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Uncle Sam wants to tax me

23 March 2021

As a YouTube content creator who receives a paltry income from adshare revenues from the platform, I am now apparently required to provide a whole bunch of info so that Google can deduct the right amount of tax for the IRS from my earnings.

Woah... hang on a minute!

I am an NZ resident, not a US citizen and I live and work here in New Zealand. So why am I being required to pay *any* income tax in the USA?

It's not like I am eligible for any tax-funded entitlements in the USA and I'm not actually conducting *my* business there at all.

Surely, since it is Google (aka YouTube) who is conducting the business, it is Google who should be liable for taxes.

Just for the record, I already pay the IRD here in New Zealand a pretty healthy percentage of my earnings, as required under NZ law -- so why are the IRS in the USA wanting to clip the ticket as well?

Just for the sake of clarity... if I have a business here in NZ and I make widgets, some of which are exported (via online sales) to customers in the USA I do not have to pay tax to the IRS. So what's the difference here?

What's more, I've been earning money from YT's partner program for a decade or so yet this tax-grab seems only to have become an issue in the past few weeks. Why is that?

Could it be the USA playing "tit for tat" over countries like NZ threatening a "digital tax" on US corporates such as Google, Facebook, etc?

Fortunately, NZ has a bilateral tax treaty with the USA and this means (I think) that any taxes witheld by the IRS can be credited (in full or at least in part) against my liabilities to the IRD here in New Zealand.

However, what about those who are in countries that don't have such a bilateral tax treaty?

Well apparently they could lose up to 24% of their earnings to "Uncle Sam" -- even though they are operating their own business far from US borders and, like myself, having no entitlement to any US tax-funded services.

Surely it should be Google that is liable for taxes on *its* profits in the USA, not its "partners" who have never set foot on US soil and probably never will -- likewise having no US presence whatsoever.

I'm not averse to paying my fair share of tax -- in fact I should actually be GST registered because I would likely be able to claw back a few thousand dollars from the IRD as a result -- but I'm just lazy and I figure that (at least in theory) that money is going to help those less well off than myself. Likewise, I could be claiming my pension but I don't -- for the same reasons.

However, I am not at all happy with the prospect of paying money to a foreign government for no apparent reason -- other than they say "you must". I would like to know why there's no parity with my (ficticious) neighbour who makes widgets and sells them at a healthy profit through his website to US customers and has no such demands from the IRS.

Remember...

It is Google that is selling the advertising space.

It is Google that is delivering the advertising service.

Surely Google should be simply deducing its input costs and paying tax on the balance of profit it earns.

As a separate business running wholely in New Zealand and who does not even raise an invoice to Google, my tax obligations are with the IRD and not the IRS.

What do readers think?

Is this latest move (just announced) simply a retaliation by the US government in the wake of proposed "digital taxes" being levied on Amazon and threatened for Google, Facebook and others?

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