowledge that in a vacuum people will be ruthlessly selfish rather than act towards the common good. The only way someone who is rich becomes Libertarian is if they can't stomach the social policy of the GOP (which is tailored to attract the religious social right). They tend to see both public and private corruption as evil, but seem to think natural laws will overcome that.
For completeness sake, people become Democratic when they have faith in the system of checks-and-balances and believe in the common good, without realizing that what will happen is half your money will go to the rich (because they'll get it anyway) and the other half will go to the poor (because of your social programs) and you in the middle will just be paying higher costs for everything. They tend to see private corruption as a greater evil than public corruption.
It also depends somewhat on what your life goals are and how you define success or happiness, but that's how I see it.
Re:What will the complaints be... (Score:3, Insightful)
That mechanism is incredibly slow and in most industries could only ever operate on a scale of many years.
And you just can't stand the thought of that first company making any evil profits, even though they were the first to market, and they were the risk-takers who didn't know ahead of time that there would be any profits.
And, yes, for things like heavy industry, it takes a while for competition to get up to speed. That's not a bad thing. It's far better than, for instance, having the government rushing to give out loans to companies that can't compete even with the government handouts, as we've seen several times in the last few years.
Re:Greed (Score:3, Insightful)
They benefited from the system all their lives but when it's their turn to pay in, they leave.
Please, what system? Workers are mobile inside Europe.
No, they're not. Inside the European union (which I'm sure is what you meant), while you have the right to move around and work as you wish, most people don't do it and don't want to. In practice there's language barries and cultural barries all over the place.
Social security and welfare is more or less equal inside Europe as well.
Absolutely not. You can start by looking at one article in wikipedia [wikipedia.org] where it is immediately apparent that countries are running their own systems, with substantial differences in rules and rates. The Nordic countries (such as Finland) are generally in the lead.
Rovio is in this case a prime example of a company which has benefited substantially from Finland's school system for skilled employees (they're one of the absolutely best in the world), Finland's stable democracy and their stable economy. When they're asked to pay back, they flee -- an extremely immoral act which I sincerely hope will bite them in the ass.
Re:What will the complaints be... (Score:3, Insightful)
In Angry Bird-like industries, where they have an actual monopoly on that game and a virtual monopoly on games of similar ilk, the slowness is actually legislated in. Essentially, anywhere there are patents and copyrights slowness tends to be institutionalized.
Some of this is by design. Creators should be able to profit from their work for a while, which is why we have patent / copyright laws.
So there is no capability for the market to operate in these areas, as society has already decided that it should not. In infrastructure heavy sectors, the barriers are natural, in IP heavy sectors barriers are largely legal.
So there will be no end-user price reduction. (Hell, its free on Android, so unless you expect to be paid to download it, it can't get much cheaper).
This move to Ireland is strictly a tax avoidance move by the owners, and will help their Yacht fund. Further, its probably a bluff, trying to secure some tax breaks from Finland, because you don't uproot 400 people (or even the 100 people you really want to keep) just to avoid some taxes.
Figures for Rovio [techradar.com] total revenue suggest about $95 million in total revenue (2011). After paying wages and plant costs, their earnings (before taxes) was $58.7 dollars, which suggests they are banking 65% of their total intake.
Paying 12% Ireland tax rates will save them around 7 Million bucks per year in taxes over the Finland rate.
Since you could probably move the company lock stock and server farm for $7Mil, the multi-year payout would be significant, but not earth shattering.
Angry Birds has about run its course, and unless they have a stable of additional games in the pipe-line there may not be any long term advantage in moving.
Ta-hoochapie!
Re:People do what you incite them to do (Score:5, Insightful)
Why would I want a Canadian-style health care and retirement plan when I already have a better private plan in the US?
For the time when you get fired from your current job.
Re:What will the complaints be... (Score:4, Insightful)
It's not surprising. They're going to try to pocket that money they save for themselves alone at least as hard as they're going to try to save it in the first place.
The magic bunny, er I mean invisible hand, of of laissez faire capitalism as espoused by Ayn Rand and Mitt Romney or to speak more precisely Mitt's handlers, puppet masters and soon to be policy makers Paul Ryan and Grover Norquist benefits, as a matter of historical fact, the top 1% as we all know by now:
http://www2.ucsc.edu/whorulesamerica/power/wealth.html [ucsc.edu]
Re:What will the complaints be... (Score:5, Insightful)
Some of this is by design. Creators should be able to profit from their work for a while, which is why we have patent / copyright laws.
This is a misconception. Patents don't exist to help inventors profit from their invention. They exist to encourage inventors to reveal the technical brilliance behind their inventions to the rest of society, thus benefiting society at large. That's why they exist. In order to lure the brilliant people at Angry Boids to tip the hand of their overwhelming genius to the eternal benefit of a grateful society, they are offered by the government a time-limited monopoly. Not all inventors opt in, e.g. Google.
Patents are not issued to help inventors make money or profit from their invention. They're issued to further progress in the useful arts and sciences.
It's an important distinction. If the patent system doesn't have the effect of advancing the useful arts and sciences, then the patents should not be issued and the inventor be damned.
This goes to the heart of the software patent debate. Do software patents advance the useful arts and sciences? In fact, they impede them. So they should stop being issued and those issued should be nullified. What about the inventors profiting from their work? That is not the concern of the government or the patent system.
Re:Rich people are most dependent on government (Score:5, Insightful)
North Korea is the perfect example of *WHY* all wealth comes from government.
If your government refuses to allow you to have wealth... you won't have wealth. If your government allows you to have wealth then you can have wealth.
Now you can say "oh well I just won't live in a region without a government. Ok... then the first roving gang that comes along will take your wealth and all wealth comes from roving gangs--at which point roving gangs are essentially your form of government.
Someone is going to determine the rules by which you 'play the game'. If you don't setup a government of sufficient strength then someone else will impose their rules on you--and you might not get to participate in its decision making process so it behooves you to establish a sufficiently powerful organization that you can control. In our case the government is "of the people" therefore we are self governed. Therefore all wealth comes from "The People". It's a fine line between this distinction and circular logic but ultimately all wealth comes from the government (which establishes the rules by which property ownership is determined) and all government derives its power from various source. If that's the military then ultimately all wealth is from the military. If it's from the people then all wealth is ultimately from the people but sanctioned by their manifestation of will which is the government.
Now the fox news paranoid survivalist says "ahh but I have GOLD! The government can't control bartering of gold!" Sure. But the government is sufficiently powerful to take said Gold from you. So the fact that the government doesn't use its power to take your gold by force isn't thanks to your impressive weapons collection (however much you have isn't enough to stop a navy seal team) it's thanks to the governments lack of *desire* to take your gold.
ALL wealth comes from the government because the freedom to live ultimately is held by the most powerful organization in the land. And the most powerful organization in the land is your defacto government. The Taliban in many parts of Afghanistan isn't the "Government" but seeing as it controls the territory and is capable of writing the rules by which those living in the territory will behave it's the "Government".
The libertarian who thinks the government hasn't done anything for him is ignoring the fact that the government is protecting the libertarian rule-set. It could just as easily use that power to say that nobody can own anything and the state has absolute power.
So participate in your government and ensure it's the most powerful force in the land--so that it's actually the government and not a proxy for another interest but also participate so that it's acting as a proxy for the people who give it authority.
Re:What will the complaints be... (Score:2, Insightful)
"....even though they were the first to market, and they were the risk-takers who didn't know ahead of time that there would be any profits."
Bullshit. Seriously. We were talking about oil. Hundreds of wildcat outfits rushed to take advantage of the Texas oil boom in 1901, over one hundred years ago. Today's mega-corporations bear little to no resemblance to those companies, and most, if not all of their "risks" are insured and subsidized.
Re:What will the complaints be... (Score:5, Insightful)
"However that money will be reinvested into the company to allow the company to grow, and hire more people."
Assumption. And even if that's what's being said, it's a rationalization. Effective tax rates for corporations are at the lowest they've been for decades. Many industries, like the aforementioned oil industry, are enjoying record profits and sitting on mountains of cash.
And yet job creation is at a standstill. If giving more money to the rich "creates jobs", everyone would be employed by now. They're not.
In all likelihood, the extra profit will sit on the companies books or be doled out to upper management in the form of bonuses and other executive perks. The only "reinvestment" likely to occur is in yet another Ferrari.
Re:What will the complaints be... (Score:3, Insightful)
I'm assuming that you're talking about the US Federal government. You are making two assumptions here:
1) That the US Federal government still exists to serve the citizens of the US and
2) That the corporations that benefit the most from the current labyrinth of Federal tax law, loopholes, etc., would actually permit that. No Federal taxes on corporations would actually help level the playing field, and there's NO way that the corporations that are benefiting from the US Federal tax code as it currently exists will ever permit that.
After all, they paid good money to lobby for them, and they're entitled to the rewards, right?
Cynically,
dj
Re:What will the complaints be... (Score:5, Insightful)
Why would it not make sense, to have the US charge 0% corporate tax, since in thought, these taxes just get passed to the consumer in price considerations?
It's a silly argument.
All taxes are ultimately passed to the consumer. Personal income tax, too - since the company has to pay higher to its employees to entice them to work for it, and of course it also needs to raise prices for compensate. Ditto for sales and property taxes, since they affect the cost of living, and therefore indirectly how much people will ask in wages.
At the same time, you could similarly argue that taxes are "passed on to the corporations" - if I'm taxed higher, I'll ask for a bigger wage.
The truth it, taxes aren't "passed on to" anyone. They are simply extracted from the economy. Both companies and physical persons are actors in that economy, so both pay.