[HN Gopher] EU adopts global minimum 15% tax on big business
___________________________________________________________________
EU adopts global minimum 15% tax on big business
Author : nixcraft
Score : 185 points
Date : 2022-12-16 18:39 UTC (4 hours ago)
(HTM) web link (www.bbc.com)
(TXT) w3m dump (www.bbc.com)
| zerr wrote:
| Why businesses are taxed so low but individuals/employees so high
| in EU (35%-65% income tax)?
| dantheman wrote:
| Ideally both should not be taxed.
| tmtvl wrote:
| Then where do we get the money to pay for things like the
| justice system, law enforcement, national infrastructure,
| unemployment benefits, healthcare, pensions, customs,
| diplomats,...? Switch to a system where the government owns
| everything and gives people what they need if they work
| properly?
| mywittyname wrote:
| Inflationary/deficit spending.
|
| The MMT argument for taxation is that it's necessary to
| encourage demand for a currency, thus making it more
| valuable. But there's no fundamental reason that a
| government which _controls its own currency_ must collect
| taxes to pay for various services.
|
| Congress could pay state and local governments directly
| each year.
|
| If you're willing to throw away some property rights, then
| state and local governments could theoretically lease land
| as a means of raising revenue without direct taxation.
| (this is a terrible idea)
| ClumsyPilot wrote:
| > If you're willing to throw away some property rights,
| then state and local governments could theoretically
| lease land as a means of raising revenue without direct
| taxation. (this is a terrible idea)
|
| Why is it a terrible idea?
| cjbgkagh wrote:
| My favorite MMT detail is the currency lock up accounts
| to reduce inflation. Basically they prevent people from
| spending money until inflation decreases. They claim it's
| not confiscatory as people will get their money back
| eventually and not taxation because it's the same amount
| of money. Despite their claims it is indeed both of those
| things as the real value of the money has decreased.
| rogers18445 wrote:
| Predictable large inflation each year with no taxes may
| make theoretical sense in some models. But it seems like
| it would not be compatible with human psychology.
| HEmanZ wrote:
| I think OP means that there should be one or the other, not
| both. Just increase the rate of one if you need more money
| instead of inventing a new one to double-tax the same
| income stream
| [deleted]
| djbebs wrote:
| Because businesses are owned by people who in turn are taxed.
|
| In effect any corporation tax is a double tax.
| zuminator wrote:
| That's how taxes work generally though. I already paid income
| taxes on my salary, but when I spend it on something I have
| to pay taxes again, and then the retailer has to count it as
| taxable income as well. Anytime money changes hands the
| government gets its vig. I don't see how the corporate tax is
| so egregiously different.
| diego_sandoval wrote:
| > Anytime money changes hands the government gets its vig.
|
| And doesn't that create an artificial pressure for money to
| change hands fewer times (for example, in the production of
| a consumer good)?
| mywittyname wrote:
| > In effect any corporation tax is a double tax.
|
| There are a whole host of corporate entities which allow for
| pass-through taxation: LLC, S-Corp, sole proprietorships, and
| the like. I'd be surprised if European countries didn't have
| similar mechanisms.
| josefx wrote:
| Double the tax for double the legally distinct entities.
| poszlem wrote:
| > "Today the European Union has taken a crucial step towards tax
| fairness and social justice," EU economy commissioner Paolo
| Gentiloni said.
|
| There is a saying in Poland: "The difference between <<justice>>
| and <<social justice>> is the same as the difference between <<a
| chair>> and <<an electric chair>>.
|
| I wish we would actually listen to the those countries, when it
| comes to topics like socialism and communism. Though I suspect
| the Western European countries need to taste that themselves
| first to be able to understand what that means.
| rsj_hn wrote:
| I wouldn't call a 15% tax on corporations "communism". The
| actual policy objective is reasonable even if many can argue
| both sides with rational debate.
|
| The main problem is this idea that a bunch of people on the
| liberal side of the Western world can create "global goals" and
| try to strong arm the rest of the world into following, which
| then leads to the inevitable outrage and disappointment when
| the rest of the world does not follow. And yet it never seems
| to happen in the other direction -- e.g. Africa deciding on
| global rules and then trying to force Europe to follow them,
| assuming they have a right to set global goals. The global
| goals only flow in one direction.
|
| The idea that corporate tax policy is something that countries
| outside of the EU have actually thought of, and are doing their
| best to address in their own way, and for their own purpose, is
| something that never occurs to these self-described "global
| planners" who are in reality deeply provincial and trapped in
| their own micro-culture.
|
| It is also something that people on the other side of this
| debate _have_ thought of, which is one of the reasons not to
| tax corporations at all, but to tax those who receive the
| profits of corporations and that are domiciled in a particular
| tax jurisdiction. There is a lot of self-contradictory results
| when you try to tax the business separately from the owner of
| the business -- for example, a corporation can deduct interest
| payments but not dividend or share repurchases, when all three
| are basically the same thing, and a corporation has the option
| of doing all three. So this incentivizes corporations to take
| on debt, which then promotes financial fragility. Lots of
| distortions happen in a vain fight against "tax loopholes",
| when the real problem is that you are trying to tax the company
| separately from the owners.
|
| So then you say, "I agree that trying to define 'profits' is
| prone to tax loopholes, so I will tax corporate _revenue_ ".
| Good idea! But then you will penalize business that have high
| expenses, e.g. a retail store that buys an item and sells it
| for a 20% markup would be driven out of business by a 15% tax
| on sales. So you say, "I will tax revenue net of input prices".
| And all of a sudden you have a value added tax, which is a form
| of sales tax, which is regressive. And then people complain
| about that regressivity and say "we should be taxing income
| instead", which was my original point!
|
| So you keep chasing your tail because you are making decisions
| without really thinking things through, much like the decision
| for the EU to cavalierly set "global goals" even as it's
| relative importance is rapidly shrinking, even as Asia is
| pretty much ignoring all these goals because they are following
| their own interests and don't care about EU global goals.
| poszlem wrote:
| It being a "global goal" is exactly what I don't like. I
| don't especially care if a country wants to tax their
| citizens whatever high. My problem is only when we reach a
| state of a "global government" deciding what's best for
| specific countries.
| rsj_hn wrote:
| There is really not much to look forward to in Europe
| besides trying to police others.
| cjbgkagh wrote:
| The continent already feels like it's trying to tax
| itself to death. I don't know how Europeans survive, and
| this was before the energy crisis. I do worry European
| wealth will start to evaporate and we'll see the kind of
| social strife that occurs when the pension funds run out
| and people who were promised dignity into old age find
| out they're not going to get it.
| rr888 wrote:
| I used to think this until I moved to the USA. Property
| taxes here are insane. Add state tax, NYC city tax,
| Social Security etc the marginal taxes are well over 60%
| of income. And you still have to pay for your own
| healthcare after that.
| cjbgkagh wrote:
| They're not mutually exclusive, both can be true.
| consumer451 wrote:
| I am sitting in Poland, grew up under the thumb of the Soviets,
| but I don't see the connection to a global minimum tax.
|
| Are you saying it's like communism?
| dadjoker wrote:
| IMO yes. As I see it, this is countries with high taxes being
| jealous of countries with lower taxes, and so instead of
| maybe lowering taxes to become more competitive, they - along
| with the bloated EU leadership - bully the countries with a
| logically lower tax into raising theirs, so the bullies feel
| better about themselves and don't lose "their" tax money.
|
| This is the inherent problem of the EU, from both a social
| and economic standpoint; the member countries lose their
| competitive advantages over other countries because the
| socialistic EU bureaucrats can't handle any one country a)
| having any type of competitive advantage over another and b)
| not conforming to what they want.
| realityking wrote:
| In the past, before the EU single market and widespread
| free trade agreements, a country would simply raise a
| customs duty when another country would overly subsidize an
| industry. Or they would raise the customs duty merely to
| protect their domestic industry. Or because they don't like
| that country for some other reason.
|
| A large purpose of the EU is to remove those trade barriers
| to make the economy more efficient. Of course some
| countries figure out how to take advantage of the single
| market using regulatory arbitrage, quickly entering a race
| to the bottom. Thus the EU is becoming the regulator in a
| lot of (non-tax) areas to prevent this. This is just the
| next logical step in this regard.
|
| It's worth noting that any EU rules on taxation are decided
| with unanimous consensus. No country here has to do
| anything against their will.
| tstrimple wrote:
| The word communist has lost absolutely all meaning today.
| Biden is communist. Taxes are communist. Wanting universal
| healthcare is communist. None have anything at all to do with
| a classless society without private ownership of property.
| manmal wrote:
| What are you criticizing, the wording or the fact that big
| corps are being taxed?
| poszlem wrote:
| A bit of both. I don't mind corps being taxed if that's what
| a country wants to do. I do have a problem with making this a
| "global government mandated" thing though. And as I mentioned
| in other comments, I despise the revival of the communist
| vocabulary ("reactionary", "bourgeois", "social justice",
| "equity").
| jameshart wrote:
| Survivors of an abusive relationship might struggle with
| the fact that their partner told them that they 'loved'
| them, and yet that supposed love took the form of cruelty
| and abuse.
|
| They might struggle to trust anybody else who talks about
| 'love'.
|
| But that doesn't mean that other people who use the word
| 'love' are secret abusers.
| poszlem wrote:
| That is true, but there are certain "red flags" that you
| will hear from most abusers. In the case of governments
| one of those is "we do it for social justice [not normal
| justice]".
| orangebeet wrote:
| You're absolutely right. When we are all fully fledged EU-
| colonies and the non-democratically elected Urzula has bought
| out all corrupt politicians to the benefit of Germany, "we"
| will understand what it means.
| vkou wrote:
| If we're going to listen to reactionary wisdom of folk sayings,
| I've got a long, long list of ones that will provide us with
| all sorts of simple-to-grok, contradictory, and utterly
| pointless advice for how to steer our politics.
|
| And this particular one works just fine if you reverse the
| adjectives. After all, the justice system is generally the one
| responsible for executing people. It does tend to apply itself
| in a rather... Unjust way - but that's just one of life's
| little ironies.
|
| If you're asking people to listen, you're going to need to
| actually express your arguments, instead of vaguely
| gesticulating in the general direction of a 'Four legs good,
| two legs better' poster.
| poszlem wrote:
| It's kind on interesting that the word "reactionary" is also
| really disliked in Poland too (alongside with the likes of
| "comrade"). Both of those (plus "social justice") have been
| used to silence and oppress there. It's really disheartening
| to see that kind of vocabulary coming back to fashion in
| English.
| vkou wrote:
| Reactionary has never left the lexicon, and is a perfect
| term for describing the bones of most modern conservative
| movements. It may become less relevant when the latter stop
| behaving in that manner, but you can't blame me for calling
| a spade a spade.
|
| When they start talking about things like Laffer curves
| again, and stop trying to turn the clock back on things
| like marriage and contraception, then it will stop being an
| appropriate moniker.
| baal80spam wrote:
| Another one is "collaboration". As someone working in IT, I
| had a hard time getting used to it meaning "work with your
| peers toward the common goal". In Poland it has a
| completely different (negative) meaning.
| woodruffw wrote:
| The difference between a sandwich and a peanut butter sandwich
| is the difference between a chair and an electric chair, too! I
| look forward to more sage wisdom.
| poszlem wrote:
| The only difference is, I suppose, the fact that one comes
| from a people that got very close to experiencing the "social
| justice paradise" and the other is just a made up phrase by
| an internet troll. Otherwise, they are practically
| indistinguable.
| jameshart wrote:
| Do you believe that when Paolo Gentiloni is using the words
| 'social justice', to describe a goal he is evidently in
| favor of accomplishing via the EU, he is saying he intends
| to adopt the economic and social policies of communist
| Poland?
|
| Because I think that is a fairly uncharitable reading of
| what he likely intends.
| poszlem wrote:
| I don't even think the communist government of Poland
| wanted to adopt those policies. The problem with "social
| justice" is not the intention behind it but the actual
| implementation and what it requires. For example, here we
| don't go from country to country asking their citizens if
| they agree with the tax rate, instead we create an
| unelected global body that decides what the rest of the
| world is going to do (in this example raise taxes).
| woodruffw wrote:
| I'm not a troll. And I don't think most people, including
| the majority of strident believers in social justice, would
| consider the 20th century Soviet Bloc to be a paradise.
| LawTalkingGuy wrote:
| Perhaps the more ideological wouldn't enjoy the Soviet
| union but they approve of and use their methods.
|
| The current focus on purity of thought is remarkably like
| the communist struggle sessions, how they tortured people
| to correct their thinking not just to achieve a
| confession, how there was always room for more ideology
| and more purges as the party continually turned on its
| heroes.
|
| Here's an example. At ~25s the officer talks about people
| who want to help (lower-case social justice) being faded
| out by people who know nothing of the situation and are
| just using it for political clout. He's black and trying
| to discuss the protests with black protestors and they're
| being interrupted by white protest leaders (upper-case
| social justice) who need to stoke conflict to remain in
| power.
|
| https://www.youtube.com/watch?v=hm2aFTTuLek
| martinald wrote:
| This isn't really as big a deal as it's been made out to be, IMO.
|
| This is Pillar 2 of the OECDs tax reform for corporations.
|
| Pillar 1 is much more interesting, and would require corporations
| to actually book profits where they are made (so not putting
| everything through Ireland for example). This will have a much
| bigger impact imo than this 15% ruling, because right now there
| are a bunch of tricks you can use to get round any tax rate.
|
| For example, even though Ireland's headline tax rate is currently
| 12.5%, the effective rate after all the tricks for many US tech
| cos was <1% to the Irish state.
| cwkoss wrote:
| Is this a tax on profits? If so, I worry it will remain weak to
| hollywood-accounting attacks: it's easy to spend money until
| there are no 'profits'.
|
| I'd really love to see progressive taxation of corporate
| revenue: the bigger a company is the higher the tax rate. Huge
| corporations benefit from economies of scale, so there is an
| incentive for power concentration. This power concentration is
| bad for society: it delivers increasing wealth disparity and
| allows businesses to grow "too big to fail" leading to
| corruption.
| red_trumpet wrote:
| > it's easy to spend money until there are no 'profits'.
|
| If they have to spend the money in the same country as they
| gained the profits, that might work as intended.
| treewalking wrote:
| It's weird that individuals are taxed on revenue but
| corporations are (usually?) taxed on profit.
| Diggsey wrote:
| Not really. If you imagine a supply chain with raw
| materials at one end and finished products at the other, if
| every step along the chain is taxed even a small amount on
| their total revenue, the cumulative effect would completely
| dwarf the value of the final product.
|
| To solve this, in most countries, companies are taxed VAT
| instead, so intead of taxing the total value of product at
| every step, you are only taxing the value the company
| _adds_ in the process.
|
| Effectively the government is taxing the total value of the
| product at a fixed rate _once_ but that tax is being split
| among the companies which helped supply that product
| proportionally to the value added by each company.
| hollerith wrote:
| How would you define how much profit an individual made
| last year?
| ErikVandeWater wrote:
| Income minus basic living expenses would be one way.
| anonuser123456 wrote:
| Individuals (in the US) have standard deduction, which
| approximates the minimum value to sustain one's person.
| It's a bad approximation, but it is what it is.
|
| It's assumed that corporations spend as little as possible
| on operations. Individuals obviously don't. Whereas a
| corporation wouldn't rent employees 500 sqft / person,
| individuals regularly rent/purchase that density for
| themselves. Similarly, while a corporation might buy a
| Camry and run in into the ground, some individuals will buy
| a new BMW every 3 years.
|
| Corporations also don't have a motive to exist beyond
| profits. If you tax revenue and make profits untenable,
| then corporations simply will not exist. Individuals on the
| other hand try not to die.
| Nextgrid wrote:
| Out of curiosity, how do you define where profits are made when
| it comes to selling digital services? There is no physical
| movement of goods. Do you determine it based on where the
| software was originally written?
| zeruch wrote:
| Depends. If it's services, I could see where the services are
| delivered from (e.g. location of platform or service
| personnel), OR where the services are destined for (client
| location) and commit the rev-rec there.
| smachiz wrote:
| Generally, for tax purposes, it's the address of the customer
| for cloud services. If they give you a NL address, you tax
| according to Dutch law. If they give you a DE address, you
| tax according to German laws, regardless of where services
| are actually provisioned.
|
| It would not be that difficult to pay EU taxes based on % of
| revenue attributed to each country. I.e. if you made $1B, and
| 70% of your revenue came from The Netherlands, and 30% came
| from Germany, you'd pay Dutch taxes on $700M and German taxes
| on $300M.
| sokoloff wrote:
| Or licensing deals. If I license a processor and put it in my
| product that's designed in the US, using an ARM core licensed
| from the UK, manufactured in China, sold to a distributor in
| Switzerland, and sold to an end user in Australia.
|
| Where were the profits from that device made? Surely not
| entirely in Australia (or any of the other single
| jurisdictions), as actual value was added in several
| different locations.
| mox1 wrote:
| billing zip code seems to be the standard in the united
| states.
| alkonaut wrote:
| If I was trying to invent some "fair taxation scheme" I'd tax
| the profit based on the revenue in that country.
|
| So if a company had $100B global revenue and $10B global
| profit and 0% of the profit was in France while 10% of the
| revenue was in France, then the company should be taxed based
| on the $1B profit that can be attributed to France based on
| revenue there.
|
| Any other scheme seems it's prone to creative licensing
| schemes and similar.
| cscurmudgeon wrote:
| > If I was trying to invent some "fair taxation scheme" I'd
| tax the profit based on the revenue in that country.
|
| Why is that fair? In your example, if UK provided 100% of
| the labor shouldn't UK get 100% of the tax to support
| social programs for that 100% labor?
|
| Labor seems a better way to distribute and incentivize
| employment.
| breakfastduck wrote:
| Not really because its extremely exploitable. Revenue is
| not - it DOES come from someone somewhere - its
| traceable.
|
| Work effort could be distorted in whatever fashion the
| country wants. They could declare all their work is done
| in some off shore 0% tax nation and pay nothing.
| bilbo0s wrote:
| This seems to just scream "outsource to low or no tax
| developing nation".
| yardstick wrote:
| > if UK provided 100% of the labor shouldn't UK get 100%
| of the tax to support social programs for that 100%
| labor?
|
| The UK gets 100% already from the income tax for their
| workers.
| alkonaut wrote:
| It's "fair" only in that it's understandable and somewhat
| enforcacble (and not possible to avoid with loopholes).
|
| It's not fair in the sense that the right countries
| necessarily get the tax money - but it's certainly more
| likely than it is today.
|
| It's not fair in that it guarantees businesses aren't
| taxed too much or too little, but it does guarantee that
| the profits are taxed _somewhere_ which ends the
| incentive to shift the profits around.
|
| Perhaps "fair" is the wrong word. I mean "fair" as in
| hard to evade overall, not fair distribution.
| jpollock wrote:
| That would have different tax results depending on whether
| or not it was operating under a reseller model, where the
| reseller is the one importing the item.
|
| Then there is little or no revenue local to France.
| abeppu wrote:
| Maybe this is obvious to people that do accounting for
| multinationals, but it's not clear to me how you even
| establish that 10% of the revenue was in France.
|
| If a global company like Google pays a global company like
| Apple $K billion to be the default search engine on
| iphones, should Apple consider that revenue to be all in
| the US because Google is headquartered in the US even
| though it's purchasing something that will apply to people
| in lots of countries? Does it matter if Google uses local
| corporations in a number of companies to each pay Apple? If
| Google pays through its subsidiary in the jurisdiction with
| the highest corporate taxes, can it force Apple to realize
| revenue there?
| sfe22 wrote:
| What if France has complex rules and extra regulations that
| bring the profit from the country to just 1 percent,
| compared to ~10% on global operations. With your logic you
| will tax the subsidiary way more than 100%.
| causality0 wrote:
| If you're trying to do fair taxation do away with "profit"
| taxes entirely. Not like any of us plebs get to dodge taxes
| by spending our income. Subtract what the company spends on
| salaries from its total revenue and then charge them 20-30
| percent of the remainder just like the rest of us pay.
| "Corporations are people" after all. Toss in a seven
| percent sales tax on all stock purchases.
| diggernet wrote:
| That would instantly bankrupt every single company in the
| many industries with single-digit profit margins.
| exceptione wrote:
| True. Proposal of parent could be made more realistic by
| making sure only few things like bill of materials,
| resale items and personnel costs can be deducted.
| Companies already keep track of all these things.
|
| You will have to go after financialization tricks, where
| healthy companies get loaded with debt, weird tricks with
| assets and all the stuff the finance industry comes up
| with that has nothing to do with core function of the
| company. Now imagine the powerful lobby you have to work
| against.
| diggernet wrote:
| Yup, gets pretty complicated. Seems like it'd be easier
| to forget about corporate tax, and charge income tax on
| every dollar going from the company to an individual.
| pclmulqdq wrote:
| I would personally be in favor of a ~5% flat tax on
| corporate revenue across the board if it meant replacing
| the convoluted profit-based tax schemes that currently
| exist. The costs of compliance and "tax minimization" are
| already a couple percent of revenue for many companies,
| so replacing that cost seems very reasonable.
| brnt wrote:
| For VAT this is already defined (in the EU): wherever the
| purchaser is when they get their goods handed to them. If I
| drive over the border to Germany, I pay German taxes. If I
| buy online and have it shipped to the Netherlands, I pay
| Dutch taxes.
|
| A digital good is handed to me wherever I am when I purchase
| it, so I pay taxes in that jurisdiction.
| ratg13 wrote:
| If you sell concert tickets, would this mean that you need
| to book the profits in the respective countries of anyone
| anywhere in the world?
| Xylakant wrote:
| In case of services it's in the country where the service
| is provided - thus in the location of the concert. Now,
| online streaming again is provided is provided in the
| location of the viewer, that's a bit of a mess (used to
| be involved in running conferences, same thing there)
| moonchrome wrote:
| That's not a good analogy - VAT is simply added to base
| price at the time of purchase. Profits are entirely
| different - how would you account expenses for example. Not
| to mention various tax benefits that differ from country to
| county.
| kace91 wrote:
| Surely if, say, netflix is offered to french costumers profit
| is made in france?
| toast0 wrote:
| Why should the profit be made in france if the engineering
| that went into delivery was made in the US, the content was
| made in X, the deal for the content was negotiated in Y,
| network source is Z (probably france, but not necessarily)
|
| VAT in France on the subscription makes sense, but figuring
| out where the profit lies, is more nebulous.
| badrabbit wrote:
| Because that is where the sale happened. You buy a lot of
| stuff that was made in China but pay tax in your country
| right? Not only was the sale in france, the goods that
| the customer pay for (video content) are delivered too
| france like normal goods and watched/consumed in france.
| Ygor wrote:
| No, you pay VAT/sales tax for stuff made in China. The
| company pays taxes on profits where the company is
| registered. When you pay for Netflix in France, you pay
| VAT on the transaction too.
| ClumsyPilot wrote:
| Is that why iPhone is design in US, Built in china but
| the taxes are paid in bermuda? Totally legitimate?
| Ygor wrote:
| I'm not arguing that the setup is legitimate. I'm
| pointing out that the above analogy is confusing
| different tax types. The sales tax is not in question
| here. I'm all for revisiting how profits are taxed based
| on where they are made, but sales taxes/VAT is already
| collected correctly for both iphone and netflix.
| mpweiher wrote:
| > engineering that went into delivery was made in the US
|
| That's a cost, not profit.
|
| > the content was made in X
|
| Cost, not profit.
|
| > the deal for the content was negotiated in Y
|
| Negotiating the deal also sounds like a cost to me.
|
| > network source is Z
|
| Cost.
|
| The profit is made where you get money, not where you
| spend it.
| toast0 wrote:
| If you paid an external company to make all those things
| for you, they'd have profit in all those places, but if
| you do it in house, the profit just moves to the point of
| sale?
|
| Why not replace income tax with VAT/sales tax if sales is
| the basis of taxation anyway?
| abraae wrote:
| True in theory (and much more so for physical goods) but
| in practice for services like Netflix, Google and
| Facebook, from the EU's point of view, who cares.
|
| Giant tech company, pay your 15% based on local
| advertising revenue from local customers. We all know
| you'll still be making huge profits regardless of your
| costs. Your whole business is built on fixed costs and
| infinite scaling of revenue.
|
| If you really can't afford to pay 15% then leave the
| market, someone will certainly take your place.
| redm wrote:
| It's where the profits are, not where the cost centers
| are. If the customers are in France, the profits are in
| France.
| dantheman wrote:
| Are you confusing profit with revenue? The revenue is in
| France - easy. Profit is revenue - cost, which costs do
| you factor in?
| mywittyname wrote:
| At some point, I think governments are going to need to
| break down and start taxing revenue instead of profits.
|
| A 3% tax on total revenue is the same as a 15% tax on the
| profits of a product with 20% profit margins.
| jandrewrogers wrote:
| Taxing revenue has turned out to be a terrible idea every
| time it has been tried. It creates perverse incentives
| that encourage companies to be inefficient and wasteful.
|
| One of the biggest policy problems with revenue taxes is
| that the effective tax rate is much higher on smaller
| companies than larger companies. A large vertically
| integrated company like Apple would pay a lower effective
| tax rate on an iPhone than any of their competitors,
| giving them a natural advantage. These are pretty dis-
| economic policy outcomes and the main reason no one
| seriously considers revenue taxes.
| im3w1l wrote:
| What about only taxing B2C revenue? Then the degree of
| vertical integration wouldn't matter.
| r00fus wrote:
| Quite the opposite. You can't fake revenue nearly as much
| as you can fake profits. Examples are legion - look at
| any company in the US that pays 0% (or negative)
| corporate tax rate.
| jandrewrogers wrote:
| You are not understanding the issue. Revenue can be
| trivially made to disappear, and this is what actually
| happens when governments tax revenue.
|
| Revenue is recognized as the size of a sales transaction.
| The number of sales transactions required to build and
| sell a given product can vary enormously based on the
| structure of the business, usually as a product of
| optimizing for efficiency and specialization. When you
| tax revenue, businesses have a large incentive to
| restructure their business to optimize for _minimizing
| the number of sales transactions_ in the course of
| building the product, because revenue taxes essentially
| compound as a function of the number of transactions
| which is then a cost of business. The compounding is why
| revenue taxes are so low, usually around 1%. Being tax
| efficient lowers your costs more than being business
| efficient, leading to bloated and non-competitive
| companies.
|
| I've operated a business under one of the few revenue tax
| regimes. The perverse incentives to verticalize the
| business structure are very real. Revenue taxes add up
| quickly.
| rr888 wrote:
| Its one of the reasons Value Added taxes are popular
| everywhere. (except USA)
| nickff wrote:
| This would benefit large and established companies with
| stable margins, while penalizing smaller businesses and
| startups. I don't think this is the intended result.
|
| It also discourages long-term investments, and further
| rewards short-termism (which everyone seems to dislike).
| ClumsyPilot wrote:
| you can apply a rule only to companies with over 10
| billion in revenue
| mpweiher wrote:
| > Are you confusing profit with revenue?
|
| Don't think so.
|
| Profit only happens when there is revenue.
|
| Cost is a _negative_ influence on profit, revenue is the
| positive influence.
|
| If you have zero cost, you still have profit (provided
| you have non-zero revenue).
|
| If you have zero revenue, you don't have profit.
|
| So it is obvious that the profit is where the revenue is,
| even though revenue [?] profit.
| toast0 wrote:
| If I make a physical good in the US and ship it to a
| buyer in France who pays above my costs, I don't owe
| France any income tax.
|
| If I have a warehouse in France, some of the profit was
| in France and some was where it was made in the US. Same
| thing here where there's lots of small pieces done
| wherever.
| bee_rider wrote:
| What if Netflix France has to license their content and
| platform from Netflix US, the the license costs are
| coincidentally exactly the same as the revenue made in
| France? Then there will be no profits in France.
| olivierduval wrote:
| Actually that's what Coca cola has been doing for
| years... and it's quite pissing up every european gov
| Marsymars wrote:
| Apply business purpose test to license cost calculations.
| ClumsyPilot wrote:
| thats exactly the kind of accounting trick they are trick
| to get rid off.
|
| The fact that it matches the revenue exactly shows that
| its not a real lisencing deal
| Jochim wrote:
| Take the ratio of global revenue against national revenue
| and apply it to global expenses. Allow some leeway around
| any particularly unique national expenses and you've
| immediately put an end to the bullshit games these
| sociopaths play.
|
| I strongly support immediately jailing anyone found to be
| playing these licensing games. They're parasites who have
| no place in society until they've shown reform.
| msh wrote:
| You could argue that the profit is made where the money
| is made.
| wernercd wrote:
| If you offer a service in France, charge $10 and pay %15
| on that $10... then when that money makes it into the US
| and Netflix has to decide what the profit is (after
| server fees, electricity, content fees, paying off
| politicians, etc)?
|
| Not sure but I'm seeing 2 different conversations here:
| flat tax on what you pay at the pump... and what the
| company reports as profit at the end of the day.
|
| France doesn't care if you make a profit or not on the
| 8.50... just like Apple doens't care when they take 30%
| off the top.
|
| Am I reading it wrong? Is it 15% off the top ala Apple
| Store? or 15% off of profits? both of which are different
| conversations.
|
| Looking at the article, it seems like a nothing burger
| until it's voted in officially... The Paris Accord was
| "passed"... and then left because it was just a verbal
| agreement. What's enforcing this and stopping the next
| POTUS from leaving it all together?
| closewith wrote:
| You are thinking of VAT, which in France is normally 20%.
|
| That is not the tax that is being referred to here, which
| is Corporation Tax - the tax on corporate profits.
| colechristensen wrote:
| Digital services are taxed where the services are rendered.
| In other words, the location of the user.
| betaby wrote:
| VAT taxed in this case, sure. Those are taxes on consumers.
| Article is bout corporate profit taxes.
| colechristensen wrote:
| Likewise corporate tax should be in the jurisdiction
| where services are rendered. You sell something digitally
| in a market then you are locating yourself in that market
| and that's where you should pay tax on profit for goods
| sold there.
| tdhoot wrote:
| It's not that trivial to track down.
|
| Say a US company's French subsidiary sold something for
| $10 in France. If the software is developed in the US,
| then the US company will sell it to the French subsidiary
| for $9, so then they only have pay profits on $1 in
| France. Then in the US, they will say they paid $3 in
| costs and sold the software to their French counterpart
| for $9, booking $6 of profits in the US at a lower rate.
| [deleted]
| foepys wrote:
| The person buying is usually on planet earth and inside a
| country. This country is where the profit was made.
| tenebrisalietum wrote:
| Welcome to my factory on a boat and also my remote
| controlled factory on a satellite.
| techpression wrote:
| Meanwhile the Swedish government is giving massive incentives to
| Amazon, Google, Facebook and Microsoft to build data centers (and
| I assume other countries do too). Almost zero taxing on
| electricity and actual monetary payouts.
|
| In other words, this is a bit of a headline without any actual
| teeth (there's plenty of ways to compete unfairly), which is the
| problem when you start wanting to govern the world, you can't
| cover all the bases.
| alkonaut wrote:
| Such deals aren't politically viable right now, and past ones
| seem to be scrutinized too.
| [deleted]
| badpun wrote:
| In Poland, there's plenty of "special economic zones" and the
| companies which establish there are off the hook for corporate
| income taxes for the next 30 years (IIRC). Other EU countries
| probably also have similar things?
| mytailorisrich wrote:
| > _European leaders praised the decision, with Germany 's
| Chancellor Olaf Scholz describing it as a "project close to my
| heart". French President Emmanuel Macron said the country had
| been pushing the idea for more than four years._
|
| Of course countries with high taxes are all for raising taxes in
| countries where they are lower!
|
| Now, unfortunately the article does not mention the interesting
| bit, which is that EU countries with lower corporation tax will
| therefore have to raise their rates. I'm thinking especially
| about Hungary and with the current tense relations I'm surprised
| that they agreed... What is the deal?
| gumby wrote:
| They can use the EU as an excuse to raise taxes without taking
| the blame. Most people have no idea how the EU works and don't
| realize that that rule would not have been put in place unless
| their own government had supported it. That's what unanimity
| means.
|
| Also at the end of the day most EU laws are aquiescence rules:
| if you have a specification for cucumbers it must be like this.
| But if you don't have such a spec (and producers in other
| countries aren't prevented from doing business with you) then
| you don't need to put the rule into place. After all, every EU
| "law" is actually a description which has be be implemented in
| each country by its legislature.
| sequence7 wrote:
| Hungary desperately needs EU funds and it would have lost
| several billion euros is it had blocked this.
| jacooper wrote:
| More money for the government, why would they refuse ?
| rnk wrote:
| At a certain point, where you have such different views in
| countries like Hungary (Hungary wants to placate Russia or
| something similar leading to not helping Ukraine, wants to
| block Finland and Sweden from Nato, wants to
| disable/reduce/destroy democracy in Hungary, wants all that
| stimulus money from the EU to keep coming in), we just have
| to say we'll go our way, you go yours. Unity required for so
| many decisions means the extreme minority of 1 can extract
| too much. Similar thing for Turkey and Nato.
|
| Either that, or the groups (EU, NATO) will have to change
| their rules to allow a few no votes on things, or they'll
| just become broken orgs. I'm sure Russia would offer almost
| anything to the wanna-be dictators in Turkey and Hungary to
| get them to vote no on these things. These "complete
| agreement" democratic groups don't work when some leaders are
| dictators.
| jiveturkey wrote:
| It severely reduces their ability to attract future business,
| as well as the likelihood that companies will _continue_ to
| remain headquartered there. If you go there for tax benefits
| and those tax benefits go away, how likely are you to
| continue to bother with such complex structures?
| anm89 wrote:
| This is empirically not always true. Higher taxes can lead to
| lower tax revenues if it reduces the size of the pie when
| business go to tax friendly jurisdictions.
|
| This can also work with income taxes. For example if you set
| income tax at 100%, you'd get 0 revenue probably because no
| one would work. This effect happens at values below 100%
| skt5 wrote:
| This is what economists call the Laffer curve. See
| https://en.wikipedia.org/wiki/Laffer_curve.
| mytailorisrich wrote:
| Why do countries have lower tax rates to start with?
|
| For many small/remote countries, lower corporation tax is a
| way to attract companies that would never have come if the
| tax rate was higher.
| manmal wrote:
| Looking at you, Ireland.
| secondcoming wrote:
| Ireland did the right thing. The 1980's and 1990's were
| bleak times.
| lechacker wrote:
| And the 2020s and 2030s are going to be even bleaker,
| now.
| poisonborz wrote:
| Your wondering is justified, and (like almost every other EU
| issue nowadays) Hungary was a holdout opposer, and used the
| vote to blackmail in other areas. They struck a deal in a
| "package" that includes Ukrain aid as well, in return they got
| some of the EU funds that was held back because of corruption.
| What a great happy Union this is.
|
| https://www.politico.eu/article/eu-deal-hungary-drop-vetoe-r...
| TacticalCoder wrote:
| > What a great happy Union this is.
|
| Also the EU repeatedly called out Hungary for corruption but
| now Hungary is having its moment pointing that several member
| of the european parliaments have been caught in a very
| serious corruption scandal (and these are only those who got
| caught).
|
| What a great happy honorable Union full of integrity we enjoy
| too.
| mytailorisrich wrote:
| Ah, thanks for those details and that link.
| agilob wrote:
| Didn't know about Hungary. All I was thinking was how EU had to
| force Apple and Ireland to pay taxes in Ireland, because...
| Ireland didn't want some free billions
| https://www.theguardian.com/business/2016/aug/30/apple-pay-b...
| secondcoming wrote:
| Ireland would prefer the jobs to the taxes. A country has to
| tune itself to keep people employed. Every country is
| different and small countries would be ruined by tax
| harmonisation. France et al give zero shits about Ireland, it
| wants the jobs Ireland has.
| Aulig wrote:
| Did I miss it in the article or was there no mention of where the
| cutoff is for "big" businesses? Or does it apply to all
| businesses?
| mhaberl wrote:
| The threshold is set to 750 million euros.
|
| Here are the details: https://read.oecd-
| ilibrary.org/taxation/tax-incentives-and-t...
| oliv__ wrote:
| _" The US has not taken steps to adopt the rules so far, despite
| Ms Yellen's championship of the plan."_
|
| Lol, obviously. Cheering them on as they shoot themselves in the
| foot
| Lionga wrote:
| US LLCs are pass trough entities and the solution of choice for
| digital nomads to completely avoid paying any taxes. US is
| still the best tax avoidance haven for most people. EU does not
| care about good laws they care about good headlines for the
| news not matter how shitty the things they do are.
| manmal wrote:
| > EU does not care about good laws they care about good
| headlines for the news not matter how shitty the things they
| do are
|
| What political system could not be accused of this? Heck my
| small town is like that.
| kazen44 wrote:
| also, the EU has done some quite proper laws and
| directives.
|
| Schengen and the entire construct of the internal market
| being one of the main advantages.
| nszceta wrote:
| One does not simply avoid paying taxes with an LLC unless
| your gross income is minute, tax deductible expenses are
| huge, or your losses are huge. IT IS NOT SOME MAGICAL
| LOOPHOLE. It is hard enough to stay afloat as a business
| without misinformation like this being spread.
| nonameiguess wrote:
| I wish the BBC would elaborate on what they mean by this. The
| US passed a 15% corporate minimum tax in August.
| Jensson wrote:
| This isn't about getting all countries to put a 15% corporate
| tax, that will never happen. This is about increasing taxes
| on corporations even when they aren't headquartered there
| until their effective global tax becomes 15%, making it
| worthless for them to try to hide in tax havens.
| dantheman wrote:
| Hopefully the US will lower it in a few years.
| mahkeiro wrote:
| No because the law allow the EU country to tax the benefit made
| inside of their boundary if the company is not subject to the
| minimal 15% tax rate. So if the US don't want to tax at 15%, EU
| country will tax on their side.
| dahfizz wrote:
| Doesn't America already have a corporate tax rate well above
| 15%? What would we have to do to "adopt" these rules?
| Jensson wrote:
| Tax companies that are currently hiding profits in tax
| havens. The idea is basically that companies headquartering
| in tax havens will get taxed anyway, until they pay 15% total
| global tax on those profits. No single country can do this,
| but when almost all countries agree to do it then companies
| can no longer hide.
| dahfizz wrote:
| > Tax companies that are currently hiding profits in tax
| havens.
|
| > No single country can do this
|
| I don't understand. If America already has a >15% tax rate,
| then it already abides by these rules. America is not a tax
| haven.
| Jensson wrote:
| USA needs to tax companies that are headquartered in tax
| havens, to ensure that those companies can't enjoy less
| than 15% global taxes. I don't think that USA is doing
| that right now.
| splix wrote:
| If those companies are controller by a US person then
| they do tax them in US. See https://en.wikipedia.org/wiki
| /Controlled_foreign_corporation
| nszceta wrote:
| Please educate us how companies are hiding profits in tax
| havens. Asking for a friend.
| fragmede wrote:
| https://en.wikipedia.org/wiki/Ireland_as_a_tax_haven
| andsoitis wrote:
| One mechanism is via a _Double Irish with a Dutch
| Sandwich_ https://www.investopedia.com/terms/d/double-
| irish-with-a-dut...
|
| Another example is leveraging the secrecy provided by
| states such as South Dakota, Nevada, Delaware, etc. via
| anonymous shell companies: https://en.wikipedia.org/wiki/
| United_States_as_a_tax_haven
| jacooper wrote:
| America and the EU as usual
| hassanahmad wrote:
| Bigger tax for bigger business. Fair enough.
| cheald wrote:
| The US income tax was originally supposed to be a tax on just
| the richest, too.
|
| These things have a way of scope creeping.
| Nextgrid wrote:
| True, but for everyone except the richest, a tax that's
| originally targeting the rich that ends up scope-creeping to
| include the common man down the line is still better than a
| tax that targets the common man right from the beginning.
| zdragnar wrote:
| No, it just acclimates people to their government lying to
| them.
|
| When (or if) they protest new measures, they're gaslit as
| if their concerns are hyperbolic and that scope creep isn't
| a thing that happens.
|
| Fauci and others admitted to intentionally misleading
| people. In particular, I'm thinking of when they were
| trotting out the % of the population that would need to be
| vaccinated, which crept up from 60% to over 85, before they
| stopped talking numbers altogether.[0]
|
| Now, you've got people who were already predisposed to
| mistrust authority who will flat-out disbelieve anything
| that comes out of the CDC, even if the CDC told them the
| sky was blue.
|
| [0] https://www.medpagetoday.com/opinion/vinay-prasad/90445
| woodruffw wrote:
| I can't find any evidence of this: the earliest US income tax
| was levied for the Civil War, and amounted to a 3% tax on
| anybody making around $27,000 (in 2022 dollars). That's not a
| particularly "rich" cutoff.
|
| Edit: about $27,000[1].
|
| [1]:
| https://www.in2013dollars.com/us/inflation/1861?amount=800
| bombcar wrote:
| I think they're referring to the one that was enabled by
| the amendment.
| woodruffw wrote:
| Okay. In that case the cutoff was around $80,000 in
| today's money, which is certainly not poor (but not rich
| either).
| leereeves wrote:
| Top three percent is fairly rich.
|
| > The Revenue Act of 1913 ... established a one percent
| tax on income above $3,000 per year; the tax affected
| approximately three percent of the population.
|
| https://en.wikipedia.org/wiki/Revenue_Act_of_1913
| woodruffw wrote:
| Not in absolute terms: the fact that 97% of Americans in
| 1913 made less than $80,000 equivalent per year is more a
| testament to America (and broadly the world's)
| _staggering poverty_ relative to our current wealth.
|
| Put another way: you can't tax destitute people (at least
| not for long, and not without losing your head), but can
| absolutely can tax the average American household in
| 2021[1].
|
| [1]: https://www.census.gov/library/publications/2022/dem
| o/p60-27...
| bombcar wrote:
| Weren't substantial percentages of the US still on
| subsistence farming/bartering at the time? It's hard to
| income tax a society without much income.
| cjbgkagh wrote:
| The difference in the amount of tax has a big effect on
| post tax money. If it's 45% (city + state + federal +
| social security etc.) you'd have to make x * (1 - 45%) =
| $80K * (1 - 3%), solving for x gives $141K which is a big
| difference.
| mattrighetti wrote:
| Who decides what's _bigger_? Those taxes are going to make
| almost zero changes since customers and workers are going to
| pay for it, same ol ' story about the triangle company-worker-
| customer.
| Negitivefrags wrote:
| I don't really like this kind of idea because it really goes
| against a kind of fundemental freedom. "If you don't like it, you
| can leave".
|
| Instead, laws around making sure that the profits generated from
| a countries citizens are taxed by that country make more sense to
| me. A lot of laws around that already exist, and I suppose a lot
| of people would say that they have not been effective.
|
| A lot of it comes down to the treatment of Intelectual Property.
| A lot of the tax games that companies play relate to licencing
| their IP around between different countries. I wonder what would
| happen if a country tried banning licencing of IP between related
| parties internationally?
| chmod600 wrote:
| "I don't really like this kind of idea because it really goes
| against a kind of fundemental freedom. "If you don't like it,
| you can leave"."
|
| I'm not sure it's a fundamental freedom, but it is important.
|
| If a law exists over the whole world, there's no competition
| and no alternative to compare against.
| mrweasel wrote:
| > and I suppose a lot of people would say that they have not
| been effective.
|
| They really aren't. Q8, the gas stations, have been in Denmark
| for 30 year, if not more, they've apparently never been
| profitable, certainly not enough to pay taxes. The same goes
| for Coca Cola, which may have start to pay taxes.
|
| The only solution I've seen propose is a revenue tax. Similar
| to a VAT it would be added at the point of sale, making it
| impossible to avoid for companies. In return corporation would
| pay tax on profits. It has it own set of problem though.
| johnchristopher wrote:
| > I don't really like this kind of idea because it really goes
| against a kind of fundemental freedom. "If you don't like it,
| you can leave".
|
| That's not fundamental freedom, that's a variation on Hobson's
| choice.
| chmod600 wrote:
| I assume you refer to people who can't reasonably leave for
| whatever reason.
|
| But even if you can't leave, seeing the results of another
| country that does something a different way is a valuable
| comparison point that can drive a change of policy where you
| are.
| viraptor wrote:
| > profits generated from a countries citizens are taxed by that
| country
|
| What about people who migrate somewhere else? What about dual+
| citizenships? It makes little sense for me to pay taxes in a
| country I haven't lived in for 20 years.
| scarmig wrote:
| A reasonable modified goal would be "profits generated by a
| country's residents are taxed by that country."
| poszlem wrote:
| Yeah, I would not even mind a "no double citizenship" rule.
| 79a6ed87 wrote:
| Many countries don't allow for double citizenship, but
| sometimes they have to make exceptions because some
| countries don't allow you to renounce to your nationality
| ClumsyPilot wrote:
| You can't get rid of a greek citizenship,its impossible.
| I think thats how it should be.
|
| The games with revoking citizenship of Snowden, etc. ate
| absurd and should not be allowed. Even if the person is a
| criminal, he must server punishment defined in law. He is
| still 'your' American/greek/ whatever criminal
| viraptor wrote:
| That would be just shitty for kids. Your parents are from
| A and B, but live in C. A and B are hard to enter without
| citizenship and impossible to live/work in long term
| without it. If you limit multiple citizenships, you
| basically kick the child and limit their family access
| without any reason in that situation.
| poszlem wrote:
| I wholeheartedly agree with this, and I think the idea "If you
| don't like it, you can leave" is one of the most important, if
| not THE most important freedom a person should have. It's the
| reason why former communist countries took passports away from
| their citizens.
|
| It's the idea that we know what's best for you and you better
| adapt because there is no escaping. It's the fundamental idea
| of many social justice movements that require totalitarian
| methods to get what they want.
|
| This is why self-determination is such important concept,
| something that the global utopians can never really grasp.
| Jensson wrote:
| You can leave, but corporate profits can't leave, that is the
| idea. I don't see why corporate profits leaving the country
| they were generated in is necessary for freedom.
| [deleted]
| ClumsyPilot wrote:
| nokne us stopping anyone from leaving EU markets. This whole
| post is a hissy fit about wanting to have your cake and
| eating it too
| wyldfire wrote:
| > "If you don't like it, you can leave".
|
| s/leave/rent a new PO Box over here and change some DNS
| records/
| jacooper wrote:
| > The landmark deal between nearly 140 countries aims to stop
| governments racing to cut taxes in a bid to attract companies.
|
| > It was praised by US Treasury Secretary Janet Yellen as "an
| historic agreement which helps even the playing field".
|
| This is a global goal, not just an EU Law.
| lzauz wrote:
| jiveturkey wrote:
| ok but the story here is about the EU adoption of such.
|
| > The US has not taken steps to adopt the rules so far, despite
| Ms Yellen's championship of the plan.
| jacooper wrote:
| I know, but the title makes it seem like an EU campaign.
| jiveturkey wrote:
| I don't see how. 'global' is right in the headline.
| stilist wrote:
| I assumed it was a tax the EU applied to global business,
| not a globally-agreed tax the EU signed onto.
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