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The missing profits of nations

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Re: The missing profits of nations

#21

Post by mattmanser »

ThrustVectoring wrote: post #19
tcfunk wrote: post #18

Maybe this is a silly question, but why don't we just lower the corporate tax rate significantly (maybe 10 or 15%), and make the use of tax havens illegal? I'll bet 10% of $17bil is still quite a bit more than whatever Google paid in US taxes that same year. Is it because "making the use of tax havens illegal" is hard/impossible?

In the ideal world, corporate tax rates and taxes on investment income are zero . Google et al should be paying taxes on its earnings when it spends it on compensating employees, buying equipment for their offices, renting office space, etc.

Without any explanation of why this is ideal, this just comes across as a way of rewarding the rich 'land holders' and forcing the tax burden on the poor.

What the logic behind this 'ideal'?

Re: The missing profits of nations

#22

Post by jaredklewis »

tcfunk wrote: post #18

Maybe this is a silly question, but why don't we just lower the corporate tax rate significantly (maybe 10 or 15%), and make the use of tax havens illegal? I'll bet 10% of $17bil is still quite a bit more than whatever Google paid in US taxes that same year. Is it because "making the use of tax havens illegal" is hard/impossible?

> Is it because "making the use of tax havens illegal" is hard/impossible?

It is at the very least hard. How would the law work?

Will it be illegal for a company to sell/transfer their intellectual property to a company in the Caribbean? Will it be illegal for that company to license intellectual property to a company in the US?

Everyone feels they can recognize tax evasion when they see it, but to come up with a set of quantitative tests that can be applied fairly is difficult. Being able to apply the law consistently is essential, as the government will picking market winners and losers if they let some companies get away with tax evasion but not others.

One of my biggest criticisms of income tax is that it is such a nightmare to implement fairly as income is very fungible.

Re: The missing profits of nations

#23

Post by phkahler »

tcfunk wrote: post #18

Maybe this is a silly question, but why don't we just lower the corporate tax rate significantly (maybe 10 or 15%), and make the use of tax havens illegal? I'll bet 10% of $17bil is still quite a bit more than whatever Google paid in US taxes that same year. Is it because "making the use of tax havens illegal" is hard/impossible?

>> Maybe this is a silly question, but why don't we just lower the corporate tax rate significantly (maybe 10 or 15%), and make the use of tax havens illegal?

We should do only one of those things.

Every person should incorporate themselves and do what the big guys do.

Re: The missing profits of nations

#24

Post by kennxfl »

phkahler wrote: post #23
tcfunk wrote: post #18

Maybe this is a silly question, but why don't we just lower the corporate tax rate significantly (maybe 10 or 15%), and make the use of tax havens illegal? I'll bet 10% of $17bil is still quite a bit more than whatever Google paid in US taxes that same year. Is it because "making the use of tax havens illegal" is hard/impossible?

>> Maybe this is a silly question, but why don't we just lower the corporate tax rate significantly (maybe 10 or 15%), and make the use of tax havens illegal? We should do only one of those things. Every person should incorporate themselves and do what the big guys do.

Individuals cannot register their "intellectual property" to another jurisdiction other than the one they operate in right?

Re: The missing profits of nations

#25

Post by lovich »

ThrustVectoring wrote: post #19
tcfunk wrote: post #18

Maybe this is a silly question, but why don't we just lower the corporate tax rate significantly (maybe 10 or 15%), and make the use of tax havens illegal? I'll bet 10% of $17bil is still quite a bit more than whatever Google paid in US taxes that same year. Is it because "making the use of tax havens illegal" is hard/impossible?

In the ideal world, corporate tax rates and taxes on investment income are zero . Google et al should be paying taxes on its earnings when it spends it on compensating employees, buying equipment for their offices, renting office space, etc.

Why should corporate taxes be zero but employee compensation should be taxed?

Re: The missing profits of nations

#26

Post by dzink »

Technically the FAANG profits are somewhat reflected in the stock price. With their 20-50% in annual gains, holding stock in some of these allows you and retirees and other US stockholders to partake in the gains. The stock growth then rewards tax shifters vs non-tax shifters. This is essentially a wealth shift from tax global tax revenue that gets distributed by politics to global shareholders who are able and aware enough to invest in US fast-growing corporates (while possibly bubbling stock prices a bit).

Re: The missing profits of nations

#27

Post by soneil »

kyrra wrote: post #7
Hermel wrote: post #4

Large companies should be taxed where the value is created. And because that’s hard to measure, cost should be used instead. So if Google spends 60% of its budget in the US, 60% of its profits should also be attributed to the US. (Side note: the alternative of taxing profits where the revenue is generated does not make much sense as this would be equivalent to a sales tax.)

All large multi-national corporations do this. For example, NYT did a piece about Apple doing it[0]. Wikipedia has a list of companies that used the Double Irish setup[1]. The double-irish has been closed (via regulation) and most companies will be moving off of it by 2020. [0] https://www.nytimes.com/2017/11/06/world/apple-taxes-jersey.... [1] https://en.wikipedia.org/wiki/Double_Irish_arrangement#US_mu...

They'll figure out an alternative. eg, Liechtenstein only has 2.5% corporate tax rates for IP & royalties. So create a shell there, sell it your IP, and then license it back.

Re: The missing profits of nations

#28

Post by ThrustVectoring »

mattmanser wrote: post #21
ThrustVectoring wrote: post #19

Earlier quoted context omitted.

In the ideal world, corporate tax rates and taxes on investment income are zero . Google et al should be paying taxes on its earnings when it spends it on compensating employees, buying equipment for their offices, renting office space, etc.

Without any explanation of why this is ideal, this just comes across as a way of rewarding the rich 'land holders' and forcing the tax burden on the poor. What the logic behind this 'ideal'?

Investment is, broadly speaking, how individuals use current production to fund future consumption. Investment taxes are a tax on future consumption over and above taxes on current consumption, creating a distortionary effect.

Re: The missing profits of nations

#29

Post by ThrustVectoring »

lovich wrote: post #25
ThrustVectoring wrote: post #19

Earlier quoted context omitted.

In the ideal world, corporate tax rates and taxes on investment income are zero . Google et al should be paying taxes on its earnings when it spends it on compensating employees, buying equipment for their offices, renting office space, etc.

Why should corporate taxes be zero but employee compensation should be taxed?

We want corporations to use current funds to generate future positive cash flows. Stuffing a corporation full of money to get their preferential tax treatment is pretty much pointless when it gets taxed anyways when it gets used.

Re: The missing profits of nations

#30

Post by leetcrew »

mattmanser wrote: post #21
ThrustVectoring wrote: post #19

Earlier quoted context omitted.

In the ideal world, corporate tax rates and taxes on investment income are zero . Google et al should be paying taxes on its earnings when it spends it on compensating employees, buying equipment for their offices, renting office space, etc.

Without any explanation of why this is ideal, this just comes across as a way of rewarding the rich 'land holders' and forcing the tax burden on the poor. What the logic behind this 'ideal'?

i don't intend to argue GP's point for them, but it is important to be aware of the difference between paying a tax and actually bearing the burden of that tax. if (hypothetically) you increase some tax by 5% and all the companies raise their prices by 5%, you might end up with a situation where the companies "pay" the tax, but it entirely comes from the pockets of consumers. this is called tax incidence, and you can read more about it here: https://en.wikipedia.org/wiki/Tax_incidence

the corporate tax is actually very controversial among economists. it seems like a straightforward case of "making the big corps pay", but there is very little consensus as to who ultimately foots the bill for this type of tax.

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