[HN Gopher] G7: Rich nations back deal to tax multinationals
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G7: Rich nations back deal to tax multinationals
Author : ddek
Score : 810 points
Date : 2021-06-05 11:24 UTC (11 hours ago)
(HTM) web link (www.bbc.co.uk)
(TXT) w3m dump (www.bbc.co.uk)
| dmje wrote:
| There was a time that companies paid back into their local
| communities, funding schools and parks and infrastructure. It was
| normal until relatively recently for a pretty big chunk of profit
| to be "distributed" in this way. And it made sense. A company
| needs the community it sits in as much as the community needs the
| company. Then everyone went all single entrepreneurial / maximise
| profits for shareholders; a tiny sliver of people got
| astonishingly rich and incredibly greedy, and we ended up where
| we are with a huge poverty gap.
|
| Companies are making enormous, enormous profits - of course they
| should be taxed. Tax them more. Bring back more money to the
| services that need them. Redistribute the wealth, because the
| alternative is absolute insanity.
| joelbondurant wrote:
| Slavery is on.
| nickpp wrote:
| So the largest violence monopolists in the world are using the
| unique opportunity handed to them by the pandemic to create a
| cartel with two purposes:
|
| - raise the protection tax they levy on their subjects
|
| - prevent smaller violence monopolists from undercutting their
| protection fees through competition
|
| Basically governments deciding competition is not good for them
| and everyone should just pay up.
| miohtama wrote:
| It's good if all competition can be taxed equal. Small biz
| cannot compete against Amazon that pays 0% tax in their
| international arrangements.
| mnouquet wrote:
| "Small business" are just the "think of the children" or
| "9/11" argument to justify money grab. True motive is simply
| to siphon more money to the ruling western elites.
| nickpp wrote:
| Small biz can use their creativity to find other ways of
| competing, not just price. Support for example, which Amazon
| is atrocious for.
|
| We cannot held consumers hostage for the good of the "small
| biz".
| grey-area wrote:
| This is all true, but I think I marginally prefer the dominion
| of politicians I can vote for to the feudal structure of
| multinational corporations, which we have even less power over.
| nickpp wrote:
| There are 3 ways to vote in a corporation:
|
| - with your wallet: buy or not buy from them
|
| - with your broker: invest (and then literally vote from the
| inside) or not in them
|
| - with your feet: work or not for them
|
| Corporate interests are directly aligned with us exactly
| because without these votes they are finished. That is why
| corporates try to create products clients want, profit
| investors want and salaries workers want. On top of that,
| social responsibility programs to keep everyone happy and pay
| their taxes.
|
| There is only one way to vote when it for politicians: with
| your feet. And they don't care since they win by getting
| votes and they get votes by spending money which is taken
| from us. They have no interest aligned to ours.
|
| That is why I much prefer the dominions of corporations.
| avianlyric wrote:
| This is such crap. While in theory you're right, it ignores
| the biggest difference.
|
| With politicians ever person only gets one vote,
| theoretically equal power to force change.
|
| With corporations, the number of votes a person gets is
| directly related to their bank balance. There's no such
| thing as equal power for the people, only the rich get to
| vote.
| nickpp wrote:
| That is exactly how we got the planet to its current
| state: if you give more power to the numbers you'll
| encourage more numbers. Maybe it's time to give more
| weight to another human accomplishment than reproduction,
| like to the value created.
|
| But I don't hear governments giving more voting rights to
| more populous countries, instead it's to the "more
| developed" (PIB) and "more powerful" (military) both
| proxies for wealth.
| dane-pgp wrote:
| > like to the value created.
|
| Or to the value stolen. You have to understand that by
| giving state power to the wealthy, they will declare
| their own actions legitimate and the actions of the poor
| to be illegitimate.
| rayiner wrote:
| Seems like a pretext for a G7-wide cut of corporate tax rates to
| 15%. Bravo globalists.
| antattack wrote:
| "The rules on making multinationals pay taxes where they operate
| - known as "pillar one" of the agreement - would apply to global
| companies with at least a 10% profit margin. "
|
| Tying tax rate to profit margin sounds like a loophole. For
| example - Hollywood Accounting[1]
|
| [1]https://en.wikipedia.org/wiki/Hollywood_accounting
| unreal37 wrote:
| Amazon ran at almost 0 profit for years, but then they ran out
| of ways to make the money disappear.
|
| Still, this would catch them.
| bpodgursky wrote:
| In 2020 Amazon had revenue of $386 billion and profit of
| $21.33 billion, so no it would not. That's far under 10% (as
| expected for a retail seller).
| jokoon wrote:
| I already said that the pandemic would force the entire world to
| lean to the left in terms of politics. It's inevitable.
|
| I'm very happy about that decision, but I'm not really confident
| it will lead to something. I'm also a bit cynic that it took a
| pandemic to make countries realize they need money.
|
| I'm also waiting to see if government are really planning to
| fight against tax havens.
|
| The problem is that it's impossible to protest against those
| small Island tax havens because they're just too far away. Maybe
| protesters could block flights or boats that go to those tax
| havens?
| mnouquet wrote:
| > I already said that the pandemic would force the entire world
| to lean to the left in terms of politics. It's inevitable.
|
| Do you mean totalitarian, correct ?
| runarberg wrote:
| If the tax havens are democratic (and most are) then government
| boycotts + divestment + sanctions could go a long way.
|
| Imagine being a panama citizen, your government is hellbent on
| protecting foreign billionaires from paying taxes in their home
| country. Now the Panama Canal is seeing only 50% of the traffic
| with resulting job-loss, the national team is no longer allowed
| to play in Copa America, and your countrymen have to play under
| a different flag if they go to the Olympics. And all because of
| a government policy you don't agree with.
|
| You will probably factor that in when you decide who you will
| vote for in the next election.
| toyg wrote:
| Panama is probably the one country that could hold it out -
| retaliation on the Canal would escalate matters to a point
| where rich countries have to choose between a dangerous
| military occupation or sitting at the table with the local
| government.
|
| But yes, isolation of countries like Bermuda and Cayman
| Islands could achieve a lot very quickly. To be brutally
| honest, the UK government could shut down most of them
| tomorrow, if they wanted to; but they have a few incentives
| to do only just enough to appear like they want to, without
| actually doing so (going from nefarious "their own moneyed
| citizens want to keep money flowing" to relatively innocent
| "they risk losing whatever little formal power they still
| have on former colonies that they can't directly occupy
| anymore").
| runarberg wrote:
| I wonder how essential the Panama canal actually is. If the
| Panamanian government decided to play rough and use it as a
| threat, there are several alternatives for global shipping.
| Some could use the Suez canal instead with only a minor
| increase in shipping time. Others could use rail, and the
| worst affected could still go through the Magellan
| straight.
| large wrote:
| >I'm also a bit cynic that it took a pandemic to make countries
| realize they need money.
|
| Money doesn't come from taxes. Maybe 'progressive' taxes should
| be low to none.
| cheche07 wrote:
| Not convinced, they may appear to be taxing them more, to the
| public eye But the offset from new "grants" and "funding
| initiatives" will result in the same outlay for these
| corporations Basically all politics and double speak
| varispeed wrote:
| If they really wanted to do it, they'd do a requirement for a
| company to show their books to IRS in a given country. They would
| call out fake charges to hide profits and demand back tax on
| that. It's all doable, but all those politicians are corrupt.
|
| The whole piece reads as if it was bought by Facebook and Amazon
| for PR. It's going to be business as usual unfortunately.
|
| I hope a party will show up and have guts to actually do
| something about those tax dodgers. To charge tax on these fake
| intellectual property arrangement you don't even need any laws
| changed. You only need a few officers that are not bent.
| ptr2voidStar wrote:
| I'm fascinated that people actually believe this would make a
| _material_ difference to the way all the paraphernalia
| surrounding taxes (e.g. legal, accounting, geopolitics etc.) are
| currently structured.
|
| To quote Tancredi (from "The Leopard"):
|
| "Everything must change for everything to remain the same"
| seaourfreed wrote:
| Finally a politician (Joe Biden) is fixing one of the major area
| of the rigged economy. If workers auto-deposited their paycheck
| overseas and didn't pay taxes, they would be in jail. If small
| businesses did fraud that their profits were over seas, they
| would be in jail.
|
| Our politicians have been selling us out, as big corporations did
| this. Big corporations are doing fraud at saying their profits
| are happening in these other countries.
|
| Hopefully Joe Biden can actually fix this. Big corporations will
| fight him hard.
| hosker4u wrote:
| Biden did not invent this. Its been in the works for years
| pushed by other countries. USA just agreed or some will say
| conceded.
| [deleted]
| tonyedgecombe wrote:
| _The deal - from the US, UK, France, Germany, Canada, Italy and
| Japan - will put pressure on other countries to follow suit,
| including at a meeting of the G20 next month._
|
| I can imagine what those other nations responses will be.
| peteretep wrote:
| Short-term whining from Ireland and Hungary, big words and
| little action from the true tax havens, and everyone else
| should be pretty happy with it?
| rjknight wrote:
| I do wonder if we wouldn't be better off eliminating corporation
| tax entirely.
|
| The revenue of a corporation can, roughly, be:
|
| 1. Spent on goods or services from another company (including
| freelancers, contractors, etc.)
|
| 2. Spent on rent
|
| 3. Spent on capital purchases
|
| 4. Spent on wages
|
| 5. Spent on debt repayment or other forms of financing
|
| 6. Paid out in dividends
|
| 7. Spent on share buybacks
|
| 8. Invested in something else
|
| Items 1-5 are all good things that we want companies to do, and
| corporation tax is normally applied after this spending is
| accounted for. Items 6 and 7 ought to be taxed, and frequently
| are (dividends and buybacks create income for individuals who
| will pay tax on that income). Item 8 is a bit vaguer, but
| probably shouldn't be taxed in most cases (if we're worried about
| companies parking cash in very low-risk assets, then super-low
| yields are effectively a tax on that anyway).
|
| All that the corporation tax adds to this picture is the creation
| of work in tax avoidance services, and an unjust inequality
| between those firms that can afford those services and are
| structured to take advantage of the rules, and those that can not
| and are not.
|
| It's not obvious to me that corporation tax /can/ be fixed, and
| so it may be better simply to scrap it and replace it with
| something more difficult to dodge.
|
| EDIT: formatting
| runarberg wrote:
| I'm of the opinion that there should only be income tax (paid
| as a function of standard deviations from from the mean wage on
| the logistical curve). And all personal profits should be
| considered income, including sold shares, paid dividends,
| earned interest, etc.
|
| However I can see how that system would be abused. E.g. instead
| of buying that yacht from your personal money (which you need
| to pay 70% tax on when you transfer it from the company) you
| simply have the company pay for it and say this is a company
| yacht. Then I can see how people would continue to hide their
| wealth in off shore shell companies that they never have to pay
| a tax on. So even with this scheme it is still ripe for tax
| havens.
| ipaddr wrote:
| Capital gains is much lower in the US compared to other
| countries, your idea floats the value at your current tax
| bracket.
|
| It could work but where do royalities fit in? Estate taxes?
| jandrewrogers wrote:
| This is incorrect, capital gains rates in the US are
| currently similar to or higher than many European
| countries. Federal (20%) + NIIT (3.8%) + State (up to
| 13.3%) puts you firmly in the middle of the pack for
| European countries. The proposed changes would make them
| the highest in the developed world, by a large margin.
|
| The elephant in the room is that the main difference
| between US and European tax rates is that the _middle-
| class_ tax rates in the US are _much_ lower than their
| European counterparts. If you are in the top tax bracket in
| California, the income taxes aren't that much different
| than in most of Europe and the capital gains taxes are
| typically lower.
| ipaddr wrote:
| The full amount of a short-term capital gain (property
| held for less than 1 year) is taxed as regular income.
| Long-term capital gains are taxed at a lower rate than
| regular income, but the amount depends on your tax
| bracket. Long-term capital gains in the 10% and 15% tax
| bracket aren't taxed at all, those in the highest tax
| bracket are taxed at 20%, and everything in between is
| 15%.
|
| In the US, capital losses can reduce capital gains and up
| to $3000 of regular income. If losses are $3000 more than
| gains, you can carry them forward to future years.
|
| If you make 90,000 in Florida City, Florida. You purchase
| a home for 100,000 sold for 200,000 your capital gains
| is: $15,000 15% federal 0% state 0% local
|
| In VermountVille New York State 21409 15% federal 6.41%
| state 0 local
|
| In Sf 24,500 21,000 if you are married.
|
| In order to pay 36% you have to be earning over 500,000
| to pay that rate and single.
| ncallaway wrote:
| This seems sensible to me, so long as I'm allowed to use
| corporate personhood to tax a company's income under this
| scheme.
|
| If your money counts as speech because you have first
| amendment rights, then your income counts as income because
| you have IRS obligations.
|
| I'm 100% over letting corporations pick some of the benefits
| of citizens but skate away from all the obligations. If you
| want the rights, you get the obligations. If you don't want
| the obligations, you don't get the rights.
| heliodor wrote:
| How about the self-sustaining farmer who doesn't need to work
| in society? Completely capable individual, has a certain way
| of life, and suddenly they don't need to contribute?
|
| How about the person who has so much wealth that they will
| never need to work in their life?
|
| Government is labor that benefits the people. The only way an
| individual can escape the duty is if they are incapable or if
| society deems that they deserve a break.
|
| Taxing only income misses the mark by a bunch.
| ipaddr wrote:
| They would pay property taxes at the city level and other
| fees still.
| runarberg wrote:
| Indeed. Which is the reason why my conclusion was opposite
| to the opinion. The real world gets in the way of it being
| practical.
|
| But in my ideal world inheritance is considered income and
| is taxed as such. And on a logistical curve a billionaire
| inheritance is taxed really close to 100%. Anybody that has
| earned so much money they no longer need to work has paid
| as much in taxes (and continue to do so as interest is
| taxed as income). Additionally on a logistical curve it is
| almost impossible anyway to earn this much since a huge
| earning is taxed close to 100%. For example, someone making
| 5 standard deviations above the mean pays 99.33% tax on it,
| so they will probably end up with less after taxes then
| someone earning 2 standard deviations below the mean
| (11.92% tax).
|
| As for the farmer who is self sustaining. I guess they are
| not using up much of the shared infrastructure anyway, I
| see no need for them to be paying taxes.
| didip wrote:
| I am with you, we should tax on things that are undodgeable and
| stop this wasted energy on corporate taxes.
|
| * Property tax is 1 obvious place, you want the land in this
| country? You pay the tax for it.
|
| * VAT is another obvious one. You want to sell in this country?
| You pay the tax.
|
| There are plenty of things that can be taxed which are
| undodgeable, we just have to be creative.
| nostrademons wrote:
| This is the case with any form of government financing - taxes,
| deficits, and inflation _all_ introduce market distortions
| where they reduce productive activity. This is inherent to
| economics, because a basic principle is that there is no free
| lunch: if you are going to spend resources on _spending_ ,
| those resources have to come from somewhere else, and the
| private sector by definition is the "not public sector".
|
| But if you _don 't_ accept these deadweight losses, which means
| that there is no way of funding a government, which means that
| the essential services a government provides - notably a
| monopoly on violence and a peaceful way of adjudicating
| disputes - no longer exist. This is _more_ damaging to
| businesses - when business every business needs to hire a
| protection racket to avoid being ripped off and killed,
| productive activity tends to come to a halt.
| pitaj wrote:
| Different taxes have different amounts of dead weight losses.
|
| For instance, land value tax has no dead weight loss.
| Corporate tax has one of if not the highest dead weight loss.
| yojo wrote:
| Here's a different lens: tax is a mechanism for determining who
| pays for shared infrastructure and social services.
|
| Any entity that has to pay obviously has other ways they can
| more productively (as seen from the entity level) deploy the
| cash.
|
| But ideally we are not optimizing for a single entity or class
| of entity, we're trying to optimize at the societal level.
|
| We know that corporations can bear some burden, because we are
| taxing profits. I couldn't tell you whether this is an optimal
| place to tax, but it intuitively feels reasonable -
| corporations are large non-governmental concentrations of
| wealth and power. This seems like a valid pool to tap for
| funding the state, and better than many alternatives (e.g.
| taxing the poor and powerless).
| StopHammoTime wrote:
| Here's an idea, let's charge tax on revenue and it can just be
| the cost of doing business. Small businesses get a tax holiday
| for the first few years. Problem solved.
| kapuasuite wrote:
| Why tax a corporation's income at all when you can tax its
| shareholders income instead?
| jakeinspace wrote:
| Well, the shareholders may live in a different area or
| country than the one in which the company operates. If a
| corporation is largely owned by American investors, but
| does its production largely in a developing nation (relying
| on their infrastructure to operate), then I think it's fair
| to say that both the developing country and the US should
| both get a slice of the pie: 1 for providing the
| infrastructure and labor market, and the other for
| providing the comforts of a developed country to
| shareholders.
| elbasti wrote:
| Most countries on earth--US being a notable exception--have a
| better version of this: the VAT.
|
| It's a very elegant tax on paper, but significantly
| complicated from an accounting POV. It's one of those areas
| where there are huge gains to be had from digitizing
| financial records, and countries that have succeeded in this
| (like Mexico) create a very powerful revenue source.
| sokoloff wrote:
| Taxes on revenue create strong incentives for vertical
| integration and consolidation (because there are fewer links
| in the chain to be taxed).
|
| If one entity owns the farm, the food distribution, and the
| grocery store, they have one revenue transaction to be taxed.
| A small farmer selling their eggs to a distributor who sells
| them to the grocer who sells them to you is taxed three times
| on what amounts to same activity.
| kaveh_h wrote:
| This is perhaps true of revenue tax. But for VAT You can
| deduct VAT of sales from VAT of purchases.
| sokoloff wrote:
| Indeed. Which is why VAT is a much better structure of
| taxation than a tax on all revenue.
| riffraff wrote:
| This does not address the issue this new tax agreement is
| supposed to tackle: that big companies produce income in
| country X but shift profit to country Y where it is taxed less,
| effectively extracting wealth from the first.
|
| If you only taxed dividends the problem would not go away.
| bradleyjg wrote:
| One problem is that this would effectively distribute tax
| revenue from a company by the citizenship of the owners (6 and
| especially 7) but most countries think they are entitled to
| some tax revenue from companies operating in their nations even
| if the company is wholly owned by foreigners.
| sudhirj wrote:
| That's usually the case of any kind of operation, no? If you
| use the infrastructure and services of a particular country
| its seems reasonable to pay taxes on your profits there.
| bradleyjg wrote:
| It does seem like a reasonable principle, which makes
| abolishing the corporate tax unpersuasive. If there were
| only a single jurisdiction the argument would be more
| compelling.
| zemvpferreira wrote:
| It certainly isn't impossible for nations to tax foreign
| individuals operating companies locally without a
| corporate tax. A way would be:
|
| a) similar to KYC laws, make knowing all persons who own
| part of a company mandatory, regardless of how many
| structures (corporations, trusts, whatever) you have to
| go through.
|
| b) preemptively tax every individual on
| profits/salaries/perks/payments from the company at some
| established rate.
|
| c) come tax season, ask for a global income statement
| from everyone taxed. Adjust their taxes based on whatever
| bracket they land in.
| magila wrote:
| Even without a corporate income tax companies would still
| generate tax income in foreign countries where they sell
| goods and services, e.g. VAT/sales tax. They would also pay
| property tax on any physical presence they maintain and
| probably a myriad of other taxes depending on the country.
| bradleyjg wrote:
| While the tax incidence (where the burden lands) of
| various taxes is a thorny question subject to much debate
| in the literature I don't think it's especially
| controversial to say that sales, property, and wage taxes
| are likely to have different incidences than a tax on
| profits.
| TacticalCoder wrote:
| > ... but most countries think they are entitled to some tax
| revenue from companies operating in their nations even if the
| company is wholly owned by foreigners.
|
| Any individual in the EU buying anything from a foreign
| company operating in their EU nation pays the VAT on the good
| or service. That's usually 21% and up to 25%. And that's not
| on the profits.
|
| That's already quite something.
| PaulRobinson wrote:
| If you're going down this route, many will argue that all forms
| of income tax are equally "wrong".
|
| Henry George - a 19th century political economist - proposed
| exactly this, and suggested the only thing that should be taxed
| should be land: impossible to hide from a tax inspector,
| potentially a waste to the public commons if useful land that
| could be exploited isn't and you can even protect land you wish
| to keep pristine more easily (tax it very, very highly).
|
| His ideas are now considered eccentric, but I do wonder if the
| World would be a great deal simpler if globally we moved to a
| Henry George system and stopped trying to tax sales, income and
| everything else going we do.
| PragmaticPulp wrote:
| > Henry George - a 19th century political economist -
| proposed exactly this, and suggested the only thing that
| should be taxed should be land
|
| That may have made sense in the 19th century when agriculture
| dominated the economy, but it's irrelevant today.
|
| At scale it becomes a tax on how space-inefficient your
| business is. Bad news for farmers, great news for the
| business running a 1000-person operation out of a skyscraper.
| You could of course start trying to change taxation rates
| based on various factors to compensate, but those factors
| reduce to proxies for revenue, which puts us back to square
| one.
|
| 19th venture taxation theories don't translate to modern
| multinational trade with digital commerce.
| cvwright wrote:
| Tax intellectual property too then.
|
| This would also help push back against ridiculous patents
| and eternal copyright.
| ridgeguy wrote:
| This would prevent me, an individual inventor of (I'll
| claim) non-ridiculous inventions, from monetizing my
| efforts. The monetary barriers to patent protection and
| enforcement are already significant to me. I can't be the
| only one in this circumstance.
|
| Eternal copyright, however - yes, sucks.
| pydry wrote:
| >Bad news for farmers, great news for the business running
| a 1000-person operation out of a skyscraper.
|
| Not especially. The skyscraper land is probably 10000x more
| valuable per square foot so the tax will be 100x higher.
|
| If you assume every square foot is taxed the same then
| you've kind of missed the point of a land value tax.
|
| It won't fix the inherent problems with intellectual
| property though.
| MrPowers wrote:
| Land taxes are based on the value of the land, not the size
| of the land. The property tax system already performs land
| value assessments.
|
| Land taxes are highly progressive.
|
| Note that land taxes are only assessed on the value of the
| land, not the value of any buildings on the land. This
| incentivizes land owners to put the land to its highest and
| best use.
| PragmaticPulp wrote:
| > Land taxes are highly progressive.
|
| Maybe in the 19th century, where this idea originated.
| Economics of business have changed too significantly to
| use it as a one size fits all taxation scheme.
|
| It may have made sense when revenue was somewhat
| proportional to the amount of land a business occupied,
| but that no longer holds true in the age of skyscrapers
| and digital revenue generation.
|
| An internet company in a 10-story building would love
| this scheme, though, because they could generate billions
| in revenue but be taxed at the same rate as a local
| neighborhood of people who owned their homes for a few
| decades.
|
| Land-only taxes may have been an interesting idea in the
| 19th century, but they aren't relevant to a modern
| economy.
| tzs wrote:
| > Note that land taxes are only assessed on the value of
| the land, not the value of any buildings on the land.
| This incentivizes land owners to put the land to its
| highest and best use.
|
| Doesn't it incentivize them to put land to the use that
| generates the most revenue? I don't see how that is
| necessarily the "best" use.
|
| There will almost always be a way that a yard or garden
| could make more revenue, for example, such as by letting
| a bunch of advertisers put up billboards on it or letting
| someone use it for storage.
|
| Is it really best to make it so that only the wealthy can
| afford to use land in a way that they enjoy rather than
| as an asset to be exploited for maximal revenue?
| klipt wrote:
| Do you think that's a problem with existing property
| taxes?
|
| The main difference between property and land tax is that
| with a land tax, the _structure_ isn 't taxed. So you can
| build _up_ "for free" wrt taxes, which encourages more
| density on the most valuable land.
|
| E.g. land in the middle of downtown San Francisco that's
| currently rented out as a flat parking lot, could instead
| be built up into multi level parking or housing instead.
| Whereas the current tax structure would punish such
| developments by increasing the tax (which is why it's
| still a flat parking lot).
| MrPowers wrote:
| San Francisco is an interesting case cause they used to
| have a land tax and economists argued that's what cause
| San Fran to be quickly rebuilt after it was burned to the
| ground in 1906. Land owners were still taxed the same,
| even though their building was gone. They'd have to
| either sell or rebuild.
|
| Contrast that with New Orleans after Hurricane Katrina.
| Property owners had their buildings destroyed, so taxes
| went to zero (taxes based on the property value, not the
| land value). This incentivized property owners to wait
| and see if their neighbors would rebuild rather than take
| immediate action.
| PragmaticPulp wrote:
| > San Francisco is an interesting case cause they used to
| have a land tax
|
| Property taxes on land aren't unique to San Francisco.
| It's basically standard practice in most cities to have
| one tax for property and one tax for improvements.
|
| > Contrast that with New Orleans after Hurricane Katrina.
| Property owners had their buildings destroyed, so taxes
| went to zero (taxes based on the property value, not the
| land value)
|
| New Orleans has separate property taxes on land and
| structures, so property taxes did not go to $0 after
| Katrina.
|
| Overall property tax rates went up because income from
| taxes on structures went down, but unimproved lots still
| get a tax bill.
| oblio wrote:
| That's works only if you're an investor. You're going to
| rebuild your home immediately, finance optimizations be
| damned.
| duped wrote:
| But that's not what happened. People didn't rebuild their
| homes, they left and never came back.
| burlesona wrote:
| Most serious study on this suggests it would have the
| opposite effect: make it harder for the wealthy to horde
| land in the form of low density residences in prime
| locations where townhomes and apartments would be a much
| better economic outcome enabling many more people to live
| affordably in close proximity to their jobs.
| pbourke wrote:
| How much land does Google use vs the most successful
| farmer in a given county?
|
| What's the value of the land that Google uses?
| Ericson2314 wrote:
| Urban office land is easily more expensive.
|
| I say the land value tax (LVT) is best grouped with
| Pigouvian taxes; as PP says, normal property tax
| relatively incentivizes holding undeveloped land, which
| is like charging a higher carbon tax if your car has a
| better MPG.
|
| One one hand, we can also do a VAT in developed countries
| --- perhaps more feasible than in the 19th century and
| making more sense if we are no longer rapidly developing
| and reliant on private investment to foster those changes
| --- on the other hand in big closed economies we can also
| just print money quite safely, so Henry George is quite
| right to focus Pigouvian taxes when "taxation for the
| revenue" is far less important than curbing bad material
| outcomes.
|
| (I only suggest VAT with a UBI to make it no longer
| regressive.)
| tristanj wrote:
| Google owns more than $50B of real estate...
| claudiulodro wrote:
| The value of the land that Google uses is tremendous
| _because_ the Google offices are located on it!
| edgyquant wrote:
| But an LVT isn't a tax on the infrastructure it is a tax
| on the value of the underlying land.
| larsiusprime wrote:
| It's the proximity to Google's economic activity that
| makes the land valuable. A plot of land right next to the
| Googleplex that has nothing on it is immensely more
| valuable than an equally sized plot of land in the middle
| of the Nevada desert.
| edgyquant wrote:
| Sure this is true, but this also one of things Georgism
| seeks fix (land speculation.) A georgist LVT appraises
| land based on the intrinsic value of the resources it
| contains and not what is build on it. In fact it seeks to
| fix "land hoarding" to incentivize productive land. Under
| a proper LVT it would be really expensive for e.g. one
| person to own 100 acres of land they aren't utilizing to
| it's true economic potential.
| mjmahone17 wrote:
| It's bad news for farmers that are farming in the middle of
| a city, yes. But farms in rural areas will hardly get taxed
| at all, because the land couldn't be used for much else, so
| has very little intrinsic value.
|
| Land value taxes adjust based on how desirable a plot is:
| basically, you get to keep any value you generate above and
| beyond the value the society surrounding the land gave it.
| If you leave a plot of land empty in downtown, you're
| preventing someone else from using that plot productively,
| and adding a net negative cost to the surrounding
| properties. So you should be taxed accordingly.
| skybrian wrote:
| I'm wondering how this is supposed to interact with
| zoning? There is a lot of agriculturally-zoned land in
| California that would turn into housing developments
| pretty quick if it weren't illegal. It's typically in a
| nice-looking area near some water or a park, not in the
| middle of a city.
|
| If you keep the zoning then maybe the land isn't worth
| that much, but if property taxes were based on the "true"
| land value then it would mean farmers sell out faster to
| create sprawl.
| Ericson2314 wrote:
| Agricultural-zoned land would be cheaper.
|
| I would rip up urban zoning with an LVT to ensure
| density, but keep the agricultural zoning because we
| can't eat skyscrapers.
| eloff wrote:
| I remember my economics professor arguing that would be the
| most efficient tax after he explained how all taxes have the
| side effect of reducing the thing being taxed.
|
| So taxing something bad like CO2, great idea. Taxing
| something good like income or creating jobs - bad idea.
|
| Land tax would be simple, and very progressive, the tax rate
| of most young people renting world now be 0. It's more
| complex than that because the landlord pays the tax and hikes
| the rent appropriately. It enforces that land is used
| efficiently, which is so dysfunctional in many large cities.
|
| It's a great idea in my opinion. You'd solve taxation,
| eliminate personal accountants as a class, and solve the
| housing crises with one stroke (there is still zoning, but
| this makes poorly zoned land undesirable to hold because it
| bleeds money - creating an incentive for the land owners to
| vote for zoning the land better). But politicians deal with
| popular ideas, not smart ideas. The odds of any country
| trying it seem slim.
| silexia wrote:
| I actually love this idea, although I would just do a
| wealth tax. Anyone who owns wealth gets taxed a bit. If you
| only taxed land, then lots of people would just move all
| their assets into stocks instead of land.
| sagarm wrote:
| LVT has been tried in Pennsylvania, actually:
| https://www.strongtowns.org/journal/2019/3/6/non-
| glamorous-g...
|
| It's worked well in some cities but been repealed in others
| because people were upset that mansions weren't taxed
| enough relative to smaller SFH.
| Khaine wrote:
| I'd also like to point out that for the longest time the
| Roman and Byzantine states taxed land and not commerce. It is
| not a new idea. In some ways it is an ancient idea. Land
| value and use is dependent on the climate and success of
| farming. It can be volatile, and while land may have an
| intrinsic value, the earnings to pay the tax can be highly
| variable (I.e. a drought).
|
| I don't think this is the best idea to solve tax issues in
| the modern world
| odiroot wrote:
| > If you're going down this route, many will argue that all
| forms of income tax are equally "wrong".
|
| I frequently come to a conclusion _personal_ income tax
| should be abolished as it punishes work.
|
| CIT, VAT, capital gains and inheritance taxes should be
| enough to sustain a budget. These are all unrelated to
| performed work.
| daveFNbuck wrote:
| Why is punishing adding value not wrong? Isn't adding value
| a good thing?
| relaxing wrote:
| I frequently come to the conclusion that personal grocery
| bills should be free, as charging for food punishes
| existing.
| Ericson2314 wrote:
| I mean, socialism for basic needs and capitalism for
| status symbols is a pretty nice system. No problem doling
| out status symbols for productivity improvements which
| benefit basic needs production.
| closeparen wrote:
| Groceries are exempt from sales tax.
| mjmahone17 wrote:
| Yes that sounds right: everyone should probably be given
| a ration for a guaranteed allotment food each month. In
| NYC during the pandemic they opened up free meals for
| everyone, regardless of income. A society where enough
| food is provided by default seems like a more humane
| society to me.
| 542458 wrote:
| I was under the impression that CITs were far, far more
| distortionary than well structured progressive PITs.
| dennis_jeeves wrote:
| >World would be a great deal simpler if globally we moved to
| a Henry George system
|
| Yes it would, but you see that will not be popular for many
| obvious reasons ( less jobs for tax
| collectors/consultants/auditors etc.) A more non-obvious
| reason is that the ordinary Joe on the street hates the rich
| so much that he wants the rich being taxed rather than see
| the simplicity of taxing no one.
|
| >His ideas are now considered eccentric,
|
| He actually seems a level headed guy to me :)
|
| I would go even one step ahead and say that even land should
| not be taxed except for the cost of keeping land records.
| MrPowers wrote:
| The deadweight loss of taxation is much lower for a land tax
| than an income tax. The deadweight loss is the economic
| resources allocated to complying with the tax. The armies of
| tax lawyers would be able to perform other economically
| productive activities if they weren't pouring over the tax
| code.
|
| Pigovian taxation is even better. Taxing gas is a great
| example. Gas consumers emit carbon which has a cost for
| society. We should make them pay for this negative
| externality via a gas tax, so their consumption is
| economically optimal. This is how to prevent the Tragedy of
| the Commons.
|
| I'd argue that some taxes are objectively better than others
| and not all equally wrong.
| lars512 wrote:
| As an Australian who moved to Sweden, I was amazed at how
| efficient the Swedish income tax process was. The
| government already knew everything they needed to calculate
| your return, and gave it pre-filled. There were not endless
| exemptions. Nobody at my work used an accountant, most
| approved their tax with a few clicks and were done. So much
| more efficient than in Australia!
| oblio wrote:
| In Romania if you're a regular employee, you don't have
| anything to do. Flat tax rate, taxes at the source, no
| exemptions, no deductions.
|
| You don't even file.
| gambiting wrote:
| In the UK if you're in full time employment and only have
| one job, then there's literally nothing to do. Not even
| clicking somewhere to approve your tax return - your
| employer does it all for you. I know people who are
| literally unaware when the tax year ends because they
| never in their entire adult lives had to do anything with
| the tax return - it's just completely irrelevant to a
| normal working person. And on the ocassion that you have
| to fill one out for whatever reason, most of it is
| already prefiled from the information HMRC holds about
| you already.
| briane80 wrote:
| It's even better - they work out if you paid too much
| automaticallly and send you a check in the mail. Had 3
| checks over the past decade or so from having time off
| between jobs but paying full rate for the remaining time.
| Nothing quite so satisfying as a PS1000 check from HM
| Revenue and Customs!
| jejones3141 wrote:
| Would I be correct in suspecting that you don't get
| interest on overpaying, but get charged serious fees for
| having to pay too much on tax day?
| ownagefool wrote:
| No. HMRC pay interest on money they hold that belongs to
| you. You pay interest if you fail to pay on time.
|
| They may additionally fine you though.
| briandear wrote:
| You should be furious that you gave them a free loan.
| Ekaros wrote:
| Finland has next step. They have my account number in
| records so every year they move what they owe me
| automatically to my account.
| tazjin wrote:
| This only works until you make ~100k GBP or have
| "complicated" income (e.g. shares instead of cash), which
| people in our industry hit very easily.
| gambiting wrote:
| I'd argue about the "very easily" point for IT workers in
| the UK, as 100k+ salaries are _very_ rare, and if you get
| shares instead of cash it 's still taxed as income and
| doesn't trigger a self assessment. Only if you hold onto
| them and only if you make more than the capital gains
| threshold, you have to fill out a self assessment.
|
| But in either case - sure, but the system means
| absolutely no worries about your tax return for 90% of
| British employees.
| walshemj wrote:
| Normally shares are not taxed as income in the UK
| dependent on how they are structured -dividends are
| though.
| throwaway894345 wrote:
| The American tax system is similarly frustrating. I'm a
| senior engineer and I have a hard time navigating tax
| forms even with the help of Intuit, and it frustrates me
| that I have to pay Intuit (or someone else) to help me do
| taxes which are complicated in large part because Intuit
| et al lobby for complex tax codes and against the sort of
| Swedish model you describe.
|
| Worse, when I moved to Chicago the state of Illinois
| _wouldn't even accept my taxes electronically_ because
| their form required one of a handful of authentication
| methods--the only one of which that ought to have worked
| for me was to use my Illinois driver's license number--a
| 12 digit sequence; however, their form only permitted 8
| digits. It was a significant hassle just to get them to
| take my money.
|
| I've also had difficulties figuring out how much to
| withhold. In the US they give us a form that calculates
| "allotments" (or something--I forget the term) but it's
| unclear whether more of those correspond to more or less
| withholdings and in any case the form computed
| incorrectly for me for several years (I'm sure it was
| user error somehow and senior engineers are just not
| reliably smart enough to figure it out, even with the
| help of HR) and I would end up owing thousands in taxes
| as well as a separate penalty for not withholding enough.
|
| It's maddening that our government makes it so difficult
| for earnest people to pay their taxes.
| tzs wrote:
| > I'm a senior engineer and I have a hard time navigating
| tax forms even with the help of Intuit, and it frustrates
| me that I have to pay Intuit (or someone else) to help me
| do taxes which are complicated in large part because
| Intuit et al lobby for complex tax codes and against the
| sort of Swedish model you describe.
|
| I don't think Intuit has anything to do with why the tax
| code is complex. Their lobbying is for making filling out
| the forms complicated, such as by stopping the IRS from
| pre-filling forms with the information they already have.
|
| The tax code complexity almost all stems from people not
| wanting to pay tax. That complicated the code in two
| ways. First, it means that we get exceptions and special
| cases written into the code either because people that
| want to pay less tax convince Congress to make a special
| case for them or Congress takes advantage of the desire
| to pay less tax to provide exceptions to motivate people
| to change behavior.
|
| Second, it means that if there is any ambiguity or wiggle
| room in interpreting something, someone will exploit that
| to pay less tax than Congress intended them to pay. The
| tax code gets patches to fix that, usually resulting in
| an increase in complexity.
|
| A great example of the later was that a long time ago a
| big company was going to give shareholders a dividend.
| This would be taxes as ordinary income to the
| shareholders.
|
| Someone came up with an idea to turn that into capital
| gains instead. Rather than give a divident, the company
| first did a stock split, say 100 for 99. So each 99
| shares each stockholder held became 100 shares. This is
| not a taxable event.
|
| Then the company did a stock buyback, 1 out of every 100
| shares. That decreased each stockholders holding by 1%,
| so every 100 shares a stockholder held became 99, and the
| stockholder got some cash. That is a taxable event, but
| it is capital gains.
|
| Net result: every stockholder ended up with the exact
| same percentage of the company that they started with,
| with some cash from the company, and got to pay the lower
| capital gains tax on that cash instead of the higher
| income tax.
|
| The tax code was patched to fix that. Buybacks became
| ordinary income. But it didn't end there. Consider a
| family owned business owned by four members of the same
| family. One of them is moving away and will not be
| participating in the business. The company wants to buy
| him out. It was generally agreed that this was not a
| buyback to dodge taxes--it is a legitimate buyback and
| should get capital gains treatment.
|
| And so the patch to fix the buyback tax dodge needs an
| exception to try to recognize "legitimate" buybacks. It
| ends up having a formula that involves looking at the
| distribution of ownership before and after the buyback
| and having several criteria for recognizing when the
| distribution change signifies a legit buyback that should
| get capital gains treatment.
|
| This was a fairly simple instance, so it only added maybe
| a few paragraphs to the tax code, plus some more to the
| regulations.
|
| But that sort of thing is all over the code, sometimes
| just adding a few sentences, and sometimes pages.
| aisengard wrote:
| It's because they're trying to give people breaks on what
| they owe. The more money you make (and the more ways in
| which you make it), the more exemptions and breaks you
| tend to be eligible for, so the more complicated your
| taxes tend to be. A realistic simplified tax code would
| probably mean you, as a senior engineer, would pay much
| more in taxes, which would be fine with me! A properly-
| funded government can be a great boon to society. But you
| might not feel the same way, so be careful what you wish
| for.
| booleandilemma wrote:
| I'm pretty sure the system we have here in the US is
| designed to be complicated to encourage us to rely on tax
| filing companies. Also, a more complicated system is
| easier to game. Makes it easier for the rich to take
| advantage of loopholes.
| reedjosh wrote:
| I think a lot of it is the nudging that the US does with
| tax incentives. Taxes are often used as a way to
| economically nudge society toward desired outcomes.
|
| Think tax breaks for solar panels or even just getting
| insulation added to your home. There are thousands of
| this type of tax break available to nudge people to move
| toward the gov's goals.
| oivey wrote:
| This system sounds like would be gamed just like how property
| taxes are now: bogus assessments. At least income and sales
| have a clear, non-subjective value in dollars.
| larsiusprime wrote:
| If "bogus assessments" lead to an incentive to declare a
| low value for your land, then that will be caught if and
| when you try to sell it or rent it out for a higher price.
| So if people just stick with a low valuation to pay less
| land tax, this will have the effect of greatly decreasing
| land prices, which are the principal cause of housing
| unaffordability, which seems like a good thing to me.
| world_peace42 wrote:
| George's ideas are interesting to ponder now and then. I'd
| definitely want to be a billionaire in that system, though,
| you'd pay pennies on your penthouses split with everyone
| living below you. If only taxes were that easy to figure out.
| closeparen wrote:
| Middle class families in single family homes are hoarding a
| scarce and essential resource. Billionaires in high rises
| aren't. The idea is to punish bad behavior and reward good
| behavior, not to cut down the tall poppies.
| reedjosh wrote:
| In urban area's sure, but I don't think it's fair to call
| it hoarding in suburban or rural areas. There's tons of
| land in the US, it's just that there are no homes _right_
| next to jobs and restaurants and the culture people want
| to live in.
|
| Now that I'm remote, I plan to move to a rural area and
| grow some of my own food in a single family home. I don't
| think that should be considered hoarding.
| closeparen wrote:
| Where there's tons of land, it's not that valuable. LVT
| would be low. It would only be punitive to people with a
| lot of land (per person) in those spots that are valuable
| because of those restaurants, culture, jobs, etc. nearby.
| reedjosh wrote:
| I don't really disagree with the LVT tax idea, I just
| want people to be clear about hoarding and single family
| homes. In regards to pushing single family homes out of
| high value areas, then LVT does make sense.
|
| That said, I'm a crazy pro individualism and no tax no
| government guy, so I have no real place in this thread. :
| p
| admax88q wrote:
| If you move rural you're not hoarding. If your holding a
| small single family home in the core of a dense city
| where lots of jobs are, you are hoarding.
|
| That land would probably serve society better if it had
| more than a single family dwelling on it, you could have
| 10 families in walking distance of their jobs rather than
| one, and 9 families commuting via car.
| reedjosh wrote:
| I'm fine with this statement, just wanted clarity. : )
| Ericson2314 wrote:
| Well, the hope would be that you would have never become a
| billionaire in the first place because somewhere along the
| line that wealth was predicated on holding cheap real
| estate and collecting rents.
|
| Now, that argument doesn't help with switching too an LVT,
| but there are other reasons to be optimistic. Taxing Jeff
| Bezos at any level is worthless in comparison to a) Paying
| enough UBI that the warehouses _would_ unionize, b)
| directly expropriating the warehouses into the postal
| system. (post : IP :: warehouse sku system : content-
| address based networking).
|
| Basically, trying to account for the power of billionaries
| and mega corps in monetary terms is a dangerous exercise
| where they can probably out-loophole you.
| [deleted]
| [deleted]
| cycomanic wrote:
| This is brought up again and again. You can make similar
| arguments for every tax. In fact let's look at income tax. The
| money people spend on income tax they could spend on.
|
| 1. Spent on goods or services
|
| 2. Spent on rent
|
| 3. Spent on capital purchases
|
| 4. Spent on debt repayment or other forms of financing
|
| In fact income tax does not have the last two points that you
| admit are bad, so maybe we should eliminate income tax and use
| corporate tax only?
|
| The thing is low corporate taxes create an inequality between
| labor and capital gains. It's already the case that wealth
| inequality is quite unrelated to income inequality, the highest
| wealth individuals often don't register in the high income
| brackets.
| indymike wrote:
| Corporate profits are easily reduced to zero by say... Paying
| fat bonuses to ceos. All high corporate taxes do is encourage
| companies to dispose of the profits before the end of the tax
| period.
| nmfisher wrote:
| Those bonuses are then taxed too, which should give you a
| hint why corporate tax is a bit daft to begin with.
|
| Corporate tax is, by and large, a fiction to placate
| voters. It could (should?) be replaced with a more flexible
| system that isn't as susceptible to the usual deduction and
| profit shifting.
| closeparen wrote:
| What I generally hear is a wealth inequality frame: raise
| taxes on the rich so that they won't accumulate savings so
| fast. Income inequality is much steeper than consumption
| inequality, and taxes are proposed at the top end of income,
| not consumption. So it is already sensitive to this concern,
| and steering clear of reducing personal spending.
|
| Now it's true that invested savings become goods and
| services, capital purchases, etc. for the companies you
| invest in. But the idea is that government will take over
| some of that role and invest the taxes collected in more
| socially beneficial activities, with returns accruing to the
| public.
| kapuasuite wrote:
| Capital gains taxes (paid by shareholders) are completely
| separate from corporate income taxes (paid by corporations).
| You're also forgetting (or ignoring) that the legal incidence
| of a tax and the economic incidence are completely separate.
| For example, employers and employees are both legally
| responsible for paying a portion of payroll taxes, but
| economically speaking that tends to lead to lower wages,
| making the employer's portion fall at least partially on the
| employee.
|
| https://voxeu.org/article/effects-employer-payroll-tax-cuts
| cycomanic wrote:
| I'm a bit confused by your post, it seems you are agreeing
| with me, but you say you disagree?
|
| I am aware of the difference between capital gains tax and
| corporate tax (also note that not every country has a
| capital gains tax). My argument applies to both, i.e. one
| of the reasons for raising inequality is the inbalance of
| labour and capital and the low corporate and capital gains
| taxes definitely contribute.
|
| About the effect of income tax on salar, I'm not quite sure
| what that has to do with my points. I was not arguing that
| we should eliminate corporate tax and just let income tax
| handle it. Unless your argument is we should use income tax
| instead of corporate tax because it lowers salary?
| kapuasuite wrote:
| Yes - corporate income tax should be eliminated entirely
| - the revenue can be made up in other, less terrible
| ways. Corporate incomes taxes are a poor way to address
| inequality because they tend to fall, at least in part,
| on workers, and not on wealthy people themselves, who
| largely accrue wealth through investment, not work. If
| the goal is to reduce inequality then we should simply
| tax rich people more, not corporations, whose money will
| eventually be passed to shareholders anyway.
| Pelam wrote:
| 9. Buying and controlling media for desired political outcomes.
|
| 10. Astroturfing
|
| As different sectors of business have different structures of
| material costs, labor costs, profit and investing. Maybe having
| at least some kind of equal corporate tax can be seen as being
| fair across different types of businesses.
|
| Additionally many forms of business have externalities which
| are negative for the rest of the humanity. Often it has been
| the public sector which has to pick up the slack or clean up
| the mess.
|
| Also most people agree that there exist at least some forms of
| infrastructure which are best managed publicly and are
| difficult organize privately in a way that encourages
| competition. Also corporations often directly benefit from
| different forms of public infrastructure, so in this sense it
| can be seen as fair to directly tax them.
| simondotau wrote:
| Your 9 and 10 aren't captured by corporate tax either,
| because spending money reduces profit.
|
| But your 9 and 10 are captured by the income tax of the
| people tasked with executing these operations.
| dehrmann wrote:
| > ...dividends and buybacks create income for individuals who
| will pay tax on that income)
|
| This is an important point people miss. The owners of those
| companies eventually pay taxes on the profits, so a corporate
| tax is a double tax.
|
| There are a lot of things that get taxed: property, income,
| sales, corporate profits. You can vary these rates and still
| come up with a viable government revenue model. Oregon doesn't
| have a sales tax; Washington state doesn't have income tax. The
| only problem, and it's what this deal is about, is when these
| varying policies interact, or one jurisdiction does something
| very different from others.
|
| What you end up taxing is a social policy lever, but it's
| otherwise not all that important. The important part is getting
| some degree of alignment so you don't encourage people to live
| in Vancouver, WA, but buy everything in Portland.
| marcosdumay wrote:
| > The owners of those companies eventually pay taxes on the
| profits, so a corporate tax is a double tax.
|
| Will they? Countries have a wide set of positions from "tax
| only corporate income" to "tax only dividends", with a lot of
| them sizing both taxes taking the other one into account.
| antihero wrote:
| 1, 2, 3, 5, 8 also apply to normal people so why not get rid of
| income tax? The point of tax is for the government to gain
| money to spend on public services and what not, what you're
| suggesting keeps money private.
| golergka wrote:
| Yes, that's also a very good follow-up idea to the OP's
| point.
| ghiculescu wrote:
| No OP is suggesting that money get to the government via
| income tax. As opposed to the extra layer of complexity
| company tax adds.
|
| There isn't a clear equivalent where if you ditched income
| tax some other tax would make up for it.
| mrgordon wrote:
| You're ignoring that the companies can just keep lots of cash
| without distributing it to individuals in order to avoid
| taxation under your system. So for example the company can rent
| houses, cars, and airplanes for every employee to ensure there
| is not much money left to be taxed as income. On paper they
| look like corporate expenses but it's really just a way to
| distribute money without it being taxable.
| kapuasuite wrote:
| Those would be taxable for the employees receiving those
| perks, giving away shareholders' money to employees to reduce
| a tax bill is absolutely nonsensical in financial, and if a
| publicly traded company were to do this for "every employee"
| (or even just management) there would be an immediate
| lawsuit.
| aiisjustanif wrote:
| That would be imputed income passed on to employees.
| darksaints wrote:
| That problem already exists, and I can't see it getting any
| worse than it already is. And you solve it the same way that
| you do now: by regulating which expenses are actually
| deductible. Basically any benefit that primarily benefits an
| individual is counted as income to that individual.
|
| What goes away is the incentive to locate all of the
| company's IP in a subsidiary in the Cayman Islands, and then
| rent it all back to the subsidiary in New York at wildly
| inflated prices that ensure that all income is technically
| earned in the Cayman Islands. Because it would no longer
| matter where the income was earned, it would only matter to
| whom it is paid out to. Less protection for billionaires who
| are primarily interested in asset inflation.
|
| I'm pretty sure this would actually increase total taxes
| collected because it shifts tax burden away from low and
| easily avoided corporate taxes, and towards individuals that
| pay higher income tax rates that are much harder to avoid.
| But even if it doesn't fully compensate, you can easily
| adjust top bracket rates to fill the gap, without any worry
| that it will hurt workers like the corporate income tax does.
|
| https://taxfoundation.org/labor-bears-corporate-tax/
| IanCal wrote:
| > You're ignoring that the companies can just keep lots of
| cash without distributing it to individuals
|
| Nobody benefits from a company growing indefinite wealth
| without distributing it to actual people.
|
| > So for example the company can rent houses, cars, and
| airplanes for every employee
|
| If they could do this, all companies would do this already to
| avoid taxes. In reality, this is dealt with by (in the UK)
| considering those things "benefits in kind" aka equivalent to
| cash.
| TomVDB wrote:
| > Nobody benefits from a company growing indefinite wealth
| without distributing it to actual people.
|
| Isn't this exactly what companies like Apple etc. are
| doing? As it accumulates wealth, the stock price (which is
| supposed to reflect the value of the company) goes up as
| well. And thus the shareholders benefit.
| hbosch wrote:
| I believe actual cash hoards on hand is considered bad
| business. Apple having cash on hand is seen as okay, at
| present, because investors trust them to spend it well on
| expansion. Remember share price doesn't indicate how well
| a company is _doing today_ , it indicates how well people
| _believe it will do In the future_.
|
| If you have piles of cash and don't plan on spending it,
| somehow, on your business then you can't expect your
| stock to rise and in fact if you're so inept that you
| don't know how to spend your billions your stock price
| may actually drop.
| TomVDB wrote:
| You can expect that the market cap will be at least the
| amount of cash they have, if it's a profitable company.
| (This isn't always the case, but it's close.)
|
| The more cash they gather, the higher the lower bound of
| the share price.
| IanCal wrote:
| Why would the stock price go up for a company that
| explicitly did not distribute the money ever to real
| people?
|
| And don't apple pay dividends?
| TomVDB wrote:
| Company A has $X in revenue, $Y in profits, and $0 in
| cash.
|
| Company B has X revenue, Y in profits, and $1T in cash.
|
| Which of the two would fetch a higher price in an
| acquisition?
| rsj_hn wrote:
| > Nobody benefits from a company growing indefinite wealth
| without distributing it to actual people.
|
| No, many would benefit in very obvious ways, if you just
| think about it a little bit: if you want to accumulate
| wealth you prefer to be taxed on what you spend rather than
| what you earn. That allows you to save more quickly, it
| allows you to create a dynasty where wealth is passed to
| your offspring, who in turn would prefer to pay taxes on
| their consumption rather than their income.
|
| So if a company served as a type of money making engine but
| didn't distribute anything, you can save by purchasing
| shares and letting compound interest work to your benefit
| and then spend some of that in your retirement by selling
| some of your shares and give the rest to your kids. You
| would have a lower overall tax burden as you could earn
| like a king but live just a middle class lifestyle,
| allowing your kids to live like kings even if they earned
| just a middle class lifestyle, and with some left over due
| to the magic of interest.
|
| This is why if your income >> your consumption, you really
| want only consumption taxes.
|
| There is also the issue of precautionary saving. Most
| people prefer to have money in the bank to insure
| themselves against future loss of income, and this type of
| precautionary savings benefits people even if there is no
| consumption, just as having insurance provides a benefit
| even if you never get into an accident. So if you don't
| need to pay taxes on savings, then you can shield yourself
| more easily from future income losses and smooth
| consumption so you always prefer taxes on consumption,
| which do not make consumption smoothing more difficult,
| than taxes on income, which do. Think of it in this way --
| a tax on insurance makes insurance more costly and thus
| more difficult. But financial savings are a form of
| insurance for when you lose your job or face some other
| financial setback.
|
| So in summary, one can argue that the purpose of money is
| consumption so "nobody benefits" by acquiring money that
| they don't spend on consumption. But this is a naive view
| that ignores the role of risk, time and inter-generational
| concerns.
| IanCal wrote:
| Your explanation requires paying out money to real
| people, so I don't see how it relates to the idea of a
| company that does not pay out money to real people.
|
| > So in summary, one can argue that the purpose of money
| is consumption so "nobody benefits" by acquiring money
| that they don't spend on consumption. But this is a naive
| view that ignores the role of risk, time and inter-
| generational concerns.
|
| It's also not what I've said.
| jk7tarYZAQNpTQa wrote:
| > Nobody benefits from a company growing indefinite wealth
| without distributing it to actual people.
|
| Shareholders do. And shareholders own the company.
| IanCal wrote:
| Shareholders don't benefit unless the company is or is
| expected to distribute it to actual people.
| ashtonkem wrote:
| > Nobody benefits from a company growing indefinite wealth
| without distributing it to actual people.
|
| And yet companies actually do this. Perhaps your model of
| what motivates companies is wrong?
| IanCal wrote:
| Companies tend to pay wages, dividends or use capital for
| growth to pay for those.
| tw04 wrote:
| That is completely avoided if the person makes less than
| 12k/year though. So there is already a loophole, there just
| hasn't been enough incentive to use it yet. Although I'd
| question if that's why some executives take a $1 salary and
| the rest in stock. All of their benefits are now tax free*.
|
| yes I realize it's nuanced and depends on country.
| saddlerustle wrote:
| No, the value of benefits in kind count towards the
| income tax band.
| IanCal wrote:
| That is absolutely not true in the UK. Again, this would
| just be what _every_ business would do if that were the
| case.
| NovemberWhiskey wrote:
| Perks/fringe benefits for employees are imputed income in
| virtually every tax system.
| SMAAART wrote:
| > So for example the company can rent houses, cars, and
| airplanes for every employee ...
|
| there's already laws in the books today that those are
| taxable as in-kind compensation
| charlesdm wrote:
| That should be taxable in the hands of the employee,
| obviously. Estonia seems to be doing well with their tax
| system, and it's pretty much exactly what is described above.
| BurningFrog wrote:
| This a typical economist analysis, and I think it's mostly
| right. But I don't think those making these decisions think in
| such terms at all.
|
| People love to tax companies, because they think it's "someone
| else" paying those taxes.
|
| Maybe there is also some anthropomorphising going on where you
| think of the company as another person who is much wealthier
| than you.
| acomjean wrote:
| In the US at least companies have many rights like they're
| people.
|
| https://en.m.wikipedia.org/wiki/Corporate_personhood#Case_la.
| ..
| BurningFrog wrote:
| I see that mostly as "code reuse".
|
| Instead of writing separate but very similar laws for
| personal and corporate property, you say that the law is
| the same for both cases, aside for a few exceptions.
| ncallaway wrote:
| To the point that we call the bundle of rights corporations
| get "corporate personhood".
| (https://en.m.wikipedia.org/wiki/Corporate_personhood)
|
| Frankly, if OP doesn't want me to anthropomorphize
| corporations for tax purposes, they'll need to go back in
| time and stop the courts from anthropomorphizing them for
| various rights.
|
| If a company gets 1A rights under citizens united, then it
| can have tax obligations as well.
|
| I'm pretty over this double standard where companies are
| handed various rights, but not commensurate obligations.
| BurningFrog wrote:
| The anthropomorphizing I speculate about goes something
| like this:
|
| "I work hard and pay my taxes, Ford makes billions and
| pay much less tax!"
|
| But Ford is an abstract entity that is not a person and
| doesn't have a better life than you.
|
| All those billions are eventually paid to living humans,
| who _do_ pay taxes on that income.
|
| This is the economist perspective, but it requires a
| level of analysis not compatible with rage.
| ncallaway wrote:
| I'm 100% fine with that perspective. However, I think it
| means taking away other "anthropomorphic" rights from the
| entity.
|
| If you say: we'll only collect taxes from the individuals
| that are paid by Microsoft, instead of taxing Microsoft,
| that's fine by me. But, I would then say that Microsoft
| also doesn't have free speech rights as a corporation,
| after all each individual in the corporation has free
| speech rights.
|
| If we decide that a corporation *is* entitled to some
| rights granted to people (such as a right to free
| speech), then the corporation should also be subject to
| taxation, separately from all the individuals that
| compromise it.
|
| I'm unwilling to give one without the other. If a company
| want rights, it should have obligations. If it has
| obligations, then the company should have rights.
| BurningFrog wrote:
| I think everyone can agree that companies should have
| both rights and obligations.
|
| Linking taxation and free speech, among all possible
| rights and obligations, does seem completely arbitrary
| though.
| ncallaway wrote:
| > Linking taxation and free speech, among all possible
| rights and obligations, does seem completely arbitrary
| though.
|
| Well, it was completely arbitrary as it's serving as an
| example. I'm not saying my policy would literally be X
| Taxes and Citizens United, just using each as an example
| of the general class of things that I think should be
| linked.
|
| I've seen corporate personhood used aggressively to argue
| that corporations should have more rights, but then when
| we're in a tax policy discussion, suddenly we are
| squeamish about anthropomorphizing corporations. My
| argument is that the _amount_ that we anthropomorphize
| corporations should be equal whether our discussion is
| about rights (with free speech as one example) or about
| obligations (with taxation as one such example)
| OminousWeapons wrote:
| > People love to tax companies, because they think it's
| "someone else" paying those taxes.
|
| I think you can very safely generalize this to "people are
| always in favor of more benefits for themselves that they
| don't have to pay for".
| obventio56 wrote:
| I think some people would find issue with the distribution of
| wages paid in #4.
| WanderPanda wrote:
| Then again there are hefty (progressive) income taxes
| involved. The worse the distribution the higher the tax
| revenue.
| bgroat wrote:
| I think this idea, but I always thought that a country or
| countries should just be on the cap table.
|
| Forget tax, but if I want access to the Canadian grant
| ecosystem they take 7%.
|
| I want Delaware Chancery courts the U.S takes 8%
|
| Swedish bank secrecy, 6%
|
| And we access states more like VCs and their value add.
|
| Obviously all numbers are made up
| ihsw wrote:
| Like most discussions about taxes, it is less about the
| effectiveness in revenue collection and more about "fairness."
| ffggvv wrote:
| i really don't get why people get upset over share buybacks but
| not dividends. they're literally the same thing.
|
| as a stock holder there's no difference between the stock going
| up 10 cents from a buyback versus me getting a 10 cent
| dividend. other than the fact that i can have more control as a
| shareholder in the buy back
| raldi wrote:
| I'm perplexed with your endorsement #2 above: Why would it be a
| good thing for tax breaks to end up flowing into landlords'
| pockets?
| ineedasername wrote:
| I don't think corporate taxation has always been this bad, so
| there's no reason why is should be impossible to return. To
| something reasonable.
|
| And while 1-5 are good, they don't pay for the massive
| infrastructure and other investments that governments have made
| the enable corporations to do business in the first place.
| Those resources have to come from somewhere. I don't see it
| likely, for example, for dozens of corporations to come
| together and fund interstate highway and bridge maintenance.
|
| I might agree with you more if corporate profits were plowed
| back into higher pay or better benefits for employees,
| significant voluntary investment back into society, etc. But
| benefiting from government investments in their ability to do
| business without paying taxes essentially means they are
| extracting their profits indirectly from all individual tax
| payers whether or not they are even customers.
|
| I do #1, #3, #4, #5 and I'm still expected to pay taxes.
| parineum wrote:
| >they don't pay for the massive infrastructure and other
| investments that governments have made the enable
| corporations to do business in the first place
|
| Firstly, that infrastructure is for everyone to use and I
| think it's semi-useful to view private business as
| infrastructure as well. They exist to provide goods and
| services to the people.
|
| Second, it seems obvious to me that you'd simply increase
| other taxes to make up the deficit. The impulse to create
| special taxes is a bad one, imo. It only serves to complicate
| the tax code, obfuscate how much we're actually paying in
| taxes and makes it more difficult to actually provide
| incentives when they are needed.
| todd8 wrote:
| Corporations pass the tax expenses on to consumers as higher
| prices of produced goods, lower wages to employees, and lower
| returns to owners that supply capital. These taxes are all paid
| by us but they are largely invisible and justified to the
| voters as making corporations "pay their fair share".
| [deleted]
| CalChris wrote:
| Corporate taxes are not expenses. An expense is the cost of
| operations that a company incurs to generate revenue, either
| on cost or accrual basis. Corporate taxes are based on
| declared profits, gross revenue net of these expenses.
|
| Furthermore, these taxes are not paid by all of us. They are
| paid by the owners of the corporation who and which receive
| considerable benefit from the government services they are
| paying for.
|
| Consider corporate taxes, if you will, as use taxes for using
| the economy.
| ipaddr wrote:
| These taxes are paid by various stakeholders and entities
| around the business. The public gets the tax income and uses
| it for services to allow the business to operate.
|
| Do you feel the cost/value of having the ability to a call a
| number and have a well trained team put out a fire in minutes
| that could ruin your business is 0 or free? What about
| rules/services that allows your business to have an advantage
| over another in a different region?
|
| Taxes need to be paided by everyone. Corporations use more
| services than you would think and rely on a stable government
| that they need to contribute to.
| todd8 wrote:
| > Do you feel cost/value ... is 0 or free?
|
| No, of course not. (Why the insulting tone of your
| rhetorical question?)
|
| > Corporations use more services than you would think ...
|
| How many publicly traded companies have you started?
| philjohn wrote:
| Corporate tax, as a share of total taxation in the US, has
| dropped from 30% to 10% since the 50's ... yet wages have
| been pretty stagnant since the 80's (in real terms).
| todd8 wrote:
| The top corporate tax rate had been ~35% for roughly 25
| years ; in 2018 it dropped to 21% and wage growth has
| indeed increased since 2018. Were wages positively affected
| by the lower corporate tax rate? I don't know, so many
| factors affect the economy; corporations might choose to
| lower prices or do more research on better products or
| issue greater dividends to attract capital for expansion. I
| was just making the point that we humans end up paying
| somehow for the spending that the government chooses for us
| and that I would rather make these tax costs more visible
| to the people actually paying the taxes.
| CalChris wrote:
| Average effective tax rate for corporations is
| considerably less than the top rate, so much so for
| companies like the FAANGs as to make a mockery of
| corporate tax as being anything more than a guarantee of
| full employment for tax attorneys. OTOH, brick and mortar
| which has to compete against Amazon has the privilege of
| paying for Amazon.
| Taniwha wrote:
| If you're going to legally treat corporations the same as
| actual humans - then tax them the same.
|
| We pay taxes for services we expect from governments, defence,
| policing, justice, water, sewers etc etc I don;t see why
| corporations that use all these things shouldn't pay their
| share
| njovin wrote:
| I look forward to the day that we punish corporations by
| removing their freedom (ability to operate) instead of fining
| them laughably small percentages of their yearly revenue for
| serious violations of laws and regulations.
|
| In reality I understand that this would harm the employees
| and the public to an unacceptable degree so maybe some form
| of "jail time" whereby all profits go directly to non-
| executive employees and price discounts would be more
| effective. Depriving shareholders of dividends may lead
| investors to "vote with their wallets" and we'd see more of
| an actual free market instead of what we have today where
| economy-destroying decisions go effectively unpunished and in
| some cases are rewarded by bail outs.
| jasonwatkinspdx wrote:
| One of my more radical political views is I'm 100% behind a
| corporate death penalty, as well as direct personal
| criminal consequences for company principals that engage in
| fraud or similar.
|
| The sad reality of the world is that once a business is
| past a threshold of power, it's nearly impossible to hold
| them accountable. Craven sociopaths know they can do what
| they do, and worst case, suffer some bad press while they
| move on to the next thing, banking 100's of millions the
| whole way.
|
| Make those people truly terrified of the consequences of
| their actions and politics will be utterly transformed.
| vmception wrote:
| Right, actually impairing a corporation leads to a monopoly
| and less competition which the state doesn't want to be
| directly responsible for
|
| This guides the trend in enforcement actions or lack
| thereof
|
| There are some books on this
| tablespoon wrote:
| > I look forward to the day that we punish corporations by
| removing their freedom (ability to operate) instead of
| fining them laughably small percentages of their yearly
| revenue for serious violations of laws and regulations.
|
| I agree, but like you mentioned, the externalities on
| innocent parties would be too great. Also a lot of
| companies do not issue dividends, so focusing on them would
| do no good in a lot of cases. I think a threefold strategy
| would need to be implemented:
|
| 1. Direct action against executives in the board (e.g.
| heavy fines amounting to a large fraction of their total
| compensation and/or jail).
|
| 2. Confiscation of dividends for a period of time.
|
| 3. Forced issuance of new shares to dilute existing
| shareholders, with sale proceeds going to the government.
|
| One issue is that shares can be traded, so it's possible
| for a shareholder to benefit from some bad action, then
| avoid any punishment by selling the shares before the
| punishment is implemented. Maybe such people could be
| shared a per-share fine based on shares held at a
| particular date?
| bumby wrote:
| > _Maybe such people could be shared a per-share fine
| based on shares held at a particular date?_
|
| I think it's nearly impossible to expect most
| shareholders to understand the business underpinnings to
| this degree within the existing system. Think of
| pensioners with mutual funds, do you think most even
| understand all the businesses in those funds let alone
| the operations of those businesses?
|
| To me, this is akin at employees being punished as well.
| Both benefit from the business operations but it's hard
| to expect employees to have knowledge and be responsible
| for the decisions of the C-suite.
| anoncake wrote:
| You are responsible for your property. If you own stock,
| you own part of a company so you are responsible for its
| actions. In the case of mutual funds, it's the funds' job
| to understand the businesses it invests in for you. There
| could be an exception for non-voting stock though.
| reasonabl_human wrote:
| Well this is just false. You are not at all responsible
| for a company's actions just because you are a
| shareholder. HN is evidently quite out of its depth with
| these kinds of threads.
| anoncake wrote:
| Why not? Don't shares represent ownership of a company?
| Aren't you responsible for your property?
| bumby wrote:
| Just to underscore what was previously stated, I think
| this philosophy would drastically change the paradigm.
| I'm guessing it would severely restrict the money flowing
| into stocks which would have repercussions in other areas
| like pensions etc. Point being, I don't think it can just
| be layered onto the existing system without serious
| blowback.
| alien_ wrote:
| Confiscating profits wouldn't work, many companies are
| reinvesting their profits. Probably the best way would be
| to just make the fines hurt more, by using a fixed and non-
| negligible percentage of the monthly/yearly revenue, much
| like Finland does for traffic fines.
| reacharavindh wrote:
| I can't believe we as a society don't adopt this idea
| more. Punishment should be a percentage of taxable income
| of that year. The impact should equally felt regardless
| of your current financial status. Extending this to a
| corporation would simply put them in back foot in a
| market.. which is indeed the punishment.
| HWR_14 wrote:
| In the US, income based fines have questionable
| constitutional allowability. I fall on the "the seem
| constitutional" side, but some people apparently think it
| violates the 8th amendment.
| Bilal_io wrote:
| > maybe some form of "jail time" whereby all profits go
| directly to non-executive employees
|
| In theory this would give an incentive to some employees to
| mess up if they know they won't get caught.
| throwaway34241 wrote:
| Humans are taxed on their income. Corporations are taxed on
| their profits (they deduct their expenses).
|
| Corporations _can_ be taxed on the money coming in, that
| would look like a sales tax or VAT. The problem with that tax
| is it falls on the consumer (since what really matters is
| which transaction you tax, not which side pays the tax).
|
| But this brings me to a solution to the corporate tax
| avoidance issue that has already been figured out by
| economists, but rarely gets discussed.
|
| This is a simplification, but basically corporations have one
| place money goes in, and two places it goes out, like this:
|
| sales = expenses + profits
|
| If you tax the sales, but _deduct_ the expenses, this leaves
| the _incidence_ of the tax on the profits. Unlike profits, it
| 's usually much clearer where the sale takes place so it's
| much harder to avoid than the existing corporate tax. It's
| called a border adjustment tax. [1]
|
| Where this gets complicated is international trade - how this
| works is only domestic expenses are deductible. At first
| glance that seems protectionist, but apparently the currency
| exchange rates adjust which balances is it out and although
| it's not obvious it ends up trade-neutral.
|
| It was actually seriously proposed as part of US tax reform
| in 2017, but some big companies were against it so it got
| killed.
|
| [1] https://en.wikipedia.org/wiki/Border-adjustment_tax
| optimiz3 wrote:
| > Humans are taxed on their income. Corporations are taxed
| on their profit
|
| Not true. States like WA have general B&O taxes which are a
| tax on revenue, not profit.
|
| This makes it much harder to operate thin margin businesses
| like groceries and manufacturing, while favoring high
| margin businesses like software.
| throwaway34241 wrote:
| Sure, I believe Ohio has something similar. More
| significantly I think (in percentage terms), there are
| already sales taxes and VATs.
|
| But when people are discussing the corporate tax and
| corporate tax avoidance, usually they're talking about
| the corporate income tax, which is also what the article
| is about.
| bumby wrote:
| Is this similar to a gross receipts tax?
| throwaway34241 wrote:
| No, a gross receipts tax is on sales and not profits.
|
| If I understand it correctly (I don't know the details
| for every state), a gross receipts tax doesn't even
| adjust for value added (the VA in VAT).
|
| For example say a few companies are involved in producing
| a good (starting from raw materials) so the supply chain
| looks like this:
|
| $7 (raw materials) -> $8 (components) - > $9 (finished
| good wholesale) -> $10 (store price)
|
| With a VAT, the total taxed amount is $10, which is
| divided up among the companies based on how much value
| they added (so if they move from $8->$9, they pay tax on
| $1).
|
| With a gross receipts tax, the total taxed amount is
| $7+$8+$9+$10=$34. Goods that are produced by many small
| companies working together will pay a lot more taxes than
| those produced by huge vertically-integrated ones.
|
| There's some good reasons to use a VAT if you want to tax
| revenue, and one of them is to avoid problems like this.
| jfengel wrote:
| With a VAT each layer deducts the tax they pay. The net
| tax is only on the the value added. The company in the
| middle pays tax on $7 and collects tax on $8, and
| forwards the difference.
|
| It's very elegant and fair, but imposes a lot of
| accounting. Sales tax is easier in that it only collects
| at the end, but it's actually hard to define "end". (Buy
| a screw and you pay tax, buy a manufacturer buying the
| same screw usually does not.)
|
| There are still problems about regressive taxation (are
| stock profits value add? Services? Plain old labor?
| What's the difference? Usually poor people end up paying
| the taxes on everything while rich people buy things that
| aren't subject to the system). Still, if you want to tax
| profits on consumables, it's remarkably straightforward.
| throwaway34241 wrote:
| It does add more accounting, but one advantage of
| involving the companies in the middle is it makes
| cheating harder and less lucrative, since a bunch of
| companies have to coordinate to avoid paying the VAT
| instead of just one company at the end.
|
| Agree that VAT/sales taxes are regressive and shift more
| of the tax burden to lower-income people. Although the
| only US political candidate I can remember recently
| proposing a VAT was Yang in which case his UBI proposal
| would probably more than balance out the effects on
| after-tax income.
| jfengel wrote:
| VAT plus UBI does save problems for the poor, but it's
| still regressive. The net effect is to put the main
| burden on the middle class.
| fallingknife wrote:
| We don't legally treat them the same, though. That's a myth.
| Ericson2314 wrote:
| But then it's highly unfair to tax humans on _revenue_ , but
| corporations on _profit_.
|
| I think the right answer is VAT + externalities taxes (LVT,
| Cabon tax, etc.) + UBI, which is both very easy to enforce
| and perhaps net progressive enough. Re "progressive enough":
| I don't so much care if BWM owners are screwed over relative
| to private jet owners on paper, I think reducing work hours
| and propping up demand at the bottom with UBI will have a
| trickle-up effect.
|
| There might be room for a wealth tax, but I think it might be
| less loophole-prone _and_ better theoretically to attack that
| problem more directly and less monetarily in terms of
| socializing key natural monopolies, promoting coops, etc.
| Trying to financialize the big question of "who controls the
| means of production" I think might be just too difficult.
| milesward wrote:
| DING DING DING
| rrrrrrrrrrrryan wrote:
| VAT + LVT + misc. pigeovian taxes probably wouldn't be
| enough to power society as is, let alone fund a UBI. You
| could maybe replace income tax with a progressive
| consumption tax or a wealth tax, but you'd need to replace
| it with something.
| marcosdumay wrote:
| Why can't VAT fund a modern government? The GP didn't say
| anything about the tax rates.
|
| VAT's regressiveness would probably become a real problem
| in that situation, but that's a different problem.
| Ericson2314 wrote:
| Yeah not sure what GP is saying. VAT can absolutely suck
| up a huge amount of money. The UBI makes it far less
| regressive, basically to the point I no longer care.
|
| (VAT + UBI is great for everyone but those 90th
| percentile luxury-car-and-McMansion-owning inner ring
| suburb types that are the Democrat's favorite
| constituency :/)
| marcosdumay wrote:
| Coupling a regressive tax with money transfer creates an
| inverse "V" shaped effective tax rate that will squeeze
| some part of the society (probably on the middle class).
|
| If the taxes and transfers are diverse enough, one can
| reduce that problem by making them compensating each
| other, but if you make VAT + UBI make the lion share of
| the government's money flow, it will be a really large
| problem.
| anoncake wrote:
| If you can deduct work-related expenses, income tax is a
| tax on "profit".
| HWR_14 wrote:
| > But then it's highly unfair to tax humans on revenue, but
| corporations on profit.
|
| Wow, it's a good thing we don't do that. Good news, the
| income you spend to further your business is deductible. We
| include a personal exemption for generic costs, child
| exemptions, mortgage exemptions, healthcare cost
| exemptions, retirement savings exemptions, and numerous
| others.
|
| Additionally, the whole concept behind a progressive income
| tax is to tax people in a similar way to taxing them on
| profit. After all, percent of income spent on necessary
| goods goes down as income goes up.
|
| But I don't think anyone wants a system where this is done
| by itemized receipts instead of with generalizations.
| philjohn wrote:
| In some countries, true. In the UK about the only things
| you can deduct are:
|
| 1. Pension (up to a maximum amount, and tapered down from
| 40k to 4k depending on income) 2. Cycle to Work bike 3.
| Childcare vouchers
|
| There's also some allowance if you're required to
| purchase things for your job, e.g. a uniform or tools,
| but vans, cars etc. are out.
| pmalynin wrote:
| Huh? How is it not unfair that, for example I can't
| deduct rent from my income? A company would be able to do
| that. What about amortizing the cost of my domicile over
| 30 years?
|
| The personal exemptions are a sham and do not reflect the
| reality of high cost of living areas.
| nearbuy wrote:
| I get a tax rebate for rent. Maybe it depends where you
| live.
|
| For a house, your net worth hasn't decreased by the cost
| of the house. A company wouldn't be able to deduct that.
| They can deduct for assets that depreciate.
| pmalynin wrote:
| A company cannot depreciate land, but they can depreciate
| the value of the buildings on top of it over a fixed
| period of time. So in addition to writing off the
| mortgage as an expense, you can also amortize it since
| the value of additions (not the land) decreases.
| nearbuy wrote:
| I'm not sure what you mean here. You can't write off a
| mortgage. You could write off interest, but not the value
| of the mortgage.
|
| Real estate tends to appreciate in value, especially in
| cities. The company would have to get unlucky with their
| real estate to be able to write off a loss. Buildings
| don't usually depreciate.
|
| They could allow their buildings to fall into a state of
| disrepair, hoping it would lower their value. But why
| would they? The can deduct the repairs. It's a legitimate
| expense.
| rsj_hn wrote:
| > How is it not unfair that, for example I can't deduct
| rent from my income?
|
| Tax policy isn't set by moral arguments, it's set by
| government need for revenue which is then tweaked by
| political pressure groups.
|
| The reason why you can deduct mortgage interest but not
| rent has nothing to do with fairness, which is undefined
| and a massively ambiguous term, but because banks, which
| are the primary beneficiaries of mortgage subsidies, have
| a lot more political power in Washington than landlords,
| who would be the primary beneficiaries of national rent
| subsidies.
| Ericson2314 wrote:
| Governments like the US today can borrow money or print
| it with very few constraints. Taxes are not primarily
| about raising revenue.
|
| For small, opening (usually developing) economies the
| matter is different, and they should have more capital
| controls accordingly.
| [deleted]
| dtwest wrote:
| We don't treat them the same, and we shouldn't treat them the
| same.
|
| Having a multi layered tax policy is complicated and has
| proved difficult to enforce. Multinational corporations have
| shown time after time that they are able to get around the
| first layer of taxation (corporate tax), so why not just
| eliminate it and put more of the burden on the second layer
| (income, capital gains, sales tax, etc).
|
| The general idea is not to raise or lower net taxes, in this
| particular instance we could keep net taxes the same while
| allowing for less corporate avoidance and more targeted tax
| collection.
|
| Companies like Amazon historically have minimized their
| profit to grow revenue, assets and shareholder value. They
| barely pay corporate tax while profitable small businesses
| will pay corporate tax plus the second layer.
| asdfasgasdgasdg wrote:
| > If you're going to legally treat corporations the same as
| actual humans ...
|
| We don't do that, though, not by a long shot. There are some
| cases where the rules are the same but many, many cases where
| they are different. So I don't think that can serve as an
| argument that they should be taxed the same.
| sologoub wrote:
| 1 through 6 already lead to taxes being paid - sales/VAT
| taxes in most places, individual income taxes, employee
| social security/retirement contributions and so on.
|
| Share buybacks lead to greater stock value and therefore
| income when sold for the owners, who in term are taxed as
| individuals.
|
| You theoretically could have a hold Corp that never paid out
| anything and instead funded the lifestyle of the
| owners/employees, but I'm sure there are ways to close that
| and the current 15% min is a far cry from what most people
| pay.
| cle wrote:
| But they _aren 't_ always treated the same as humans. In some
| cases they are, but it is not a blanket "corporations are
| people". In order for me to buy an argument like this, you'd
| need to dig into the specifics of how the ways in which
| corporations are treated the same as people justifies the
| argument. And also consider the ways in which corporations
| aren't treated the same, why they are treated differently,
| and how that also impacts the argument.
| valenterry wrote:
| Exactly this. Imagine a company that has makes X dollars and
| spends X dollars. So the company pays no tax. What that means
| is that all the other tax payers pay for all the
| infrastructure.
|
| And that's fine, but if such a company ever needs to call the
| police and go to court, etc., they then would have to pay all
| of that out of their pockets (i.e. the work of the police,
| the lawyers and judges, and so on).
| ahallock wrote:
| I agree. Just charge everyone a monthly fee for essential
| gov services. And do I mean essential. If you want extra
| programs from the gov, you need to pay voluntarily.
| peoplefromibiza wrote:
| the fact that streets are illuminate at night and pollice
| patrols them is using services provided by taxpayer's
| money.
|
| Uber benefits from streets more than the average citizen.
|
| if corporations had to pay per use, they would prefer to
| build their private infrastructures and police forces,
| while public infrastructure would lag behind chronically
| underfunded.
| lostcolony wrote:
| I'm not entirely sure why you think what corporations
| -prefer- matters when it comes to a discussion on
| taxation?
| bumby wrote:
| Well they have a right to petition the government in the
| US at least. Would you say the same about what citizens
| prefer does not matter in a representative democracy?
| lostcolony wrote:
| Citizens tend to be all over the place when it comes to
| taxation. Traditional corporations are pure profit
| seeking entities. What they would -prefer- is to pay no
| taxes at all, while benefiting from all tax paid services
| they can. So I'm not really sure, given we're talking
| hypotheticals here anyway, that designing a system to tax
| corporations based on what they -prefer- is really going
| to get us anywhere. The current system, whereby many
| major corporations pay nothing in taxes, while benefiting
| from major government subsidies, directly and indirectly,
| is already pretty close to what they'd -prefer-.
| bumby wrote:
| > _would -prefer- is to pay no taxes at all, while
| benefiting from all tax paid services they can._
|
| I think you could probably preface the above with the
| word "citizens" and it would still be true. But both
| citizens and corporations have the right to lobby their
| representatives in their own interest. It's the
| politicians job to try and create policy that balances
| the interests of all their constituents.
| valenterry wrote:
| I don't think building "private infrastructure" in the
| sense of streets on public ground would make any sense or
| ever be allowed.
|
| The company could just pay for the usage of the road (in
| some way) and the government makes sure the roads exist.
| Besides the bureaucratic overhead, I don't see why that
| couldn't work.
| [deleted]
| stuaxo wrote:
| Exactly, 15 percent is nothing.
| swiley wrote:
| 9. Just kept in a large pile like Apple does.
| simondotau wrote:
| I don't see how that's a problem. It's just delaying the
| inevitable taxation of that cash. It's not avoiding it.
| rjknight wrote:
| This is really a case of 8. I doubt that Apple has an account
| full of US dollars, and I mentioned that low yields on safe
| investments is already a way of "taxing" this money in order
| to encourage spending or riskier investment.
| op03 wrote:
| More like a large mountain range.
| nickpp wrote:
| Apple's cash reserve hasn't grown in a while since they are
| spending it on stock buybacks and dividends.
|
| But the very reason they didn't repatriate it and spend it in
| the US is the corporate tax the GP is arguing against.
| MuffinFlavored wrote:
| 9. Pocketed by corporate executives / board members
|
| Trickle up economics, right?
|
| Now make a list of all of the things the money could do if it
| is taxed and gets to the government. Schools, roads, etc.
| simondotau wrote:
| Pocketing corporate money is illegal. If they do it legally,
| it's taxed as income/dividends/capital gain.
|
| I don't see the problem.
| kileywm wrote:
| One thing to keep in mind is the non-monetary side of taxes:
| they are used to influence behavior. Offering employee benefits
| (healthcare, retirement, etc.) is incentivized by US tax code
| thus influencing more companies to do so.
|
| I'm not saying that corporate behavior becomes uninfluencable
| when profit taxation is removed, but rather that it will
| require a different incentive mechanism. That is assuming that
| we still want to influence corporate behavior through
| government without legislating it.
| rubyn00bie wrote:
| No. We would not be, just as we would not benefit from taxing
| corporations at 100% either.
|
| There is a sweet spot, where the amount we tax generates more
| than it costs, this is known as the "fiscal multiplier." Tax
| breaks are among the worst incentives ever to exist and have
| the lowest net-return to society. A corporation paying no
| taxes, is then completely freeloading off of the countries they
| operate within. Tax breaks are handouts, full-stop. Tax breaks
| ONLY increase deficits by necessarily decreasing input (tax
| revenues) without a corresponding decrease in costs or increase
| in output. It's literally saying "you don't have to pay your
| share of taxes because you already make so much money." This is
| the precise reason Republicans run up the deficit. No one
| realizes tax breaks are a fucking hand out, we have a budget.
| "Tax breaks" are just the same kind of spending as food stamps,
| except they provide a negative return where as food stamps
| provides a positive one with something like a 1.73 multiplier
| (which is fucking awesome[1]). If we were taxing multinational
| corporations at a 70% tax rate, sure, then _maybe_ a tax break
| might actually help stimulate some growth... but we sure as
| shit ain 't even close yet.
|
| The corporate tax rate should be something like 35% in the USA,
| but if you do the math it's closer to 17.5% on average that's
| paid (or was when I checked a couple years ago, I can't imagine
| it has improved). I can promise all of you, that the
| overwhelming majority of corporations aren't able deploy
| international tax avoidance strategies (and are paying really
| close to that 35%). So... then, 'cuz like averages, 'n' shit,
| that _means_ (did I get a pun?) a handful of extremely large
| players are likely paying literally _nothing_ in taxes to get
| the USA 's average rate down to 17.5%.
|
| It's pretty easy to go calculate these numbers for yourself,
| and to look into what things actually cost. I'd recommend
| anyone and everyone go take a gander at https://www.bea.gov/
| and actually go do it.
|
| [1] https://en.wikipedia.org/wiki/Fiscal_multiplier
| Misdicorl wrote:
| The problem I don't see addressed is that no/low corporate tax
| leads to bad market incentives. It is more efficient for my
| company to buy me things than for me to buy me things. But my
| company will inevitably buy inoffensive/cheap things that
| appeal to all employees rather than what I really want. This is
| most often implemented as a food perk or car perk, but
| obviously extends to almost any consumable purchase.
| Black101 wrote:
| 9. Kept in cash
|
| Like Apple likes to do:
| https://www.cnbc.com/2020/10/29/apple-q4-cash-hoard-heres-ho...
| world_peace42 wrote:
| Wouldn't that exacerbate the tech giant problem? Currently
| their war chests only get opened to vulture up fledgling
| companies. I'm not saying it can be instantaneously transmuted
| into gold if the government tried to take more, but I can't see
| your proposal alleviating that problem.
| ericjang wrote:
| I agree about the "corporate tax creates work in tax
| avoidance", but if corporate taxes are abolished, wouldn't it
| drive more individuals to incorporate their own businesses?
|
| The tax avoidance industry now shifts to servicing individuals,
| and again we find ourselves with inequality between individuals
| who can afford those services and those who cannot.
|
| An alternative way to tax would be to simply raise interest
| rates, and discourage capital from not being deployed
| productively.
| kumarvvr wrote:
| Incorporation and maintaining related documentation is a
| tough job.
|
| I guess one solution could be to classify various types of
| corporations and tier them. And then tax rules change
| accordingly.
|
| Similar to how tax breaks are given to startups.
| nojokes wrote:
| If they want to use their money then they have to pay
| dividends or wage.
| reedjosh wrote:
| Unless they run a catering business out of their home.
|
| They need furniture, computer, food, and a home for that
| business, so boom...using the money 'for the business' tax
| free.
| SMAAART wrote:
| that is an idea that I've been floating for a while,
| unfortunately people who don't understand economics and rely
| mostly on their feelings don't approve, and those are the
| majority of votes hence the politicians don't want to commit
| political suicide by promoting something like that.
|
| Think about it, a no tax corporate tax, yet taxing the
| recipients of dividends and distributions would:
|
| * eliminate tax heavens * foreign companies would come to the
| US * stimulate the economy * benefit the shareholders at large
|
| Of course the shareholders would pay taxes, and distributions
| to foreign entities could be taxed at the source.
|
| Easy, smart, logic.
| Strom wrote:
| This is how corporate taxes work in Estonia. There is no
| income tax, but dividends/distribution is taxed. I think it's
| great overall.
|
| However there are some loopholes that companies still figure
| out. In Estonia's case we have big international banks that
| found a juicy loophole. The local Estonian branches pay no
| corporate tax, but they also never pay dividends. Instead
| they give out a no interest loan to their foreign mothership
| and have no intention of ever getting it back. This loophole
| has since been patched, but it shows that companies will
| still hire teams of lawyers to find new loopholes to not pay
| a single cent.
| SMAAART wrote:
| Let's face it, no regulation can ever be perfect, make
| rule(s) and someone will find loopholes, then... close the
| loopholes and the cycle continues.
|
| That is life.
|
| And that should not be an excuse to impede improving
| society.
| suchire wrote:
| The main issue tackled here is that multinational corporations
| operate across borders, and thus create problems of capital
| flight out of a country. Thus, even if the economic activity is
| almost entirely happening within a country (e.g. a local shop
| uses locally targeted online ads, sold by a sales team working
| out of a local call center, to attract neighborhood customers),
| the profits could be captured somewhere else, like an Irish
| subsidiary handling profits from continental Europe. Even if
| those profits get reinvested or distributed to shareholders,
| they might not get reinvested or distributed in that country
| where the revenue was generated.
| Neil44 wrote:
| None of those things directly go to improve society and
| infrastructure though.
| pera wrote:
| When companies generate more profit they very rarely do any of
| the things you mention, why would they start doing it if they
| didn't have to pay taxes at all? In reality when a company gets
| to generate more profit the result is an even bigger gap
| between C-levels and normal employees salaries.
|
| Here is a better idea: companies should be the only entities
| paying taxes in a capitalist society. If you think about it it
| really makes perfect sense :) since they already do all the
| boring accounting stuff and with the power of their lobbies
| they could make tax law simpler and more efficient (something
| that normal citizen will never be able to push forward).
| nohuck13 wrote:
| > when a company gets to generate more profit the result is
| an even bigger gap between C-levels and normal employees
| salaries.
|
| This is #4 "spent on wages" no?
|
| We already tax wages. A graduated income tax targets
| specifically the problem you are flagging here. Taxing
| corporations exclusively would do away with this.
|
| If you're making an equity argument, why not argue for the
| opposite of what you're saying: reduce corporate taxes to
| zero, then make up for it by taxing only the highest earners'
| wages? Not advocating for a policy position here, just
| pointing out that the argument in the GP post is precisely
| that they lack of those granular policy levers is a drawback
| of taxing corporate income. Policy levers which could be used
| to nudge the income gap down by taxing the "excessive"
| executive comp at a higher rate, for example, don't work if
| you collect that tax revenue as a monolithic corporate
| profits tax.
| pera wrote:
| To me "spent on wages" means on every employee's salary,
| not only the top 0.01%
|
| It would be pretty awesome if companies increased salaries
| for everyone at the same proportion of their interment of
| profit.
| nohuck13 wrote:
| Yeah but you gotta use the tax code's definition of wages
| when arguing about the tax code ;)
|
| > It would be pretty awesome if companies increased
| salaries for everyone at the same proportion of their
| interment of profit.
|
| It would be pretty awesome if corporations didn't pollute
| our air too. But corporations are sociopathic profit
| maximizers. Presumably you support regulating their
| emissions, rather than just wringing your hands at the
| bad people. Moral suasion arguments are not effective as
| tax policies.
| justicezyx wrote:
| Hmm, insightfully looking but profoundly ignorant.
|
| Take a look at the history of tax. And make a judgement on the
| necessity of tax yourself. Stop wasting time coming up with
| some seemingly clever explanation of things.
|
| https://en.m.wikipedia.org/wiki/Tax#:~:text=The%20first%20kn...
| .
| celticninja wrote:
| Why should a corporation not pay taxes to support the
| infrastructure they use (which is paid for by taxpayers) to
| undertake their business. Amazon ship a lot of goods, that is a
| lot of road miles. I pay toward the upkeep of the roads and I
| get considerably less use out of them than Amazon do, in fact
| they are vital in order for Amazon to do business, so they
| should be willing to support it. The only reason they dont
| (support it) is because they are rich enough to argue with the
| government over it, and that argument is not due to ideological
| reasons, rather it is because arguing (in court) is cheaper
| than paying the taxes. So it is just because it is financially
| beneficial, even if the net effect is negative to society.
| scythe wrote:
| Why not just tax buybacks? When a company buys its own stock,
| it pays a tax on the value of that stock to the government.
|
| Sure, this makes stock prices lower. But it encourages
| dividends by comparison, which is probably a good thing, or at
| least everyone seems to think it is, and then these are taxed
| as regular income (not usually subject to gains rate).
| ajmurmann wrote:
| Buybacks to a large degree end up not being taxed or only much
| later. Most people are holding on to stock for long periods
| now. Behavior can also often be easily be adjusted to capital
| gains tax. Extreme example is Larry Ellison buying in island
| with a loan backed by his stock rather than selling the stock
| and buying the island from that directly.
| BbzzbB wrote:
| Isn't that just how every billionaire "spends" money tho?
| ajmurmann wrote:
| If it is, it undermines the point that buybacks get taxed
| raverbashing wrote:
| Ending corporate tax would be an interesting proposition and it
| would be interesting to study the possible effects of that
|
| However I think the main downside on the abolition of corporate
| tax is that companies are hiring even fewer people with time
| (automation, subcontracting, etc) so the taxation
| "opportunities" are reduced if you only have "payroll"/income
| taxes and sales taxes.
|
| The current situation leads to things like Starbucks having an
| exaggerated advantage over local cafes for example, since they
| 1) pay much lower effective tax 2) can have more advantageous
| rental agreements which leads to some ridiculous situations
| where one Starbucks is visible from another.
|
| (Though yes, governments do overtax people and companies IMHO)
| kapuasuite wrote:
| The government could tax shareholders, i.e. the people who
| receive a corporations profits to begin with.
| awillen wrote:
| People's attitude towards Amazon is the biggest counterexample
| of this. They have avoided a lot of taxes not through nefarious
| means, but by constant reinvestment (items 1-5). At some point,
| when a company is bringing in enough revenue, a lot of public
| attitude seems to be that it should be paying taxes regardless
| of whether it's investing that revenue in things that we
| generally see as positive.
| nickpp wrote:
| Which "people"? Consumers are delighted with Amazon,
| otherwise Amazon's revenue would dwindle. Investors, even
| more.
|
| I think the attitude you are talking about is largely driven
| by media.
| awillen wrote:
| The main reason Amazon is paying a $15 minimum wage is
| because of substantial pressure from progressives - there's
| an extensive record of this. The media reporting has
| largely been coverage of Bernie Sanders and the like, so
| it's pretty clear that there are non-media folks who have
| been driving it.
| nickpp wrote:
| Artificially putting a floor under the price one's
| allowed to charge for one's services benefits only
| politicians proposing such populists ideas and the non-
| working.
| graphtrader wrote:
| I know people personally that are always complaing about
| Amazon being too big and a monopoly while also being prime
| members and basically addicted to getting packages everyday
| in the mail. Sums things up pretty much.
| ashtonkem wrote:
| Absolutely not.
|
| Not only is this massively regressive, it ignores how much of
| our public infrastructure is built to support the economy. This
| proposal would effectively allow shareholders to turn
| infrastructure tax dollars into shareholder money without
| having to kick a single dime into the bucket. That's absolutely
| nuts.
| rcpt wrote:
| The conversion into shareholder money is where the tax
| happens.
|
| The idea is that if you want to tax rich people do it
| directly. Don't make it complicated.
| another_poster wrote:
| All taxes are avoided (or illegally evaded) to some degree, and
| the most taxed (i.e. the wealthiest people and firms) will
| always have the largest incentive to avoid taxes. To reduce the
| incentive to avoid taxes, countries often tax capital (or
| labor) at multiple stages but with lower rates (e.g. a
| corporate tax, dividend tax, and sales tax). As you point out,
| the corporate tax is redundant to other forms of taxation, but
| the redundancy lowers overall taxation rates and hence tax
| avoidance. So it's a feature not a bug of modern taxation.
|
| Some interesting alternatives to corporate taxation have been
| proposed[1][2], and I think they merit consideration for their
| potential to remove disincentives to invest or hire labor. I
| personally like Michael Pettis's argument that continued
| economic growth depends on increasing economic demand through
| redistributing wealth from capital (or more generally the
| wealthy) to labor [3], so I am skeptical of reforms that stop
| taxing capital.
|
| [1] https://cdn.americanprogress.org/wp-
| content/uploads/issues/2... [2]
| https://taxfoundation.org/value-added-tax-revenue-neutral-al...
| [3] https://foreignpolicy.com/2020/09/29/capital-flow-united-
| sta...
| elcritch wrote:
| > I personally like Michael Pettis's argument that continued
| economic growth depends on increasing economic demand through
| redistributing wealth from capital (or more generally the
| wealthy) to labor [3], so I am skeptical of reforms that stop
| taxing capital.
|
| This is an important point, and is misunderstood in (US)
| politics and deabtes, IMHO. Supporting capitalism and
| taxation aren't mutually exclusive positions. Well thought
| out taxation is crucial to balance the inherent network
| effects of large corporations. There's huge network effects,
| especially in tech [1], that leads to less ability for
| smaller firms or new players to compete. If anything, I'd
| wager that appropriate taxation of network effects is crucial
| to a well functioning capitalist society, especially as so
| much of success is due to luck and network effects in
| addition to hard work and talent [2].
|
| Just because you have capital doesn't mean you have
| capitalism, where most any individual(s) can access capital
| to bring about new companies and products. The trick is
| defining empirically and scientifically sound taxation
| measures rather than giving into simplistic models of
| Socialism or Reganism.
|
| 1: https://medium.com/@nfx/70-of-value-in-tech-is-driven-by-
| net... 2: https://arxiv.org/abs/1802.07068
| tmpz22 wrote:
| Are you kidding me? All of modern history points to the money
| being spent on only one thing: executive compensation. You
| really things the wealth of the world should prioritize
| Zuckerberg buying another island in Hawaii??
| fallingknife wrote:
| Zuckerberg's salary is $1. The billions of dollars he has
| come from his equity share from, you know, founding the
| company.
| dogma1138 wrote:
| Salaries come out of pre-tax revenue, any corporation can
| reduce their tax liability to about zero by handing out cash to
| their employees, yet that (almost) never happens.
|
| Same goes for financing, while dividends can only be paid out
| from post tax profits loan payments and even stock buybacks can
| be structured in a very tax efficient manner. Yet that doesn't
| happen that often either.
| jakozaur wrote:
| Essentially countries are forming a cartel to set bottom income
| tax. Forming cartels by private companies to ,,fix" prices is
| illegal, but countries are free to do it.
|
| However, the actual mechanics of that tax is hard:
|
| 1. Countries can still do subsidies, but avoid touching income
| tax.
|
| 2. Taxing by income where revenue is generated is hard to
| compute. It would make sense to enforce it only on big
| multinationals. E.g. Big tech pay income taxes proportional to
| revenue from different countrues or/and where they employees are
| located.
|
| 3. Looking at statistics the ideal income tax floor should be
| around 19%.
| nickflood wrote:
| Countries are supposed to in the end benefit people who live in
| those countries. There are many things that countries do that
| private companies can't, like jail people without their
| consent, for example.
| boublepop wrote:
| Putting the safety nets in place so the nations can gear up
| against corporations when time comes due to reap back everything
| that has been poured int the economy during the pandemic. Your
| can't really raise interest rates and taxes if corporations will
| just move to Ireland. And you can't fault Ireland for accepting
| them with open armes in times when they need money.
| rufus_foreman wrote:
| >> The G7 group of advanced economies has reached a "historic"
| deal to make multinational companies pay more tax
|
| No, it hasn't. Some finance ministers met and talked:
|
| "Finance ministers meeting in London agreed to battle tax
| avoidance by making companies pay more in the countries where
| they do business. They also agreed in principle to a global
| minimum corporate tax rate of 15% to avoid countries undercutting
| each other."
|
| I have no idea how it works in other countries, but in the US,
| finance ministers don't have the power to agree to treaties.
| Treaties in the US require a super-majority (two thirds) vote in
| the Senate. Unless Mitch McConnell has signed off on this, the G7
| group of advanced economies did not reach a deal on anything. I
| don't even see the word "Senate" in the entire article.
|
| US Treasury Secretary Janet Yellen can tell reporters whatever
| she wants. Without buy-in from Republicans in the Senate, finance
| ministers agreeing "in principle" amounts to finance ministers
| agreeing that if they had ham, they could make ham and eggs, if
| they had eggs.
| OJFord wrote:
| Yes it has. Several other comments have pointed out 'reaching a
| deal' vs. 'it has been enacted everywhere'; I'll just add that
| it's not at all novel language, e.g. Brexit saw the UK & EU
| reaching deals before (or without ever) enacting them.
| briandear wrote:
| > They also agreed in principle to a global minimum corporate
| tax rate of 15% to avoid countries undercutting each other.
|
| Why? If a country can be more efficient, why must they be
| penalized by being required to raise taxes? This is the
| equivalent of a price floor. Why should a country be required
| to have higher taxes to appease those that make different
| policy decisions? It should be up to the government (voters)
| what tax rates work for their country. Why wouldn't a tax rate
| ceiling be proposed instead? Why should Ireland raise taxes
| just because France wants to run huge healthcare deficits or
| offer extremely generous train worker pensions? Seems like
| decisions on tax rates should be left to the country. If a
| country wants a 50% tax rate, that's their business. If they
| are economically harmed by someone else having a 10% rate, then
| the problem isn't that someone else has a lower cost but that
| they have too high a cost.
|
| As far as the 2/3 rule for US treaties, that's a good thing.
| That ensures that treaties are good for the entire country
| rather than just a simple majority. I don't want 51% being able
| to ignore 49%. If Republicans were in power and proposed a
| maximum tax rate treaty, those complaining about the 2/3 rule
| would be singing a different tune. The Constitution was
| designed specifically to ensure that a narrow majority isn't
| able to run roughshod over everyone else. Gridlock is a
| feature, not a bug. And that feature benefits everyone at
| different times.
| ketzu wrote:
| I was under the impression that "agreed upon" for international
| diplomacy was regularly used before ratification by any
| national government or parliament, because that is usually the
| required first step. It might still fail later on before
| becoming law.
|
| I think it is the same for national things as well, e.g., two
| government parties in a coalition "agreeing" to make a law,
| even though it was an out-of-parliament discussion and has not
| been voted on in parliament and might never make it that far.
| nickysielicki wrote:
| They print the money, though! They can force businesses to
| denominate in dollars, inflate the dollar to construct a 15%
| tax, and make up the difference for individuals through
| transfer payments and UBI.
|
| I'm making a rhetorical point here, but this isn't as far
| fetched as it might sound at first. When you look at the
| numbers coming out of the fed, it's pretty clear who is calling
| the shots and it's not the Congress.
| ncallaway wrote:
| You're referring to the process of finalizing a treaty. That
| would be conceptually similar to "executing" an agreement
| between parties--the most important step that makes it legally
| binding!
|
| But "reaching a deal" and "executing the agreement" are often
| different steps. When we have discussions with a client, and we
| negotiate on the terms we can reach an agreement on the
| negotiation before we actually execute the contract.
|
| After reaching satisfactory terms in the agreement, I need to
| run the agreement by my business partner and ensure he
| approves. Sometimes the person who actually signs the contract
| may be a different party that I've never met or talked with
| during any part of our discussions.
|
| All of which is to say the language here seems appropriate. The
| G7 has reached a deal--that doesn't mean the deal is now
| effective or legally binding. Deals that have been reached can
| still fall through. But the G7 _has_ reached a deal. What they
| haven 't done is yet made it legally binding through a formal
| treaty process.
| wolverine876 wrote:
| > You're referring to the process of finalizing a treaty.
| That would be conceptually similar to "executing" an
| agreement between parties
|
| It's not even that. Most international agreements are
| executed without a treaty.
| skissane wrote:
| > It's not even that. Most international agreements are
| executed without a treaty.
|
| Only in the US (and possibly a handful of other countries
| which copy the US approach). Under international law, all
| legally-binding international agreements are treaties. What
| the US calls "international agreements" are treaties from
| the non-US point of view.
| rayiner wrote:
| Your analogy is flawed because you seem to be assuming that
| the people with execution authority are the ones who reached
| an agreement in principle. You'd expect them to succeed in
| papering it up.
|
| That's not the case here. The agreement in principle was
| reached by someone who has no power to do anything with
| regards to corporate taxes. Congress sets U.S. tax law and
| agrees to treaties. To do that, you need 60% or 66% of the
| Senate. It's like the CFOs reaching an "agreement in
| principle" to something that requires Board approval--and a
| big chunk of the Board is hostile to management.
| lukeschlather wrote:
| > The agreement in principle was reached by someone who has
| no power to do anything with regards to corporate taxes
|
| I think you are considerably understating the power of the
| G7 finance ministers including the US Secretary of the
| Treasury. Sure, they can't ratify a treaty without the
| cooperation of congress. They're still extraordinarily
| powerful individuals and have loads of direct authority to
| shape tax policy.
| occamrazor wrote:
| There are actually _many_ steps. In this case:
|
| 1. The finance ministers reach an agreement. This is what
| has happened.
|
| 2. A treaty is written and signed, normally by the head of
| state, but sometimes by the head of government (for the US
| in both cases the President). At this point the treaty in
| not yet legally binding, although according to
| international law the signatory country has an obligation
| "to refrain, in good faith, from acts that would defeat the
| object and the purpose of the treaty."[1]
|
| 3. The parliament (for the US the Senate) ratifies the
| treaty, making it binding.
|
| 4. The parliament (House and Senate in the US) creates the
| necessary national legislation to implement the provisions
| of the treaty.
|
| 5. The government creates the secondary legislation for the
| application of the national legislation created at 4.
|
| Usually after 2. the other steps follow more or less
| smoothly, but there are some high profile cases where the
| ratification never happened (e.g. the Kyoto protocol).
|
| [0] https://treaties.un.org/pages/overview.aspx?path=overvi
| ew/gl...
| skissane wrote:
| > 3. The parliament (for the US the Senate) ratifies the
| treaty, making it binding.
|
| Under international law, ratification happens when the
| states representatives (head of state or government,
| minister for foreign affairs, ambassadors) formally lodge
| instruments of ratification with the depositary. (See
| Article 2(1)(b), Vienna Convention on the Law of
| Treaties.) When the US Senate "ratifies" a treaty, that
| is not ratification under international law, that is a
| domestic legislative procedure which confusingly happens
| to have the same name.
|
| Under international law, legislatures are not involved in
| ratification, only the state's international
| representatives are (which almost universally belong to
| its executive). Domestic law may require those
| representatives to consult or seek approval from the
| legislature, but international law mostly (but not
| entirely) doesn't care about those requirements.
| ncallaway wrote:
| My analogy is really just a reference to what "reached a
| deal" colloquially means.
|
| "reached a deal" doesn't mean the deal absolutely 100% will
| be implemented. It means, the referenced parties have
| reached an agreement to something.
|
| In this case, the leaders of the G7 countries have reached
| an agreement among themselves to have a minimum corporate
| tax rate. Note that the United States has _no_ obligation
| according to this deal--only Joe Biden has agreed the deal.
| And Joe Biden has no legal obligation under the deal, he
| merely has a reputational one.
|
| Since the agreed minimum corporate tax rate is 15%, and the
| United States corporate tax rate is 21% there's _literally
| nothing_ Joe Biden needs to do in order to meet the terms
| of the deal he made with the other G7 leaders.
|
| If they want to turn this into an international treaty,
| absolutely, GOP Senate votes will be needed (though, given
| that the treaty would create a floor that's 6 percentage
| points below our current tax rate, I would imagine those
| would be attainable votes--if the GOP created a global
| floor that was lower than our tax rate, they could use it
| to argue for lowering our corporate tax rate).
| mistermann wrote:
| Tyler Cowan seems unimpressed:
|
| https://marginalrevolution.com/marginalrevolution/2021/06
| /th...
|
| More smoke and mirrors perhaps?
| [deleted]
| [deleted]
| rufus_foreman wrote:
| >> After reaching satisfactory terms in the agreement, I need
| to run the agreement by my business partner and ensure he
| approves
|
| Do you think Mitch McConnell sees US Treasury Secretary Janet
| Yellen as his business partner? Or vice versa? That's your
| perception?
|
| >> The G7 has reached a deal--that doesn't mean the deal is
| now effective or legally binding
|
| So if I'm negotiating with you and you tell me we have a
| deal, I should consider that to be something that may or may
| not happen, may or may not be effective, and may or may not
| be legally binding?
|
| Which car company do you work for?
| ncallaway wrote:
| Assume we're going back and forth in negotiations. After a
| few back and forth a, with small changes each time, I send
| you over some language and you say: "That'll work, I'll
| draw up a contract and send it over to you".
|
| At that point, I would tell people internally to my company
| that we have a deal with that client.
|
| But we don't count on that revenue arriving, until we have
| a signed contract in place. Anything can happen between the
| negotiation and the contract being signed. The client could
| come back to us and say "there's been a sudden change in
| priorities on our end, and we're cancelling the project".
| Or they might come back with any other change that they
| want "when I sent this to my VP, he said the top line
| number wouldn't work, and we need to move it again, I'm so
| sorry!"
|
| Yes, we don't consider anything to be legally binding until
| the contract is signed. We "had a deal", but deals can fall
| through.
|
| If you deal in any contract worth more than a few hundred
| dollars, I really recommend you take the same attitude:
| everything is provisional until the final agreement is
| written down and signed.
|
| > Which car company do you work for?
|
| Was that necessary? Really? You can make your point without
| attempting to attack people.
| rufus_foreman wrote:
| "everything is provisional until the final agreement is
| written down and signed"
|
| Here's what I read:
|
| "The G7 group of advanced economies has reached a
| historic deal to make multinational companies pay more
| tax"
|
| Is that true?
| ncallaway wrote:
| > > "The G7 group of advanced economies has reached a
| historic deal to make multinational companies pay more
| tax"
|
| > Is that true?
|
| Yep! Because a "deal" can be something that is
| provisional. "Reached a deal" to me doesn't in any way
| mean that the deal has been executed, finalized and is
| legally binding. It means the first step of negotiations
| has been completed and all parties are agreeing to the
| terms of the deal.
|
| Look, we're just arguing about the semantics of how final
| "reached a deal" is. I think it's not very final
| (especially when discussing large multiparty negotiations
| like the ones described here). You seem to think it
| refers to an absolutely final step. That's fine! English
| is messy and we can disagree about what specific phrases
| mean. I'll just caution you that most of the world will
| use the phrase "reached a deal" to refer to negotiations
| that are preliminarily complete, but the terms not having
| been formally adopted or legally finalized.
|
| For example the "Brexit deal" was "reached" on December
| 24, 2020 (https://www.cnn.com/2020/12/24/europe/brexit-
| deal-uk-eu-gbr-...).
|
| The deal wasn't approved by the British parliament until
| December 30, 2020 (https://news.yahoo.com/uk-parliament-
| approves-historic-brexi...).
|
| That deal went into effect on January 1, 2021.
|
| However it wasn't "finalized" until it was also ratified
| by the EU parliament on April 28, 2021
| (https://www.france24.com/en/europe/20210428-european-
| parliam...), nearly 5 months after it had gone into
| effect!
| rufus_foreman wrote:
| If I say we had a deal and you say well we did last
| Tuesday but not now, I know not to make deals with you
| ever again.
| dwaltrip wrote:
| Couldn't you first ask to finalize it in writing?
| ncallaway wrote:
| That's totally fair! I don't disagree that people who
| reach a deal shouldn't change the deal after that point
| (though the UK government seems to think it's fine).
|
| But, suppose the following events happen:
|
| - we reach a deal on some cool project
|
| - reporters announce that we have a deal on the cool
| project
|
| - I decide to back out of our agreement and not go
| forward with the cool project
|
| - reporters announce that I backed out of our agreement
|
| - You condemn me for my treachery, and tell everyone that
| I'm a backstabbing two-faced used-car dealer
|
| - reporters announce that you have condemned me
|
| The reporters aren't wrong at any step in this! We _did_
| have a deal, and it 's _correct_ to report on it and
| _correct_ to say we had a deal. Even if the deal
| ultimately fell through to my used-car treachery.
|
| I'm not saying people shouldn't hold to the deals that
| they make (though you seem to think that's my argument,
| so I must've made my point poorly somewhere along the
| way). 100% of my point is "reached a deal" doesn't mean
| it's final, and it's OK and even correct to say that a
| group of people have reached a deal--even if you don't
| think that deal is feasible.
|
| Another example: Let's say that I form a deal with 10
| investors that I will guarantee them a risk-free 50%
| annual return on their investment. You would be
| absolutely correct to say that I was probably lying! You
| would be correct to say it's clear that malfeasance
| exists! But you would be wrong to say that we didn't
| reach that deal. We did reach that deal, even if you
| think there is a 0% chance that the deal will actually be
| accomplished in the real world.
| YZF wrote:
| There's all sorts of outcomes here. While you may be right
| that the US will not sign on to the deal it might still
| have to deal with some consequences. E.g. while Yellen may
| not have the ability influence US tax laws there are also
| foreign tax laws that are part of this over which McConnell
| has no control. Let's say the rest of the G7/G20/OECD
| changes the way they tax global companies, if the US
| doesn't ratify their side there's still plenty of real
| world consequences. I think Yellen's agreement does count
| as in this is the US's (sort of foreign policy?) position,
| i.e. the rest of the world can proceed to make changes
| based on that agreement even though Yellen does not have
| the authority to commit to changing US tax laws.
| rufus_foreman wrote:
| >> I think Yellen's agreement does count as in this is
| the US's (sort of foreign policy?)
|
| No it doesn't work like that.
|
| To get anything done, you need Republican votes. I have
| no idea, I haven't checked this afternoon, how many
| Republican votes do you have for a minimum corporate tax?
|
| That's what I want to know, I'm guessing it is zero, but
| let me know what the number is.
| cm2187 wrote:
| Though if it is sold as a missile against big tech...
| YZF wrote:
| I'm not sure why Canada imposing a tax on Google's
| revenue in Canada requires US Republican votes? Or what
| the Republicans would do about it? So seems like we can
| get a lot of things done without those votes. Most of
| these companies are US based and they are effectively
| dodging taxes in other countries, it's not the US tax
| laws that impact those for the most part.
| kergonath wrote:
| Indeed. Luckily, "the world" [?] "the US".
| rufus_foreman wrote:
| There's a term, G7, what are the 7?
| stdbrouw wrote:
| The US corporate tax rate is 21%, above the 15% minimum
| that was proposed. Furthermore, it was the Trump
| administration who introduced GILTI and BEAT, both
| measures aimed at taxing foreign profits in low wage and
| low tax countries. Now, of course, republicans are
| probably loathe to give the White House any "wins", so
| that might throw a spanner in the works, but republicans
| don't have any love for tax havens.
| dragonwriter wrote:
| > To get anything done, you need Republican votes.
|
| This seems to be the kind of financial thing that fits
| right into reconciliation, which means you don't need
| Republican votes.
| cozzyd wrote:
| Isn't ratifying a treaty something completely different?
| ncallaway wrote:
| If they want to make this a formal treaty, yes.
|
| But it could be an informal agreement between the leaders
| of these countries, that they will all pass such laws. In
| that case, passing a law that changes the corporate tax
| rate would fit into a reconciliation package with no
| issues.
|
| Though, if it's an informal agreement then no such law
| even needs to be passed, since our corporate tax rate is
| above the agreed minimum.
| toomuchtodo wrote:
| Reconciliation requires no Republican votes.
|
| https://www.brookings.edu/blog/up-front/2021/02/05/what-
| is-r...
| rufus_foreman wrote:
| You think the Constitutional right of Congress "To lay
| and collect Taxes, Duties, Imposts and Excises" can be
| wiped out with reconciliation?
| [deleted]
| ncallaway wrote:
| To be clear, Constitutionally the United States Senate
| only needs a majority to pass a law that changes the
| Taxes collected from corporations.
|
| The Senate Filibuster which requires a 60-vote majority
| is not a Constitutional provision, and you wouldn't
| strictly need a Treaty for this agreement, if all the
| countries simply adopted the same tax provisions.
|
| So, if the Democrats had the vote for it, they _could_
| pass this law with 0 Republican votes. In fact, since
| raising taxes is a budgetary measure, they could
| absolutely pass the corporate tax increase on
| reconciliation and do it with 0 Republican votes and
| without touching the filibuster. So, it seems quite
| plausible to me that this will happen.
| dragonwriter wrote:
| Reconciliation is a process within Congress by which the
| Senate does not impose its not-Constitutionally-required
| supermajority requirement to certain budget-impacting
| measures.
|
| So, no, its use doesn't bypass Constitutional powers (not
| rights, which are not attributes of government bodies) of
| Congress, it is a means by which Congress has chosen to
| exercise them.
| [deleted]
| rsj_hn wrote:
| You are not going to ratify a treaty with the required
| 2/3 votes in the Senate via reconciliation.
| [deleted]
| dragonwriter wrote:
| > You are not going to ratify a treaty with the required
| 2/3 votes in the Senate via reconciliation
|
| Which is among the reasons this won't technically be a
| treaty in US law (even if it is in international law),
| but a Congressional-executive agreement [0].
|
| [0] https://legal-
| dictionary.thefreedictionary.com/Congressional...
| ncallaway wrote:
| You don't need to ratify a treaty through reconciliation.
| There's no need for this to be done with a formal treaty.
| It could simply be each of the nations passing laws that
| do the same thing.
|
| If the Senate passes a law that changes the corporate tax
| rate to a certain amount, that is a budgetary measure
| that could absolutely be passed with reconciliation.
|
| Yes, this law wouldn't be a treaty, but it could have a
| similar effect.
| rsj_hn wrote:
| > If the Senate passes a law that changes the corporate
| tax rate to a certain amount, that is a budgetary measure
| that could absolutely be passed with reconciliation.
|
| If it was revenue-neutral, sure. That is unlikely to be
| the case with changes to corporate tax rates. And even
| then, you are going to have a hard time getting even 50
| votes.
| dragonwriter wrote:
| > If it was revenue-neutral, sure.
|
| No, revenue-neutrality doesn't weigh in favor of being
| eligible for reconciliation; a measure must _principally_
| address either spending, revenue, or the debt limit to be
| eligible for that process.
| ncallaway wrote:
| That's an incorrect description of the budget
| reconciliation process.
|
| One of the budget reconciliation categories is explicitly
| for _revenue_ , which means being revenue-neutral would
| make it harder to pass under reconciliation.
|
| Being an aspect that explicitly impacts revenue makes it
| much easier to pass under the revenue reconciliation
| process. In fact, adjusting those rates would be a pretty
| straight-down-the-middle use of reconciliation.
|
| https://en.m.wikipedia.org/wiki/Reconciliation_(United_St
| ate...
| Taylor_OD wrote:
| >> So if I'm negotiating with you and you tell me we have a
| deal, I should consider that to be something that may or
| may not happen, may or may not be effective, and may or may
| not be legally binding?
|
| I hope you don't touch contracts in your job. Until a
| contract is signed nothing is official.
| rufus_foreman wrote:
| OK. Until a contract is signed, something is not a
| "historic" deal, is that right?
| summerlight wrote:
| Yeah, it is merely a high level blueprint for the actual
| treaty. There should be lots of details to be hashed out coming
| months (or years).
| dragonwriter wrote:
| > Treaties in the US require a super-majority (two thirds) vote
| in the Senate.
|
| That's misleading, because what are called "treaties" in
| international law include more than what are called "treaties"
| in US domestic law, but also "Congressional-executive
| agreements" and some (but, IIRC, not all) "sole executive
| agreements."
|
| Virtually all "treaties" in the international sense that have
| come into force in US law in recent decades have been
| Congressional-executive agreements.
| caymanjim wrote:
| Not every international agreement is a treaty. You're right,
| though; this is merely an agreement in principle and has no
| force whatsoever. That doesn't mean it won't lead to actual
| legal changes, but this article is misleading.
| wolverine876 wrote:
| > this is merely an agreement in principle and has no force
| whatsoever
|
| You mean that it's unenforceable in a court, but that doesn't
| mean at all that it lacks force:
|
| Court enforcement isn't the the only force. If your boss,
| client, spouse, etc. pressures you to do something, it can't
| be enforced in a court, but it can have great force. We all
| are subject to great social pressure in our behavior,
| conduct, life choices, etc. - we all generally speak the same
| language, dress the same, follow the same life and career
| paths, avoid socially unacceptable things (even those that
| are unfairly discriminated against), etc. HN mods have great
| influence here, even though they have no means of court
| enforcement (in any practical sense).
|
| International relations in particular has no law, in the
| sense of a court that can make enforceable decisions. In a
| sovereign legal sense, it's anarchy. There is no
| international sovereign government (the UN is a conference of
| sovereign governments). But obviously a great deal is done
| which has real force. It's actually very interesting to see
| the creative ways in which 'international law' (again, not
| the same as a sovereign government's law) is crafted, given
| that very significant constraint, in order to give it force
| and effectiveness. Note that the G7 is exceptionally
| influential despite having no legal power - why do you think
| these very powerful, busy people are spending their time
| there?
|
| The President controls the Executive Branch of the U.S.
| government. Their decisions have great legal force.
| Politically, those decisions mostly carry forward to future
| presidents.
| CameronNemo wrote:
| The executive is allowed to make executive agreements without
| consent of congress.
| nohuck13 wrote:
| In the US, executive orders cannot change tax law, since the
| "power of the purse" is constitutionally reserved for
| congress.
|
| If you're thinking of the Iran nuclear deal, that's head-of-
| state stuff where the president is considered to have more
| powers (though of course it still was never a treaty, so
| could be/was scrapped easily by the next administration).
| [deleted]
| HideousKojima wrote:
| And those executive agreements have no binding legal force,
| and can be broken by the next executive (or even the same
| executive who made them) on a whim. See, for example, the
| Iran deal and the Paris climate deal.
| nohuck13 wrote:
| I agree with your main point but I wouldn't say executive
| orders lack binding legal force. They derive binding legal
| force from congress or the constitution first telling the
| executive branch "you go figure out the details here."
|
| Foreign policy.
|
| The SEC.
|
| Heck, the emancipation proclamation was an executive order.
| Everyone knew Lincoln and his contemporaries wanted to
| abolish slavery, but Lincoln was absurdly careful at the
| time to frame the proclamation as a wartime measure aimed
| at crippling the south's economy. He went out of his way to
| appeal to existing commander-in-chief powers in order to
| make it lawful.
| [deleted]
| rsj_hn wrote:
| They can make all the agreements they want, but it's not a
| legal treaty until 2/3 of the Senate agrees, and even then,
| this stuff requires that laws be passed -- many laws
| affecting jurisdiction, accounting standards, and the tax
| laws themselves. None of this can be done with an executive
| agreement.
| skissane wrote:
| > They can make all the agreements they want, but it's not
| a legal treaty until 2/3 of the Senate agrees
|
| That's not true under international law. The confusing
| thing here is that "treaty" means different things under
| international law and US law.
|
| Under international law, any legally binding agreement
| between two countries is a treaty.
|
| Under US law, there are three types of agreements between
| the US and foreign states (or international organizations):
| treaties, congressional-executive agreements, and sole
| executive agreements. The first are approved by two-thirds
| vote in the Senate, the second by an ordinary Act of
| Congress, the third by the President acting alone (without
| Congressional involvement.) But all these three are
| considered equally to be treaties under international law.
| The distinction between the three is purely a US domestic
| law distinction. Article 46 of the Vienna Convention on the
| Law of Treaties says that domestic law does not determine
| the validity of treaties under international law unless the
| violation is manifest, which means that for most purposes
| the rest of the world can just ignore this US-internal
| distinction.
|
| The authority to ratify treaties, in the international law
| sense of "ratify" and "treaties", solely belongs to the
| President (and the Secretary of State, and ambassadors,
| acting on the President's behalf). When the US constitution
| speaks of "ratifying" a treaty by the Senate, that is not
| ratification under international law. That's actually a
| domestic US legislative procedure which confusingly happens
| to have the same name.
|
| > many laws affecting jurisdiction, accounting standards,
| and the tax laws themselves. None of this can be done with
| an executive agreement.
|
| In practice this will likely be done by an ordinary Act of
| Congress (a "congressional-executive agreement") which only
| requires an ordinary (not two-thirds) vote in the Senate.
|
| However, one needs to understand that ratifying a treaty
| under international law, and passing domestic legislation
| to implement it, are independent things. Under
| international law, the President or Secretary of State can
| legally submit the instrument of ratification for the
| treaty even if Congress hasn't passed any implementing
| legislation. International law doesn't care about
| implementation legislation, that's a domestic law concern.
| Now in practice the President or Secretary of State
| wouldn't do that, because that is not the traditional
| practice of the US. But other countries in the world do
| sometimes ratify treaties before the implementing
| legislation is passed. That generally happens in systems -
| whether Westminster democracies or non-democracies - in
| which the executive can be confident they'll get the
| implementing legislation passed.
| jedberg wrote:
| An agreement can be reached without a treaty. But that's not
| even super relevant here.
|
| The US doesn't need to change any laws to meet this agreement.
| We already tax our corporations more than 15%. What the US
| wants is for other countries to tax that much, to discourage
| our own multinationals from booking revenue outside the US to
| avoid US tax. The EU wants companies to book revenue where they
| make it, which they can do all on their own. They don't need
| the US for that.
|
| And what makes you think the GOP wouldn't support this? It
| would give them cover to _lower_ the tax rate to 15% from 21%
| to "be in line with the rest of the G7". Also, if our
| multinationals can't avoid tax anymore, there is a good chance
| they would just book their revenue here in the US, leading to
| more revenue for the US and less for Europe.
| cm2187 wrote:
| The agreement changes the way a company revenue is recognized
| and allocated between jurisdictions. I suspect it may require
| to change the tax treaties between those countries. It's not
| just changing the corporate tax rate.
| jedberg wrote:
| From what I can tell with what's out there on there
| internet, the main change is allowing local jurisdictions
| to tax a company on the money they make in that country,
| even if they have no presence there.
|
| So again, it would just increase revenue for the US, and I
| see no reason they wouldn't agree to it.
|
| At the end of the day, I don't think the US had to
| compromise here. I think it's universally better for the US
| government, just not US based companies, but it gives the
| GOP enough air cover to agree to it anyway.
|
| It mostly benefits the European countries that are missing
| their tax revenue.
| bjt wrote:
| The US corporate tax rate is already 21%. Agreeing to "at least
| 15%" should not be a tough sell.
| wolverine876 wrote:
| > in the US, finance ministers don't have the power to agree to
| treaties
|
| The U.S. Secretary of the Treasury speaks for the President;
| it's a fundamental dynamic of organizations. Otherwise,
| effectively Yellen wouldn't be Treasury Secretary - Yellen
| would be powerless and meaningless - and would resign or be
| fired. Only Trump seemed to ignore this and undermine the
| people under him. Also, I expect that the Treasury Secretary
| has great legal authority to make binding decisions for the
| U.S. government; remember that the American people decided the
| cabinet members would be separately confirmed by Congress
| (i.e., the Senate), per the Constitution.
|
| Similarly, if the CFO of Apple makes an agreement, the counter-
| party assumes they speak for CEO Tim Cook. Otherwise, why talk
| to this person?
|
| > Treaties in the US require a super-majority (two thirds) vote
| in the Senate.
|
| Most international agreements are not treaties. The people of
| the U.S. delegate the power to conduct foreign affairs almost
| exclusively to the President, again in the Constitution. Only
| certain actions, such as treaties, require Congressional
| approval.
| rufus_foreman wrote:
| Here's what it says in the Constitution:
|
| "The Congress shall have Power To lay and collect Taxes,
| Duties, Imposts and Excises"
|
| Crystal clear.
| wolverine876 wrote:
| There is far more to U.S. government than the Constitution,
| which is only a framework. There are an enormous body of
| law, court precedents, institutional customs, federalized
| government, and of course public opinion.
|
| Among that body of law are existing tax rates, which are
| currently over 15% for corporations. Under the
| Constitution, the President must agree to changes in tax
| rates unless their veto is overridden.
|
| You're right that Congress theoretically could violate the
| agreement, but in practice, it's almost irrelevant. They
| could theoretically pass a bill tomorrow that eliminates
| every tax and every law in the U.S.
| rufus_foreman wrote:
| No.
|
| The United States Constitution is not "only a framework".
| tacomonstrous wrote:
| You're good with getting rid of the filibuster then?
| wolverine876 wrote:
| Could you provide something to backup your statement?
|
| As further examples of my point, beyond the laws, legal
| precedents, customs, and institutions mentioned above:
| None of the executive branch departments (State, Justice,
| Defense, Treasury, etc.) are mentioned in the
| Constitution. No federal court besides the Supreme Court
| is mentioned. Even specific laws are only loosely
| defined; for freedom of speech, no provision is made for
| slander, fraud, harassment, government secrets, etc.; for
| the right to bear arms, nothing defines what 'arms' are
| (and I don't suggest we try to define them here). The
| filibuster and other Congressional rules are not defined.
| Etc.
| Black101 wrote:
| They will just pass that on to the consumer... it's an expense,
| after all
| workallday21 wrote:
| In other words, US is the #1 backer if imaginary assets which are
| also the best trick used by major multinationals to shift their
| tax burden. In order to solve this problem US does not get rid of
| imaginary assets but raises the tax on the world.
|
| Sure, so the competitive advantage of poor countries will be what
| -- low wages?
|
| This is nothing more than ladder pulling.
| csomar wrote:
| It could be worse. If these doesn't exclude small time
| exporters, and they need to report to foreign tax bureaus; I
| can see them having trouble doing any exports or having to go
| through intermediaries who will make additional charges.
| jessecurry wrote:
| If private companies did something like this it would be called
| price-fixing and they would be prosecuted.
| the-dude wrote:
| If private companies would start to imprison shoplifters, it
| would be illegal and they would be prosecuted.
|
| A private company is not government and government is not a
| private company.
|
| What is your point exactly?
| ourmandave wrote:
| https://www.wikihow.com/Legally-Detain-a-Shoplifter
| the-dude wrote:
| That is why I said imprison.
|
| Even if the state does it in NL, there is a difference
| between imprisonment and detainment. They are even
| physically different : they are different buildings.
| EMM_386 wrote:
| This is absolutely necessary.
|
| Think about this Microsoft Irish subsidiary that "made" $200
| billion with ZERO EMPLOYEES.
|
| Not even a single person to go buy a sandwich at lunch and "help
| the local economy".
|
| Nobody.
|
| The only beneficiary is Microsoft because nobody gets any tax
| revenue. And Microsoft can just hoard cash, it's not like they
| are going to rain it down to everyone's paycheck.
|
| This is a global problem, it requires a global solution. As much
| as that answer is anathema to some, it seems necessary here.
| flavius29663 wrote:
| they do have some employees - the directors
|
| > Microsoft Round Island One, the registered address of which
| is at an office of the law firm Matheson in Dublin, states in
| its accounts that it has "no employees other than the
| directors".
|
| https://www.theguardian.com/world/2021/jun/03/microsoft-iris...
|
| What the Guardian is not saying (but I am not surprised, since
| it's a rag) is that MS has a huge presence in Ireland, in a
| different company, probably.
|
| Ireland has been MS base in Europe for decades, they have 2000
| employees there, and it's where Azure had it's first European
| data center. I know because I applied to them back in the day,
| and my company had a one day outage in 2011 because of a
| lighting strike to the data center...
|
| MS should pay a minimum of 5-10% of those money in taxes, where
| they are produced, for sure. But let's get our facts straight,
| so we have a better voice when we say this.
| [deleted]
| [deleted]
| [deleted]
| MichaelMoser123 wrote:
| which of the FANG companies is going to take the biggest losses?
| They all seem to be very good at dodging taxes, but are there any
| differences between them?
| peteretep wrote:
| Irish are gonna be pissed. Also and not ironically, what a huge
| win for the workers over capital.
| loxs wrote:
| Such a huge win, now poorer countries will get even poorer.
| peteretep wrote:
| I think you are misinformed about the level of corp tax in
| most poor countries. Twenty countries have corp tax less than
| 15%, of which about half are poor. 15 have no corporate tax
| and are either rich or are just unambiguous tax havens.
|
| Average corp tax in Africa and South America is 28%, Europe
| and Asia are 20%.
|
| https://taxfoundation.org/publications/corporate-tax-
| rates-a...
| loxs wrote:
| Most of these are poorer than G7 (and especially the US who
| is the main beneficiary), so my statement is 100% correct.
| I didn't say that _all_ poorer countries will get poorer by
| this specific action. There are many other actions to make
| everyone poorer than the US.
| peteretep wrote:
| What's the mechanism by which poor countries will get
| even poorer exactly here?
| loxs wrote:
| Less companies will be formed there if they don't have a
| tax advantage.
| peteretep wrote:
| And yet tax receipts locally will be up.
| CryptoPunk wrote:
| And less private spending and investment by these
| corporations and their shareholders. The optimal size of
| government spending, as a percentage of GDP, for economic
| growth, is likely well below 25%, and significantly lower
| than the level in every OECD country, so to the extent
| that this enables increases in government spending, it
| will likely hurt economic growth:
|
| https://web.archive.org/web/20170821004405/http://ime.bg/
| upl...
| allengeorge wrote:
| "The rules on making multinationals pay taxes where they operate
| - known as "pillar one" of the agreement - would apply to global
| companies with at least a 10% profit margin. Twenty percent of
| any profit above that would be reallocated and taxed in the
| countries where they operate, according to the G7 communique."
|
| How will taxing authorities determine which companies meet the
| 10% profit margin threshold? Which jurisdiction is this threshold
| calculated in for multinationals?
| toyg wrote:
| These are details that inevitably will be hammered out in the
| following months.
|
| In the end, most of these companies are public, their profit
| margins are already disclosed.
| CryptoPunk wrote:
| This reminds me of when the G7 political elite got together in
| 1990 and created FATF, to institute a financial warrantless mass-
| surveillance system, euphemistically called an anti-money
| laundering system, and nearly every government in the world soon
| signed up, despite it turning out to be one of the least
| effective policy experiments in history:
|
| https://www.tandfonline.com/doi/full/10.1080/25741292.2020.1...
| CrazyCatDog wrote:
| This is collusion, plain and simple.
| abc03 wrote:
| As there are some misinformation and confusion, I try to
| summarize a few points: What is it: Pillar 1 tries to tax the
| digital economy (FAANG etc., scope still under heavy discussion).
| The goal is to prevent a digital tax in each country. Basically,
| the profit will be taxed in market states (i.e. Google pays tax
| in Germany). Pillar 2 tries to impose a global minimum tax rate.
| Countries levy a top-up tax on the foreign operations of their
| headquarter companies (i.e. difference between minimum global tax
| rate and effective tax rate) Who will be affected: This is
| different for Pillar 1 and Pillar 2 but both only want to tax
| multinational corporations defined for example by sales (> EUR
| 750 m turnover for pillar 2) and only if you have some minimum
| foreign operations. So your typical small company is not affected
| at all. What's so genius about this project: The OECD is very
| worried that there are still some loopholes, so they want to
| close them. They do it by basing the effective rate on IFRS
| income (or US GAAP) with some adjustments. IFRS income is also
| the basis they report to shareholders, so companies have a
| problem: Higher IFRS -> more taxes to pay How do the countries
| ensure that all countries participate: You don't have to impose a
| global minimu rate. If one country doesn't do it, other countries
| can levy the top-up tax through a different system (undertaxed
| payments rule for those who want to look it up). What's the
| position of the Biden Administration: The USA has their own
| system called GILTI which is accepted as well. It looks like the
| USA gets away again by participating but in the end, they will
| decide we won't follow the rules. Is this fair? Opinions differ.
| Why should highly developed economies like Ireland, Switzerland,
| Singapore not be able to set their own tax rates. They invest a
| lot in the education of their people. And if you think tax is
| fair, you don't know life. What countries will do is increase tax
| on profit but decrease other "taxes" (i.e. price on mining
| rights, social contributions etc.). If you have questions, AMA. I
| devote a large part of my life on this project.
| fastball wrote:
| > It was reported this week that an Irish subsidiary of Microsoft
| had paid zero corporation tax on $315bn (PS222bn) profit last
| year because it was resident in Bermuda for tax purposes.
|
| This is just flat wrong, right? MSFT's profits last year weren't
| even close to that.
| gorbypark wrote:
| I think the consensus is that Microsoft shifted some assets
| from it's Irish shell company to another shell company and
| recorded a bunch of "profit" because of it.
| ajkdhcb2 wrote:
| A few countries agreeing on a global law. Sounds to me like "USA
| and UK agree that China should do X". Good luck enforcing it and
| closing all loopholes when there are powerful people that don't
| want that. Empty political talk to make it look like they are
| trying
| peteretep wrote:
| China's tax rate is considerably higher than 15% and they also
| don't want their industries to be competing against companies
| who are cheating the tax man.
| ajkdhcb2 wrote:
| I just wanted to show how silly is sounds that some ally
| countries think they can enforce actions on other countries
| seoaeu wrote:
| Isn't the literal definition of 'allies' a group of
| countries which pool their military resources to compel
| other countries to act how they want? I don't see the
| contradiction
| Schlaefer wrote:
| This happens all the time, see e.g.:
| https://en.wikipedia.org/wiki/Brussels_effect
|
| Of course you're free to ignore it, if you don't care about
| hundreds of million potential customers.
| ajkdhcb2 wrote:
| It links to the opposing effect too:
| https://en.wikipedia.org/wiki/Race_to_the_bottom
|
| So it isn't that simple when it is something like this.
| So far history shows that tax havens work and the loop-
| holes are very challenging to close.
| Schlaefer wrote:
| This legislation is directly aimed at preventing a race
| to the bottom, because societies (represented by their
| governments) realized that they are getting played by
| extranational entities if they act alone.
| csomar wrote:
| > Good luck enforcing it and closing all loopholes when there
| are powerful people that don't want that
|
| They are, essentially, agreeing to police their imports from
| world wide countries/companies; which makes them able to
| enforce it.
| williesleg wrote:
| Great! Now we all pay more! Taxes come from somewhere.
| exabrial wrote:
| Taxation is a barbaric practice that humans need to move past.
| Refusing to pay taxes ensures the state will dispatch a team of
| armed thugs to assault you and likely kill you if you resist.
| diamondhandle wrote:
| Will rich nations back a deal to tax multinational _citizens_?
|
| This is one area where America has a secret lead for both
| foreigners and ultra-rich citizens. Checkout GRATs and
| Opportunity Zones if you want to daydream about how to pay near-
| nothing in taxes as an American sitting on a massive windfall.
|
| And then there's all of the things you can do inside of an
| insurance policy.
| throwaway13337 wrote:
| This sounds like it will be hell for small software companies
| with customers all over the world.
|
| Paying taxes differently for each country of the customer you
| sell to is a ridiculous hardship.
|
| It only benefits the large multinationals to reduce their
| competition. These sorts of rules centralize markets to fewer and
| fewer companies able to spend the resources to fulfill more and
| more complex rules.
|
| The end result is higher prices and lower innovation for
| consumers. While employment gets centralized to slow-moving,
| inefficient, but compliant companies.
|
| It's a real shame that legislation is actively trying to make it
| harder to do business as a small entity. Functioning governments
| should have it very high on their list of priorities to do the
| opposite.
| vanilla-almond wrote:
| Small software companies with customers all over the world are
| not multinational companies. These small software companies are
| located in one country i.e. one physical presence, unlike tech
| companies where their presence is in multiple countries. So
| this tax change won't affect small software companies located
| in one country with international customers.
|
| _Edited to add_...
|
| The article states: " _the rules will aim to make companies pay
| more tax in the countries where they are selling their products
| or services, rather than wherever they end up declaring their
| profits._ "
|
| The following scenario is unclear to me: A software company
| based in a European country sell their SaaS product to
| primarily US customers. The majority of their profits are made
| with US customers, but the company has no office presence in
| the US. Does that mean the profit from US sales is subject to
| the rules of this new tax law? (I assume not, but I could be
| mistaken.) I assume this law only applies if the company has a
| physical presence in the US. (But now wondering if my
| interpretation is correct!)
| unreal37 wrote:
| European VAT, for instance, applies even for non-European
| companies. I can totally see some EU politician thinking that
| they deserve some portion of the profits of each sale (income
| tax) as well as a sales tax.
|
| Potential for having to pay income tax in countries you have
| customers in, sometime in the future, is > 0%.
| reader_mode wrote:
| >Small software companies with customers all over the world
| are not multinational companies
|
| It's extremely common even for small software companies to
| have offices across the world
| elteto wrote:
| Then they already pay taxes there.
| reader_mode wrote:
| They might (probably not since the sales likely go
| through parent company) but that doesn't equate to paying
| taxes separately in each country you have customers in.
| H12 wrote:
| Thank you for your reply. In hindsight it makes a ton of
| sense that this would only apply to companies with a physical
| presence in multiple countries.
|
| Tracking country of origin for every online purchase and
| grouping them in order to pay international taxes would be an
| absolutely ludicrous requirement. No matter how low your
| opinion of the G7 is, they're not _that_ dumb.
| viraptor wrote:
| Doesn't this already apply though? I don't know the details
| here, but Steam seems to apply both state- and country-
| specific taxes at checkout. Steam is not a multinational
| corporation as far as I know.
| m12k wrote:
| A lot of countries have laws requiring companies that
| sell more than $X annually to their citizens to register
| as a foreign company and apply local VAT.
| rjknight wrote:
| The European Union did introduce a system similar to this
| for VAT, where the rate paid depends on the country of the
| buyer, not the seller:
| https://europa.eu/youreurope/business/taxation/vat/cross-
| bor...
|
| It might be a bad idea but it's not beyond the realms of
| possibility.
| jlokier wrote:
| However, within the EU they also have a nice (or at least
| automatable) online system where small businesses can
| process inter-country VAT sales declarations through
| their own country's tax system. It's not particularly
| onerous for small businesses to sell across borders to
| other countries within the EU.
| toyg wrote:
| TBH the bad idea in the EU scheme is allowing different
| countries to have different taxes on digital sales. There
| should be one rate across the whole Union, to be paid to
| the Union itself. This can then be redistributed to
| national governments in various ways, or reinvested in
| digital infrastructure that benefits the whole continent.
|
| Enforcing fair taxation is not a bad idea, making it
| awkward is.
| sbacic wrote:
| If it's going to be anything like the digital services tax,
| then the answer is a resounding yes as the US is where your
| customers are.
|
| I see two things come out of this:
|
| 1. Companies selling their B2C services digitally will be
| paying both their sales (or VAT) AND their corporate income
| tax in countries where their customers are. This will be a
| benefit for countries with large markets and leave smaller
| countries where the companies are headquartered wondering
| what the value of these companies to their economies is.
|
| 2. A major problem for digital businesses will be the fixed
| costs of compliance. I suspect that a lot of side-projects
| and lifestyle businesses won't see the light of day on
| account of how expensive it will be to keep them running for
| years while they build up revenue.
| zmk_ wrote:
| They still would hire domestically and pay salaries that
| would be taxed.
| sbacic wrote:
| They'd need to grow to a certain size first and even
| then, they could just hire remotely.
|
| My hope is that these rules will only apply to large
| multinationals but somehow I doubt it - governments are
| unlikely to leave money on the table and will likely use
| this opportunity to expand the scope to include smaller
| businesses as well.
| [deleted]
| csomar wrote:
| > This sounds like it will be hell for small software companies
| with customers all over the world.
|
| Uh, no, this will bring required tax profits for rich
| governments from these predatory countries that will finally
| fix their budget deficits and insure equality between its
| citizens.
|
| /just kidding, this will break small companies and make it
| almost impossible to sell/export to richer countries for small
| new comers. The big companies will find new loopholes while
| facing less competition. The EU governments will then just
| increase the VAT to 35% to fix their deficits. Everything is
| fine.
| ed25519FUUU wrote:
| Interesting narrative here. Ireland is "predatory" because
| they create an extremely low tax environment for
| competitiveness.
|
| Is Texas also predatory for having no income tax versus CA,
| NY etc 10%+ income tax?
| csomar wrote:
| Predatory from the perspective of other nations/states.
| manmal wrote:
| I think Ireland are. They are actively trying to shoot down
| a case where Apple would need to pay them billions in
| taxes: https://www.irishtimes.com/business/economy/ireland-
| wins-app...
|
| What government in their right mind fights taxes they would
| receive? They want to keep Apple (and others) happy so they
| don't take their income elsewhere.
|
| So I'd say this smells of predatory pricing.
| max_ wrote:
| Naive people think that politicians still possess any form of
| altruism.
|
| I suspect this is just some kind of scam in good cosmetics (as
| with other globalism policies)
|
| It's always about protecting the bread of the powerful.
|
| The side effects, such as what you raise are just collateral
| damage.
| [deleted]
| ok123456 wrote:
| > This sounds like it will be hell for small software companies
| with customers all over the world.
|
| No. Because, they have a single physical nexus and can't pick
| and pick and choose where to declare their profits, after of
| course reaching a sweat-heart deal.
|
| If a small business doesn't pay a tax the IRS thinks it owes,
| the IRS sends armed agents to serve process. They have no
| leeway compared to the large multinationals that pay nothing.
| dalbasal wrote:
| It's neither here nor there, for that.
|
| If you are a simple, single entity, your income tax is
| calculated there. It's hard to say what if anything will
| actually come of this. Tax legislation has a tendency to hide
| the main point. But currently, small businesses disadvantaged
| by the things this legislation ostensibly wants to curb.
| Multinationals have the resources and complexity to avoid tax
| entirely. It's usually just sole traders that pay full income
| tax.
| fighterpilot wrote:
| So if someone has a small company in Bermuda with 10
| employees and they serve US customers primarily, will they be
| impacted by this?
| dalbasal wrote:
| There isn't a public "this" yet, so IDK. Also, Bermuda is
| unlikely to agree to this.
|
| It sounds like the primary purpose here is residency
| definitions, which could mean that the US would be
| obligated or entitled to consider the Bermuda company
| american for tax purposes.
|
| IRL, that Bermuda company is likely to be a shell company,
| receiving payment from a single client (EG msft) so that
| the parent company can book it as an expense.
|
| That said, it's pretty much impossible to say anything at
| all before details go live, and accountants have had time
| to chew on it. Tax rules are all detail. Headlines really
| do mean nothing. " _Where they do business_ " could mean a
| lot of things. Sales. employees, manufacturing,
| financing/listing.
|
| Corporate income tax is applied to the net of revenues and
| expenses.
|
| Some of the language in other statements seems to suggest
| there will be some sort of a quota system. MSFT will be
| defined as x% american, y% Bermudan, etc. This is pure
| speculation though.
| fighterpilot wrote:
| That's good information. "Also, Bermuda
| is unlikely to agree to this."
|
| Will it matter whether or not Bermuda agrees to it? It
| seems like their buy-in will be irrelevant, since if the
| company wants to keep serving US customers then they'll
| have to go along with the rules the US is setting up?
| dalbasal wrote:
| It will matter, because (again, totally guessing) the
| agreement will probably make distinctions between in-
| treaty countries and out-treaty. Beyond theat, idk.
| graphtrader wrote:
| Not just software either. I mean what great business idea at
| this point is only going to have local consumers.
|
| It is just a terrible idea on so many levels. It is like
| something Jay Gould would come up with once already at the top.
| christkv wrote:
| I suspect a whole bunch of companies specializing and being
| middle men handling this will pop asap.
| plantain wrote:
| Is that meant to be a good thing?
| christkv wrote:
| I don't make a value judgement I'm just noting that there
| will be an arbitrage business opportunity and it will be
| filled by someone.
| trinovantes wrote:
| Don't payment processors like Stripe already handle different
| regional taxes?
| DizzyDoo wrote:
| No, Stripe take their cut and the tax implications are down
| to the seller. However! They did recently acquire TaxJar
| (https://stripe.com/newsroom/news/taxjar) so I imagine things
| will become easier in this regard, reporting and filing,
| soon.
| Silhouette wrote:
| That's an interesting bit of news, in that at least it
| confirms Stripe have recognised the danger. I will be happy
| to be proven wrong about this, but I fear their reaction is
| too little and too late for merchants here in the UK. The
| likes of Paddle are already offering much simpler tax
| arrangements and other significant advantages as well, and
| as you would expect, this is already disrupting some
| markets that might have been considered Stripe's natural
| territory just a few years ago.
| rvz wrote:
| Absolutely NOT.
|
| Stripe is ONLY a payment gateway, 'Stripe handling taxes' is
| a complete myth that is always brought up by uninformed US
| Stripe customers only to hype Stripe up.
|
| Stripe customers in the EU have to deal with this VAT tax
| pain already which is why they either don't use Stripe and
| use Paddle instead.
| Silhouette wrote:
| Not really. That sort of payment processor might allow you to
| specify a tax rate to include on a bill and maybe to
| configure different rates that are automatically selected
| depending on where your customer is. However, typically they
| do not actively monitor and update the current tax rates for
| different areas, nor do they handle the reporting and
| remittance to all required authorities, so they only take
| care of a small part of the overall compliance requirements.
|
| There is another type of service becoming increasingly
| prominent, which is a "merchant of record". In effect, the
| service becomes a reseller for your product or service, and
| since they are then the vendor for legal purposes, they also
| become responsible for all the end customer taxation issues.
| You in turn typically deal with them as a much simpler B2B
| relationship between just two entities.
| nabla9 wrote:
| Don't worry.
|
| The proposed tax does nothing you think it does, as the article
| explains. Pillar one does not apply small companies.
|
| Small companies pay just corporate tax as they did before, as
| the article explains. Nothing changes in that front. Pillar
| two.
| novok wrote:
| Yeeeeahhhh, just like the GDPR had exemptions for small
| companies and side projects for someone's sunrise calculator
| app. Oh wait, it didn't.
| nickpp wrote:
| This time. Once the mechanism is in place and the large
| companies have complied, they will come for the small
| companies too.
| nabla9 wrote:
| Pillar two already takes care of the small companies.
|
| There are two good mechanisms that apply for both cases.
| estebarb wrote:
| I'm thinking that this will be a entry barrier for new global
| startups. How are a self funded entrepreneur supposed to support
| any country tax at day zero?
|
| Taxes where business takes place is nice, but an easy way to pay
| taxes globally would be better.
| hosker4u wrote:
| SmallCo are excluded.
| fairity wrote:
| For anyone wondering if this will actually have a sizable impact
| on FAANG and their aggregate tax burden, my guess is no based on
| the following quote:
|
| > Tech firms say they welcomed the move. Facebook vice president
| Nick Clegg said they recognised it could mean the company "paying
| more tax, and in different places".
| wongarsu wrote:
| Paying taxes, just like employing people, gives you leverage
| and generally more friendly conditions (including court
| rulings). With Facebook (and FAANG in general) coming under
| increasing scrutiny I imagine they would happily pay a bit more
| if their tax is spread over more territories and thus
| influences more politicians and courts.
| decasteve wrote:
| It would be nice to see some analysis. This is just a write-up of
| the G7 talking points.
| hemantv wrote:
| This feels like US wants to keep competition out from creating
| big companies.
|
| Very similar to feeling to how wealthy wants higher income taxes
| (not wealth taxes) when they have all the money the need. To
| maintain status quo.
|
| Seems like US enjoyed with this arrangement by creating very
| large companies (monopolies) worldwide, now they want to keep US
| world order intact.
|
| Good for world, China wouldn't play balls with this. Bad for
| Europe since they have ever smaller shrinking big companies.
| M2Ys4U wrote:
| This is good news for countries where US companies are active,
| but use creative accounting to move their profits out of those
| countries.
| ffggvv wrote:
| pretty sure google and facebook would be just as big even if
| they didn't dodge taxes. especially as they were already
| sizable before they started doing it.
|
| it's mostly to disincentivize all this creative accounting
| orf wrote:
| Summary:
|
| > Firstly, the G7 want a global minimum tax rate so as to avoid a
| "race to the bottom" where countries can undercut each other with
| low tax rates.
|
| > Secondly, the rules will aim to make companies pay tax in the
| countries where they are selling their products or services,
| rather than wherever they end up declaring their profits.
|
| Good. It's a shame that Biden had to back down from the initial
| 28% because of domestic opposition.
| lanevorockz wrote:
| More taxes is always good, can't wait for 100% taxes so I can
| use my gucci bag voucher while playing ps5 at home
| Tostino wrote:
| What a reductionist view of things. No one serious is arguing
| for that.
| cal5k wrote:
| Top marginal income tax rates in many countries now exceed
| 50%, not even considering payroll tax, property tax, sales
| tax, etc.
|
| The question is: how can anyone seriously support tax rates
| that high? After a certain level, more than half your time
| is spent working for the government - failure to pay means
| fines and possible jail time. This is serfdom.
|
| Higher corporate tax rates should not be applauded by
| anyone. Higher corporate tax rates invariably increase cost
| of living because companies can simply raise prices to
| compensate. If all of your competitors have to pay the same
| (higher) tax rates as you, the correct game theoretic move
| is for everyone to simply bake the higher tax rates into
| the price of their products/services.
|
| Almost all forms of taxation ultimately impact the middle
| class in one way or another, either directly or indirectly.
| So while nobody is "seriously arguing" for, say, a 70% top
| marginal tax rate, it's easy to get there when you actually
| look at the entire tax burden across all levels of
| government, including price increases caused by higher tax
| rates.
| floren wrote:
| Between 1951 and 1963, the highest marginal tax rate in
| the US exceeded 90% [0]. This is a period of time
| generally regarded as one of booming economic growth in
| the US, an exceptionally good time to be in the middle
| class, and a time span looked upon fondly by your
| stereotypical American conservative.
|
| Edit: Why do people put up with it? Because of the
| progressive tax system. If my choices are a) earn $517k
| b) earn $1m but get taxed 37% on everything over $518k, I
| know what I'm picking. (Numbers come from the 2020 US tax
| brackets)
|
| [0]
| https://www.taxpolicycenter.org/statistics/historical-
| highes...
| rsj_hn wrote:
| During the same period, only a handful of families paid
| that rate. There was an enormous amount of tax
| avoidance[0], with the real rate actually paid by top
| incomes under 50%[0]. When the official rate was lowered
| by JFK, tax receipts surged. This is the "real" laffer
| curve. Now it's not clear where the Laffer point is, but
| it's certainly to the left of 90%.
|
| [0] https://www.latimes.com/business/la-fi-nocera-tax-
| avoidance-...
| marcosdumay wrote:
| > Top marginal income tax rates in many countries now
| exceed 50%
|
| You mean, for people right? I have never heard about any
| place that taxes anywhere near 50% of a corporation
| revenue, but yeah, it's not rare to find places that tax
| more than 50% of a worker's income (all taxes in, if you
| are talking exclusively about income tax, I never heard
| about it either).
|
| Why do corporations need lower taxes than individuals?
| elitan wrote:
| Because corporations would move.
|
| Individuals don't move as much. So they are in a much
| worse negotiation position.
| throwkeep wrote:
| The absurdity of this comment is actually useful because it
| forces you to question how much is too much.
| sneak wrote:
| > _Good. It's a shame that Biden had to back down from the
| initial 28% because of domestic opposition._
|
| This presupposes that maximizing revenue to the state is itself
| beneficial.
| dalbasal wrote:
| The actual rate is the least important part. What is important
| is jurisdictional issues, accounting standards, corporate law,
| deferral rules and the like.
|
| This is the problem with corporation tax generally. You can't
| really have a conversation about it in "normal" terms, that a
| journalist, politician or MOP can understand. It can only be
| understood via scenario plans and spreadsheets. It's a million
| little details. There is no "big picture."
| Ericson2314 wrote:
| And furthermore, I'd say however they harmonize the taxation
| shouldn't even matter, because the the G7 countries (or at
| least the euro ones acting zone wide) have no structural
| constraints preventing the money printer.
|
| The _real_ important thing here is establishing the
| importance in preventing the race-to-the-bottom, so more
| important things like multinational carbon taxes, developing
| country capital controls, etc. are newly inside the Overton
| Window.
| dalbasal wrote:
| IDK what you mean by "constraints preventing the money
| printer," but in the eurozone we have the opposite problem.
| Only the ECB can "print" money, or rather, only the ECB can
| create primary loans to national governments. National
| banks can't.
|
| In practice, expanding national debt requires eurozone-wide
| unanimity. Ask Greece.
| a1369209993 wrote:
| > Only the ECB can "print" money
|
| > expanding national debt
|
| I feel the need to point out that currency debasement is
| a fundamentally different thing from taking out
| loans/issuing bonds/other debt. If anything, currency
| debasement _reduces_ national debt in real terms, by
| devaluing the currency it 's denominated in. I'm not
| especially clear on the situation, but I was under the
| impression that Greece's problem was that noone was
| willing to lend them money due to a expectation that they
| wouldn't be paying it back, not that they were prohibited
| from borrowing by EU law, but even that would be a
| different thing from being prohibited from printing
| money.
| dalbasal wrote:
| I feel like I need to point out that they are identical,
| inasmuch as debasement means anything in our current
| currency systems.
|
| Debasement of gold happens because gold isn't printed.
| You need to dilute it in order to make more coins. In a
| gold currency system, it's the gold that's the "real"
| currency. Gold value rises and falls, but that's not
| debasement. The coins are debase. It's theoretically
| possible for a gold coin to be debased, but also worth
| more because the value of gold has increased by more than
| the coin has been diluted.
|
| Euros and dollars aren't redeemable for anything, so
| debasement doesn't really mean anything.
|
| In the Eurozone, when a national government runs a
| deficit (all of us, currently) then the ECB issues a
| loan. That money is then available for the government to
| spend. This is where Euros come from.
|
| The ECB refused to loan/print money to the Greek
| government until they agreed to certain demands. Ireland,
| my country, did agree to the demands and the ECB made
| some euros for us to pay our banks with.
|
| It works in a similar way in the US. The Federal Reserve
| Bank gives their government dollars, and they US
| government give them bonds in exchange... a loan. The Fed
| can then sell those bonds to anyone who wants them, or
| hold them.
|
| The one unbreakable eurozone rule is no printing your own
| money. The "Greek Crisis" was a fear the Greece would try
| to issue its own bonds, which would trade at a different
| rate & effectively create their own separate euro...
| confusing everyone.
| imtringued wrote:
| Extremely short analysis. After 2008 Greece's GDP crashed
| by 50% over several years and stabilized 2016. It's
| pretty obvious that when you have a shrinking economy
| that your real debt burden is going up over time. 100%
| debt to GDP will turn into 200% and it's not because of
| irresponsible spending or low taxation.
|
| If anything you have to lend more money to Greece and
| only give the most productive companies/sections of the
| government access to loans, if Greece's GDP was 355
| billion EUR in the past it can recover up to that old
| level.
| indigo945 wrote:
| But Greece is prohibited from printing money because it's
| currency is the Euro, and like all countries that have
| it, Greece had to sign the stability pact and, more
| importantly, also had to sign off the right to print more
| Euros. Only the European Central Bank can print money,
| and Greece can't tell it when to.
| Ericson2314 wrote:
| By "structural" I meant the material nature of the
| economy; the E.U.'s is certainly big and closed enough.
|
| Yes, there is the straight-jacketted neoliberal
| constitution that makes everything terrible, but that's
| separate. I really hope they can fix that.
| usrusr wrote:
| So true. It's a fixing the algorithm vs tweaking some
| parameters situation.
|
| PS: if I were to design a state I would make it a part of the
| constitution that laws must either be written with
| placeholder variables for any concrete numbers you'd want to
| put into them or specify only concrete values for those
| placeholders and nothing else. And no single vote can contain
| both kinds at once.
| [deleted]
| layer8 wrote:
| Parameters vs. algorithms is really a spectrum though. Just
| ask the lispers. ;)
| clairity wrote:
| rather than simple placeholder variables, we should employ
| placeholders for smoothly continuous functions over the
| relevant parameter space. for taxes, the parameter space
| might include revenue and profit, over which the tax is
| smoothly continuous. discontinuities just beg to be
| exploited.
| usrusr wrote:
| Yeah, this is basically what got me to that idea of
| separating formula from parameter: whenever politics
| should care about some quality of a formula, it gets
| _completely_ drowned in the noise of people screaming at
| each other trying to drag the parameters one way or the
| other. As evidenced by every single discussion about UBI.
| Sometimes the formula still turns out ok, but far too
| often not ok at all.
|
| It was in my second or third programming side job when I
| was asked by the ramshackle finance marketing upstarts I
| was working for if it was possible to implement the
| almighty Income Tax Table (in Access, obviously). I had
| heard scary things about that beast. A few minutes of
| googling (I think was already Google?) and I realized
| that the law in question defined a simple linear factor
| that increases at certain thresholds, with a tax-exmpt
| base per threshold to correct for any jumps. I was so
| disappointed! Not so much by a scary mad beast that
| turned out to be all tame and reasonable but by the
| professions of finance marketers and tax consultants who
| routinely acted as if it was some arbitrary monstrosity
| that could only be dealt with in a lookup table.
| clairity wrote:
| yah, the lookup table is just discrete points of a
| stepwise function, so why not just use the underlying
| formula instead, and smooth it out while we're at it
| since it simplifies the calculation?
|
| in this era of handheld supercomputers, we're well beyond
| having to manually multiply out the formulas anyway. and
| tax forms are already basically one long formula where
| you just plug in the variable values in a step-by-step
| manner (and usually have a computer do the math for you).
| specialist wrote:
| I eagerly await the broad recognition that economies are
| non-linear complex adaptive systems.
| clairity wrote:
| exactly. social phenomena in general are many orders more
| complex than physical phenomena for which mathematical
| models are generally deployed effectively.
|
| but even so, a zero- (e.g., a single tax rate) or quasi-
| first-order (like a limited number of tax brackets) model
| makes no sense, when we can much better fit the desired
| effect with a slightly higher-order function for only a
| small complexity trade-off. better fit means reducing the
| exploitation surface.
|
| tangentially, this is a relevant application of basic
| linear algebra and calculus to civics, which could be
| used as concrete motivation in the high school education
| of those subjects.
| bckr wrote:
| Expand on this please? What would be excluded in the
| "nothing else"? And what good would it do to ban single
| votes on both parameters and constants?
| a1369209993 wrote:
| Based on pattern-matching on my own political science
| knowledge, they're saying that a legislative act can
| either: establish a law, but all numbers must be
| unspecified placeholder parameters, or: specify the (new)
| values for the parameters of some existing law, but
| without changing the text of the law. A single vote
| cannot apply to both.
| adrianb wrote:
| Also it seems the agreement is that 7 countries agree that
| all countries in the world need to have that minimum rate?
| How would they convince the rest of 180+ countries?
| Especially, how do you convince the ones who would lose a lot
| of tax income by closing their tax heaven loopholes.
| pochamago wrote:
| These seven countries have a lot of sway, but even if it's
| only these countries that implement it it will likely
| affect a number of corporations. There are benefits to
| being legally located in stable modern economies, so this
| at the very least minimizes shopping around for the lowest
| tax rate among them.
| occamrazor wrote:
| Basically, you do not consider payment to non-cooperating
| countries for tax purposes.
|
| For example ACME Inc. produces widgets with costs of 50 and
| revenue of 100 in the US. To avoid taxes, it also pays 50
| in "licensing fees" to ACME Tax Heaven in the Cayman
| Islands, so that the profit in the US is 0.
|
| If the payment to the Cayman Islands is not counted, then
| the taxable profit in the US becomes 50.
| dalbasal wrote:
| Dunno. They haven't actually agreed to minimum rates yet.
| They just said they might in future.
|
| Broadly, you are not going to convince pure tax havens (eg
| Bermuda) to close tax loopholes. They don't even have
| corporate tax. You _can_ do other things though.
|
| Part of the problem here is that reporting is mixing up
| issues. It's not clear how (if at all) the MSFT-Bermuda
| shenanigans relate. The minimum tax rate hasn't been done
| yet, and may not be. What they do seem to have agreed on is
| some sort of joint accounting standards. Accounting
| standards define what counts or doesn't count as an
| expense, investment, etc.
|
| Where that (may, we don't know yet) relate to the rest of
| 180+ countries is, for example: US accounting standards no
| longer recognize payments to (for eg) the Bermuda entity as
| an expense transaction.
|
| When you are uncoordinated, discrepancies in these
| standards allow companies to pick and choose.
| Zenst wrote:
| > Good. It's a shame that Biden had to back down from the
| initial 28% because of domestic opposition.
|
| It's a compromise/balance and as we know of many taxes - easier
| to raise them than to get them inplace too start with.
|
| Biggest issue in all this would be that it will need the weight
| of those supporting it to peer-pressure the other countries to
| join. So Ireland, Luxenburg and other corporate tax over-
| friendly countries need to come onboard and that will be easier
| to achieve with a lower bar of 15% than to go in hard at 28%.
|
| Also when negotiating, there are always compromises and by
| going in high at 28%, left a lot of room to compromise had he
| gone in at 15% inititialy and with 15%, whilst far from what
| people demand, it is better than currently and good foundation
| start.
|
| Far more important though is the second aspect: "Secondly, the
| rules will aim to make companies pay tax in the countries where
| they are selling their products or services, rather than
| wherever they end up declaring their profits."
|
| That is far more important IMHO as currently see countries
| seeing their taxes due being off-shored and lost - that in
| itself is the bigger issue and this addresses that aspect.
| sumedh wrote:
| > So Ireland, Luxenburg and other corporate tax over-friendly
| countries
|
| Why cant US pass laws banning companies registered in tax
| haven countries to operate in the US?
| gruez wrote:
| Because that would lead to a trade war?
| sumedh wrote:
| Do you really think countries like Ireland, Liechtenstein
| can afford to piss of US. US has the leverage here, it
| should use it.
| pydry wrote:
| The fact that they could levy such inducements and
| everybody knows it is probably why this deal is happening.
|
| Tax havens require the complicity of larger, more powerful
| states to exist. They are by no means inevitable.
| treis wrote:
| That's throwing the baby out with the bath water. Apple has
| a legitimate need for a subsidiary in countries they
| operate. What needs to stop is the shenanigans around
| revenue & costs designed solely to generate profit in low
| tax countries.
| bertil wrote:
| Both Ireland and Luxembourg have legitimate activities:
| Irish whiskey isn't a big deal compared to tech, but
| there's no real reason to ban it. Defining a line is hard,
| especially when the country's traditional advantage _is_
| finance, like it is in Luxembourg, even outside of tax-
| optimisation.
|
| It's easier to have rules against countries with less
| credibility, but then again, you risk making things
| complicated for Seychelles, Curacao, St-Martins. It's
| easier to define a minimum tax so that they don't have to
| pick between tourism and tax optimisation.
| dkersten wrote:
| Maybe an import duty needs to be applied. Importing the
| Irish whiskey will incur a duty. Google US paying a 100%
| license to Google Ireland should also incur a duty charge
| for importing the license from Ireland.
|
| Something like that, anyway.
| mohanmcgeek wrote:
| Yes! Exactly this.
|
| Except the reason it's not done today is because back in
| the 90s, people argued that it's not possible to tell
| if/when services/IP crossed borders because there's no
| fixed port of entry.
|
| (They were making this argument because software CDs were
| subject to import duties but downloads were not and that
| they were unfair)
|
| Today it's still the case and services/IT are not subject
| to duties.. but I think large licensing agreements like
| this should definitely attract import duties
| dkersten wrote:
| The solution is simple enough: look at the companies
| books, if money is leaving the country, duty is charged
| unless it can be accounted for by something else (like
| the existing duty on physical goods).
|
| IRS: Hey Google, you said you made this much money, so
| you owe us tax.
|
| Google: No, see, here we paid it to Google Ireland as IP
| license fees, so we in fact made $0
|
| IRS: Great, you owe us duty on that payment
| selimthegrim wrote:
| All rise, court is now in session. The honorable Lina
| Khan presiding. The case of U.S. vs. 10 Billion Wrapped
| Individually Marked Bills.
| sumedh wrote:
| > Both Ireland and Luxembourg have legitimate activities:
|
| So those countries need to decide if they want to support
| legitimate activities or legitimate activities with fair
| tax policy approved by the US.
|
| If they dont like US's demands they can stop trading with
| US but we know they are not going to do that.
| foepys wrote:
| In that case the US should first handle Delaware before
| throwing the first stone.
| smnrchrds wrote:
| Canada's corporate tax rate is 15%. Canada would have never
| agreed to double its tax rate overnight.
| hellbannedguy wrote:
| "Good. It's a shame that Biden had to back down from the
| initial 28% because of domestic opposition."
|
| He can always change his mind. Plus--I have a weird feeling
| Biden would't mind putting off spending trillions on a nebulus
| bill right now. Of course he won't admit it publically.
| dd36 wrote:
| It's odd that they aren't already paying taxes where goods are
| sold.
| [deleted]
| jpadkins wrote:
| The argument is a tax on revenue is very unfair to low margin
| business like retail or farming, so corp. tax is usually on
| profits. Which creates the loophole of where are the profits
| recognized.
| teddyh wrote:
| IIUC, they _are_ paying taxes on goods sold, but those taxes
| are then offset by "losses" which they incur by "buying",
| say, IP licenses, from their sister company. This sister
| company get record profits, but _this_ company is then
| located in a tax haven, and pays no taxes on these profits.
| phkahler wrote:
| Similar could be achieved by taxing locally and also having
| import/export taxes. Other options exist too, but they're
| aiming for global control.
| starkd wrote:
| Agreed. You have to wonder how establishing a global minimum
| lessens or even removes the incentive to make local
| government more efficient. It may even establish an
| acceptable level of grift.
| refurb wrote:
| This is a terrible idea. This "race to the bottom" is what
| drives efficiency and better ways of doing things. It's why we
| don't have $10,000 desktops in our homes with 386 processors.
|
| If computer chip manufacturers decided to create a floor price
| for their products that would be collusion and bad for
| consumers. Same here. It's bad for citizens of a country.
|
| You damn know some developing country is going to be told "nah,
| sorry, can't lower your corporate tax rate too low to spur
| investment, those jobs are staying in developed countries".
| CryptoPunk wrote:
| To add to that, there structural problems with an income tax
| in general, and a corporate income tax in particular, and
| there are many arguments for eliminating it altogether, and
| replacing it with other types of taxes (e.g. a transaction
| tax, a carbon tax, a land tax, etc). But this locks it in
| place as a constant for all countries.
| etherael wrote:
| This is just G7 isn't it? Seems to me like all the typical
| very low tax jurisdictions you'd select for as somebody
| optimizing tax with the freedom to locate wherever you choose
| are still open.
| toyg wrote:
| This is the first step. G7 can then strongarm or cajole
| their "client states" with coordinated action. Even just
| the fact that such action is finally happening, is a great
| step. This was considered a sci-fi scenario 20 or 30 years
| ago and now it's become reality.
| ulzeraj wrote:
| They can't even prevent corporations within their own
| borders from using Uyghur slave labor.
| etherael wrote:
| It's one thing to get G7 to agree on something when
| they're literally in the same club, another to get their
| client states that might previously have been attractive
| options like Ireland or Estonia to get on board to some
| degree. But jurisdictions that are much more independent
| and less prone to leverage like Georgia or Malaysia on
| the other hand I just don't see it. And that's before you
| get off into the weeds of jurisdictions that are more
| accurately described as oppositional and are raising
| their own efforts to attract offshore investment which it
| seems would be even less likely to kiss the ring.
|
| It's easy to forget that the legacy brand countries with
| the extremely high tax rates and absurd conditions like
| citizenship based taxation in the most abhorrent cases
| internationally are the exception, not the rule. Their
| residents with their political biases make up the
| majority of participants in forums like this, and this
| contributes to the perception that their regime is
| enormously more widely adopted than it actually is, but
| if you look at the actual numbers by the actual areas
| that's just not the case.
|
| And worst case scenario then you have crypto, where it
| goes from the legally difficult realm into the
| technically impossible realm.
|
| This is just a fight they're guaranteed to lose on a long
| enough timeline.
| toyg wrote:
| Low-tax countries in the EU are being ruthlessly isolated
| already. This has been happening for some 15 years now,
| and accelerated after Brexit; covid might well be the
| nail in the coffin.
|
| I am also sceptical of your claim that jurisdictions like
| Georgia and Malaysia are "less prone to leverage" - their
| proximity to large adversaries actually makes them more
| dependent on soft-power diplomacy to maintain big
| friends.
|
| Obviously the likes of Russia and China might not play
| ball - but they have much bigger issues to worry about,
| from a capitalistic perspective. You put your money into
| China, you can't pull it out ever again; you put your
| money into Russia, and tomorrow it might well be Putin's
| money.
| rsj_hn wrote:
| > Low-tax countries in the EU are being ruthlessly
| isolated already.
|
| In what way? How is life for anyone in say Ireland or the
| Netherlands or the Bahamas materially different than,
| say, 20 years ago? Are they not allowed to travel
| somewhere? Obtain visas? Purchase goods and services from
| abroad? Are airlines refusing to land there? Even a
| single example of this "ruthless isolation" would be nice
| to show, otherwise, I suspect this is more of a dream
| sequence than a description of reality.
| ulzeraj wrote:
| > their proximity to large adversaries actually makes
| them more dependent on soft-power diplomacy to maintain
| big friends.
|
| Considering how the west interacted with the Crimea
| takeover I'm pretty sure these countries have realized by
| now that the west doesn't really care about their
| protection.
| etherael wrote:
| > This has been happening for some 15 years now, and
| accelerated after Brexit; covid might well be the nail in
| the coffin.
|
| Estonia will be a useful barometer to keep an eye on for
| this in the future, but since their tax rate is actually
| basically in line with this floor anyway it may well be
| that this just doesn't affect them at all.
|
| > their proximity to large adversaries actually makes
| them more dependent on soft-power diplomacy to maintain
| big friends.
|
| Georgia already has recent experience with such
| relationships not keeping the bear at bay so may well
| view the extra capital from remaining an attractive tax
| friendly jurisdiction as more useful than bowing to
| parties who have already failed them in the recent past.
|
| Malaysia seems even less likely to buckle to the
| "international order" as they have neither the cultural
| homogeneity nor the magnitude of the threat that Georgia
| has.
|
| > You put your money into China, you can't pull it out
| ever again; you put your money into Russia, and tomorrow
| it might well be Putin's money.
|
| When what your money gets you is absolutely nothing, one
| parasite is just as bad as another in the long run, it
| just becomes a question of which one costs you more.
| Russia and China have to restrain themselves in the
| looting sector less and less to the extent that their US
| & EU competition go all out in order to look like better
| alternatives.
|
| And then, there's the implications of an extortion war
| across the global economy providing capital flight
| impetus to push the cryptosphere to obscene heights and
| complete inability to tax in a worst case scenario.
|
| I think the fundamental fact of the issue will remain
| that as long as it's a forced payment not linked at all
| to delivery or quality of goods or services, all rational
| parties will be forever motivated to avoid it to the
| maximum extent possible, as it resolves to nothing more
| complex than "burning money" given what it actually buys
| you.
|
| Time will tell I guess.
| WanderPanda wrote:
| If it would be only for the complex tax evasion schemes I
| would be on their boat but in the end it will reduce
| competition between countries which is just dystopic.
| jdikatz wrote:
| First, tax competition creates its own inefficiencies ---
| companies locate production in low tax jurisdictions instead
| of optimal locations given local skills, factor prices, etc.
|
| Second, this argument only makes sense if you think tax
| competition leads to "innovation" in tax policy, but it's not
| clear why that would be the case. Almost any kind of tax
| structure is jurisdictional and would be undone by zero-sum
| competition between countries.
|
| Third, would this hurt developing countries? Right now this
| is a voluntary agreement between developed countries to
| achieve a common goal, so that complaint isn't super
| relevant. Think of multilateral tariff reduction agreements
| --- it's often a good idea to unilaterally put up tariffs if
| everyone else lowers them, which can result in a high-tariff
| equilibrium even if each player would like lower global
| tariffs. Multilateral agreements are the way to achieve the
| collectively desired outcome that can't be achieved in a
| decentralized way.
|
| But a global minimum tax could be also be a good idea for
| lower income countries, if it's not set too high. Typically
| the economic incentives are there to locate especially
| production in the developing world. If all developing
| countries had the same minimum tax, then companies couldn't
| play developing countries off one another to get lower tax.
| Lower income countries would reap more gains from
| globalization and have more funds to eg invest in
| infrastructure and development.
| refurb wrote:
| First, companies don't optimize for tax at the exclusion of
| everything else. And calling tax optimization and
| inefficiency is interesting considering it directly impacts
| returns.
|
| Second, the innovation isn't in the tax policy, it's in the
| use of the tax revenue. If I come up with a less
| bureaucratic and less costly administrative process for
| companies, why shouldn't I pass the along if I want to?
|
| Third, the implementation goal is global. That's been
| stated by Biden.
|
| And I'm guessing the lower income countries will suffer.
| You want to pay t a similar tax rate for the US for say
| Myanmar? Abundant corruption, questionable private property
| rights, untrustworthy courts?
| jdikatz wrote:
| On (1), I'm speaking from an allocative efficiency
| standpoint (should have been more precise). For example,
| say I'm a company selling in NY, I can locate production
| in NJ or AZ, and pretax it is cheapest to locate in NJ.
| If AZ offers a tax incentive that makes it cheaper for me
| to locate in AZ I'll do it, but if you sum up pretax
| revenue minus costs they are lower than had I located in
| NJ. So this is a transfer from NJ coffers to company
| profits + AZ coffers, but it is negative sum.
|
| Not sure I understand what you're saying on (ii). I think
| you're saying that if countries have to compete for
| business, then, holding fixed their statutory tax rate,
| they have an incentive to improve bureaucratic efficiency
| to increase resources available (given the statutory tax
| rate). But I think the issue is you get competition on
| the _statutory_ rate, which pushes rates towards zero. I
| actually think a minimum tax which binds and hence
| constrains the statutory rate could provide a great
| incentive along the lines youre talking about to optimize
| bureaucracy.
|
| On (iii), I'm guessing a minimum tax wouldn't bind in
| countries willing to explicitly expropriate FDI. Also
| having a minimum could limit the scope to vary effective
| rates for individual companies as carrots / sticks, which
| if anything could reduce corruption.
| hliyan wrote:
| Good. I didn't think such a global minimum was politically
| possible. There was recently an article on HN where the author
| claimed that high tax rates don't impact high net worth
| individuals because they have already made their money. It just
| makes it harder for others to join the club. Perhaps what we
| need is a global maximum _wealth_ (rather than income) cap, as
| a multiple of global median per-capita wealth. Perhaps start
| with a large multiplier (say 10,000x) and reduce 1% annually?
| nabla9 wrote:
| This is corporate tax, not personal tax.
| eganist wrote:
| This'll be hard to do when voting power in corporations is
| directly tied to paper wealth.
|
| Although one idea I was playing around with in my mind was
| around whether the tax could be made payable in public stock,
| provided that the voting rights are still assigned to the
| holder for a guaranteed minimum window (5 years?) that could
| extend pretty much indefinitely until the government chooses
| to close a position, e.g to pay for things.
|
| I have no idea how good or bad an idea it is, but it's an
| idea.
| varispeed wrote:
| Or you can request their books, highlight fake arrangements
| that hide profits, slap tax on them. Job done. Easy. Don't
| even need to change any laws.
|
| E.g. what is this IP charge by Cayman company that belongs
| to you as well? NON DEDUCTIBLE.
| thinkloop wrote:
| The problem is a wealth tax is almost impossible to
| implement. People will form crappy charities or put the money
| in their kids' names or move it to the Caribbean or some
| other gymnastics that will make worse use of the money
| overall.
| bluecalm wrote:
| There is one asset you can't hide - land. Tax that.
| a1369209993 wrote:
| I predict your proposal will significantly increase the
| demand for yachts.
| sagarm wrote:
| Yachts are depreciating assets that don't confer the
| ability to rent-seek. Let them buy yachts.
| nostrademons wrote:
| If the wealth tax is uniform it doesn't matter if they put
| it in crappy charities or their kids names or whatever -
| the crappy charity or kids will still need to pay the tax.
|
| I see bigger problems with evasion and valuation. Evasion
| can be solved by coupling the wealth tax with enforcement
| of property rights. You own an offshore bank account,
| somebody steals from that offshore bank account, you show
| up in court to prosecute them, and the government says "I'm
| sorry, we don't have any record of your ownership of this
| bank account, and you have never paid taxes on it." Oops.
| Also makes logical sense, as the function of the state is
| to enforce property rights.
|
| Valuation is tricky, as a lot of wealth-producing assets
| are illiquid and it's hard to pin a specific value on them
| in the absence of a specific transaction. The way LVTs
| handle this is through statistics: you know what comparable
| land sells, you know what improvements are on it, you can
| run a regression against all the features that impact
| valuation and subtract them out to get a reasonable
| estimate of the value of the land itself. Something similar
| could work for income-producing assets: you know all the
| cash flows from the asset (because you've been declaring
| your income, right?), you can do a discounted cash flow
| analysis that smooths them out and arrives at an estimate
| of the NPV of the asset under current cash flow & interest
| rate conditions.
| codetrotter wrote:
| https://www.wolframalpha.com/input/?i=y+%3D+10000+*+0.99%5Ex.
| ..
|
| It will then take slightly over 229 years until the
| multiplier has shrunk from 10,000 to 1,000.
|
| After another 229 years the multiplier will have shrunk
| another order of magnitude, from 1,000 to 100. And it makes
| sense mathematically that if it shrinks an order of magnitude
| in the first 229 years then it will shrink another order of
| magnitude in the next 229 years.
|
| https://www.wolframalpha.com/input/?i=y+%3D+10000+*+0.99%5Ex.
| ..
|
| As a layperson this seems reasonable I think. But I also
| think there is no "right" or "wrong" in this case, and it
| will boil down to personal views.
| a1369209993 wrote:
| I mean, that clearly doesn't seem reasonable _long-term_ to
| any mathematically literate layperson, since after ~917
| years, the maximum wealth would be _less_ than the median.
| (10 '000x * .99^917 = 99.42%) But I suppose it's not like
| it'll last that long before corruption sets in anyway.
| codetrotter wrote:
| I was more thinking like, we stop at 1 or some point
| before that.
| KingOfCoders wrote:
| The secret of high net worth individuals is they don't own
| anything and they don't earn anything.
| emayljames wrote:
| They pretend they don't.
| lotsofpulp wrote:
| What?
| wolfram74 wrote:
| "Some folks are born silver spoon in hand Lord, don't
| they help themselves, yeah But when the taxman comes to
| the door The house look a like a rummage sale" -Fortunate
| Son, Creedence Clearwater Revival
| KingOfCoders wrote:
| The trick is to not own things (personally) but control
| them, e.g. if you want a yacht, you create a holding
| somewhere that buys the yacht and owns the yacht, and you
| can use it whenever you like. The holding then has
| contracts with other companies renting you out. And you
| work for 0 EUR for the holding and have no income. The
| holding also owns the house you live in. If you're a high
| risk person the company can be owned by your wife(example
| is simplified, the setup is more complex and implemented
| my EY e.g.).
|
| For example I want a computer. If I pay for the computer
| as a private citizen, I have to pay income tax, social
| security on the money before I can spend it and then I
| have to pay VAT on the item.
|
| Hamilton got too greedy here [1] and the setup wasn't the
| best, but you get the idea:
|
| "Hamilton set up another Isle of Man company to purchase
| a EUR1.7m motorhome that he uses at racetracks. [..] He
| is contracted to Mercedes, with whom he secured his
| fourth world championship last month, via a Guernsey
| company."
|
| See Hamilton doesn't get the money from Mercedes, his
| "Guernsey company" does. He doesn't own the motorhome, he
| owns the company that owns the motorhome. No VAT payed,
| no income tax payed. And the company he owns might be
| through several shell companies so no IRS knows what he
| owns. And when it knows, the company only makes losses
| (see Trump setup), so no taxes payed on owning the
| company either.
|
| [1] https://www.theguardian.com/news/2017/nov/06/lewis-
| hamilton-...
| lotsofpulp wrote:
| That semantic/legal quirk stuff will get harder and
| harder as the government's need for funds grows:
|
| https://www.loeb.com/en/insights/publications/2021/02/new
| -tr...
|
| The only protection I would count on is if you were high
| up politically, like Putin or a Saudi prince.
| varispeed wrote:
| But these arrangements are clearly fake to avoid tax.
| There are already laws that see through it, just there is
| nobody that would dare to do anything about it. In the UK
| for example, for a long time people paid themselves in
| loans, to completely avoid tax. This was at first
| available only to the rich, HMRC knew about it and did
| nothing. Only when the "pleb" learned about it and
| started using it, they woke up and applied the tax
| retrospectively and called it "disguised remuneration".
| Many people lost everything they had, many committed
| suicides.
|
| Why HMRC does not do the same with companies using fake
| charges to hide profits? Those companies got huge
| competitive advantage over local small companies who
| cannot afford such creative accounting. So many
| businesses didn't happen because of that.
|
| I think it's time HMRC doubled down and destroyed this
| gravy train.
|
| I am sure we have clever people that would build a new
| Facebook, that is ethical and pays taxes.
| throwaway9980 wrote:
| This anxiety about being able to join the club is the key to
| keeping the 99% imprisoned. We are all just temporarily
| embarrassed millionaires.
| FredPret wrote:
| Maximum wealth cap? What are you, Stalin?
| crisdux wrote:
| This is currently the top comment and it includes obvious
| misinformation. 28% was never proposed by the Biden
| administration for the global minimum tax.
| slver wrote:
| > Good. It's a shame that Biden had to back down from the
| initial 28% because of domestic opposition.
|
| 28% is a ridiculous minimum to try and impose on the ENTIRE
| WORLD. You have to be quite clueless about taxation worldwide
| to think this has a snowflake in hell chance of passing at all.
| "Domestic opposition" is not a factor at all.
| papito wrote:
| 15% is a more reasonable minimum tax rate if there is a
| guarantee this is a loophole-proof, concrete floor rate. 28%
| would probably never fly without loopholes that would bring the
| effective rate to 15% anyway.
| walshemj wrote:
| nah Biden wanted other countries to raise the rate but wasn't
| going to address US companies moving revenue from country a to
| country b.
| hosker4u wrote:
| UK was the holdout that forced this Two Pilar compromise.
| andy_ppp wrote:
| Biden has been consistently good at this, going in with a crazy
| bold position and letting people argue him down to somewhere
| that would probably be his real position in the first place.
| toyg wrote:
| Veteran politician can do politics, who knew! /s
|
| It's about time people started to elect leaders who can get
| shit done in the frameworks that exist to get shit done,
| instead of trying (and failing) to destroy such frameworks.
| hosker4u wrote:
| This was all pre-biden, just could not go forward with Trump.
| With Biden it was possible again.
|
| Give him credit for agreeing. Don't give him credit for
| creating.
| dtwest wrote:
| "It's a shame that Biden had to back down from the initial 28%
| because of domestic opposition."
|
| You are misrepresenting the situation. A 28% global minimum was
| never on the table. 28% was Biden's proposed domestic rate
| (which to your point, he is backing down from). But these are
| two separate rates so we should be clear what we are discussing
| here.
| Hermel wrote:
| I agree with the minimum tax rate. But I think the criterion
| for taxing profits should not be where the products are sold
| (for that, we have the sales tax or the VAT). The right
| criterion is where the value is created, which is usually the
| country where the most expenses/employees are.
|
| For example, if an Australian mining company digs up iron ore
| and sells it to China, it would seem unnatural to tax the
| company's profits in China. Of course, China might impose
| tariffs or a sales tax, but the profits should be taxed in
| Australia.
|
| A strange side effect of this would be that the law of one
| price on international markets would no longer hold. Imagine
| you manufactured a product for 10$ that you could either sell
| for 50$ in a country with a low profit tax of 15% or for 60$ in
| a country with a profit tax of 40%. Then the rational choice
| would be to sell it for 50$ in the low-tax country, because
| after taxes, you still get 44$, whereas in the high-tax
| country, you would only get 40$ after taxes.
|
| Consequently, a destination-dependent profit tax will lead to
| lower prices for consumers in low-tax countries and higher
| prices for consumers in high-tax countries, essentially making
| the consumers pay for it just like with a sales tax or VAT.
| skeletal88 wrote:
| Then the effect would be that all the taxes on facebook,
| google etc go to the US, not in the countries where they earn
| the money. The problem exist for example with internet
| advertising - the local agencies are all doing badly,
| advertising has moved to the internet - to google and
| facebook, so they receive most of the money that otherwise
| would be spent on local radio, print and tv advertisements,
| the local ad agencies organizing that would pay taxes in our
| country but now all the money and the taxes leave our
| countries and we get nothing - no taxes, and no money spent
| locally. this is what all the countries except the US want to
| avoid.
| varispeed wrote:
| The Facebook value is created in the countries they operate
| through the data they harvest. The work is done by people
| who use this service. Any Ad revenue that used targeting in
| the UK should be taxed in the UK. Simple as that.
| Unfortunately HMRC is only strong towards individuals. They
| wouldn't dare to go after company like Facebook. Even if
| they did, I am sure, given how little inspectors earn,
| they'd happily accept an offshore bearer account and quit.
| cblconfederate wrote:
| This taxes everyone along with the multinationals. The complex
| deals they do mean they always pay a lot less than the 12.5% or
| whatever the tax rate is so i don't see how raising it for
| everyone else will help
| galangalalgol wrote:
| A flat tax on business without deduction seems like it would
| squash smaller players that must devote a larger percentage
| of their profits to fixed costs.
| EastSmith wrote:
| Deduction means hiring people to do your deductions. Flat
| rate for everyone means less money spent on tax
| consultants.
| galangalalgol wrote:
| I was thinking of either a standard deduction, or a
| deductionless progressive tax
| amelius wrote:
| > Firstly, the G7 want a global minimum tax rate so as to avoid
| a "race to the bottom" where countries can undercut each other
| with low tax rates.
|
| Why is this necessary, if countries can just tax companies
| based on the money they made _in their country_?
| tomp wrote:
| Where is the money made?
|
| Take Apple selling phones in the UK. Is the money _made_ in
| the UK, where the phones are sold? Maybe part of it (selling
| phones), but Apple enjoys a large premium over Android, and
| that 's more debatable. Was the money _made_ in Taiwan, where
| iPhones are made? Or in California, where iPhone was
| invented? Personally, I don 't really see why UK would tax
| Apple more than Android makers, simply because Apple (from
| California) was more inventive... while the profits were
| _realized_ in the UK, they weren 't _created_ in the UK.
| dd36 wrote:
| It's where they're sold.
| BTinfinity wrote:
| If I buy online and have it shipped to the UK, is it sold
| in the UK, in another countries warehouse or wherever
| they have a web sever?
| toyg wrote:
| This has already been settled in the EU - from a tax
| perspective, the sale is happening where the customer
| placing the order lives, which typically coincides with
| an address in the same country.
|
| Now something like this is bound to come, from the new
| treaty, to all G7 countries, which hopefully means it
| will trickle down to the G20 at the least.
|
| The main issue is not rules on sales though - it's
| cracking down on profit-shifting masqueraded as IP
| transfers and licensing. Hopefully that too is being
| cracked down on.
| rsj_hn wrote:
| First, this is not a treaty, it is an annoucement. To
| make the announcement a "real thing", each country needs
| to go back to their own legislatures and pass laws, and
| in those countries that are federal, they need to somehow
| get their states to pass laws. That then needs to trickle
| down into account changes, jurisdictional changes, etc.
| None of that has happened. What has happened is that
| leaders got together in a conference and issued a joint
| press release of an intention to address a certain
| problem within a framework of certain types of solutions.
| Think of it like the Kyoto agreement -- there is a big
| difference between popping some champagne corks and
| actually getting stuff done.
| throwaway4good wrote:
| Maybe they should do a sales tax then.
| rmah wrote:
| The UK already has an 18% GST rate, which is equivalent
| to an 18% tax on revenues. In 2020, Apple had revenues of
| $274B and pre-tax net income of $67B. On which, they paid
| $10B in income tax (a 15% rate).
|
| Apple revenues in the UK was about $2B. Which means Apple
| is already paying $360mil in GST tax to the UK gov. Apple
| also paid some amount of wage, income, real-estate and
| other taxes.
|
| Let's imagine companies had to pay income tax on a pro-
| rated, point-of-sales basis. Thus, apple's pre-tax income
| for the UK would be 2/274 * 67 = $500M. At a 20% income
| tax rate, this would net the UK gov an additional $100M.
|
| This is why they want this sort of thing. It has nothing
| to do with fairness. The US gov is generally opposed to
| pro-rating profits based on location of sales. Because
| the US tax code allows companies to effectively deduct
| foreign taxes from net income, income taxes paid overseas
| has the effect of reducing income tax paid to the US gov.
| dragonwriter wrote:
| > The UK already has an 18% GST rate, which is equivalent
| to an 18% tax on revenues.
|
| No, GST is a VAT (in fact, the UK's is called a VAT, not
| a GST), which is not the same as a revenue tax.
| saddlerustle wrote:
| The majority of Apple's sales is to consumers, so it's
| equivalent for the sake of argument.
| lanevorockz wrote:
| This is just to make the silly socialists happy, we all know
| that friends of the government will get tax rebates and not
| pay any taxes just as today.
| Naga wrote:
| It's complicated. "Money they made in their country" is hard
| to define. Large companies abuse intangible assets to shift
| profits around, but it's hard to say at what point abuse
| starts. For example, Google USA sells advertising to its
| clients. But, the assets it is selling are actually owned by
| Google Ireland. Google Ireland charges Google USA a license
| fee of 100% of the revenue they made. Suddenly, Google USA
| has net profit of 0 and Google Ireland has a large net
| profit.
|
| This at the same time happens frequently, but also some
| amount of intercompany shifts in profit are reasonable.
| Google Ireland might be the actual owner of the asset.
| Company ownership might be fuzzy as well - maybe foreign
| subsidiary is only partially owned by the parent and
| partially owned by another company. Drawing the line can be
| very hard. Do we make it so companies are not allowed to sell
| or transfer assets overseas?
|
| Probably the best solution is a minimum tax worldwide. This
| reduces the incentives to shift profits around, since the tax
| rates are the same everywhere.
| a1369209993 wrote:
| > Google Ireland charges Google USA a license fee of 100%
| of the revenue they made. Suddenly, Google USA has net
| profit of 0 and Google Ireland has a large net profit.
|
| That's irrelevant; Google USA made a gross profit of X G$
| and should be taxed accordingly. If they want to claim some
| of that as a tax-deductable business expense, the burden of
| proof[0] is on them to demonstrate that it's a legitimate
| business expense.
|
| 0: If accused of tax _evasion_ , the burden of proof would
| on the IRS to demonstrate that they intentionally
| misreported and should suffer criminal penalties, but if
| they're innocent, they still owe back taxes plus nominal
| interest.
|
| (Edit: In case it wasn't obvious, I'm talking about what
| the law _should_ require, not what laws paid for by
| corporations currently _do_.)
| PaulDavisThe1st wrote:
| > Google USA made a gross profit of X G$ and should be
| taxed accordingly. If they want to claim some of that as
| a tax-deductable business expense, the burden of proof[0]
| is on them to demonstrate that it's a legitimate business
| expense.
|
| They've done this, repeatedly. The laws as written (US,
| UK, many other countries) make this a completely
| legitimate business expense.
|
| So, what _should_ the law require? How would you create a
| law that prevents this from being a legitimate business
| expense but doesn 't eliminate other things that would be
| broadly agreed as being OK?
| naveen99 wrote:
| A 100% license fee seems like a non arms length transaction
| at a non market rate.
| eoo wrote:
| Yep, this is just the introduction to these kinds of
| thing. Then, they start to get accountants in both
| countries to agree on what seems a reasonable rate, say
| 30%? And the other 70% can be delayed earnings or
| whatever, and then maybe they decide to reinvest it
| instead. The list of resources is bottomless and
| continuously increasing.
|
| What matters is that because the savings are potentially
| huge, your BigCo is incentivized to reduce that tax
| exposure and they've got the legal and accounting
| workforce to find that optimization.
| pirate787 wrote:
| This is a terrible solution because it eliminates tax
| competition between states. The corporate tax rate should
| be zero-- that is the best solution, as it would free up
| all of this ridiculous accounting and financial compliance
| machinery for actual productive uses. Corporate profits are
| already taxed at the individual owner-level as a capital
| gain or dividend. The corporate income tax is grand-
| standing political tax with no basis in science or
| economics.
| imtringued wrote:
| I agree. Taxing personal income is better, taxing land is
| even better.
|
| Simplify the tax code and there will be no loop holes.
| hervature wrote:
| Except we already have a minimum tax worldwide - 0%.
| Perhaps every country should meet the others and offer 0%
| corporate tax. The solution isn't as simple as "minimum
| tax" as some places legitimately believe that corporate tax
| is not the most effective way to generate government
| profits (Wyoming and South Dakota at the state level).
| ClumsyPilot wrote:
| So I register a limited company, undertake all my work
| through it and keep my revenue, money and saving in that
| company, paying no tax on them.
|
| Then I have the company buy a car, laptop and every other
| possible expence I can get away with placing on company.
| You've solved nothing
| hervature wrote:
| I didn't claim to solve anything. Merely that a world
| wide corporate tax rate isn't as simple as everyone
| thinks. For what it's worth, a corporate tax rate doesn't
| prevent you from doing what you suggest. In fact, you are
| encouraged to do so to avoid the tax.
| a1369209993 wrote:
| Actually, we don't - there is no legal/treaty reason why
| a government could not offer a _negative_ corporate
| income tax rate (at least in the lowest N-1 tax
| brackets), and we may actually see that if corporate
| abuse of political processes is allowed to continue far
| enough.
| amelius wrote:
| > Probably the best solution is a minimum tax worldwide.
|
| Wouldn't that make companies pay taxes in countries they
| are based in (as opposed to where they make money)?
|
| Anyway this could be the push that the EU needed to start
| their own Silicon Valley.
| ben_w wrote:
| > Anyway this could be the push that the EU needed to
| start their own Silicon Valley.
|
| Given the combined market caps of Apple, Microsoft, and
| Amazon (~$5.6T) is larger than the national net worth of
| all but the four largest EU countries, I don't think
| there's a lack of motivation here.
| blibble wrote:
| wealth and income are not comparable
| eloff wrote:
| You can't compare market cap to GDP. If you compare to
| actual net ( you're actually comparing GDP) worth the
| numbers are very different.
| ben_w wrote:
| No, I am not using GDP, when I wrote "national net
| worth", _I meant exactly that_ : https://en.wikipedia.org
| /wiki/List_of_countries_by_total_wea...
| rmah wrote:
| [edit] "all _but_ the four largest "... my bad, I
| misread. Not sure why comparing mega-corps to small
| nations has much value though.
|
| Not sure where you got your info, but I'm afraid it seems
| inaccurate. The total wealth of the four largest EU
| nations, as of 2019, are as follows:
| Germany: $14.7T UK: $14.3T France: $13.7T
| Italy: $11.37T
|
| Just FYI, the three wealthiest nations are: the US at
| $106T, China at $64T, and Japan at $25T.
|
| This info is from a Credit Suisse report and is widely
| cited (https://en.wikipedia.org/wiki/List_of_countries_by
| _total_wea..., https://www.visualcapitalist.com/all-of-
| the-worlds-wealth-in..., etc).
|
| By digging a bit into the US data, those numbers are, if
| anything conservative. According to the US Federal
| Reserve Bank, in 2014, the US had total assets of $270T
| and total liabilities of $146T for a net worth of $124T.
| hutzlibu wrote:
| " of all _but_ the four largest "
|
| So those 4 not included.
| ben_w wrote:
| Was about to say much the same; as the UK isn't in the
| EU, Spain was in the other country in my not-included-
| four.
| ben_w wrote:
| > my bad, I misread. Not sure why comparing mega-corps to
| small nations has much value though.
|
| No worries, it happens to all of us from time to time :)
|
| As for why... the context is just that EU motivation was
| being discussed.
|
| (Otherwise I would've said something like "Those three
| companies combined are valued more highly than _the
| entire continent of Africa_!")
| HWR_14 wrote:
| > Wouldn't that make companies pay taxes in countries
| they are based in (as opposed to where they make money)?
|
| If an American SaaS company sells a product hosted in
| Ireland to a company in Britain, where was that money
| "made"?
| edoceo wrote:
| Just tax the revenue in the country where the money
| changed hands. (The client's home) That's the taxable
| event. So, I think, for your case, Britain (UK)
| HWR_14 wrote:
| How did the money change hands in Britain? The British
| person typed his CC number into a web form that routed to
| a server in the Cayman Islands that charged a bank in
| France. That bank in France will then demand repayment at
| the end of the month from the guy in Britain.
| edoceo wrote:
| The demand side actor is the driver of the transaction.
| nearbuy wrote:
| So if you had a completely Australian company selling
| stuff online, they'd be subject to US corporate tax for
| profit earned from American customers, French tax for
| customers from France, etc?
|
| This seems complicated because unlike sales tax,
| corporate tax is based on profit at the end of the year.
| It's much more complicated than sales tax. Companies
| would have to handle corporate tax code for up to 195
| countries.
| mantas wrote:
| What was billing address on the invoice? The British
| company probably provided VAT number to buy VAT-free too.
| a1369209993 wrote:
| > If an American SaaS company sells a product hosted in
| Ireland to a company in Britain, where was that money
| "made"?
|
| Britain. If corporations want to pretend that (for
| example) China has the authority to restrict what users
| in China see on foreign websites (cf recent Bing tank man
| mess, among many others), they can apply the same
| reasoning to tax liability.
| unreal37 wrote:
| EU would need to remove a lot of regulation and red tape,
| which is the EU's sole reason for existence. So this will
| never happen.
| obventio56 wrote:
| It removes the tax benefit of realizing profits abroad,
| which would likely bring revenue back to the market where
| it was earned.
|
| I suppose a company could still move profit wherever they
| choose, but mostly likely inertia would keep it in place.
| WanderPanda wrote:
| Do you really think something like the SV can be created
| top-down?
| mantas wrote:
| It takes time. But SV was kickstarted by gov investments.
| addicted wrote:
| If there is no benefit to moving around the income
| earned, companies would stick to declaring their income
| at the point of earning (so where they provided the
| services) because that would likely be the easiest, and
| would eliminate all sorts of currency based risks,
| transaction costs, etc.
| lazyeye wrote:
| Could they create a special category for the clearly
| profitable tech titans where they are taxed simply on local
| turnover regardless of whatever legal accounting bullshit
| they use to avoid paying tax?
| Negitivefrags wrote:
| In theory this is fixed by the the laws around "Transfer
| Pricing".
|
| You are supposed to be able to prove that the deal between
| your different international entities is an arms-length
| agreement. That is to say that the revenue sharing
| agreement is similar to what would be negotiated between
| unrelated companies.
|
| In order to do that you are supposed to be able to show
| evidence that the deal is similar to other deals in your
| industry and such.
|
| I don't know how Google would get away with a licence fee
| of 100% under those laws so I kind of doubt that that is
| what they have in place.
|
| However, let's say they have a 30/70 split with 70% going
| to the IP holder (Ireland company) and 30% going to the
| selling agent (USA company).
|
| Now it's in the best interest of the company to attribute
| as many of the expenses of providing the service to the USA
| company so that we can get its profit down to zero. The
| profit margin of the US company might be 0% (so no tax)
| while the profit margin of the Ireland company is near
| 100%.
| mediocregopher wrote:
| Shod google not be taxed twice in this example? Once on the
| income made in the USA when they sold the actual thing, and
| once in Ireland when the Irish branch sold the thing to the
| USA branch? Not to mention sales tax....
| H12 wrote:
| Google USA made zero profit on those sales due to the
| 100% licensing fee with Google Ireland, so there's no
| income to be taxed. Revenue and expenses are exactly
| equal.
|
| As for sales tax, I don't really know how it works in
| this situation.
| reader_mode wrote:
| You aren't paying taxes on revenue, you pay tax on profit
| ncallaway wrote:
| That's a choice, and one we could change.
|
| My company is taxed on revenue (under the Washington
| State B&O tax scheme, and similar local tax schemes).
|
| Taxing based on revenue is viable, it just needs to be
| done with a little more care up front.
| unreal37 wrote:
| Tax on revenue is just a sales tax on the consumer of
| that product or service. You might as just increase sales
| taxes and remove corporate taxes entirely.
| throwawayboise wrote:
| All taxes are ultimately paid by the consumer. In that
| regard, I agree just impose a national sales tax, get rid
| of everything else, and be done with it. Gets rid of all
| the complexity and games played with income taxes.
|
| Give everyone an automatic refund of $X to make it non-
| regressive. This could be done as a monthly payment, an
| "advance refundable tax credit" like the stimulous
| payments.
| ncallaway wrote:
| In WA sales tax only applies to retail sales. Which means
| a revenue tax and a retail sales tax are not equivalent.
|
| For example, if a home builder is buying lumber directly
| from a wholesaler, they aren't paying a sales tax.
| Whereas the revenue tax does catch a portion of that
| income.
|
| Maybe you mean we should broaden the concept of sales
| tax, and apply it to _all_ transactions? That would be
| closer to equivalent to a revenue based tax structure,
| and would probably end up looking very similar to the VAT
| tax structure in Europe.
|
| I'm fine with a VAT tax, if we want to structure things
| that way. Honestly it's a _lot_ more paperwork to manage
| that way instead of revenue, but either works for me.
|
| Assuming arguendo that a sales and revenue tax were
| equivalent, a revenue tax would be the much simpler way
| to manage tax collection. Why would you ever prefer a
| structure that creates a tax event for every transaction,
| to an equivalent one that creates a single tax event per
| business entity?
| throwawayboise wrote:
| Yes, conventional sales taxes apply to the final retail
| sale. But in your example, a home builder buying lumber
| does pay sales taxes, since there is no sales tax on the
| sale of the finished home (at least not in my state).
| reader_mode wrote:
| Taxing revenue would kill small margin high input
| businesses, lead to double taxation, encourage vertical
| integration. Makes no sense outside of small business
| where they get a heavily discounted rate since it's
| usually there to save them the hassle of keeping
| expenses.
| alasdair_ wrote:
| > lead to double taxation
|
| I'm not sure why double taxation matters so much. If I
| get a salary then use some of that salary to get a
| haircut, the money is taxed twice but we think of this as
| normal.
|
| Human W2 taxpayers are not able to write off expenses
| such as driving to work (or even a home office), yet
| these are clearly costs of doing business. Why should
| corporations get additional rights that aren't afforded
| to humans?
| imtringued wrote:
| Double taxation only matters because it complicates the
| tax code, there is no other justification against double
| taxation.
|
| For example, if you have one tax there is only one way to
| optimize it, if you have two taxes there are two ways to
| optimize it. As you add more taxes you are adding more
| room for loopholes. Solving the problem by taxing profit
| by country is just adding more room for loop holes.
| AmericanChopper wrote:
| What you're proposing is a tax on revenue, rather than a
| tax on profits. That is what a sales tax is.
| ipaddr wrote:
| If a tax on revenue was used the outcome would be
| companies would try to increase profits but reduce
| revenue so high margin products would be the goal which
| would mean higher prices / fewer sales.
|
| I think the solution should be market based. Whatever
| rate google US gets from google Ireland should be
| available to any company and google Ireland should be
| forced to sell any services/ip to any company who
| requests it at that rate.
|
| Doing anything else means the cost of the IP google
| Ireland charges to google US is made up.
| boolemancer wrote:
| The problem in this case is that no other company would
| agree to pay 100% of revenue to Google Ireland for their
| services. Google Ireland is overcharging, not
| undercharging.
| alasdair_ wrote:
| I would pay 100% revenue. I'd then just give it all away
| for free so my revenue was zero.
| salawat wrote:
| Congratulations, by forcing a company to sell to everyone
| indiscriminately, you've effectively seized their assets.
|
| I don't really see the whole "let's unmake ownership and
| property rights" thing being feasible, but I've been
| wrong before.
| ipaddr wrote:
| If you wish to use this tax credit you can choose this
| path.
| yomly wrote:
| https://en.m.wikipedia.org/wiki/Double_Irish_arrangement
| seoaeu wrote:
| If the US branch bought a widget for $90 and sold it for
| $100, they'd pay tax only on the $10 of profit. If it
| actually cost the Irish branch $90 to make those widgets
| then that would be entirely fair and the right way to
| assign the tax burden. However, if the widget is actually
| free to "make" and yet the US branch is changed $100 for
| them we get the current situation.
| oceanplexian wrote:
| > It's complicated. "Money they made in their country" is
| hard to define. Large companies abuse intangible assets to
| shift profits around, but it's hard to say at what point
| abuse starts. For example, Google USA sells advertising to
| its clients. But, the assets it is selling are actually
| owned by Google Ireland. Google Ireland charges Google USA
| a license fee of 100% of the revenue they made. Suddenly,
| Google USA has net profit of 0 and Google Ireland has a
| large net profit.
|
| I have an even easier solution, and it doesn't require an
| International Tax Police or Global Government. Lower taxes.
| Perhaps even eliminate them. There are many ways to achieve
| this such as eliminating government pensions, removing
| entitlements, and cutting defense spending and foreign aid.
| Instead of robbing Apple or Google to buy F35's and ship
| cash to the Middle East, perhaps we could cut them a break
| to hire and build things in the USA.
| mohanmcgeek wrote:
| > Google Ireland charges Google USA a license fee of 100%
| of the revenue they made.
|
| This can be solved by placing a duty on large cross border
| IP fee transactions.
|
| US is the country that's opposed to putting tariff on IP
| 542458 wrote:
| There are lots of legitimate high-value cross border IP
| transfers, and since the US creates a lot of valuable IP
| it makes perfect sense that they'd oppose this.
| bonzini wrote:
| But why do intra-company IP transfers have to be treated
| as actually moving money?
| 542458 wrote:
| Two reasons: they're not always actually intra company.
| Apple and Apple Ireland are different companies - and
| while intuitively it feels like you can just lump them
| together, it's often much more complicated than that.
|
| Second, because it is actually moving money. If I'm a
| Canadian software company that does most of its sales in
| the US through an American subsidiary (not uncommon), the
| way it works is the American subsidiary pays the Canadian
| company back for the sales of the Canadian company's IP.
| Otherwise the money would never get back to Canada and
| the developers wouldn't get paid! Furthermore, would be
| silly and tax-suboptimal to ignore the IP-money-flow and
| treat the Canadian company as nearly pure loss while
| treating the American one as nearly pure profit.
| bonzini wrote:
| One is a wholly owned subsidiaries of the other. It's not
| of course a sufficient condition, but I m sure it's
| possible to distinguish the relationship between Apple
| and Apple Ireland from that between say Dell and EMC, or
| IBM and Red Hat, or the daughter companies of
| conglomerates like Berkshire Hathaway.
|
| > Otherwise the money would never get back to Canada and
| I wouldn't be able to pay my developers!
|
| It doesn't have to be paid for the right to sell the IP.
| You can just move all revenue back into headquarters'
| coffers, and use it to finance the various cost centers.
| Just write the law so that it cannot be called a sale.
| kgwgk wrote:
| > You can just move all revenue back into headquarters'
| coffers
|
| So it's actually moving money! And you need a reason to
| move money from one company (in the US) to another (in
| Canada). Call it sale, call it IP licensing...
| dlhavema wrote:
| Isn't there a way to block internal up transfers and
| actual IP sales? Is that the issue? Like we want to block
| google to Google transfers, but not company a to
| "actually unrelated" company b?
| dalbasal wrote:
| Technically, we (the irish) create all that IP which we
| sell to American companies. People like Seamus Jobs and
| Paddy Wozniak made OSX and stuff, which is why Apple US
| pays Apple Ireland 100s of $bns to license it. MSFT's IP
| is Bermudan. Innovative little island.
| saddlerustle wrote:
| That's not how it works at all. Apple Ireland is used to
| defer taxation on non-US sales, but those profits still
| needs to be eventually repatriated in order to pay out
| dividends and fund US R&D, which is the majority of its
| fixed costs. Profits from US sales stay in the US, and on
| net Apple Ireland pays Apple US 10's of billions a year.
|
| You can see their filings here:
| https://core.cro.ie/e-commerce/company/112189
| dalbasal wrote:
| How does Apple's money get to Ireland in the first place?
| I haven't read those filings (not gonna either, I have
| drinking to do), but I was under the impression that it
| was IP licensing.
|
| Google Ireland takes payment directly. Unless they've
| changed recently, all non-US adwords invoices are paid to
| here.
|
| Repatriation to pay dividends is fairly moot, since they
| don't pay dividends. Maybe this is one of the reasons
| buybacks are preferred.
| saddlerustle wrote:
| Apple pays a regular dividend and does regular share
| repurchases. Since 2012 its paid out about a _half
| trillion_ dollars to shareholders. These are equivalent
| from a corporate accounting point of view, share buybacks
| are paid out _after_ US corporate taxes are paid.
| Buybacks are preferred recently just because of the
| better tax treatment from an investor point of view, it
| changes nothing for the company.
|
| As for how the money gets to Ireland, most of Apple's
| non-US operations are subsidiaries of Apple Ireland. For
| illustration, there's this (somewhat outdated) graph of
| the revenue flows on wikipedia: https://upload.wikimedia.
| org/wikipedia/commons/a/a5/Apple%27...
| dalbasal wrote:
| OK so... wikipedia has a pretty good summary.
|
| You're right. I was wrong. There is no IP licensing
| payment from the US entity to Ireland.
|
| IP licensing happens between 3rd party countries and
| Ireland. Irish tax law (to our great pride) gives IP
| licensing revenue tax exemption. It doesn't count as
| revenue for tax purposes. Once here, it can be
| transferred to a proper tax haven like Bermuda. Since its
| tax free, it doesn't matter that Ireland (like everyone)
| doesn't recognise the transaction to Bermuda as a
| legitimate expense. It didn't count as revenue anyway.
|
| I guess that invoicing to Ireland is neither here nor
| there, just more convenient when the money needs to come
| here anyway.
|
| Once the cash is in Bermuda, the game is done. The
| Bermuda company can hold it, buy shares, etc. This is why
| Apple (And MSFT) have moved all their IP to Ireland
| though.
|
| https://en.wikipedia.org/wiki/Double_Irish_arrangement
|
| Here's the good bit:
|
| Without such IP, if Microsoft charged a German end-
| customer, say $100, for Microsoft Office, a profit of
| circa $95 (as the cost to Microsoft for copies of
| Microsoft Office is small) would be realised in Germany,
| and German tax payable. With such IP, Microsoft can
| additionally charge Microsoft Germany $95 in IP royalty
| payments on each copy of Microsoft Office, ensuring that
| its German profits are zero. The $95 is paid to the
| location in which the IP is legally housed. Microsoft
| would prefer to house this IP in a tax haven; however,
| higher-tax locations like Germany do not sign full tax
| treaties with tax havens, and would not accept the IP
| charged from a tax haven as deductible against German
| taxation. The Double Irish fixes this problem.[8][9]
|
| The Double Irish enables the IP to be charged-out from
| Ireland, which has a large global network of full
| bilateral tax treaties.[g] The Double Irish enables the
| hypothetical $95, which was sent from Germany to Ireland,
| to be sent-on to a tax haven like Bermuda, without
| incurring any Irish taxation.
| saddlerustle wrote:
| > Once the cash is in Bermuda, the game is done. The
| Bermuda company can hold it, buy shares, etc.
|
| A Bermuda subsidiary can't repurchase shares in the US
| parent company without booking those profits in the US.
| dalbasal wrote:
| Then I suppose then I'm missing the last part of the
| trail. Enough tax study for me. No more.
| saddlerustle wrote:
| Broadly, the point of these tax structures for US
| companies isn't for the company to completely avoid
| paying US corporate tax, it's to
|
| - Avoid paying corporate tax at a _higher_ rate than in
| the US, and
|
| - _Defer_ paying corporate tax, often for decades, until
| theres a more favourable tax situation in the US, or a
| better opportunity to reinvest their capital comes up.
|
| At the end of the day the profits belong to the
| shareholders and the only way to return the money to
| shareholders is by paying US corporate tax. Shareholders
| usually don't mind these arrangements because the tax
| savings is often more than the cost of capital having the
| money sitting unproductively.
| mohanmcgeek wrote:
| > Probably the best solution is a minimum tax worldwide.
|
| I saw a similar comment earlier this week. I don't
| understand why first world people think developing
| countries would agree to this minimum tax and not undercut
| them on day 1 to attract investments and jobs.
|
| There are no global tax authorities. Nobody is going to
| enforce these things. Even this G7 treaty is going to be a
| mess in practice because multilateral treaties are flawed
| like that.
| ben_w wrote:
| It's like fixing bugs in software: I don't expect any
| given proposal to solve everything or to close every
| loophole and workaround, but it's still important to put
| continuous effort into _trying_.
| JumpCrisscross wrote:
| > _Nobody is going to enforce these things_
|
| It doesn't become effective until the G20, or at least
| G7, pass it. Part of the law would be automatic tariffs
| against non-participants. That leaves non-signatories
| with a choice between compliance and economic decimation.
| xxpor wrote:
| The US would sanction them, and then they'd be screwed.
| throwaway894345 wrote:
| Why don't countries do this already? E.g., most European
| countries and presumably the US dislike that Ireland
| undercuts corp tax, so why don't they penalize
| corporations who operate in their borders but are
| headquartered in a country that doesn't have agreeable
| tax laws?
| OJFord wrote:
| Well they sometimes do (e.g. fine them) but at a scale
| where it matters these are companies that also have
| leverage - if Amazon responded 'Ehhh we might stop
| delivering to the UK then, Brexit is already an expense,
| with this too ...' and then the Government is the
| government that lost/banned/there-is-no-good-spin Amazon.
|
| Within the EU, (or EEA perhaps) I vaguely recall there's
| some restriction against penalising for things like this,
| as long as the other nation is also a member state.
| (Since viewed as a whole, 'one EU', it should be fine, I
| suppose.) Struggling for the right words ro search
| though.
| chriscappuccio wrote:
| without the cabal agreeing on taxes and penalties, the
| corporations would simply move to the lower tax rate
| districts
| amelius wrote:
| G7 can say: no more trade on our soil if you don't pay
| the minimum tax.
| Naga wrote:
| I agree that this is hard and that there are no global
| tax authorities, I wasn't trying to say that's something
| that can just be implemented. It's probably the most
| realistic solution to the transfer pricing problem
| though, which probably says something about the scale of
| this issue.
|
| I also disagree that the developing world is that much of
| a problem. Currently, in the developing world, money
| flows to places like the U.S. Virgin Islands, Bermuda,
| etc. While I'm sure they are not the only places that
| could act like as tax havens, there's probably a limit.
| Multinationals probably aren't going to want to relocate
| their headquarters to a developing country like Egypt for
| a variety of reasons like language, currency, corruption,
| weaker property laws, ease of moving cash, etc. Tax
| havens could also be disabled with tools like sanctions
| on a G7 or G20 basis. Bermuda doesn't want to play ball?
| Sure, then the G20 banks and governments will not allow
| their citizens to deal with Bermuda.
|
| As other people have said, the goal isn't to prevent this
| from happening, it's to make it too risky or expensive to
| justify as opposed to just paying corporate tax on
| profits without shifting them.
| saddlerustle wrote:
| What you're describing is a method of deferring taxation,
| not avoiding taxation. Google is a US publicly traded
| company so its profits ultimately belong to its
| shareholders, and it can only pay that out via the US.
| unreal37 wrote:
| The company doesn't have an obligation to pay this money
| to their shareholders, ever. You might die (of old age)
| before you get your initial investment in Facebook shares
| back as dividends.
| saddlerustle wrote:
| If that was deemed likely, the company's shares wouldn't
| be worth anything. Facebook and Google routinely do share
| buybacks these days (which is equivalent to paying
| dividends)
| gbear605 wrote:
| Shares, especially in big tech companies, are nowadays
| mostly valued as a commodity not for the dividend value.
| Even ignoring meme stocks like TSLA or GME, stocks like
| Facebook or Google are never going to pay back enough in
| dividends or buybacks to justify the price.
| saddlerustle wrote:
| While yes liquidity drives share prices over the short
| term, as a general rule that's nonsense. What do you
| think it means for them to be "valued as a commodity"?
| Why do you think shares have any value at all, or have
| any connection with company performance? Over just the
| past 3 years facebook has paid out almost $30 billion to
| shareholders through repurchases and has plans to pay out
| $25 billion more. That's the majority of what its market
| cap was just 8 years ago, and it's still a growing
| company. Do you think it does that just for the fun of
| it?
| dalbasal wrote:
| As always with tax, the concepts that we want to discuss are
| not discreet enough to translate into tax law. Revenue,
| profit, location and such are arbitrary decisions that can be
| made by an accountant.
|
| Does Apple makes its money in the US, where the company is
| headquartered and listed? Does it make it in China, where
| products are manufactured? Does it make it wherever people
| buy the stuff. Ireland, where the IP is "located."
|
| Since corporate tax is an income tax, it's taxed on profit...
| the not of revenue and expenses. Revenues and expenses are
| accrued everywhere. The entity booking them is arbitrary.
| daemin wrote:
| This is the whole difference between a revenue tax and a
| profit tax.
|
| I don't actually know why exactly a revenue tax isn't more
| popular, say 1% revenue versus supposed 30% profit tax. (As
| if any corporation actually pays that tax rate).
| helsinkiandrew wrote:
| Take for example an international coffee bar company with
| locations all over the world. They can transfer the ownership
| of the name, brand, styling, product recipes to a country
| with zero or low tax. Each cafe takes care of buying its own
| coffee but pays a license to use the name and branding
|
| When someone in a small town in some part of the world goes
| to one of the branches instead of a local independent coffee
| house - isn't it a large part due to the branding of the
| company? the coffee is just a commodity costing a few pennies
| - all the value is made by the brand and the recipe owned by
| the company in the low tax country.
| patd wrote:
| Because in practice if you make 1 million in a country,
| you'll claim 1 million in expense in another country (with
| little to no taxes) for things like IP, trademark, etc.
| jabl wrote:
| AFAIU proposals for taxing companies wherever they do
| business rather than where they are headquartered often
| involve paying MAX(X% of profits, Y% of sales), precisely
| to avoid these kinds of shenanigans.
| lixtra wrote:
| Of course it could be argued that the second company is
| also making the money in the first country where it's IP,
| trademark etc. gets used and has to be taxed there.
|
| Tax authorities already try to control for arbitrary cross
| country bills that try to shift profits (at least in some
| jurisdictions). The downside is more bureaucracy and
| unproductive friction of course.
| Zenst wrote:
| Though whole accountancy process has many parallels to a
| pyramid selling, with the IP being the top of the pyramid
| located in some tax favourable country of the moment.
| amelius wrote:
| It's basically a form of hacking. Except not with
| computers but with the tax system.
| seanwilson wrote:
| What stops individuals, sole traders and the self employed
| from doing this?
| ceejayoz wrote:
| They can't afford a legal department and the paperwork
| and compliance involved in setting up and maintaining a
| bunch of international subsidiary companies.
|
| It only makes sense with large amounts of profits to
| launder through such a system.
| pjc50 wrote:
| There's a fixed cost to administer such arrangements.
|
| But the system is not fixed - people _do_ start
| exploiting these arrangements, and once the number
| reaches critical levels they get whacked. An example in
| the UK was "employee benefit trusts", which were used by
| a lot of celebrities and footballers.
| https://www.rossmartin.co.uk/disguised-remuneration-
| zone/302...
|
| You need to be big enough to (a) pay for enough legal
| bulletproofing and (b) have political cover against the
| law going after you.
| nopassrecover wrote:
| Restrict expense claims of that nature and/or tax on
| revenue and minimum expected profit for large companies?
| young_unixer wrote:
| Any increase in market productivity is quickly compensated by
| aggressive, wasteful government interference. Citizens can never
| enjoy the benefits of increased productivity, only politicians
| and government.
| cletus wrote:
| The first proposal of having a minimum corporate tax rate
| probably doesn't mean a lot because you to then start policing
| what subsidies governments give to effectively discount below
| 15%.
|
| The more interesting part is what I hope is the start of serious
| efforts to tackle profit-shifting, which is a name invented for
| "transfer pricing" because that is technically illegal. But it's
| the same thing.
|
| A good starting point is that if you book x% of your revenue in
| country A then country A should get to tax x% of your profit.
|
| Here's another part of this they should adopt: borrowing money
| should count as repatriating profits. In the era of zero interest
| rates debt is used to effectively defer taxes forever. There's no
| legitimate reason to allow entities to borrow money at near-zero
| interest rates instead of repatriating retained earnings.
| [deleted]
| whatever1 wrote:
| The problem with businesses is that they hide systematically
| profits. The big ones are shifting their profits globally. The
| small ones never register profits (claiming they always operate
| at a loss, specially if they operate with mostly cash and not
| credit cards).
|
| And in business, it is easier to hide your profits because you
| can shift around money to assets (this ferrari and the Manhattan
| condo are company owned), compensation (my CEO will get a 1000%
| raise this year), liabilities (paid off that huge loan we got to
| buy the lambo) etc.
|
| The problem cannot be solved unfortunately. There are crude
| methods like estimating profits from revenues, but really, this
| has never worked.
| saddlerustle wrote:
| Companies shifting profits to compensation is _better_ for
| states than booking corporate profits, because income is taxed
| at a higher rate.
| whatever1 wrote:
| It depends. In my country there are examples of employers who
| were paying extra their employees (who were not taxed due to
| their pity salaries) and were requiring them to return part
| of their salary as cash.
| anticensor wrote:
| > requiring them to return part of their salary as cash.
|
| I thought that was illegal.
| IG_Semmelweiss wrote:
| The actual laws on the books are more nuanced than posters would
| like to portray.
|
| Google cannot sell something at 100% licensing fee cost, ie 0%
| margin.
|
| There is a whole set of rules that govern cross border interco
| transactions under tax transfer pricing rules.
|
| Google must by law reflect effective market markup in order to
| stay wothin the law. They cant just say "we are going to pay
| ireland 95% of sale price" and call it a day.
|
| There is a whole analysis that needs to take place to show that
| the final applied margin is market.
|
| The moment they dont , googles accountants will not sign off on
| financials, which starts another meltdown.
|
| Yes, there is some estimate wizardy that goes on, but for the
| most part companies stay within the law because its very easy to
| show otherwise. Benchmarks are transparent.
|
| Most of the upside is abroad because the IP is whats most
| valuable. Whatever shared-services google performs in the US to
| spread that IP around, are unsurprisingly low value and yiwld the
| corresponding taxes.
| dgan wrote:
| Interesting left to see how it will be enforced. Definitely a
| step in the right direction
| lbriner wrote:
| The G7 won't be able to make a decision on behalf of the world!
|
| Why do companies already register their ships in Panama or hide
| their money in the Cayman islands? (Other havens are available)
|
| Because these countries have decided they would rather have the
| income than agree that what they are doing is somewhere between
| morally dubious and completely ammoral. It is easy to point the
| finger though, some of these places probably don't have many
| other ways of making money...
| fabbari wrote:
| Yes, they will - as they did with Swiss bank secrecy [0].
|
| It's actually quite simple: if you want to do business with the
| G7 countries - with close to 40% of the world economy [1] - you
| follow their rules.
|
| While 60% is a lot, it's a much different blend of markets to
| work with - hundreds of other countries, legislations, etc. -
| and it would be a much larger effort to cover.
|
| So: wether I like it or not the truth is: if the G7 countries
| agree on something, other countries will follow.
|
| [0] https://www.reuters.com/article/us-swiss-secrecy-
| idUSKCN1MF1... [1] https://www.nationmaster.com/country-
| info/groups/Group-of-7-...
| ko27 wrote:
| Read the article again. G7 countries will collect tax
| difference that international companies avoided paying in tax
| heavens. Thus deincentivising companies from even doing
| buisness there.
| gok wrote:
| > It was reported this week that an Irish subsidiary of Microsoft
| had paid zero corporation tax on $315bn (PS222bn) profit last
| year because it was resident in Bermuda for tax purposes.
|
| This seems wrong. Microsoft didn't even have that much revenue
| globally last year ($143b) let alone profit ($53b)
| the-dude wrote:
| The cynic in me thinks this is primarily good for the _Rich
| nations_ (G7), otherwise they would not have closed the deal.
|
| Somehow, this deal will be used to keep unincumbents out.
| ggm wrote:
| I'd ask some economists if thus is net negative or net positive
| for developing economies. If the principle is you pay tax in
| the economy you supply service, then a lot of service is
| supplied over mobile devices to emerging economies. Maybe their
| tax revenues will rise?
| sbacic wrote:
| > Maybe their tax revenues will rise?
|
| I think it will depend on whether these services will even
| _be_ supplied there. More likely than not, companies will
| just pass over the opportunity to provide services to smaller
| and poorer countries due to higher fixed costs of doing
| business there offsetting the benefit of low per-unit costs
| inherent to digital services.
| the-dude wrote:
| Ah, economists, those who pretend to know things.
| thrill wrote:
| Ah, government, those who don't even pretend.
| csomar wrote:
| Net negative. This will put additional burden on small
| exporters who can't manage the ever-increasing bureaucracies
| linked to foreign exports.
| neilwilson wrote:
| Only if they peg their currency to the dollar or each other:
| If they don't then tax revenue has little to do with the rate
| of tax and more to do with the level of saving. And nothing
| at all to do with the capacity of the nation to provide
| public services - which is more to do with its overall
| productivity level and power structure.
|
| Economists struggle with how money actually works let alone
| the function of taxation and its incidence.
| TacticalCoder wrote:
| Is this really about taxing multinational companies or is this
| about establishing a "minimum 15% corporate tax rate" for every
| SME and mom and pop shop?
|
| TFA says that Ireland is going to accept the change: atm they've
| got a 12.5% tax rate.
|
| What about Hungary? Corporate tax rate at 9%.
|
| Once this shall be in place, the one sure thing is this "minimum
| 15%" is only ever go up, never down. There won't be any incentive
| ever to make it go down as there won't be the risk of companies
| moving abroad to pay less corporate taxes.
|
| And this says nothing about dividends or income taxation, so
| you'll end up with SME owners paying "minimum 15% corporate tax"
| and then on top of that 34% dividend tax, for example.
|
| I really wouldn't be surprised if this was sold as "tax the
| FAANG" while ending up trouncing the SMEs owners a bit more.
| hn_throwaway_99 wrote:
| > What about Hungary? Corporate tax rate at 9%.
|
| That's the whole point of this agreement, it doesn't matter
| what Hungary does. I mean, if a business wants to only sell in
| Hungary, sure, but what this agreement does is prohibit
| multinationals that want to _sell_ in any of these G7 nations
| from cooking up the corporate fiction where a company is
| "headquartered" in a low tax jurisdiction, and then the "real"
| company pays all of their income to this shell corp in
| "licensing fees".
| fighterpilot wrote:
| How would this work for a business in Hungary with 10
| employees, no location elsewhere, who has sizeable US
| business?
| trasz wrote:
| SMEs tend to already pay their taxes, as opposed to
| corporations.
| hosker4u wrote:
| Both. USA wanted minimum tax another countries were more
| competitive.
|
| Other countries are pissed at Google charging for day Adverts
| but paying no tax in there country on services they sell.
|
| A compromise was made.
| drclau wrote:
| This reminds me of Ken MacLeod's Descent [0]. It's a great hard
| SF book, mainly about UFOs, governments and conspiracies, but in
| a typical MacLeod style it covers plenty more subjects. I can't
| recommend it enough, and I definitely can't do it justice in a HN
| comment.
|
| Anyway... there's a sub-thread in the book about how things got
| really bad economically for the population, about a brewing
| revolution, and how governments around the world have struck a
| deal to 'defuse a hidden time-bomb under the world economy'. This
| was known as the Big Deal. It was tried many times before, but
| failed. So no one took it very seriously this last time. Except,
| this time there was a military crackdown on tax havens (except
| Switzerland): France took over Monaco, Belgia over Luxembourg, US
| over Panama, Russia over Dubai etc.
|
| This time, it did work. There's a funny and sad moment when a
| student receives a letter from the 'student loan company',
| informing her that her loan was suspended, but she should apply
| for a grant, instead. And it took her a moment to remember what a
| grant even is.
|
| [0]: https://www.goodreads.com/book/show/20618981-descent
| bodono wrote:
| The US tax code is absolutely riddled with tax loopholes. Many of
| these loopholes were designed to act as an incentive, such as tax
| breaks for hiring former felons, building factories in certain
| locations, investing in R&D etc etc. Major corporations often pay
| far lower than the US corporate tax rate precisely because they
| respond to these tax incentives (and sometimes abuse them, but
| that's a different story). Does this deal mean that the US will
| close these loopholes? If so, then 'rich nations' have lost a
| major tool for creating desired outcomes. If not, then how can
| this deal prevent other countries just offering whatever
| loopholes they want that reduce the effective tax rate below the
| minimum?
| viraptor wrote:
| > Many of these loopholes were designed to act as an incentive,
| such as tax breaks for hiring former felons
|
| I wouldn't call all of those incentives loopholes. There's an
| incentive to hire felons because it's better to have them
| working secure jobs than having to spend more tax money getting
| them through the legal system and months/years of jail again.
| It's an incentive because it's a cheaper solution overall. It's
| not the same class of an issue as double-Irish.
|
| I'm not sure what the solution for mixing this with the minimum
| tax is, but if there's a good reason for the incentive, it may
| even be beneficial to the country to essentially match the
| missing tax itself. That's assuming the incentives have the
| real impact they should.
| gostsamo wrote:
| This is a minimum with the corporate tax rate in the US being
| above that. Therefore, the difference between them minimum and
| the official value is the incentives margin that the government
| can use to nudge corporations in the desired direction.
| bodono wrote:
| Yes I understand that, but I believe that many corporations
| today pay even lower than a 15% effective tax rate. I suppose
| you're saying that these loopholes will be closed up to that
| minimum?
| nomoreplease wrote:
| Depends what you mean by loop holes. In the US, you can
| deduct R&D or capital costs like building a factory. That
| can make your tax bill nearly zero. I wouldn't call that a
| loop hope. It's something out there to incentivize capital
| spending and job creation. Other countries have the same
| bodono wrote:
| Right, so the question is will those 'deductions' still
| be allowed or not? If so, then get ready for endless
| deductions from countries that want lower tax rates than
| 15%.
| cheese_van wrote:
| Perhaps by "loop holes" we should instead say "tax law".
| peteretep wrote:
| I think your choice of words here is confusing the issue a
| little, and would propose "incentive" for a tax break the
| government would like you to take (employing felons), and
| "loophole" for tax avoidance the government doesn't want
| you to take (eg: sending all your profits to the Cayman
| Islands).
|
| Given that, if min tax rate is 15% and standard corp tax is
| 20%, the government is happy for you to get to 15% and
| would like you to get to there with incentives, but not
| happy for you to get any lower however you do it. The
| incentives are generally not powerful enough to get you
| there anyway
| bodono wrote:
| The way the government creates incentives is by creating
| loopholes
|
| https://smartasset.com/taxes/tax-loopholes
|
| "The basic definition of a tax loophole is a provision in
| the tax code that allows taxpayers to reduce their tax
| liability."
|
| And corporations readily exploit loopholes (or incentives
| if you prefer) to dramatically reduce their tax burden
| below 15%. See, eg, here:
|
| https://itep.org/amazon-has-record-breaking-profits-
| in-2020-...
|
| Amazon has enjoyed an effective tax rate of 4.7% over the
| last 10 years by using tax breaks, tax credits, and
| depreciation, that have nothing to do with offshoring
| cash.
| gostsamo wrote:
| We can't know for sure until the text of the deal is
| published, but it is the likely scenario. plus, all the
| accountants and tax lawyers on the world will be unleashed
| upon this agreement to find ways to avoid paying up. So,
| this is my hope, but it is not certain.
| BlackVanilla wrote:
| This is a G7 agreement, so it seems the success of the policy
| will depend how much sway this will have with G20 countries. If
| it doesn't get the G20's agreement, what stops multinationals
| from simply domiciling themselves in another country like South
| Korea or Australia? It's currently done in Ireland, so this isn't
| a big jump.
|
| Also, there are countries that are not in the G20 that could
| quite easily undercut an agreement, notably, Switzerland. It
| already acts as a tax haven for personal income (and corporate
| income), so an expansion of this haven seems forseeable.
|
| Despite this, I don't think this is a reason to not act. There
| will be reasons why multinationals will not want to be domiciled
| in Switzerland.
| ko27 wrote:
| It doesn't matter where they are "domiciling themselves". If
| the company is international and does buisness in any of the G7
| countries, than those countries will collect the tax difference
| between 15% and whatever they are paying in Switzerland.
| imchillyb wrote:
| > want a global minimum tax rate so as to avoid a "race to the
| bottom" where countries can undercut each other with low tax
| rates.
|
| That is competition. Governments, corporations, and every other
| entity on earth should work that way.
|
| If a global entity wants a better deal, they should be able to
| get one.
|
| This is nothing more than universal trade restriction. Trade
| restriction that is designed to keep global powers in power and
| keep the little guy scraping by.
| SavantIdiot wrote:
| Is this really happening? It is too good to be true so I fear it
| is not real.
| odiroot wrote:
| Can someone rain on my parade and explain how is it not going to
| work?
| Pelam wrote:
| Seems that most comments here are negative on the prospects of
| this. Almost as if they want things like this to fail, but of
| course it can also be seen as valid and informed critical
| thinking.
|
| Regardless, in my book this is at least a mildly positive bit
| of news even if the road to implementation will be long and
| difficult.
|
| Obviously, while no law can be enforced to 100% or be free of
| loop holes that is not a strong argument to be dismissive of
| the rule of law, international treaties or democratic or other
| political processes.
| bobthechef wrote:
| I would love to know the real motives. I don't automatically buy
| the "ensure fairness for the middle class and working people"
| line. "Love for the people" is always the stated motive of all
| oligarchs and tyrants. And frankly, these politicians aren't
| exactly in some adversarial relationship, or at the very least a
| legal supervisory one, with corporations. That myth died a long
| time ago. Better to ask: why would corporations allow for
| something like this? Why would their political allies push for
| this? Somehow it must be in their interest. Perhaps they're
| hedging because they sense a real threat and have chosen to
| concede in some way, or perhaps this actually contributes to
| furthering some perceived advantageous end.
| hosker4u wrote:
| Established Companies love regulations, it hinders competition
| to eating market share.
| throwaway4good wrote:
| But will it actually work? Let's see if Apple Microsoft Google
| etc drop 15% when the market opens on Monday.
| jacquesm wrote:
| In other news, Amazon, Apple, Microsoft, Facebook, Twitter and a
| whole raft of other companies have _just_ moved their
| headquarters to Nigeria.
| srswtf123 wrote:
| Should be interesting for Twitter, since they're now banned in
| Nigeria?
|
| ;)
| jacquesm wrote:
| No, that's perfect. Absolutely no way to get into conflict
| with the local rulers. And no way for the locals to discuss
| the unavoidable corruption.
| johnminter wrote:
| I suspect that here in the US it will require a vote by the
| Congress.
| alasdair_ wrote:
| Perhaps we can simply state that AMT applies to corporations.
| option wrote:
| why corporations have to pay tax at all?! They are owned by
| investors who pay tax on dividends and capital gains. And
| employees pay taxes wherever they live.
| Proven wrote:
| Sight, those socialist thugs...
|
| All of them are above the minimum, so what does that really
| achieve?
|
| Message for the central planners: you can't tax me anything if I
| don't work. Or if I work but not here.
|
| And let's not forget that involuntary taxation is theft.
| dgb23 wrote:
| The massive infrastructure and education is free then?
| StandardFuture wrote:
| Crumbling infrastructure and propaganda daycare seem pretty
| low cost to me. It certainly reflects a _low_ IQ society for
| sure.
| logicchains wrote:
| If you actually looked at any western country's budget, you'd
| see the vast mmajority of tax revenue is spent on welfare
| (and in the US case, warfare); only a miniscule amount is
| spent on infrastucture. Singapore for instance has way better
| education outcomes and infrastructure than most western
| countries in spirte of way lower taxes.
| mnouquet wrote:
| > you'd see the vast mmajority of tax revenue is spent on
| welfare
|
| By "welfare", I guess you meant the sponsoring of useless
| administrative job meant to ensure easy mechanical turk
| work to appease the masses.
|
| The money actually going for care is pretty minimal.
| aero-glide2 wrote:
| Even in US, they spend more on welfare than warfare. https:
| //en.wikipedia.org/wiki/United_States_federal_budget#/...
| greenwich26 wrote:
| Why are governments allowed to collude like this? Isn't this the
| same idea as price fixing? Exploiting their monopoly
| (governments' monopoly on the right to do commerce) to unfairly
| raise prices (taxes)?
|
| The world needs at least somewhere where you can opt-out from
| Western neoliberalism and socialism.
| trainsplanes wrote:
| There are some countries that you can move to that are
| generally free of the laws of western nations.
|
| For some reason, people from "western neoliberal and socialist"
| countries generally don't move to them, though.
| Chris2048 wrote:
| Because if they did, bombs would soon fall in order to
| destabilise that threat.
| lixtra wrote:
| I have difficulties to come up with current examples.
|
| Maybe some could argue that pre Soviet Afghanistan (in the
| '60) was such a place. But today?
| Chris2048 wrote:
| Its similarly difficult to find examples of competent
| propaganda ; because anything easily labeled propaganda
| is not competent.
|
| Scientific and logical principles of "evidence" to not
| apply to human political systems, b/c the method of
| inquiry are too compromised by the power the system
| wields over them. Even information about Afghanistan
| comes through via the government. But today? There is us
| nothing modern the government wants you to know about.
| greenwich26 wrote:
| On the contrary, those countries are extremely popular places
| to base your business activities or start a company or manage
| your finances from. Ever been to Bermuda? Or the Virgin
| Islands? You can't move for wealthy industrious Western
| expats and their business ventures. And also to a lesser
| extent Ireland, the Luxembourg, Singapore, Switzerland, etc.
| These are all some of the most popular countries to move to
| in the world.
|
| But now the United States and Canada and whoever else is the
| G7 are trying to shut them down and force everyone to follow
| their hellish tax laws.
| trainsplanes wrote:
| Are you implying Ireland, Luxembourg, Bermuda (part of the
| UK), the Virgin Islands (part of the US and UK), Singapore,
| and Switzerland aren't western countries part of or at very
| least allied with and influenced by other western
| "neoliberal" countries/G7?
|
| Because that's a very, uh, unique idea. Also weird to jump
| from implying escape from western influence doesn't exist
| to listing western countries as a way to escape from the
| west.
| pclmulqdq wrote:
| People do move there. Singapore picks up a ton of US expats,
| as did Hong Kong before it got swallowed by China. Bermuda
| and the Caymans have tons of companies and restrict
| immigration so tightly that they are less attractive.
| AussieWog93 wrote:
| Singapore has Common Law inherited from the British. Hong
| Kong also used to have British-style laws, until, as you
| said, it was "swallowed by China" (and even then, it's
| fairly Western on paper).
| peteretep wrote:
| Are you trying to cite Singapore and Hong Kong as countries
| that aren't neoliberal?
| spywaregorilla wrote:
| Collusion between governments isn't illegal, and there is no
| governing body that would prevent this. At best there are
| economic treaties between countries.
|
| This applies only to "global companies with at least a 10%
| profit margin". By definition, you're already playing ball with
| all of these actors if you're a global company.
| [deleted]
| tonyedgecombe wrote:
| >Why are governments allowed to collude like this?
|
| Because otherwise everything becomes a race to the bottom.
| greenwich26 wrote:
| Countries competing with each other to offer attractive
| business environments with the lowest taxes is a race to the
| top, not the bottom.
| tonyedgecombe wrote:
| Countries competing with each other to lower environmental
| standards, workers rights and social programs is a race to
| the bottom.
| ko27 wrote:
| The answer to your question is simple. Governments are the
| highest sovereign bodies. They can agree on whatever they want.
| greenwich26 wrote:
| You are right, of course. But Rousseau made it quite clear
| that the sovereignty of a government is discretionary. This
| sort of thinking isn't convincing on an ideological or
| theoretical level to anyone but a medieval peasant, and it
| only increases my indignation.
| yaa_minu wrote:
| It's interesting that you're being downvoted but you make a
| solid point. People in government are no different than
| those not in government, we're the same human beings. To
| suggest that they should be able to do anything they want
| seems pretty backwards and quite contrary to the
| enlightenment ideas.
| viraptor wrote:
| It's a philosophical point disconnected from reality. In
| most countries we've got some system of elected
| government with various branches who get more power and
| influence than other people. Having a solid philosophical
| point against it doesn't change the world.
| dane-pgp wrote:
| "Why is the government allowed to put me in prison for
| not paying my taxes, but when I kidnap someone and lock
| them up in my basement, _I 'm_ somehow the bad guy?!"
| seoaeu wrote:
| Then be indignant I guess? Countries pressuring each other
| to do things dates back as far as the existence of
| countries. And it isn't like this is a broadly unpopular
| idea either. Most people do actually believe that
| multinational corporation should pay their fair share of
| taxes.
| dgb23 wrote:
| Corporations profit the most from infrastructure, education and
| other collective achievements of a society, so it makes sense
| that they also funnel resources into that system.
|
| The charitable interpretation of this agreement is that this is
| to be achieved by coordinating taxes of multinational
| corporations.
|
| It seems reasonable to me, strategically speaking. I have
| political reservations (to say the least) towards high
| concentration of power though, since we're talking large
| corporations, G7 and so on.
| uniqueid wrote:
| Cracking down on corporate tax avoidance is antithetical to
| 'neoliberalism', no?
| peteretep wrote:
| On the internet "neoliberalism" simply means "stuff I don't
| like involving capitalists"
| csomar wrote:
| > The world needs at least somewhere where you can opt-out from
| Western neoliberalism and socialism.
|
| Welcome to Iran...
| greenwich26 wrote:
| Iran's history for the past 200 years is nothing but an
| alternation of American, British, and Russian/Soviet
| installed governments, compounded by a foreign religion
| (Islam) which is actually worse than socialism in terms of
| destroying a country.
| csomar wrote:
| I specifically mentioned Iran because they have a very low
| fiscal pressure (around 7%) comparing to say Cuba (40%) or
| France (46%).
|
| Source: https://en.wikipedia.org/wiki/List_of_countries_by_
| tax_reven...
| ChuckMcM wrote:
| I think this is long overdue, and I'm glad they recognize the
| challenge of smaller nations offering lower tax rates in order to
| "seduce" companies to do business there. For me, that is the
| insidious problem where if BigCorp paid 5% in taxes in a country
| with a GDP of a few hundred million $ they would provide all the
| tax revenue for all the services that country could need. This
| "it's a good deal for both sides" situation has made progress
| here difficult, and it will make getting this through the G20
| hard as well.
|
| I would imagine that in the ideal situation a government would
| tax some percentage of GDP which would spread the tax burden
| across the economy evenly, but making that work seems impossible.
| throwkeep wrote:
| > The deal announced on Saturday, between the US, the UK, France,
| Germany, Canada, Italy and Japan, plus the EU
|
| If all these nations can strike this kind of deal, won't they do
| the same with Bitcoin to render it useless?
| Analog24 wrote:
| What would such a deal look like? I'm not sure how much they
| can do to a decentralized entity. There are certainly things
| they could do but I don't think it can be as effective as if it
| was a central entity like a corporation.
| sagarkava wrote:
| I'd ask some economists if thus is net negative or net positive
| for developing economies.
| konart wrote:
| More taxes = higher prices. In the end buyer is the one who will
| be charged.
|
| +50$ for an iPhone in the US, +50EUR in EU and +5000[?] in
| Russia.
|
| People in rich nations will spend proportionally less than people
| in poor ones obviously. (no serious analytics, just thoughts)
| dane-pgp wrote:
| If we're being simplistic, then I could just as well say:
|
| More corporation taxes = lower income taxes
|
| A citizen should be happy that their government is seeking a
| greater share of its tax revenue from corporations, especially
| foreign-owned corporations, because it is easier for the
| citizen to avoid buying an iPhone than to avoid earning income.
| konart wrote:
| >More corporation taxes = lower income taxes
|
| Not in my country though. Why not raise both and steal some
| money?
| jasondigitized wrote:
| Raise prices all you want. The invisible hand will figure out
| what people value and what they don't and supply and demand
| will adjust accordingly. "Your margin is my opportunity."
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