[HN Gopher] Yellen calls for a global minimum corporate tax rate
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Yellen calls for a global minimum corporate tax rate
Author : aarghh
Score : 127 points
Date : 2021-04-05 17:59 UTC (5 hours ago)
(HTM) web link (www.nytimes.com)
(TXT) w3m dump (www.nytimes.com)
| tryonenow wrote:
| The proof that media discussion regarding taxation is purely,
| ideologically ideologically driven is the fact that, as in this
| article, the Laffer curve is almost never mentioned. Any
| discussion about tax rates without considering where we currently
| sit on the Laffer curve is an exercise in futility (or
| propaganda).
| [deleted]
| dontreact wrote:
| Coordination across nation states will be super important in
| order to stop runaway inequality that happens when you can easily
| shift capital around the world.
|
| The only way we will be able to close all of the complex tax
| loopholes that large corporations take advantage of is to
| coordinate tax rates across nations.
|
| https://www.investopedia.com/terms/d/double-irish-with-a-dut...
|
| How often have these loopholes come up and people say "don't get
| mad at the corporations, we need to change the rules"
|
| This is exactly the type of rule change we need to get this done.
|
| (I know this particular loophole is closed now, but there are new
| ones I haven't taken the time to learn about yet.)
| ttt333 wrote:
| Why don't we discuss corporate income taxes as effectively a fee
| for the legal and commercial advantages associated with being a
| corporate entity in the US?
|
| For example a C corporation can tap into highly liquid and well
| developed capital markets, limit and separate the owners and
| lenders to a business from management and associated liability
| beyond their initial investment, and thanks to certain legal
| decisions like Citizens United, corporations still seem to enjoy
| what seem to me more like personal rights such as freedom of
| speech, ability to participate in politics anonymously , and
| likely more I don't know about.
|
| With all the aforementioned advantages, is it any wonder that a
| huge proportion of firms above a certain size limit are C
| corporations despite the obvious downside to contend with of
| double taxation? [1]
|
| It seems like the relevant question is the value of those
| advantages to the tax rate legislated by congress, net of costs
| related to the right accounting, legal, and lobbying teams.
|
| [1]: https://fas.org/sgp/crs/misc/R44086.pdf (page 7 and 8)
| robbomacrae wrote:
| Why doesn't the US utilize the fact it has some of the richest,
| most sought-after customers in the world.
|
| If a company wants to do business in the US, just stipulate that
| they have to be paying a corporate rate of X% somewhere. If that
| X is 21% and they are only paying 12.5% then in order to do
| business in America they would need to pay the US the difference.
|
| Just like California can dictate emissions standards in vehicles
| across the rest of the states, the US has power to dictate
| standards across the world. No need to get everyone on board.
|
| Note: I'm not commenting on whether corporate tax is good/bad.
| I'm just asking if the US wants something done why not.. do it..
| and restrict those that don't from doing business here? We do
| that already for corruption (see the FIFA case[0]) Same could
| apply to carbon tax. If they don't pay a carbon tax for their
| GLOBAL business dealings, pay it to the US or your not welcome.
|
| [0] https://en.wikipedia.org/wiki/2015_FIFA_corruption_case
| sgeisler wrote:
| Tax competition is what keeps governments in check. Taxes are
| just fees for services in the territory of the state (e.g.
| security, market access, infrastructure, ...). If these services
| don't warrant paying the fee anymore people and companies should
| of course leave for better-run places! Nothing else will make
| governments become more competitive than voting with one's feet.
| We should really become less sentimental about countries, they
| are just crude constructs to provide services that need
| coordination which markets can't as easily provide. Choosing the
| best service provider is something good as it increases overall
| efficiency as only sufficiently efficient systems survive in the
| long run.
|
| Wanting a global minimum tax is like one mafia asking the others
| to increase their protection charges so their clients don't
| leave. Such collusion is frowned upon for good reasons in free
| markets as it leads to worse outcomes due to reduced competition.
|
| I'm hopeful that this idea will not work due to the profitability
| of breaking the deal and the big number of countries that exist.
| The US also shouldn't overestimate its importance which seems
| high but ever-declining.
| onetimeusename wrote:
| Another question is what do jurisdictions do with excess
| corporate tax revenue they don't need? A lot of "tax havens"
| have no need for more revenue.
|
| But that said the US has pushed a lot of countries into tax
| treaties and it sounds like they can effectively embargo
| countries that don't comply with US tax policies. So I think
| the US has ways of getting what it wants.
| AdrianB1 wrote:
| There is a joke about this: some guy goes to the market to
| buy chickens and he sees a seller that was asking 2 times
| more than the other sellers, so he is asking why. The sellers
| says: "I need the money". All the countries need money, it's
| just that some countries spend it wisely and others go crazy.
| albntomat0 wrote:
| Doesn't your train of thought only work if collected corporate
| taxes accurately reflect activity in a country?
|
| I think the frustration is in part due to a corporation
| conducting business in one country, and playing games so the
| profits occur and are taxed in a lower tax one.
| endymi0n wrote:
| Tax unification is what keeps companies in check. Companies are
| just providers for services in the territory of any state. If
| these services don't warrant paying close-to-zero fees anymore,
| people and states should of course leave for better-run
| companies! Nothing else will make companies become more
| competitive than voting with one's feet. We should really
| become less sentimental about corporations, they are just crude
| constructs to provide services. Choosing the best service
| provider is something good as it increases overall efficiency
| as only sufficiently efficient systems survive in the long run.
|
| Wanting tax loopholes and government competition is like one
| mafia asking the others to increase their protection charges so
| their clients don't leave. Such collusion is frowned upon for
| good reasons in free markets as it leads to worse outcomes due
| to reduced competition.
|
| I'm hopeful that this idea will not work due to the
| profitability of breaking the deal and the big number of
| companies that exist.
| mschuster91 wrote:
| > Wanting a global minimum tax is like one mafia asking the
| others to increase their protection charges so their clients
| don't leave.
|
| No, it's to ensure that countries with extremely low operating
| costs thanks to few citizens and not a lot of space
| (Luxembourg, Switzerland, Ireland come to my mind) don't run
| price dumping on everyone else, allowing the rich elites to
| concentrate and extract profits while the countries that made
| that profit possible (by, for example, providing an educated
| workforce or a secure legal framework to solve conflicts) get
| nothing in return.
| tchalla wrote:
| I mean, the countries that made profit possible can decide to
| block countries with low operating costs. We all know why
| that doesn't happen.
| paconbork wrote:
| Far from nothing, companies allow the government to collect
| more payroll, property, income, capital gains, and sales
| taxes. Moreover, corporate taxes are a double taxation of
| which a sizable portion of the incidence falls on labor
| dkjaudyeqooe wrote:
| This is a kind of "market will solve all" naivety.
|
| In a functioning market, this might work, but it overlooks the
| ability of corporations to game the system via one or two self-
| interested jurisdictions.
|
| The key problem is that corporations can avail themselves of
| the public goods (infrastructure, public education, public
| order) and then use accounting maneuvers to shift profits to
| jurisdictions that will not tax them.
|
| Some jurisdictions don't provide much in the way of public
| goods (small island states) or see an opportunity to raise some
| modest taxes on money they would otherwise never see (eg the
| Netherlands).
|
| So you end up with the (individual) taxpayers of some countries
| subsidising these corporations, other countries profiting
| modestly and the corporations keeping most of the tax money.
|
| Is this what an efficient market would deliver? An unfair and
| unsustainable situation? According to your theory the countries
| should compete with each other until their taxes are very low
| and their subsidies are very high, because that would reflect
| "efficiency". But what is the incentive for countries to do
| this? A rational country in the this market would set taxes to
| balance out the public goods provided. But because of profit
| shifting this is impossible, no matter how efficient they are.
| Yellen's plan is a rational response to this.
| jopsen wrote:
| > I'm hopeful that this idea will not work due to the
| profitability of breaking the deal and the big number of
| countries that exist.
|
| But it's not unthinkable that the EU could do something within
| the EU.
|
| And if big developed economies adopt it, then it's no problem
| sanctioning tiny island nations that don't.
| gh-throw wrote:
| Counterpoint: corporations are creations of the government, and
| a polity (and its government) _ought_ to do whatever generates
| the desired outcome they want from these creations, including
| bringing in more tax revenue, if that 's what they want. Ain't
| no corporation without government. They serve us. Or should.
| vmception wrote:
| Except all governments offer the creation of corporations, it
| is literally a shopping catalogue offered by every
| jurisdiction.
|
| These jurisdiction brands are in competition with each other
| and they need to stay more attractive than the next.
| anoncake wrote:
| And that's a problem. Competition is (usually) good for the
| entities that can shop around. But companies' interests
| isn't what matters. Citizens' interests are.
| vmception wrote:
| The universe of citizens interests includes countries
| that are overleveraged and can never resolve their
| budgetary constraints, alongside countries that simply
| don't need the additional revenue.
|
| The tax collection expectation is based on hubris, and
| seems to misunderstand that countries have to figure out
| their own revenue structures, with national formalized
| taxes on profits being a new scheme, and international
| taxes being newer. This obviously brushes up against the
| capabilities of the nation state concept, as enforcing it
| even by the wealthiest country is an impractical game of
| whack-a-mole.
|
| Countries should revisit how they are funded, because
| they are in competition. Its only a couple of the biggest
| countries that have egos about it.
| ineptech wrote:
| > Tax competition is what keeps governments in check.
|
| That's true for me, because if I decide US taxes are too high
| and leave the country, I don't get to keep using US roads.
| That's not true of Amazon.
|
| Edit to add: more generally, this is a coordination problem[0],
| and mutual agreements against defection are a well-studied
| solution to such problems. Comparing such an agreement to mafia
| extortion is way off base.
|
| 0: https://en.wikipedia.org/wiki/Coordination_game
| ghgdynb1 wrote:
| Here's how this gets broken: The more countries faithfully adhere
| to the global corporate minimum, the stronger the incentive
| becomes for a "cheating" country to lower its rate.
|
| The tax haven could even get around an "enforcer" or governing
| board. For instance, such a country might change what it
| considers to be "profit" so that you're paying $2 on $100 of
| revenue, whereas in the neighboring country you'd be paying $6.
| Same nominal tax rate, different effective tax rates. There are
| even more ways to play this: "Sure, we tax you at the required
| 20%, but you can then direct how those funds are used to reduce
| costs you'd otherwise have to pay directly."
|
| And this happens a ton-- see the WTO and "effective" but not
| nominal tariffs.
|
| Whether or not we see such a harmonized tax rate emerge and even
| if we could find a way to have some governing body try to
| "enforce" it, you'll still see countries lowering their effective
| tax rates to lure firms or bolster growth. I bet there's a
| maximum sustainable effective corporate tax rate, but I have no
| idea what it is (and for all I know it could be zero or
| negative).
| [deleted]
| jl2718 wrote:
| > the Biden administration's effort to help raise revenue in the
| United States
|
| This coming after a $2T pork stimulus with another $2T on the
| way. Obviously this has nothing to do with prudent financial
| management. Punishing evil capitalists? Maybe. Trying to prevent
| a mass exodus of investment from the US? Probably.
|
| I'm sure they tried to close loopholes regarding offshoring
| profits, but realized the corporations would just exit faster.
| This is desperation. It won't work. Capital can't be controlled
| and threatened the way that people can be. Capital will always go
| where it's treated best.
| anonymouswacker wrote:
| This definitely will not lead to a slippery slope or a global new
| world order.
| JumpCrisscross wrote:
| > _This definitely will not lead to a slippery slope or a
| global new world order_
|
| Hate to break it to you, but there have been multi-lateral
| treaties before. Including those that deal with taxation.
| mushbino wrote:
| You mean it will lead to an organization where Nations are
| like, United or something along those lines?
| filoleg wrote:
| Yep, just like that, except the one that actually has the
| power to do something. Because afaik, UN exists to just
| broker peace and maintain a somewhat cordial relationship
| between its member states, but not much more than that.
|
| Especially considering that the permanent members (which
| include Russia and China, as well as the US and others) are
| given veto powers, and they aren't afraid to use them
| whenever convenient for them.
|
| P.S. I don't honestly believe in the whole "global new
| world order" conspiracy-tier of political discourse. My
| reply above was just meant to illustrate that something
| like UN is not what the person, who originally brought up
| "global new world order", had in mind.
| oblio wrote:
| Why would it lead to a new world order?
| legolas2412 wrote:
| Not that it's happening, but would it be a bad thing?
| anonymouswacker wrote:
| I would prefer to have some level of control over how my
| corp(s) will be taxed at the local level where I have some
| semblance of control by voting for X political party. Letting
| tax rates be controlled by an even bigger, global quasi-
| government makes it less likely for me to have any agency.
| This is just further eroding the control of the individual
| and the sovereignty of nation states.
| fuzzer37 wrote:
| (((them)))
| marcrosoft wrote:
| How about we stop spending trillions of dollars instead?
| hitpointdrew wrote:
| Yeah, and stop bombing the middle east, and close down some of
| the 800 (formal) military bases we have around the world. How
| about the Pentagon takes a 38% (450 bil) budget cut? Which
| isn't that drastic, it only takes us back a similar Pentagon
| Budget from 1997.
| oblio wrote:
| I agree with your idea but I have to point out that the
| inflation since 1997 has, apparently, been 65%.
|
| So if my math is right, at constant prices, the 2021 US
| military budget would be $443 bn (constant 1997 prices) vs
| $282 bn (1997 budget), which doesn't seem as drastic.
|
| I'm a bit shocked, to be honest, I checked the inflation just
| to compare the two budgets and the difference is far lower
| than I was expecting.
| LargeWu wrote:
| Where do you propose we make cuts?
| IG_Semmelweiss wrote:
| You dont need to propose cuts. Just freeze everything in
| place.
|
| Thats a big start
| marcrosoft wrote:
| Start with not spending trillions on massive bills that use
| COVID as a scare tactic. Then move to cutting military by at
| least half and exit all foreign wars.
| sumedh wrote:
| Military?
| [deleted]
| [deleted]
| [deleted]
| IG_Semmelweiss wrote:
| More options are always better than less. This is the reason why
| people hate the lack of choice in mobile OS, in App stores, etc.
|
| It would be great to understand why lack of choice in tax regimen
| is different, particularly from people that are of the opinion
| that FAANGs are monopolies that should be broken up
| gh-throw wrote:
| Lack of choice in tax regimen is entirely fine _for
| corporations_. They 're creations of the state. We should bring
| them to heel, if they're finding ways to avoid what we're
| trying to get them to do. Don't like it, don't incorporate, and
| don't enjoy the state-given benefits thereof. I don't care a
| bit about increasing choices for corporations, unless doing so
| improves our ability to harness them to generate whatever we're
| trying to get out of them (economic growth, infrastructure
| development, taxes, whatever). I'd surely entertain arguments
| against this in those terms, though (i.e. "actually this will
| cause us to be less able to harness corporations to our
| benefit, for reasons X, Y, and Z")
| [deleted]
| cblconfederate wrote:
| Will countries be also given a global minimum of nuclear weapons?
| m101 wrote:
| Corporate taxes are the most blindingly stupid idea ever.
|
| People forget that the only way to level the playing field
| between Amazon and local shops is to cut taxes to 0 rather than
| layering on increasingly complex tax rules. Amazon thrives in the
| presence of corporate taxes.
|
| Corporate taxes also create huge incentive to offshore jobs to
| tax havens.
|
| Not to mention no corporate tax rates would mean no need for all
| sorts of expenses on legal and accountants for tax optimisation.
|
| In the UK I think we acknowledge they are a bad idea by having a
| plan to step them down over time to some low level (and
| potentially even 0 eventually). Covid derailed that plan.
| thysultan wrote:
| I identify as a corporation.
| laboratorymice wrote:
| Does this apply only to corporations above a certain size?
| Otherwise, if I can provide my service as a self-employed
| consultant, then why would I be employed by another company and
| pay income tax x%, when I could just offer the same services
| under my own company and pay 0% on the same income?
| m101 wrote:
| I don't really feel discriminating on size is a good idea.
| Complicated and potentially game-able.
|
| If it were up to me I'd bring income, cap gains, and dividend
| tax rates in line with eachother (or just call them all
| income), and be done with it.
|
| Edit: i might be wrong but I think bringing those three taxes
| in line is another one of these Cummings-era UK policy ideas
| jl2718 wrote:
| When you see a mechanism that is left intact despite the
| appearance of failure, always ask whether it is performing its
| intended function.
| IG_Semmelweiss wrote:
| This is a nonstarter for precisely the reasons you state.
|
| With the stroke of a pen, you would eliminate a huge industry
| (tax attorneys, tax consultants, etc)
|
| You can bet they will not go down without a fierce fight
|
| This makes total sense. Except it cannot happen.
|
| Same as term limits. Incredible idea. Never going to happen.
| gh-throw wrote:
| There exist reasonable arguments against term limits for
| members of legislative bodies, which arguments hinge on term
| limits greatly increasing the power of lobbyists, by
| effectively lowering the average skill and expertise of
| lawmakers.
| oblio wrote:
| How much skill and expertise do you need, though?
|
| In most fields of activity after 2-3-5 years you should you
| should be a reasonable journeyman and after 10 you should
| have a decent mastery of your field.
|
| To me a term limit of 15-20 years should be more than
| enough.
| plebianRube wrote:
| Try changing jobs as a software dev after 10 years. Every
| 'good' company will put you through 3-4 coding
| challenges, treating you like your fresh out of college.
| oblio wrote:
| Yeah, but we're talking about public positions here
| (public office). High visibility into both the good and
| the bad that you do.
|
| Hardly comparable with software development work which is
| generally completely out of sight and therefore hard to
| quantify or verify. And I say this as someone who's been
| through the whole interview dance a bunch of times.
| oblio wrote:
| Hey, IG Semmelweiss, your tax improvements seem very
| reasonable.
|
| We shall proceed to ignore you and continue with our
| obviously bad ideas, to the detriment of everyone.
|
| Maybe in 20-30 years another person, let's call that person
| Pasteur, will come back with much the same ideas and everyone
| will listen to them.
| throwaway8581 wrote:
| The only reason we have a "corporate tax" is because it sounds
| nice to voters who have no clue what's actually going on. And
| the average journalist is just as clueless but easily twice as
| malicious. If you "cut taxes on corporations" you are a bad
| guy. If you raise them, you are Robin Hood, taking from the
| rich and giving to the poor. This is literally the level of
| analysis that democracies operate at. Meanwhile, tax attorneys
| are getting rich off of helping megacorps evade taxes that the
| average business has to pay.
|
| For the benefit of other readers: the corporate tax is
| pointless because in the long run, all corporate profits go to
| capital gains. So you can just raise the capital gains tax and
| get rid of the corporate tax. This is why the personal income
| tax is higher than the capital gains tax, because corporate
| profit has already been taxed while corporate expenses have
| not. Just equalize the capital gains tax and income tax and get
| rid of the corporate tax and you basically have the same
| revenue and way less bullshit.
| Supermancho wrote:
| > the corporate tax is pointless because in the long run, all
| corporate profits go to capital gains.
|
| No, they do not. Rather than belabor the point, which you
| repeat over and over, just do a little more cursory research.
|
| https://www.accounting-degree.org/accounting-tricks/
| https://www.brookings.edu/blog/up-front/2017/11/30/the-
| next-... https://www.cbpp.org/research/federal-
| tax/substantial-income...
|
| If you have the assets, you can do it too. Trump takes
| advantage of it, for all the good it does him.
| throwaway8581 wrote:
| Individual tax evasion exists either way.
|
| Repeat over and over?
| _trampeltier wrote:
| Already here:
|
| https://news.ycombinator.com/item?id=26698242
| thysultan wrote:
| >Yellen calls for others governments to all follow USA's tax code
|
| Yeah good luck with that
| hctaw wrote:
| Why are corporate earnings the target for taxation? Are they just
| the easiest/least impactful to levy?
| game_the0ry wrote:
| I have a crazy and unpopular idea - America drops the corporate
| income tax to 0%, full stop, across the board, no loopholes, no
| exceptions.
|
| (ducks from the rotten vegetables that are being thrown at me)
|
| Here me out...
|
| America offsets the revenue loss by increasing tax burden on
| (rich) _individuals_ , not corporations [1]. Hopefully, that
| would bring offshore profits back and increase hiring, r&d spend,
| capex, etc etc positive feedback loop etc. More likely, corps use
| the profits to buy back stock and layoff people (which has
| happened in the past with tax holidays [2]), but hey, at least
| those profits don't just sit in a bank account in Ireland or the
| Cayman Islands.
|
| Here is a really crazy idea that won't work - Janet Yellen trying
| to compel the world to adopt a global tax rate standard, thinking
| that tax haven countries would comply for America's benefit.
| Yeah, not happening... the baby boomer generation really don't
| have any capability of second order thinking.
|
| [1] The irony is that republicans love to say corps are people.
| With that logic they should be taxed like people. Dumb. They are
| not people, they are institutions. Don't tax institutions, just
| tax people more.
|
| [2] https://en.wikipedia.org/wiki/Repatriation_tax_holiday
| [deleted]
| dalbasal wrote:
| It's very hard to reason about this stuff from first
| principles... everything means something complex in the
| complex.
|
| If you want to strike nearer the trunk, nevermind root, of the
| issue... the place to start is corporation law. Once a cascade
| of tax entities of different types/jurisdictions can own or
| control each other in cascades... it becomes impossible to tax
| anything in a simple way. Without that, it's impossible for
| corporate tax just apply to the individuals with a share. If it
| was, than we could (as you suggest) think of corporate income
| tax as a +/- to regular income tax. As it stands, it is a
| different sum and applies to different people/ tax entities.
|
| In terms of economic efficiency.... I don't think any abstract
| economic theory beats current reality observations. If you look
| at some of the biggest current companies... they are obviously
| undertaxed. A company like google doesn't accumulate 10s of
| $bns cash unless they cannot find ways of putting it to work.
| In _theory,_ no matter what their tax burden, they would have
| "produced^" and invested what they did anyway. The same is not
| (necessarily) true fro TSLA or JNJ. It probably is for FB or
| MSFT.
|
| In any case... as "mainstream" macroeconomics rapidly turns in
| a loose money direction, " _bring the money home, we don 't
| have enough money here_" is less of a thing. The federal
| reserve is making however much money they think the economy
| needs for monetary purposes anyway...
|
| ^Scare quotes because "production" measured in ad sales is a
| little abstract for me.
| cliftonk wrote:
| The reason I'd object to this is that you'd be able to
| indefinitely defer taxes by using C-corps as holding cos.
| thebean11 wrote:
| How do you stop the ultra rich from renouncing citizenship
| while their companies generate free profit in the US? Or even
| easier just keep all their cash sheltered in corporations?
| dylan604 wrote:
| Make the tax penalty for the renouncing much more severe than
| it is now?
| bluecalm wrote:
| Tax consumption, land, pollution. If those sneaky mega rich
| start founding companies in US that are clean, don't sell
| in US and thus don't pay taxes it's just a huge win for
| everyone. Once you sell to the area with consumption taxes
| you pay those. Couple that with some Ubi/reverse income tax
| to offset consumption taxes hitting the poor/middle class
| more and it's a simple and fair tax system.
|
| It's not a new idea either. You just need to get the idea
| of "evil corps need to pay" mindset.
| AdrianB1 wrote:
| They are usually just people that give up to a citizenship
| they did not chose, not slaves. You are supporting slavery
| in a modern form, the government is the new master.
| thebean11 wrote:
| I don't think comparing exit taxes for billionaires to
| slavery is very reasonable
| game_the0ry wrote:
| Likely won't happen to any meaningful effect. Think about the
| options in the first world - Europe, Canada, Australia, New
| Zealand. Some of those countries have less friendly tax
| regimes and less stability. The US is still the friendliest
| to the rich.
|
| The rich threatening to live is just that - a threat.
| AdrianB1 wrote:
| France said the same until a few famous people left.
| Playing a dare game is risky and these days there are a lot
| of nice places where American ex-citizens moved, there is
| an entire business around helping them finding the best
| places. It is lot like you have a cow to milk and it's safe
| because you put a fence so it cannot leave, when you treat
| people like cattle they can show they can be falcons and
| fly away.
| [deleted]
| rsync wrote:
| "America drops the corporate income tax to 0% ..."
|
| Both your proposal (corp rate of 0%) _and the objections to
| your proposal_ (that individual income will be shifted onto
| corporate ledgers) are already extant, and addressed, in US tax
| code.
|
| Any business can incorporate under subchapter-S, or as a form
| of LLC/LLP and pay zero taxes. Very common. Happens all the
| time.
|
| The catch is, you cannot carry income on the books arbitrarily.
| For the most part, you are forced to distribute the proceeds
| among the shareholders/partners before the end of the year -
| thus subjecting it to regular and frequent taxation.
|
| On the other hand, if you want to carry proceeds forward in the
| business and park them there, for whatever reason, you need to
| be a C-Corporation and are subject to double-taxation:
| corporate taxes and then, later, individual taxes once the
| monies are finally distributed.
|
| So you have that choice. If you want the flexibility and fewer
| shareholder restrictions of a "C" corporation, you need to pay
| corporate taxes.
|
| Personally, I prefer the simplicity of an S-corp and, as a
| bonus, the income is not double taxed.
| nodamage wrote:
| This doesn't really address the underlying proposal. If the
| corporate tax rate was lowered to 0% no one would choose to
| operate an S-corp anymore.
| game_the0ry wrote:
| > Both your proposal (corp rate of 0%) and the objections to
| your proposal (that individual income will be shifted onto
| corporate ledgers) are already extant, and addressed, in US
| tax code.
|
| Fair point, but then why are US companies still parking their
| profits off shore?
| TrainedMonkey wrote:
| I think that is a terrible idea because it does nothing to
| address the real problem - economic growth being largely
| captured by ultra rich people. Sure everyone who is invested in
| stock market will be richer, but people who need most help are
| not buying stocks.
|
| Taxation is hard, so far Sam Altman's capital tax is least
| worst option I've heard: https://moores.samaltman.com/ . It
| does have it's deficiencies... It's wealth redistribution, it
| might slow down or even completely stunt economic growth, and
| given current political climate and corruption and is highly
| unlikely to be implemented. At the same time humanitarian value
| alone it would bring is so astronomical that I believe we must
| try it. It would also greatly expand middle class which should
| boost the economy long term.
| headmelted wrote:
| edit: This turned into a bit of a rant so putting a note here
| to say this isn't personally ranting at the OP, just the
| standard of dialogue around this problem.
|
| Saying "tax the rich" doesn't make it happen.
|
| It's almost as if these politicians and celebrities that come
| along and vomit hashtags into their twitter feed are under the
| impression it's never been done because no-one thought of it
| before.
|
| Tax the rich _how_ , exactly?
|
| Lowering exemptions and allowances to raise duties is a tax on
| the working poor.
|
| Raising income tax rates is a tax on the working middle class
| (we hear plans to do this all the time because fiscally
| conservative politicians believe their voters are too stupid to
| notice the difference between income and wealth).
|
| If you want to "tax the rich" you need to tax _actual wealth_ -
| and you need to figure out a way to do that which doesn't cause
| capital flight. This has proven very difficult to do
| successfully.
|
| So, we can either re-visit wealth inequality when we have
| unilaterally matched global tax rates with no loopholes a few
| centuries from now after the robots have completely taken over,
| or act like grown-ups, put some work in and figure out a
| solution.
|
| Tweeting shallow nonsense like "tax the rich" without offering
| a plan while ignoring the massive complexity in taxing wealth
| in a global economy is a cynical ploy on the poor while
| laughing hysterically in the face of the working middle.
| nerdkid93 wrote:
| So 2 ideas, 1) make capital gains over $1 million a year
| taxed as regular income and 2) get rid of Stepped-Up cost
| basis from estate tax exemptions
| headmelted wrote:
| It would certainly be a start, although I can think of at
| least three mechanisms just off the top of my head that are
| available to people with that kind of money to make a
| capital gain not a capital gain.
|
| The loopholes are the problem, and it's a job for
| governance to fix.
|
| Every time a politician says "tax the rich" or "Company X
| only paid Y last year and should apologise and pay more"
| all I can hear is "we can't be bothered to do the job you
| elected us to do".
|
| Imagine if the police didn't respond to crimes in progress
| but instead made sternly worded public statements after the
| fact saying that criminals should be very disappointed with
| themselves and should apologise and pay back 10% of what
| they stole as restitution.
|
| The status quo is absurd.
| bluecalm wrote:
| Yeah, I was commenting on this for a few years now. It's just
| obvious corporate tax on profits is one the worst taxes you can
| come up with. It imposes big regulatory/accounting burden. It's
| completely impossible to police/enforce fairly (who the
| government officials are to decide if buying this licence from
| a Cyprus based company is worth 20 million or 30 million). It
| encourages behaviors we don't want (ballooning costs by hiding
| compensation as various perks). It makes it easier to go around
| for bigger players while being a disproportionately bigger
| burden for smaller players.
|
| It's not really race to the bottom. It's just a terrible tax.
| ipsum2 wrote:
| According to Planet Money, dropping the corporate income tax to
| 0% is one of the most popular policies among economists.
|
| https://www.npr.org/sections/money/2012/07/19/157047211/six-...
|
| > Three: Eliminate the corporate income tax. Completely. If
| companies reinvest the money into their businesses, that's
| good. Don't tax companies in an effort to tax rich people.
| nodamage wrote:
| In this scenario how would you prevent individuals from
| routing their income through corporations in order to avoid
| paying personal income tax?
| 0xDEEPFAC wrote:
| Isn't that what rich people do anyways? Foundations and
| corporate shells to hide their wealth?
| nodamage wrote:
| Not really. Or at least, not nearly to the extent
| possible if you were to zero the corporate tax rate.
| ipaddr wrote:
| You can get away with free meals, travel, education,
| housing, clothes, pocket money and entertainment now. These
| become expensives and are not taxed anyways. So no change
| on that front.
|
| This makes profit tax-free. Profit is usually split with
| the shareholders or invested back. Shareholders are taxed
| if a capital gains event occurs. Why tax profits on money
| that will be invested back into the company?
| nodamage wrote:
| Let's say hypothetically John Smith makes $500k/year as a
| software consultant. Instead of being paid directly he
| starts John Smith Inc. and routes his income through his
| corporation. He withdraws $100k/year in dividends to pay
| his living expenses which is paid under capital gains
| rates, the other $400k/year is invested in the stock
| market and grows tax-free forever inside the tax-
| sheltered corporation. The vast majority of John Smith's
| income will never be taxed as he only needs to withdraw
| enough in dividends every year to cover his living
| expenses.
| tomp wrote:
| What exactly is the problem here? How is this
| meaningfully different from investing your own post-tax
| $500k into the market and growing it forever?
|
| If you dislike this situation, what you need is _wealth_
| tax, not _profit_ tax. As the value of John Smith Inc.
| grows over time, John Smith the person will have to pay
| increasing amount of wealth taxes...
| nodamage wrote:
| > How is this meaningfully different from investing your
| own post-tax $500k into the market and growing it
| forever?
|
| What's the difference between investing post-tax income
| vs pre-tax income? The amount of income tax you paid...
| samlevine wrote:
| Famously capitalist Sweden has a lower tax on corporate
| income than the US.
|
| It's a good policy, and you should be for it even if you want
| to soak the rich.
| jl2718 wrote:
| I like these, but I think consumption tax is way too
| complicated to collect fairly. The simplest tax is literally
| no tax at all, just prudent spending on bond issuance. It
| works if the deflationary effect of greater productivity
| outpaces the monetary inflation. It fails when the money is
| wasted.
| notahacker wrote:
| "Wasted" is doing a lot of work in that last sentence.
| Unfunded spending on primary education and healthcare is
| going to generate more current period monetary inflation
| than near term output, never mind transfer payments to the
| unemployed, but it's a helluva stretch to argue that this
| makes those areas of spending a waste of money
| dkjaudyeqooe wrote:
| So if I make billions via my genius SaaS company in the US,
| with 95% gross profit margin, get a nice apartment in Monaco
| and pay exactly 0% tax anywhere, ever on said billions,
| that's good?
|
| Did these economists think this idea through?
| thehappypm wrote:
| The "I'm just a temporarily embarrassed millionaire"
| argument.
| newfriend wrote:
| I see this stupid response in every thread about taxes.
| Do you have to personally benefit from something to
| advocate for it?
| ska wrote:
| The usual way economists look at this is that proxy taxes
| aren't really effective.
|
| So your company makes a ton of income and it's not taxed -
| but if every viable path of taking money out of the company
| is taxed, economists will argue it works better.
|
| So in your scenario they are arguing for a system where
| your apartment in Monaco either came from direct payments
| to you (taxed) or is a taxable benefit for you, etc.
| gen220 wrote:
| I think you would pay taxes in monaco [1], barring any
| crazy corporate structure shenanigans that would certainly
| smell of tax avoidance.
|
| So, the government of Monaco would tax the _corporate_
| profit from Year 3 onward, assuming your genius SaaS is a
| startup, at a rate of at least 25%. You wouldn 't evade
| taxes altogether.
|
| For the corporate tax, you'd either convert to Euros to pay
| taxes (at which point, your USDs flow back into the
| international monetary system that eventually leads back to
| Uncle Sam), or you'd pay in USDs, and the government of
| monaco would do the same dance.
|
| But, you'd get 75%ish tax-free USDs, to pay yourself an
| untaxed salary with! That's a good amount.
|
| [1]: https://en.service-public-
| entreprises.gouv.mc/Tax/Other-taxe...
| dkjaudyeqooe wrote:
| No because I have no corporate entity in Monaco, it's
| strictly a US company and I am sole shareholder. Monaco
| doesn't tax US companies unless they do business there.
| nodamage wrote:
| If you lived in Monaco and operated your business from
| there presumably that would trigger a nexus requirement
| for "doing business there"?
| dkjaudyeqooe wrote:
| No, the business has to be resident, which means it has
| an office there or sells locally. A resident shareholder
| or employee doesn't count. Monaco goes out of its way not
| to tax its residents, other than VAT on local purchases.
| acabin wrote:
| In that scenario you may create a permanent establishment
| in Monaco.
| ksec wrote:
| You may want to edit your original post with more
| context.
| JumpCrisscross wrote:
| > _if I make billions via my genius SaaS company in the US,
| with 95% gross profit margin, get a nice apartment in
| Monaco and pay exactly 0% tax anywhere, ever on said
| billions, that 's good?_
|
| I assume you have employees in the U.S.? Suppliers? Payroll
| and sales tax didn't go to zero.
|
| If you don't, if you're supplying a product that has zero
| footprint in the U.S., and making a killing off it, I mean,
| sure. Fine. Keep your money. You aren't costing our system
| anything. And you're providing us with something of value.
|
| More pointedly, if you have such a business, one which has
| zero assets or employees in the U.S., only income, it's
| trivial to zero out your taxable corporate income _today_.
| The only difference between that and this is the amount of
| accounting and legal paperwork required.
| ceejayoz wrote:
| The US happily imposes taxes on its citizens even if they
| are outside of its borders, and that apartment and all your
| other company perks would be considered taxable income.
|
| You can renounce your citizenship, but you'll be subject to
| exit tax on the way out.
|
| Yes, they've thought this through.
| dkjaudyeqooe wrote:
| I was never a US citizen, I never even set foot in the
| country. I can do the same with every other country
| (except one small African country) because they tax
| according to residency. I'm only a resident of Monaco.
| [deleted]
| zdragnar wrote:
| If you make billions, you pay individual taxes (including
| on stock granted to you, and again for any capital gains if
| you hold them over a year). If the company makes billions,
| it spends it on things like salary and growth investment
| (buying goods and services), or dividends or buying out
| shareholders (all of which is taxed along the way).
|
| If you move to Monaco but stay a US citizen, you still owe
| US taxes on income. If you move and renounce your
| citizenship, you have to pay a significant sum of money
| based on your wealth (including stocks and ownership in
| companies).
|
| Your scenario has nothing to do with the corporate tax
| rate.
| dkjaudyeqooe wrote:
| Why are you assuming US citizenship? My SaaS, and sucking
| billions out of the US economy, doesn't require it.
|
| I couldn't pull off 0% taxes without using corporate
| entities that are untaxed, all countries (at least try
| to) tax all income produced within their jurisdictions.
| hluska wrote:
| This has been the dream of people around the world for a
| good part of the last century. It's a lot harder to
| achieve than to write hypotheticals about. In practice,
| the US economy is very good at taking its cut.
| gnramires wrote:
| Well, then we could just set a global minimum income tax.
|
| However... there's a great problem with this proposal.
| We're decreasing individual agency and increasing
| corporate agency.
|
| Corporations are massive evolutionary self-defending
| systems. As this kind of system, they don't fundamentally
| care (i.e. their survival and reward isn't directly
| connected) about the wellbeing of their employees or the
| general population; their success doesn't mean success of
| employees or our progress as a society. Think about how
| our bodies don't really regard the wellbeing of our cells
| (only that they do their jobs to sustain what we do care
| about) -- and of course that's fine because cells don't
| think (individually).
|
| Since corporations are non-conscious as individual
| entities (as far as I can tell), they don't have a well-
| defined wellbeing we should care for, unlike their
| employees and the population at large.
|
| In this sense, they can indeed be seen as AGI overlords
| fighting with us. If they could replace humans with non-
| questioning (and without consciousness or well-defined
| wellbeing) robots they wouldn't bat an eye, as entities.
|
| I call this _The Great Problem of Consciousness_ : there
| are a great many of (abstract) forces and incentives in
| the Universe, and almost none of them care about the only
| thing that really matters, the Collective Conscious
| experience. Profit, nationalism, bureaucracy,
| authoritarianism, entropy, natural selection, energy
| gradients, and so on. None of that really cares about our
| experience (well being), yet they are the major driving
| forces of the Universe. The great battle is to try to
| align those gargantuan monsters into our own service. We
| only have control now because of the precarious situation
| where: Power ~ Intelligence ~
| Consciousness
|
| Any variations in this condition will risk to topple
| humanity (in the sense of conscious individuals with good
| experience of life), unless we can systematically prevent
| it (before it prevents _us_ ). It's not quite it, but a
| similar concept is Scott Alexander's Moloch[1]. I'm
| studying ways to defeat this opponent (if anyone is
| interested, I hereby invite you to join in!).
|
| [1]: https://slatestarcodex.com/2014/07/30/meditations-
| on-moloch/
| whb07 wrote:
| Because you're able to pass benefits and productivity
| presumably to US citizens.
|
| Not just that, but fine, you win your arguments as they
| are perfect. So now, this founder/owners have pallets of
| US dollars. Where does one spend those funny looking
| pieces of paper?
|
| Poof. There goes that argument of "sucking billions out"
| as those dollars are FORCED to come back to the US.
| RC_ITR wrote:
| This point has been made above, but you think foreign
| corporations with no meaningful connection to the US are
| paying significant corporate taxes here?
|
| Spotify is a great example.
|
| >We have significant net operating loss carry-forwards in
| Sweden and the United States. As of December 31, 2020, we
| had net operating loss carry-forwards of EUR100 million
| in Luxembourg, EUR1,293 million in Sweden, EUR461 million
| in the United States relating to federal taxes, and
| EUR315 million in the United States relating to state
| taxes.
|
| >We have initiated and are in negotiations of an APA
| between Sweden and the United States governments for tax
| years 2014 through 2020 covering various transfer pricing
| matters. These transfer pricing matters may be
| significant to our consolidated financial statements. In
| addition, we are subject to the continuous examination of
| our income tax returns by various tax authorities which
| could result in assessments against us.
|
| Those two lines more or less tell me that Spotify will
| not pay meaningful US corporate taxes for the next
| decade.
|
| Might as well lose that non-existent tax revenue if
| that's the 'carrot' that gets the public on board with a
| wealth tax.
| tomp wrote:
| If "corporate income tax" only refers to tax on _profits_ ,
| then there is still a tax on _dividends_ , which you pay
| regardless - US taxes dividends "at source" ("withholding
| tax"), precisely to prevent individuals to relocating to
| low-tax jurisdictions and escaping capital income taxes.
|
| https://ibkr.info/article/938
| albntomat0 wrote:
| (I'm not a proponent of the 0% corporate tax, fwiw)
|
| If you are running the SaaS from Monaco and only selling
| things in the US, isn't it right that you'd only pay sales
| tax?
|
| It's the mismatch when work is done in one place (for some
| definition of work), but profits taxed elsewhere that's the
| issue, as I understand it.
|
| 0% corporate tax and higher individual income tax works as
| long as a company and its employees have to use the "full
| stack" of taxes, and can't mix and match across borders.
| dkjaudyeqooe wrote:
| I don't pay sales tax, only my customers do, if they are
| in a state that charges sales tax.
|
| No one pays income or capital gains taxes in Monaco, but
| my SaaS is genius remember, so I have only a small number
| of employees at any rate.
|
| I don't think anything of what I'm proposing is right,
| I'm just thinking though the consequences of a 0%
| corporate tax.
| [deleted]
| _delirium wrote:
| > If companies reinvest the money into their businesses,
| that's good.
|
| This is a bit of a side issue, but if a company really does
| reinvest the money into its business, in most cases that
| reinvestment will be spent on things that are deductible as a
| business expense, so that portion of revenue won't be profit
| and not subject to corporate income tax. That's one reason
| Amazon pays close to zero corporate income tax: they book
| very little in profit, since they reinvest most of the their
| revenue into qualifying business expenses to expand the
| business.
| game_the0ry wrote:
| That's a good point. You think most of corporate america
| would notice Amazon and try to do similar, instead they buy
| back stock. Buying back stock is a less risky short term
| strategy to improve stock performance. Maybe tax stock buy
| backs?
| zdragnar wrote:
| Which is intentional- Amazon grew as a company, and we want
| companies to grow. Growing companies hire more people, and
| pay the people they hire more.
| mc32 wrote:
| Didn't we have lots of people complaining that the Trump
| admin was giving away tax money by lowering the Corp tax rate
| down to 23%? I can only imagine the wild heckling of any
| present of future admin if they were so bold as to lower it
| to 0%. Krugman would probably have a fit.
| tlear wrote:
| It is just normal pandering to the base, at least I hope it is
| and they are not that dumb.
| whytaka wrote:
| Doesn't that just further incentivize using corporations as tax
| avoidance vehicles?
| coredog64 wrote:
| The IRS already takes a very dim view of people trying this.
| There are still some avenues for avoidance at the margins
| (e.g. meals for the benefit of the employer), but in many
| cases the IRS has already closed the loopholes.
| notahacker wrote:
| The IRS gets to take a very dim view of people trying this
| _because it audits corporations for tax purposes_.
|
| If corporate tax is zero their ability to investigate
| companies sending money to each other to buy yachts is
| diminished
| gogopuppygogo wrote:
| Great in theory till you realize that a corporate entity could
| just shelter profits for individuals in basically perpetuity.
|
| Want a house? Have very profitable company get into real estate
| and buy a building/housing development/etc... and use some for
| corporate execs as R&D for future projects. Want a luxury
| vacation? Have company pay for trips or heck buy a boat/plane
| so the company can make it an executive retreat.
|
| Income taxes shouldn't exist in my opinion. The government can
| already tax consumption. Why do they need to bilk citizens out
| of both ends?
|
| To pay for war. That is always the answer in the USA.
| tchalla wrote:
| > Income taxes shouldn't exist in my opinion. The government
| can already tax consumption. Why do they need to bilk
| citizens out of both ends?
|
| If you tax ONLY consumption, taxes will simply be passed on
| to the last mile which is consumers.
| AdrianB1 wrote:
| All the taxes are always paid by the consumers,
| corporations don't bring money from home to pay taxes, they
| just pass it to consumers.
| rcpt wrote:
| Tax incidence is not that simple.
| jbay808 wrote:
| Consumption taxes are harder to make progressive; that is,
| they tend to have a disproportionate burden on the poor,
| whose consumption is a higher fraction of their income. But
| that could potentially be countered by something like a UBI,
| which is a progressive measure.
| rcpt wrote:
| Progressive consumption taxes are a thing. Flat sales tax,
| yes, those are regressive.
| coredog64 wrote:
| If a corporation owns my house and doesn't charge me rent,
| then imputed rent is a taxable benefit. Same with a car.
|
| If my corporation owns a biz jet, then there has to be a
| purpose to the travel it offers. The IRS is going to look
| askance at trips to Hawaii with your spouse and kids being
| explained as "for business". Best case, they identify it as a
| taxable benefit and then you pax tax, interest, and
| penalties.
|
| In general, I think there's an overestimation of what the IRS
| hasn't already cottoned to WRT people trying to live within a
| corporation.
|
| Now family trusts are different, but that's not the subject
| of discussion.
| nodamage wrote:
| The corporation doesn't have to pay for these things for
| you to recognize a massive tax benefit from a 0% corporate
| tax rate. If you can route your earnings through
| corporation in this scenario then you effectively pay zero
| taxes on the delta between your income earned minus your
| annual expenses.
| treespace88 wrote:
| Yes, at a high enough level of wealth you don't need to own
| anything other then controlling shares in a corporation.
|
| Your spending cash is just a loan from a bank to you backed
| by the value of your corporation.
|
| All major assets are held by the corporation.
|
| A global tax of some kind is the only way to slow the divide.
| As the growth of wealth is finally taxed, and inflation can
| start to eat away at it.
| oblio wrote:
| > Income taxes shouldn't exist in my opinion. The government
| can already tax consumption. Why do they need to bilk
| citizens out of both ends?
|
| > To pay for war. That is always the answer in the USA.
|
| Almost every country in the world has income taxes, even
| neutral countries such as Switzerland (
| https://home.kpmg/xx/en/home/insights/2011/12/switzerland-
| in... ), which haven't been in a war for 200 years.
|
| I imagine most folks here are American, but not everyone is
| out to get the average US citizen, some ideas just are good
| ideas and at some point they basically become universal. The
| US government is not some special meanie, in this case :-)
| AdrianB1 wrote:
| Some countries have no personal income tax for citizens and
| residents. US did not have one for half of its existence
| and when one was created it was tiny. Now most governments
| treat their citizens as 2 classes: those that can be taxed
| to death and those that can receive for nothing in return.
| This is a big divide that is growing, not closing.
| oblio wrote:
| "Some countries" = maybe 10-15 microstates and tax
| havens.
|
| https://en.wikipedia.org/wiki/Income_tax#Around_the_world
|
| > US did not have one for half of its existence and when
| one was created it was tiny.
|
| The US also didn't have highways, a public healthcare
| system, public education, etc. for a large chunk of its
| existence. When all you needed was a homestead and a
| rifle... you didn't need much to finance the government.
| tchalla wrote:
| > Hopefully, that would bring offshore profits back and
| increase hiring, r&d spend, capex, etc etc positive feedback
| loop etc.
|
| What if they don't? We will accelerate inequality further.
| Then, spend another decades to get "correct it" unsuccessfully.
| gen220 wrote:
| I think it's an interesting idea, and not a terribly poor on
| the face of it.
|
| Unfortunately, for us non-uber-rich people, uber-rich people
| have a lot of money to hire people to help them "avoid" taxes,
| under the euphemism of "minimizing tax burdens".
|
| I think we'd probably need to address that first, by
| simplifying the US tax code (perhaps making it X% full stop,
| across the board, no loopholes, applied to all income earned
| beyond Y/year), before experimenting with such a strategy.
|
| Of course, there will still be some sleazy people hiding their
| wealth (and income) behind personally-directed "non-profits"
| and "charities". But, these are probably easier to litigate
| than the corporations those people work at/for.
| dylan604 wrote:
| > perhaps making it X% full stop, across the board, no
| loopholes, applied to all income earned beyond Y/year
|
| This has been floated for some time, usually followed by a
| discussion of a sales tax increase. However, the groups
| floating these ideas tends to be the more fringe types, so
| they are almost always dismissed out of hand.
| gen220 wrote:
| I think it'd be popular among citizens who make under
| Y/year. You can make Y arbitrarily high, like $10m/year,
| and make X quite reasonable, like 30%.
|
| Stepping back, to look at whether such a tax would be
| useful.
|
| The chief risk that thinktanky-people raise is that there
| are many desirable countries to live in, which _don 't_
| levy taxes as such. So you'd get a lot of assets fleeing
| $TAXING_COUNTRY, which, the argument goes, would have a
| deleterious impact on people inside that country.
|
| In practice, most income of these people is not circulated
| in the American economy, but immediately invested into
| "stationary" assets, such as securities issued by US
| Corporations or the Treasury. Regardless of where these
| people live or hold citizenship, much of that stationary
| income will continue to be invested in the US, where real
| growth rates have historically been sustainably-high.
|
| (a simultaneous tax on US-held-wealth, not income, would
| throw a big wrench into this argument!)
|
| In addition, I doubt many people would _actually_ give up
| their American citizenship to avoid this tax (simply having
| a residence abroad would not be enough to escape this tax,
| if you 're a citizen, since our country taxes citizens
| living abroad).
|
| IMO, most of the people who would give up citizenship to
| avoid a mandatory income tax, would have _already_ given up
| (or avoided obtaining) their American citizenship anyways,
| because of the tax implications that exist today.
|
| ---
|
| This talk of emigration reminds me of a fun thought
| experiment.
|
| I remember reading some argument whose thesis was, roughly,
| "one reason the US is able to accrue so much debt, _well
| past_ the reasonable point of leverage for the average
| country, is because the US is the only nation with
| sufficiently-international tax-collecting, finance-
| monitoring, and military potential to effectively implement
| a wealth tax ".
|
| From the buyer's perspective, Country X can buy our debt,
| essentially as a securitization of a future wealth tax
| against the US. Furthermore, this effectively doubles as
| insurance against wealthy emigres leaving your country,
| since most of them take their assets to the US when they
| go! This means that the likelihood of US Debt being paid
| back is extremely high, even past the normal metrics of
| over-leverage (debt as a % of GDP).
|
| To avoid a hypothetical tax on wealth generated in the US
| since the 1940s, you'd need to move yourself and your
| assets to a location outside the combined
| military+financial influence of the USA, that is willing to
| take your now-contraband, non-USD assets. Any USD assets
| held by most banks would be de facto seized.
|
| Presently, maybe North Korea and Iran fit this bill.
| Russia, to a lesser extent, but this is a roll of the dice.
| Not the best places to peg a long-term future on. It's
| possible to imagine China (and the countries under its
| sphere of Belt+Road influence) fitting into this category
| one day, which would be interesting and probably invoke a
| war.
|
| One interesting feature of this lens, is that the US
| shouldn't ever need to implement a wealth tax to justify
| the borrowing ability, the US simply needs to make it clear
| that such a tax would be possible to levy, if absolutely
| necessary.
|
| Another interesting implication is that, if the US should
| ever _lose_ its power to levy this tax (due to a sharp
| decline in military, economic, or financial policy
| strength), the US 's ability to borrow way above our
| annual-GDP could evaporate overnight: causing all kinds of
| mayhem, probably.
| rcpt wrote:
| Really wish land value taxes were politically viable.
| Impossible to hide land and no matter how much you tax it the
| amount doesn't change.
| pharke wrote:
| I don't think that would work in the long run either. If it
| becomes expensive to own a lot of land due to taxes then
| the simple solution is to not own land and it's easy to
| implement as there is no requirement to hold land as an
| asset, it's only a convenient store of wealth at the
| moment. The minute it becomes inconvenient you would see
| the wealthy divest their ownership of land in favour of
| some other asset with less tax burden.
| filoleg wrote:
| >The minute it becomes inconvenient you would see the
| wealthy divest their ownership of land in favour of some
| other asset with less tax burden.
|
| Wouldn't that be a "win" situation as well? Because at
| least it will reduce the incentive to go all NIMBY on new
| denser development, which seems to be the main blocker
| when it comes to housing pricing (and, consequentially,
| ownership/renting).
|
| Unless I misunderstood what you said, it seems like you
| are saying that this policy won't completely solve the
| issue. But it would make it at least better, while, at
| the same time, making "property as a store of wealth"
| less viable. Which would (in my estimation) make housing
| cheaper (directly) just due to people not hoarding the
| land anymore and (indirectly) due to decreased NIMBYism
| blocking denser housing developments.
|
| So while it might not be a win-win-win, situation, it
| could definitely be a win-win situation. Or at least a
| singular win situation without much losses or negatives
| attached to it (at least as far as I am seeing this,
| which could definitely be wrong; in which case, please
| correct me, as I am thinking through this as I am going;
| I am far from being the expert on the situation).
| skluug wrote:
| Divest how? By selling? To who?
| akudha wrote:
| If I am a smaller, poorer country (especially poor in natural
| resources), why would I agree to this? If giving tax breaks can
| attract foreign companies to my shore, why would I _not_ do it?
|
| Why should other countries make concessions for the American
| politicians (esp republicans) unwillingness to properly enforce
| the existing tax rules, make better tax code, increase funding
| for IRS etc?
|
| I don't think I understand her logic, can someone ELI5?
| ardit33 wrote:
| Why would larger countries allow/trade with you then? If you
| are being used as a tax avoidance loophole heaven, larger
| countries can just cut off any trade with you. They don't own
| you squat, if you will try to undermine them, then can just cut
| you off.
|
| All they have to say: no business in my country, are allowed to
| do any business with little loophole country, and no trade will
| be allowed between our countries. Good luck little dip-shit
| country, you are on your own.
|
| Which will defeat the purpose of your small tax heaven
| strategy. Unless your little country is a full blown 'autarky'
| (which is impossible now days, unless you want to look like
| Cuba), you will have to play by the rules of the big boys.
| oblio wrote:
| > If I am a smaller, poorer country (especially poor in natural
| resources), why would I agree to this?
|
| Well, logically, you wouldn't. Until all sort of levers start
| turning and you start feeling pain.
|
| How do you think this kind of thing happened historically? See:
| Commodore Matthew Perry & co.
| petermcneeley wrote:
| In light of this announcement I propose a new economic prediction
| where max_tax = min_tax + epsilon. I call this new relation the
| Obviously Economic Relation.
| nickysielicki wrote:
| So we were the global tax haven that undercut the rest of the
| developed world for the past 50 to 100 years, and now that we're
| drowning in debt and the government needs revenue, we're asking
| very nicely that nobody plays spoiler.
|
| Gotcha. Good luck with that.
| IG_Semmelweiss wrote:
| The US is the biggest tax haven in the world.
|
| Seems odd that people would be cool woth a global tax, when we
| let foreigners hide income in the US left and right
| Causality1 wrote:
| Is there any treaty the entire globe has agreed on? Sure, overall
| corporate tax revenues would go up but not enough to make up for
| the money a small country stands to make by not signing and
| becoming a tax haven.
|
| This is just an excuse to not pass strong controls preventing
| local companies from moving their money overseas. Start taxing
| companies based on where their employees and executives live, not
| which mailbox they stuff money into.
| JumpCrisscross wrote:
| > _Is there any treaty the entire globe has agreed on?_
|
| Charter of the United Nations [1], for one.
|
| At the point one is discussing non-signatories to it one is
| debating the definition of a country. That seems like a fair
| line at which to delineate the entire globe, more or less.
|
| [1]
| https://en.m.wikipedia.org/wiki/Member_states_of_the_United_...
| dontreact wrote:
| If the U.S. and other large governments cared enough about this
| they could make it happen because they have more power (both
| economic and military).
| jimbob45 wrote:
| Copyright rules are darn near equal everywhere now with Trump's
| trade deals, although, I don't know that there was really any
| pushback on that.
| notahacker wrote:
| The vast majority of countries are WTO members.
|
| Arguably the WTO is both the rationale for a "minimum corporate
| tax" (if it wasn't for WTO rules, countries could introduce
| tariffs and other trade barriers specific to certain countries
| to deter registration in tax havens) and the most likely way
| such a thing would be realised (in practice it would probably
| be "you can set your rate below this, but if you do WTO members
| are free to set higher tariffs on your produce than other
| countries")
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