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The missing profits of nations

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Re: The missing profits of nations

#51

Post by eecc »

dang wrote: post #2

Editorializing titles like this is against HN's guidelines ( https://news.ycombinator.com/newsguidelines.html ). When accounts do this, they eventually lose submission privileges. If you'd read the guidelines and follow them when posting here, we'd appreciate it. (Submitted title was 'Don't be taxpayer – Google Alphabet made $19.2B in revenue in Bermuda'.)

Also because the original title is a smug pun on “the wealth of nations”, Adam Smith’s essay that (neo)liberists trump around like Mao’s Red Book... Smith argued that letting capitalism loose would benefit us all - the wealth in his title - yet there seems to be quite a bit of it missing ;)

Re: The missing profits of nations

#52

Post by derefr »

jeffreyrogers wrote: post #46
derefr wrote: post #41

Question: why isn’t there an international entity that is to tax-law normalization as WIPO is to IP-law normalization, that could—like WIPO—punish offending non-members by requiring members to impose trade sanctions on them? The big players (none of which are tax havens) certainly would have an interest in building it, and in giving it power.

Because the tax havens are small countries that don't export much so trade sanctions wouldn't have much effect.

Sorry, trade embargoes, not trade sanctions. Attempt to make their imports more expensive, regardless of who they’re importing from. As if there was a global empire attempting a trade war with them.

Re: The missing profits of nations

#53

Post by gaius »

jeffreyrogers wrote: post #46
derefr wrote: post #41

Question: why isn’t there an international entity that is to tax-law normalization as WIPO is to IP-law normalization, that could—like WIPO—punish offending non-members by requiring members to impose trade sanctions on them? The big players (none of which are tax havens) certainly would have an interest in building it, and in giving it power.

Because the tax havens are small countries that don't export much so trade sanctions wouldn't have much effect.

All laws are ultimately backed by force. Have we no gunboats?

Re: The missing profits of nations

#54

Post by gaius »

dbatten wrote: post #20
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?

Yes, making the use of tax havens illegal is very hard. It's basically a giant game of whack-a-mole, where the corporations have more people with stronger incentives working to get around the tax laws than the government has trying to write new ones. Here's a fun explanation of the kinds of hoops corporations will jump through to dodge taxes: https://en.wikipedia.org/wiki/Double_Irish_arrangement

Here's a fun explanation of the kinds of hoops corporations will jump through

You're missing one piece of the puzzle: the Irish government is fully complicit in all this, with a "beggar thy neighbour" strategy to cream off taxes from their supposed partners and allies.

Re: The missing profits of nations

#55

Post by tomp »

jaredklewis wrote: post #22
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…

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

Why not? I'm sure the tax havens would be very quick to adopt sensible tax rates to stop the ban.

Re: The missing profits of nations

#56

Post by KSteffensen »

derefr wrote: post #41

Question: why isn’t there an international entity that is to tax-law normalization as WIPO is to IP-law normalization, that could—like WIPO—punish offending non-members by requiring members to impose trade sanctions on them? The big players (none of which are tax havens) certainly would have an interest in building it, and in giving it power.

A very large part of the problem here is the UK and nobody seems willing to say that out loud. Jersey, Guernsey, Isle of Wight, Gibraltar, Cayman Islands, Virgin Islands, all are british overseas territories, remnants of the british empire and known tax havens.

The UK could normalize the status of these and remove all the advantages that make them attractive as tax havens, but doesn't seem interested in doing so. Perhaps because of all the nice money involved, perhaps because the British government has other things to work on right now.

Re: The missing profits of nations

#57

Post by ucaetano »

NeedMoreTea wrote: post #10
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.)

Nothing wrong with a sales tax being part of a possible solution.

The problem is that sales taxes are regressive, disproportionally impacting those for whom consumption is a large % of their total income. Particularly poor people.

And sales taxes (vs. VAT) is a terrible idea overall, it is a tax on consumers, not on companies, as it only applies on the final sale to consumer.

Re: The missing profits of nations

#58

Post by mirimir »

solotronics wrote: post #32
kennxfl wrote: post #24

Earlier quoted context omitted.

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

You can create an LLC pretty easily and transfer any of your IP to it.

Maybe so. But I suspect that individuals who attempted profit shifting would quickly get nailed for tax evasion.

Re: The missing profits of nations

#60

Post by NeedMoreTea »

ucaetano wrote: post #57
NeedMoreTea wrote: post #10

Earlier quoted context omitted.

Nothing wrong with a sales tax being part of a possible solution.

The problem is that sales taxes are regressive, disproportionally impacting those for whom consumption is a large % of their total income. Particularly poor people. And sales taxes (vs. VAT) is a terrible idea overall, it is a tax on consumers, not on companies, as it only applies on the final sale to consumer.

OK I admit I was thinking of VAT when I made the comment (I'm in the UK), and also the typical exclusions from VAT for food, books etc and partial liability on businesses (sales minus allowable purchases).

Undoubtedly a sales tax can be regressive but don't those exceptions move it far enough into being a tax on discretionary purchases? There doesn't seem much anti-VAT feeling in the UK outside of occasional axe-grinding from the popular press.

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