[HN Gopher] 136 Countries agree to minimum corporate tax rate
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136 Countries agree to minimum corporate tax rate
Author : LinuxBender
Score : 176 points
Date : 2021-10-08 17:16 UTC (5 hours ago)
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(TXT) w3m dump (lite.cnn.com)
| motohagiography wrote:
| While it may not pass in the US, this is bad news. The reason to
| do this is to collude to bar the exits to capital flight, and
| then impose exploitative policies that would not have been
| possible previously. Why wait for your economy to grow with
| supportive policy when you can just take from the people today?
| Humans are innovative, someone will find a new way to make more,
| and then you can take it from them again and give it to the few
| who keep you in power. This cynical logic is what makes
| revolutions inevitable, because this ruling view is that people
| are basically chattel. Words are just a way to part you from your
| stuff. We can dress it up as concern for others, but we all know
| that on these leveled playing fields, some are more equal than
| others. It is not the playing field that gets leveled, it's us.
| warkdarrior wrote:
| True. As the recent Pandora Papers showed, there are a lot of
| innovative people who are forced to move their meager billions
| from country to country in order to avoid state oppression. /s
| jessaustin wrote:
| What was even more amazing about Pandora Papers is that no
| Americans were included. One almost suspects that in USA the
| billionaires don't have to worry about interference from the
| state!
| smolder wrote:
| This is one of the too-rare cases where government is doing
| precisely what you said they aren't doing: leveling the playing
| field --increasing fairness, as opposed to giving sweetheart
| deals.
|
| I have plenty of concerns with how my government is run and how
| their tax revenue is allocated, but tax avoidance is a basic
| problem of fairness and a problem to be solved.
| motohagiography wrote:
| From the perspective of a state, the rule of taxation is,
| "progressive, simple, enforceable: pick two." The US code
| gave up on simplicity and probably has 10% of GDP dedicated
| to dealing with the result.
|
| Specifically, the playing field is being leveled between
| nations by their colluding against competitive countries to
| prevent capital from leaving them when their policies become
| unbearable.
| MereInterest wrote:
| > Humans are innovative, someone will find a new way to make
| more, and then you can take it from them again and give it to
| the few who keep you in power.
|
| Which is exactly why preventing capital flight is important.
| Otherwise, exploitative business practices can take advantage
| of previously built infrastructure, hide away any profits
| resulting from use of that infrastructure, and then leave
| others holding the bill for the maintenance of that
| infrastructure.
| nybble41 wrote:
| > The reason to do this is to collude to bar the exits to
| capital flight, and then impose exploitative policies that
| would not have been possible previously.
|
| Exactly! If a private organization tried something like this
| most major governments would be rushing to enforce anti-trust
| regulations against them. But when it's the _governments_
| colluding to set price floors, suddenly that 's acceptable?
| clairity wrote:
| there may be ulterior motives by government actors against the
| power being amassed by multinational corporations, but the
| connection to increased popular suppression seems tenuous at
| best. we need to be shrinking the power and reach of any large
| organization relative to the individual, so this agreement can
| be seen as a net win in that regard. the 750MM cliff however,
| is ripe for abuse (e.g., split into multiple subsidiaries that
| are just shy of 750). tax rates need to be severely progressive
| and continuous to avoid such shenanigans.
| [deleted]
| phendrenad2 wrote:
| Counter-intuitively, this will just entrench the rich even more.
| A tax that only affects large multinationals will just make it
| harder to become a large multinational. You'll see a big
| discontinuity in the graph of corporation size. There will be
| corporations that are large enough to absorb this tax, and
| corporations that are too small to qualify for it. The
| "activation energy" to get across the gap will be significant.
| MR4D wrote:
| > * the pact includes provisions to ensure that multinational
| companies pay tax where they generate sales and profits, and not
| just where they have a physical presence*
|
| Will be interesting to see how Alibaba and other Chinese
| multinationals deal with this.
|
| If they aren't fully into this, then the whole thing will not
| work as intended.
| wolverine876 wrote:
| Why not? If the Chinese government and the governments where
| they do business chose to enforce it, then the companies will
| be paying.
| jakozaur wrote:
| The problem is real, many big tech paid less than 1% on non-USA
| income.
|
| This is likely one of the best agreements in decades. Will
| increase tax collection by decreasing incentive to avoid taxes.
| Little burrocracy, huge increase.
|
| Previous mesh of transfer prices and other meassures added huge
| amount of burrocracy on a lot of companies, yet still did not
| make much difference for the biggest avoiders.
| Aerroon wrote:
| And why is it so important that businesses pay a high corporate
| tax rate? Isn't it enough to tax the money when it actually
| leaves the business? (Is paid out.)
|
| Some economists say that corporate taxes distort capital
| allocation.[0] A minimum global tax rate removes the ability
| for a country to decide for themselves whether they want this
| or not. Estonia, for example, is worried that their tax system
| has to change as a result, because they don't charge a
| corporate tax on money that's reinvested or retained.
|
| Edit: apparently Estonia is banking on an exemption for
| reinvestment.
|
| [0]
| https://ec.europa.eu/economy_finance/publications/economic_p...
| Aa9C4xPz43Gg7k6 wrote:
| For socialists it's never enough, money has to be taxed 10
| times. And I'm not using it in the slur way that Americans
| usually do. There's a kind of thinking that believes that
| money belongs to the person who earned it. There's another
| kind of thinking that treats everything as communal (but
| managed by elite class at the top of the system), taking
| anything away from the pile is evil then.
| Volundr wrote:
| I think you would find many take issue with the concept
| that those getting rich are by definition the ones who
| "earned" it, or produced the value. Almost by definition I
| produced more value than my salary.
|
| There's also the issue of resources. How is it that a
| corporation can own the oil under my land? Why should that
| common resource be controlled by some private entity rather
| than being used for the common good?
|
| There's a balance in all things and attempting to boil this
| down to "there are two kinds of people" is reductive and
| unhelpful.
| closeparen wrote:
| A corporation successfully reinvesting its profits makes
| shareholders wealthier. People are concerned about how
| wealthy those shareholders are getting.
|
| Personal income tax is not a solution for wealth inequality.
| The problem as stated is not what rich people are selling,
| it's what they own.
| wolverine876 wrote:
| > why is it so important that businesses pay a high corporate
| tax rate?
|
| It's not a high rate; 15% is low - is there a lower income
| tax rate for any entity?
|
| It's important because societies need money to operate,
| including many things on which businesses depend such
| infrastructure; a good legal system; a healthy, educated, and
| prosperous population; security; stable, well-regulated
| markets; etc. If they don't pay their share, then others must
| or societies lose valuable things.
| csomar wrote:
| Well, the thing is, some countries don't have these
| corporations to begin with. You can't tax a corporation
| that doesn't exist; and thus some countries are happy with
| the employment and economic activity these corps provide
| even if they pay no taxes (the employees still pay taxes,
| so these corps indirectly pay taxes).
|
| That's why these countries offer a 0% tax rate. Because
| that's the only attraction they can provide.
|
| This is a law that benefit the big rich countries.
| hetspookjee wrote:
| Not quite as a lot of African countries get their small
| startups wiped out by the likes of FAANG and their local
| economy sees nothing back from it as all the revenue made
| gets taxed in Ireland and or some other haven. The
| countries with a 0% tax rate are not that many as far as
| I am aware and neither is the corporate presence there,
| if any.
| wolverine876 wrote:
| Who can say what they are happy with, but perhaps they
| benefit from not being strong-armed by companies into not
| taxing them.
| Aerroon wrote:
| Are corporations people now? Do they have their own special
| set of rights and privileges like people do?
|
| Ultimately, corporations are groups of people. Why isn't it
| sufficient to tax the money when the owners of the
| corporation are trying to cash out through dividends or in
| some other way? Why does it have to be taxed every year
| like income? Why is it necessary to tax money that the
| corporation would otherwise invest in R&D?
| ethbr0 wrote:
| > _Why isn 't it sufficient to tax the money when the
| owners of the corporation are trying to cash out through
| dividends or in some other way?_
|
| Because failing to tax capital formation in situ leads to
| all sorts of abuses.
|
| Exhibit A: The entire security-based lending industry
| [0], which allows you to realize the benefit of
| appreciated stock price while retaining stock ownership
| and without triggering a taxable event
|
| [0] https://www.investopedia.com/terms/s/securitiesbased-
| lending...
| wolverine876 wrote:
| > Are corporations people now? Do they have their own
| special set of rights and privileges like people do?
|
| Yes, that is why the legal structure exists: They've
| always been 'fictional persons'. That's what a
| corporation is: A separate entity where money can be
| pooled and personal liability (and taxes) limited, with
| it its own rights and privileges. It's fundamental to a
| corporation.
|
| > Ultimately, corporations are groups of people. Why
| isn't it sufficient to tax the money when the owners of
| the corporation are trying to cash out through dividends
| or in some other way? Why does it have to be taxed every
| year like income? Why is it necessary to tax money that
| the corporation would otherwise invest in R&D?
|
| That's called a partnership, and you are free to setup
| your business in that way. I'd talk to a lawyer first;
| there might be a reason that every major business is
| setup as a corporation - there must be something they
| like about it.
|
| Why must I personally pay taxes on money I'd use to
| invest in other things? All money in the economy is
| productive, yet we must tax something. Why does the
| corporation get off free while, requiring me to pay more?
| kukx wrote:
| Your last argument could be reduced to "if evil happens
| to me, why not make it happen to others". If taxing
| investment is bad let's agree not to do it, instead of
| perpetuating the abuse. And no, definitely not all money
| is productive and it can be easily wasted on worthless
| products and services. Taxing the tools to create value
| is not the same as taxing for example vodka.
| wolverine876 wrote:
| > Your last argument could be reduced to "if evil happens
| to me, why not make it happen to others".
|
| It's not evil. Taxes are not evil at all. I want a
| functioning government, including the services it
| provides.
|
| There's a trendy concept that all taxes are evil, but
| rationally that doesn't hold any water at all.
|
| > definitely not all money is productive and it can be
| easily wasted on worthless products and services. Taxing
| the tools to create value is not the same as taxing for
| example vodka.
|
| This undermines the free market, and basic freedom. I
| judge for myself, knowing my situation, the best place to
| spend my money. Sometimes vodka has the highest ROI, and
| don't forget that the money goes to the store which then
| spends it again. Macroeconomically, even if I gave the
| liquor store owner money for nothing, I haven't burnt the
| money. It's in new hands ready to be spent again (and the
| rate of transactions has a major impact on the economy).
|
| But yes, we still can make some judgments about what to
| tax, and investment in fact often gets a tax break.
| kukx wrote:
| I did not say that taxes are evil per se, but bad taxes
| are bad.
|
| "This undermines the free market (...)" - yes taxes
| obviously affect the free market. They are often meant to
| skew (regulate) it, like tax that targets unhealthy
| products eg cigarrets.
|
| Also, the way we spend money is not neutral to the
| economy. By buying one product over another we send an
| important signal about what is valuable. If we, as a
| sociaty choose junk, we will get more junk, if we choose
| good products, we will get even better products in the
| future.
|
| I recommend you read about "the broken window fallacy",
| since it is related.
| dragonwriter wrote:
| > Are corporations people now?
|
| Always have been, legally. That's the defining feature of
| the corporate form, as opposed to classic partnerships.
|
| > Why isn't it sufficient to tax the money when the
| owners of the corporation are trying to cash out through
| dividends or in some other way? Why does it have to be
| taxed every year like income?
|
| Its the insurance premium for the liability shield that
| comes with the corporate form.
| [deleted]
| kapuasuite wrote:
| I don't see the point of the corporate tax at all unless people
| think the IRS would be incapable of auditing people that
| incorporate.
| SeanLuke wrote:
| Are you fine with corporate personhood in other respects, but
| not this one?
| oh_sigh wrote:
| > burrocracy
|
| I always felt like we were being ruled by donkeys...
| chosenbreed37 wrote:
| I see what you did there :-)
| jikbd wrote:
| It's a common word play in Spanish; I'm not sure that it was
| intended in this case, though.
| jjtheblunt wrote:
| > many big tech paid less than 1% on non-USA income.
|
| paid to whom?
|
| I ask because I have read that (for example) a U.S. company may
| pay the U.S. taxes of less than 1% on foreign income, but
| that's because that income was generated by (example) a German
| subsidiary which fully paid taxes in Germany, where it was
| earned.
|
| Point is, taxes internationally are really a mess.
| wolverine876 wrote:
| Perhaps you are unaware, but companies often shift revenue to
| countries where taxes are lower.
|
| > these narratives sometimes look scandalous when they're
| actually following tax laws of foreign countries "correctly".
|
| It could be both; nobody said it was illegal. Following the
| law doesn't make something right - many horrible things are
| illegal; the law isn't designed as optimal behavior. And in
| many situations, they write the laws for themselves.
|
| Regardless, clearly they need to pay their share, and their
| share is more than 1%.
| ethbr0 wrote:
| As parent said, in international terms, you can effectively
| shift profits wherever you want, assuming a sufficiently
| large and non-physical business. Which led to this entire
| recent mess.
|
| It was less of a problem when steel needed to be bought
| here, and goods needed to be sold here. Can't very well
| claim that here is actually there.
|
| But with intangible goods, you can! Who's to say what the
| fair price of using Google Nigeria using Google's brand is?
|
| Which led to a game of "Where to put the profits, without
| being too obvious about it?" Which led to a race to the
| bottom in tax rates to attract business.
|
| Effectively, this base rate is good for major developed
| countries (who typically didn't need to have the lowest
| rates), international businesses (who had to play
| convoluted shell games, without ever knowing the true
| rules, to stay competitive), and even smaller or developing
| countries (who now don't have to cut their own throats to
| attract businesses).
|
| Which is probably why an agreement happened. Nobody liked
| the old game, but it was a competitive necessity.
| wolverine876 wrote:
| > Effectively, this base rate is good for ...
| international businesses (who had to play convoluted
| shell games, without ever knowing the true rules, to stay
| competitive)
|
| > Which is probably why an agreement happened. Nobody
| liked the old game, but it was a competitive necessity.
|
| Also a good explanation of how regulations benefit
| businesses. Unregulated markets are highly inefficient,
| diverting many resources to that kind of BS. Also, most
| people actually don't like cheating each other, even if
| it's legal, and want to operate in places where there's
| not competitive pressure to do it. (Of course, not every
| regulation is beneficial to everyone.)
| jjtheblunt wrote:
| nice explanation!
| dmw_ng wrote:
| This is a welcome step, but I'd expect the non-uniformity of
| accounting and taxation policies around the globe to still
| leave a huge amount of latitude for suitably sized companies.
| dragonwriter wrote:
| > The treaty will need to be ratified via a two-thirds majority
| in the US Senate
|
| Says who? Just because the it is characterized as a treaty under
| international law doesn't mean it won't be implemented as a
| congressional-executive agreement [0] in US law, just like
| virtually every other important economic treaty in the last
| several decades.
|
| Simple majorities in both houses is a lot easier than 2/3 in the
| Senate.
|
| [0] https://legal-
| dictionary.thefreedictionary.com/Congressional...
| CheezeIt wrote:
| Would it need 60% to get Senate cloture?
| dragonwriter wrote:
| > Would it need 60% to get Senate cloture?
|
| That depends on the applicable Senate rules (including any
| special one-time exceptions) at the moment when it is
| considered. Constitutionally, no, because supermajority
| cloture isn't a Constitutional requirement (and, indeed, a
| key motivation for the Constitution was frustration with the
| effect of supermajority requirements in the Articles of
| Confederation making legislation impossible.)
|
| EDIT: To summarize some of the downthread discussion:
| Assuming no special action, if brought up right now under the
| existing rules, "yes".
| CheezeIt wrote:
| I am asking if congressional-executive agreements have an
| exception in the rules.
| dragonwriter wrote:
| > I am asking if congressional-executive agreements have
| an exception in the rules.
|
| Generally, no, not currently.
|
| ("Fast track" authority for trade agreements includes,
| IIRC about the procedures associated with it, an
| exception for a specific subset of such agreements, but
| applies to agreements under guidelines and priorities set
| by Congress, which this agreement would not.)
| evgen wrote:
| It does not need an exception. The thing about the
| filibuster rules is that they are only rules if the
| members of the Senate agree that they are. At any point
| they can change the rules, and can even just decide that
| a particular piece of legislation or legislative activity
| is so important that it can bypass the rules. A multi-
| national agreement that raises corporate tax rates on US
| companies operating outside the US is pure win for the
| party currently in control of both the legislative and
| executive branch; it plays well with the electorate, it
| is easy to weaponize against your opponents, and the
| actual impact to the companies caught up in the changes
| will not be as unpleasant as they may claim in public.
| dragonwriter wrote:
| > A multi-national agreement that raises corporate tax
| rates on US companies operating outside the US is pure
| win for the party currently in control of both the
| legislative and executive branch; it plays well with the
| electorate, it is easy to weaponize against your
| opponents,
|
| ...and Manchin and Sinema will oppose any changes or
| exceptions to filibuster rules for it despite (or
| _because_ of) all that, so it won 't happen.
| fsckboy wrote:
| thank you for teaching me something I didn't know.
|
| no thank you for being a teeny bit snarky about it, as if
| everybody _obviously_ should already know this.
|
| oh, and a small correction, it's not the "treaty under
| international law" aspect that's bothersome, it's the skirting
| of the treaty provisions of the US Constitution that raises
| eyebrows.
| dragonwriter wrote:
| > no thank you for being a teeny bit snarky about it, as if
| everybody obviously should already know this.
|
| I was responding to the article text; anyone writing a news
| article speaking to the prospects for an international
| agreement coming into force in US law ought to have a basic
| understanding of how that actually happens in practice in US
| law.
|
| > it's the skirting of the treaty provisions of the US
| Constitution that raises eyebrows.
|
| The treaty provision is a permissive mechanism that allows
| the President, with strong Senate support, to make agreements
| with foreign nations while bypassing the House of
| Representatives role in normal legislation.
|
| It is not skirting that to make law within the scope of the
| legislative power through the normal Constitutional
| legislative process, just because the content of the
| legislation was agreed with foreign parties. The treaty power
| doesn't silently _reduce_ the scope of the legislative power.
| pavon wrote:
| What are the practical differences between the two? Is it
| that we aren't making any binding agreement with sovereign
| countries like we would when ratifying a treaty, instead we
| just happen to change our laws in line with the accord, but
| are free to change them again at anytime?
| dragonwriter wrote:
| > What are the practical differences between the two?
|
| Historically (pre-17th Amendment), the treaty power
| allows government-to-government agreements without the
| directly elected representatives of the people
| intervening to screw things up; their interference was
| feared to complicate diplomacy.
|
| But other than _procedural_ differences, there aren 't
| any _practical_ differences, a treaty ratified by the
| Senate and a congressional-executive agreement passed by
| both Houses and the President, and normal legislation
| (with the President or over his veto), or, I guess, a
| hypothetical sole-congressional agreement [0] all have
| exactly the same legal force.
|
| > Is it that we aren't making any binding agreement with
| sovereign countries like we would when ratifying a
| treaty, instead we just happen to change our laws in line
| with the accord, but are free to change them again at
| anytime?
|
| The Supreme Court has found (and the fact that Congress
| in Art. I, Sec. 8, is given the power to define what is
| and isn't an offense against the law of nations suggests
| that this is correct) that Congress is free to amend
| ratified treaties for the purpose of domestic law by
| normal legislation, so that's not a difference (though it
| is definitely also true of congressional-executive
| agreements, which are normal legislation.)
|
| [0] where Congress takes a text, say, adopted by an
| international conference and adopts it over a
| Presidential veto; active negotiation of such an
| agreement might have some other legal issues.
| fsckboy wrote:
| you are using a rhetorical sleight of hand when you say
| that (paraphrasal) "with strong Senate support the
| President can bypass the House, but otherwise a treaty can
| be considered normal simple majority legislation." That's
| not the way the Constitution is written, and treaties are
| not normal legislation.
|
| I'm not saying that "you're wrong", I'm convinced that it's
| being done, but imho SCOTUS should overturn this style of
| treaty.
| dragonwriter wrote:
| > I'm not saying that "you're wrong", I'm convinced that
| it's being done, but imho SCOTUS should overturn this
| style of treaty.
|
| SCOTUS should overturn the Congress exercising using the
| legislative process to do things expressly within its
| legislative powers on...what basis?
|
| OTOH, congressional-executive agreements aren't new, and
| have been litigated quite a bit. Heck, SCOTUS has even
| held a particular one to be included in the delegation by
| Congress of jurisdiction over treaty interpretation cases
| to the Courts of Appeal _over a century ago_. _B. Altman
| & Co. v. United States_, 224 U.S. 583 (1912).
| mikaeluman wrote:
| People pay taxes, not companies.
|
| These taxes are poor, because they obscure who is really being
| taxed.
|
| Is it the owners? The employees? The consumers? Most likely the
| last two groups.
| jgalt212 wrote:
| In theory, you are correct. However, if companies don't pay
| taxes, then they build up huge cash hoards, and the stock price
| goes up and the execs (who get paid in shares) don't pay taxes.
| why? because they never sell, and just take out loans against
| their ginormous paper gains. And if they do sell, they pay
| lower capital gains rates for share-based instead of cash-based
| compensation.
| csomar wrote:
| What you are saying doesn't make any sense. The take-a-loan
| against your shares will work until you have to stop at some
| point or you die and your estate is taxed...
| akudha wrote:
| Just text on the page, loads immediately! No stupid ads, auto
| playing audio/video, nagging popups.... This is how the internet
| should be. Joy to read.
| KKKKkkkk1 wrote:
| I distinctly remember the claim that most economists (left and
| right) believe the optimal corporate tax rate is 0%, but I can't
| find the source for this. The argument is that the corporate tax
| is simply an indirect income tax, and so as an alternative to
| raising income taxes, all it does is to penalize entrepreneurs
| for incorporating their businesses.
| walshemj wrote:
| Ask yourself who pays these "economists"
| wolverine876 wrote:
| > most economists (left and right) believe the optimal
| corporate tax rate is 0%
|
| Please provide some evidence, because I think only a narrow
| group of right-wing economists say that.
|
| Taxes are generally applied where money is transacted, such as
| income and sales. For economic and legal purposes, corporations
| are entities just like people. They earn money, save it, pay
| it, invest it, etc. IME, they try to come up with every
| argument, sane or bizarre, to avoid contributing their share of
| taxes.
| gruez wrote:
| >Please provide some evidence, because I think only a narrow
| group of right-wing economists say that.
|
| https://www.npr.org/sections/money/2012/07/18/156928675/epis.
| ..
|
| no transcript unfortunately, but the summary seems to be that
| economists across the political spectrum agrees with it.
|
| edit: listened to the podcast. the relevant section is at
| around 12:30. the reasoning seems to be that corporate taxes
| discourages corporations from reinvesting their profits, and
| if want corporate taxes because corporations are mostly owned
| by rich people, you should tax them directly.
| dragonwriter wrote:
| > I distinctly remember the claim that most economists (left
| and right) believe the optimal corporate tax rate is 0%
|
| Optimal for what objective?
| gruez wrote:
| general efficiency? if you want to tax corporations because
| they're owned by rich people, tax the rich people directly.
| see: https://news.ycombinator.com/item?id=28804390
| realityking wrote:
| The problem I have with that is that it favors foreign
| asset ownership. I own some Apple stock and live in
| Germany. Now when Apple designs and develops an iPhone in
| California, manufactures it in China and sells it in
| Chicago should the tax on the profit (dividends or realized
| gains) only go to Germany or should the US and China also
| get a slice of the pie?
|
| Apple definitely benefits from many resources the US and
| China provide, from roads to police.
| gruez wrote:
| >Apple definitely benefits from many resources the US and
| China provide, from roads to police.
|
| Roads are already financed by vehicle registration/fuel
| taxes. Police are funded partially from property taxes.
| Besides, most businesses don't crime by themselves.
| They're mostly caused by humans, which are already taxed.
| dragonwriter wrote:
| efficiency is a cost/utility ratio, which requires a
| definition of utility, and a measure of cost.
|
| "general efficiency" is not a thing. A thing is efficient
| in terms of how much of some good it provides in return for
| how much of some cost.
| hetspookjee wrote:
| How would taxing a rich person work if they're filled to
| the brim with debt? If they're just losing money it'll be a
| hard thing to tax. Much like the transfer pricing is how it
| works currently already I believe.
| gruez wrote:
| >How would taxing a rich person work if they're filled to
| the brim with debt?
|
| You do realize that the debt eventually comes due, right?
| It's not like debt is a money printer. If you're against
| people being able to defer capital gains, there are other
| ways around it in addition to taxing corporations.
| jostmey wrote:
| Except some bosses use their business as personal assets. A
| personal jet is a good example
| Aerroon wrote:
| That is very much illegal though. If the jet is for personal
| use and the company isn't compensated for it then it's tax
| fraud.
| DaiPlusPlus wrote:
| That's straightforward to work-around: arrange for an
| important industry meeting that's coincidentally in the
| same city as your weekend getaway.
| ur-whale wrote:
| Country level collusion.
|
| Ugh.
| johntiger1 wrote:
| So they'll just move to the remaining ~50 countries that didn't
| nicoffeine wrote:
| "Alongside a minimum corporate tax rate, the pact includes
| provisions to ensure that multinational companies pay tax where
| they generate sales and profits, and not just where they have a
| physical presence. That could have major ramifications for tech
| companies such as Google and Amazon, which have amassed vast
| profits in countries where they pay relatively little tax."
|
| I share your skepticism generally, but it seems like this
| agreement is a good step towards getting corporations to pay
| taxes. There's no point in starting a shell company in the
| Caymans if your taxes are paid based on where your products
| were purchased.
| wolverine876 wrote:
| You're imagining that major corporations will move to Sri
| Lanka? Moving from SV to Texas is considered bold, but try
| persuading employees to move out of the OECD, and then finding
| talent there.
|
| Also, businesses actually benefit from and prefer to operate in
| a well-funded, well-regulated, free society. Those are the
| societies with freedom, customers, competent and fair legal
| systems, safety, money, infrastructure, etc. The corporation is
| part of the society they operate in - they aren't a customer of
| it, they are the makers of it (just like you and me). They have
| a stake in making it work well. That will be true wherever they
| go.
|
| They might observe that most leading businesses were developed
| in wealthy countries (wealthy localities, even) where those
| businesses pay taxes - more taxes than now in the US, for the
| most part. Even in the US - what great industry has come out of
| a low-tax area? Oil doesn't count.
| zozin wrote:
| Minimum tax rate 15%; tax loopholes unlimited!
| [deleted]
| bitshiftfaced wrote:
| For those like me who were confused by what's the deal with
| removing the "at least" 15% for Ireland:
|
| > The vast majority of companies will not be impacted by the
| proposed increase in the 12.5 per cent corporate tax rate,
| Taoiseach Micheal Martin had said earlier in relation to this
| point.
|
| > Speaking in Dublin ahead of a Cabinet meeting, he confirmed the
| Government's intention was still to only apply the new 15 per
| cent rate to companies with turnovers of more than EUR750
| million, in line with OECD proposals on the matter.
|
| https://www.irishtimes.com/news/politics/ireland-s-corporate...
| klipt wrote:
| > only apply the new 15 per cent rate to companies with
| turnovers of more than EUR750 million
|
| So what stops a big corp from splitting itself into
| subsidiaries with turnover below that magic number?
| ashconnor wrote:
| Pretty sure it's global revenues. That's the point of a
| global tax no?
|
| Edit:
|
| > There are two pillars to this agreement. Pillar 1 will see
| a reallocation of a proportion of profits to the jurisdiction
| of the consumer. Pillar 2 will see the adoption of a new
| global minimum effective tax rate applying to multinationals
| with global revenues in excess of EUR750m
|
| https://www.gov.ie/en/press-release/59812-ireland-joins-
| oecd...
| anonymousDan wrote:
| The reason is we (quite reasonably) don't want to sign up to
| something and then have the goalposts shifted in a few years
| such that the minimum rate is increased again. Frankly I'm a
| bit annoyed we even signed up to this. If the US really cared
| about tax avoidance by their MNCs they could fix the problem
| tomorrow.
| pavon wrote:
| Would you mind elaborating your thoughts on the last bit? I
| don't pretend to be an expert on international corporate
| taxation, but in the case of Ireland it didn't sound like US
| companies are avoiding taxes in the US. All the complaints
| are about revenues earned outside of the US, which should be
| taxed outside of the US. So I can definitely see why the EU
| would be upset with Ireland's policies, and support
| participating in treaties to make the situation more fair,
| but it seems inappropriate for the US to unilaterally "fix" a
| disagreement that is largely between EU member nations.
| yojo wrote:
| My understanding is that schemes are often employed to
| shift profits that occurred in high tax regimes to lower
| tax ones. E.g. company registers their IP to subsidiary in
| <low_tax_nation>. That subsidiary charges crazy royalties
| for the rest of the company to use the IP in
| <high_tax_nation>. The effective earnings in the high tax
| regime is low or zero because of the "cost" of licensing
| the IP. Meanwhile the subsidiary in low tax land makes
| bonkers profits on some extremely lucrative licensing.
|
| You can try to shut down these shenanigans playing legal
| whack a mole, but the law moves slower than the
| corporations. Or you can just set a global floor on taxes
| and not have to worry about keeping up with the latest
| corporate nonsense.
| ballenf wrote:
| Yeah, you have to wonder if the US cares more about this
| framework being in place and being able to dictate other
| countries policies more than actual tax rates.
| adventured wrote:
| It's not particular to the US. The US is doing this by
| pressure as a compromise because the European powers
| threatened something worse. The US would prefer to change
| absolutely nothing and let its major corporations continue
| to avoid taxes where they can internationally.
|
| Germany and France are overwhelmingly supporting this,
| because they benefit from damaging competing nations that
| have lower corporate income tax rates (eg Lithuania,
| Ireland, Hungary, North Macedonia, Montenegro, Romania,
| Serbia, Switzerland, Albania, Armenia, Bosnia, Bulgaria,
| Croatia). Both Germany (30%) and France (26.5%) have higher
| corporate income tax rates than the US and stand to benefit
| more by forcing the rest of the world to a higher base and
| or otherwise preventing any further decline in rates. This
| helps those two nations re-level Europe to their advantage,
| and stop any further race to the bottom on rates (where
| Germany and France can't follow).
|
| For those two nations it's a particularly relevant matter
| in Europe. They've watched as Ireland has rapidly become
| one of the richest nations in world history by leveraging a
| very low corporate income tax rate. Ireland is taking
| economy, growth, away from them. In the time that Ireland's
| GDP per capita has massively exploded higher, Germany has
| seen a GDP per capita decline over 26 years. Read that
| again. 26 years, an inflation adjusted GDP per capita
| decline ($31.6k in 1995; inflation adjusted that's $57k
| today; their present GDP per capita is around $46k). A
| generation has been nearly lost to economic stagnation in
| Germany. France is in the same stagnation boat. And how has
| Ireland's GDP per capita performed in that time? $19k to
| $84k; an inflation adjusted 150% gain roughly over 26
| years. Yeah. Now you understand what's going on - it's
| about knee-capping countries like Ireland, stopping their
| incredible climb.
|
| Ultimately this corporate income tax rule is a regressive
| attack by powerful nations on typically poorer, weaker or
| otherwise smaller nations. It dilutes a substantial means
| for them to compete to draw capital.
|
| France and Germany on one side. All those other nations I
| listed before on the other. It's quite obvious what's going
| on.
| disgruntledphd2 wrote:
| Speaking as an Irish person, Ireland's GDP is nonsense
| and you should avoid using it for literally anything.
| walshemj wrote:
| Why would the USA do this they are not losing any revenue
| over it.
| zxcvbn4038 wrote:
| They might agree to raise the rate to 15%, but in reality they
| will turn around and give tax credits, exemptions, or some other
| mechanism to bring the effective rate back down to whatever level
| brings in business.
|
| Biden won't remember anyway ;)
| hinkley wrote:
| @dang someone else posted this minutes prior to this post.
|
| https://news.ycombinator.com/item?id=28801537
|
| Same domain, different url format.
| oceliker wrote:
| Honestly I prefer this format much more. Basic HTML is better
| wherever I can find it.
| jeffwask wrote:
| Finding out CNN has a lite mode was the best part of this
| post.
| franciscop wrote:
| > The treaty will need to be ratified via a two-thirds majority
| in the US Senate, which is unlikely given that it allows foreign
| countries to tax US companies, the Eurasia Group analysts said.
| An alternative could be "another major tax bill," but the United
| States is unlikely to consider that until 2025, they added.
|
| How is this possibly true? The vote that the US takes should
| _not_ affect what a company (wherever it is from) is being
| charged by e.g. France while doing business in France, that 'd be
| up to local laws, right? Passing it in the US should only allow
| the US to tax international companies there, but they'd not get a
| say in other country's taxes?
|
| Unless I'm misunderstanding it and it's the international treaty
| itself that needs to be approved locally (does that even make
| sense, having been approved already?), and not local laws based
| on the treaty.
| MichaelZuo wrote:
| In your example US and French companies in France would have to
| abide whatever rules are in France whereas US and French
| companies in the US would have to abide whatever rules are in
| the US. As it has always been.
|
| Any cross border treaty provisions, or provisions relying on
| multi party agreement will be ineffective in the case of the
| French-US relationship until both sides harmonize.
| oceliker wrote:
| Official announcement: https://www.oecd.org/tax/international-
| community-strikes-a-g...
|
| List of countries:
| https://www.oecd.org/tax/beps/oecd-g20-inclusive-framework-m...
| LeifCarrotson wrote:
| > _...it is now supported by all OECD and G20 countries. Four
| countries - Kenya, Nigeria, Pakistan and Sri Lanka - have not yet
| joined the agreement._
|
| But this list:
|
| https://en.wikipedia.org/wiki/List_of_sovereign_states
|
| contains not 140 but 193 UN member states and 206 listed states.
|
| Which are missing? Just to start, I don't see Algeria,
| Azerbaijan, Bangladesh, Bhutan, or Bolivia listed; to my
| knowledge those are ordinary nations like the four enumerated.
| Either it's not "all OECD" because those four are missing, or
| that list of four is very much incomplete. Or are they saying
| that those four support it but have not yet joined?
|
| Either way, the hard part comes when individual countries have to
| legislate compliance with the treaty that their state departments
| have agreed to, and the really hard part comes when other
| countries have to collectively enforce the treaty when a
| signatory adds a loophole or ignores it...
| realityking wrote:
| OECD only has 38 members: https://en.m.wikipedia.org/wiki/OECD
|
| The four countries mentioned are those that participated in the
| negotiation but are not signing the final agreement.
| Unfortunately the article doesn't explain their objection.
| GDC7 wrote:
| Misleading title, it's just for large multinationals.
|
| There will be a revenue treshold of 890$ million
|
| This is good news for startups! Cancel that, this is good news
| for the vast majority of unicorns as well.
|
| It's still early because we have to wait and see what the
| loophole seekers are gonna find, but in any event, as it stands
| it looks like a good development for startups and VCs.
|
| Loophole seekers are disgusting and dumb, they engineer solutions
| that save billions in taxes for multinationals but aren't paid
| proportionally. A genius in the transfer pricing dept. at one of
| the big 4 makes like an above average lawyer in NYC or LA.
|
| They are more instrumental to the public company profits than the
| CEO in many instances.
| acd10j wrote:
| what will prevent an multinational to make dozens or hundreds
| of subsidiary with each having revenue threshold of $890
| million ?
| GDC7 wrote:
| Public companies can't do that, unless they want to have at
| least as many tickers.
|
| The 890 million treshold is calculated for the holding, not
| the subsidiaries
| hetspookjee wrote:
| Pretty sure you can create an index fund filled with all
| your sub 750M subsidiaries, redistribute the money that was
| gained by selling those and voila. You can even mix and
| match. Of course this is no cheap thing to materialise
| given that the law will probably be against such a thing
| but I'd give it a years time before the first ones raise
| their head with this approach.
| evgen wrote:
| Oh wow! You found that ONE TRICK that governments HATE.
| Somehow thousands of legislators and economists around the
| world never, ever thought of that and are going to be
| completely fooled by a company that structures its revenues
| in this fashion. I am absolutely sure that will work...
| jessaustin wrote:
| Do you believe that "loopholes" exist?
| [deleted]
| imtringued wrote:
| I hope it means that there will be dozens or hundreds of
| additional CEOs.
| sbacic wrote:
| I just hope the 750 million euro limit doesn't suddenly vanish
| "somewhere along the line" because "countries couldn't agree"
| and we end up with the whole Digital VAT Directive circus all
| over again - that is to say, that this minimal tax starts
| applying to small businesses it was never meant to apply to.
| president wrote:
| The cynic in me says it wouldn't have been agreed on if the
| loopholes weren't already baked in.
| goodpoint wrote:
| Nothing cynical, it's lobbying 101.
| codesuki wrote:
| wow, unrelated to the article content, but... I was on the page
| and thought 'how come there is so little noise on this page and I
| can focus on the text?' Didn't know there is a 'lite' CNN. I wish
| the internet would be like that again.
| snidane wrote:
| Welcome to the future where only big companies survive. As a
| small business you don't have means to avoid taxes. As a
| multinational corp you just invent research, marketing and other
| fictitious expenses between your branches and always come up with
| expenses close to incomes, paying 15% corporate tax of close to
| zero net profits You operate very efficiently in the market where
| other participants have to carry the 15% deadweight as they are
| unable to avoid it like you.
|
| After certain rounds of Mergers and Acquisitions to achieve ever
| bigger economies of scale incentivized by the tax system we end
| up with a few single players per market, if not only a single
| one. Such bureaucracies become almost indistinguishable from
| state owned companies operated under soviet union.
|
| How that ended up you can find in history textbooks.
| wolverine876 wrote:
| The minimum applies only to large corporations.
| swman wrote:
| I'm no expert but let's say this happens- they'll just
| incorporate in Space, Moon, or Mars.
| [deleted]
| dragonwriter wrote:
| > they'll just incorporate in Space, Moon, or Mars.
|
| Incorporation is a government act. It also is irrelevant if it
| is not recognized by the governments of the places where you
| try to do business.
| swman wrote:
| I was being cheeky considering big corporations always find a
| way to dodge taxes.
| gnopgnip wrote:
| It doesn't matter as long as they have customers in the 136
| countries that ratified it
| dane-pgp wrote:
| So it turns out that "But corporations would just move somewhere
| else" wasn't a valid argument against raising corporation tax all
| along, and countries could have agreed this 100 years ago.
|
| Now let's create a wealth tax using the same international
| approach. The treaty could say that each country should have a
| wealth tax of say 8%, with the first $100m being tax free. For
| comparison, the average US household has a net worth of $120k and
| pays $10k in taxes every year.
|
| If a billionaire lives in a country that doesn't join the treaty,
| then the countries which have joined can refuse to allow that
| billionaire to travel to or through their territory, or own any
| assets in their jurisdiction.
| throwaway34241 wrote:
| Apparently it's also possible to address the issue of shifting
| corporate profits to tax-havens even without a large scale
| international agreement, using what's called a border-adjustment
| tax. [1]
|
| Basically, corporations have one place money comes in and two
| places it comes out, like so:
|
| sales = expenses + profits
|
| If you tax the sales, then deduct the expenses, that leaves the
| incidence of the tax on the profits. But importantly, unlike
| profits, it's usually clear to which country a sale belongs to.
|
| Where this gets complicated is international borders, the
| solution there is to only deduct domestic expenses. At first that
| seems protectionist, but apparently changes to the currency
| exchange rates eventually balance out the effect and it ends up
| trade neutral.
|
| This idea was actually seriously proposed a few years ago as part
| of a Republican tax reform initiative, and even economists like
| Paul Krugman seemed to think it checked out (who has a Nobel on
| trade, but is normally on the other side of the aisle). In the
| end it lost momentum after some big companies opposed it.
|
| Even though that's maybe more ideal, just going for an agreement
| also seems reasonable since it's probably achievable than in-
| depth reform (so it's likely solutions like this or nothing at
| least in the medium term).
|
| [1] https://en.wikipedia.org/wiki/Border-adjustment_tax
| wanderingmind wrote:
| If corporates have freedoms like individuals, they must also be
| taxed like individuals on the total revenues. I don't get to
| deduct my day to day expenses before paying income tax, why
| should a corporation be able to deduct it's expenses for tax.
| cjalmeida wrote:
| Because it's bad overall. It pushes for large monolithic
| corporations instead of specialized companies.
|
| Also, you do get to deduct expense when doing value adding
| business activities. Just incorporate. Likewise corporations
| can't deduct (loopholes aside) "leisure activities"
| wanderingmind wrote:
| Then only tax individual income tax on savings as well
| because it's bad to see people struggle to make ends meet
| and the government on top making it more difficult by
| taxing on entire income
| throwaway34241 wrote:
| The practical reason is that this would penalize smaller
| companies working together over large, vertically integrated
| ones. If company A sells an item for $10 and buys $8 in parts
| from company B, who buys $6 in parts from company C, the
| total taxed amount will be $10+8+6 = $24, while a totally
| vertically integrated company would only pay tax on $10.
|
| You can get around that by only taxing the value added
| ($10-$8 etc) which is a VAT tax and a popular way for
| countries to raise revenue.
|
| The bigger issue is companies transact with consumers,
| workers, and shareholders. But when you have a tax, what
| matters is really what transaction you tax and not which side
| of the transaction pays the tax. For example, payroll and
| income taxes both reduce wages. If you tax revenue, that's
| basically taxing the transaction from consumer->company, so
| that tax (VATs, sales taxes, etc) falls on the consumers.
| wanderingmind wrote:
| They can have different tax rates based on total revenues
| like how individuals with lower wages are taxed at lower
| rate. It's immortal when a corporation can deduct a party
| expense but a single mom earning minimum wages cannot
| deduct the expense of buying groceries or even a single
| restaurant meal.
| White_Wolf wrote:
| Wouldn't a % taxation at source be more effective in retaining
| money inside the borders?
|
| Tbh some people here do have a decent point. A private
| individual can't deduct rent and such. One could argue those
| are neede to keep working.
| throwaway34241 wrote:
| > Wouldn't a % taxation at source be more effective in
| retaining money inside the borders?
|
| If you're talking about taxing revenue and not deducting
| expenses like wages etc, yes that's basically how VATs work
| and they're very popular and can raise a lot of money. The
| main difference is that falls on consumers and not just
| shareholders.
| trhway wrote:
| >[1] https://en.wikipedia.org/wiki/Border-adjustment_tax
|
| basically it shifts the tax burden from multinationals onto the
| domestic consumers (and domestic producers for domestic market)
| and increases the tax on otherwise cheap foreign import like
| from China. No wonder the initiative didn't make it - while the
| government and multinationals are always happy to hit the
| consumers, that one is really too much.
|
| >the solution there is to only deduct domestic expenses
|
| it does nothing. A multinational will always be able to shift
| franchise fees, IP property leases, etc. so that would become
| "domestic expenses" where it will reduce the taxes most.
|
| Global approach like the minimum tax rate is an adult step of
| recognition of reality of the borders being borders only for
| small players.
| throwaway34241 wrote:
| > increases the tax on otherwise cheap foreign import like
| from China
|
| The domestic currency is supposed to appreciate in value in
| proportion to the tax, so for example 1 US dollar buying 20%
| more Yuan, which cancels out a 20% tax (although I have to
| admit this is not as intuitive as the other parts, so I'm
| trusting the economists to do the math there). I'm not sure
| if the Yuan specifically is a good example, since the Chinese
| government controls the exchange rate politics might be more
| important than economics there.
|
| > and domestic producers for domestic market
|
| If you have a pure domestic business, wouldn't you just
| deduct your domestic expenses and pay tax on what's left
| over? That's basically what happens now, so I don't see how
| it would make a difference.
|
| > A multinational will always be able to shift franchise
| fees, IP property leases, etc. so that would become "domestic
| expenses" where it will reduce the taxes most.
|
| You could set up a domestic subsidiary, but now that
| subsidiary will have to pay the tax. If it's not a domestic
| subsidiary, then you have to pay the tax (since you can't
| deduct it). I get that in the current system it's very easy
| to do these things, but can you explain in a little more
| detail how this would work with the border tax?
| cameronh90 wrote:
| > "The treaty will need to be ratified via a two-thirds majority
| in the US Senate, which is unlikely given that it allows foreign
| countries to tax US companies, the Eurasia Group analysts said."
|
| So, it's not going to happen then?
| zxcvbn4038 wrote:
| Haha, I think you called it!
| ko27 wrote:
| It will, just like in Ireland. That's the beauty of this deal.
| It's blackmail basically. If the US does not pass it, other
| countries will tax the difference even on US profits (company
| just needs to have presence in the EU). US would be shooting
| itself in the foot, especially being the one to propose it
| originally. Also, I am pretty US is already above 15% corporate
| tax rate.
| cgearhart wrote:
| >US would be shooting itself in the foot...
|
| That's very "on brand" for the US. All we need is a change in
| party running the White House to torpedo our own ideas. See
| also: TPP.
| Causality1 wrote:
| The TPP included some lunatic overreaches.
| wutbrodo wrote:
| > All we need is a change in party running the White House
| to torpedo our own ideas. See also: TPP.
|
| TPP was opposed by both major-party candidates by the time
| of the general election; Hillary Clinton flip-flopped her
| position on it to pander to Bernie-inclined voters (or
| charitably, in order to better represent her constituents'
| views).
|
| Regardless, our withdrawal from it had nothing to do with
| "a change in party running the White House", and we
| would've likely withdrawn regardless of who won the
| election. It was just a consequence of the populist wave
| that swept America across the political spectrum (and is
| sweeping much of the world).
| tweedledee wrote:
| I think it's more likely Hillary would have just flipped
| again.
| wutbrodo wrote:
| That's certainly possible, but only if she felt like she
| didn't need the populist-left energy anymore (which is
| plausible).
| lovich wrote:
| That's not blackmail, that's the cost of access to those
| countries markets. Much like you could ignore GDPR if you
| never intended to touch the European market.
|
| You can't claim blackmail because a club charges you a cover
| to enter the door
| 1123581321 wrote:
| They probably just meant to say extortion, since the OECD
| isn't threatening to release any damaging information about
| the US. :)
|
| That said, to your point, by definition a nation or group
| of nations can never commit extortion. They can treat other
| countries miserably and completely refuse to trade, if they
| want, and go to war if they choose to. Individuals have
| more restrictions on their interactions with others.
| lovich wrote:
| I think I quibble with that definition still. Something
| like the US sailing up to Japan and forcing them to trade
| at gunpoint would still be extortion but refusing to let
| you into their borders unless you comply with certain
| criteria is not.
|
| I noticed this sort of illogical argument that preventing
| access to a market was aggression with the GDPR drama as
| well. Americans(I say as one) seem to be completely
| incapable of handling when other countries use access to
| their markets in negotiations despite the US using that
| lever constantly.
| 1123581321 wrote:
| Certainly--I'd say it comes down to the necessity of
| access to the market in question, for the company or
| country outside of it. It quickly becomes subjective,
| hence the blindness to one's own demands.
| lovich wrote:
| It's literally not subjective. It's their own land and
| country. The only way you can treat removing access to it
| as extortion or blackmail is if you feel you have a
| legitimate claim to it in which case you are by
| definition not recognizing their sovereignty.
|
| That's a position you can(and many countries have) take,
| but it's an oxymoron to recognize a countries sovereignty
| and also expect a claim to their sovereign lands
| 1123581321 wrote:
| Right, I started the thread by saying that. I tried to
| neutrally describe the double standard citizens of some
| countries have.
|
| If you mean we should expect everyone to forgo holding
| opinions that benefit them selfishly: perhaps, but any
| success wouldn't last past the next perceived opportunity
| or threat.
| lovich wrote:
| Reading through my previous reply I think I came off as
| accusatory when I said "you". I meant that as in a
| general royal you type sense, not you in particular. I do
| understand you are trying to describe their double
| standard.
|
| I guess my point is that we don't have to mangle the
| language and redefine words just because they have a
| double standard. They can call it blackmail and extortion
| all they want but it's not something we should go along
| with
| 1123581321 wrote:
| Gotcha. I shouldn't have responded defensively either. I
| share the desire for accurate language.
| goodpoint wrote:
| > just meant to say extortion
|
| "just"?
| [deleted]
| goodpoint wrote:
| It's not blackmail nor extortion at all.
|
| These are 136 countries finding in agreement, not one country
| imposing its willpower on the rest of the world using threats
| of force.
| keewee7 wrote:
| >Four countries that participated in the talks -- Kenya, Nigeria,
| Pakistan and Sri Lanka -- have not yet joined the agreement.
|
| Why not?
| lbriner wrote:
| I can only guess that they either have or might want to have in
| the future, some foreign companies come and base their
| businesses there to generate some much welcome money and jobs
| into the national economies.
|
| They might also be suspicious of the motivations of the West.
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