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The missing profits of nations

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Re: The missing profits of nations

#71

Post by zo1 »

hinkley wrote: post #37
chriswarbo wrote: post #14

Earlier quoted context omitted.

One trick used to push profits offshore is to use "transfer pricing": transactions are made with a subsidiary based in a tax haven (either part of the same legal entity, or a partner/shell company used to the same effect), with prices skewed so that the offshore company comes out with a huge profit. (Googling around, I found http://repository.essex.ac.uk/8098/ which seems to my untrained eye to give a reasonable over…

Doesn’t Hollywood pull stuff like this to cheat collaborators out of their percentage? Certain cult classic movies that look like flops on paper. I always wonder if the money went down a subsidiary black hole to keep insiders happy.

That's what coined the term, Hollywood Accounting:

https://en.wikipedia.org/wiki/Hollywood_accounting

Re: The missing profits of nations

#72

Post by leetcrew »

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.

> 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.

you are correct that sales tax is almost always regressive, but please be careful making this kind of "just so" argument regarding taxes. the place in the production pipeline where taxes are collected has almost nothing to do with who ultimately bears the burden of the tax. see https://en.wikipedia.org/wiki/Tax_incidence if you're interested in learning more.

Re: The missing profits of nations

#73

Post by TokyoKid »

opportune wrote: post #61
candiodari wrote: post #34

Earlier quoted context omitted.

You forget the effects of the "full reinvestment" policy. Amazon barely paid any tax at all. Not on sales, not on storage space, not on profits, not on ... (note: Jeff Bezos DID get enough money out of it to become the richest man on earth, but not through profit. Rather he got "capital gains on his shares", which is the same thing in practice, but a very different thing for the IRS. Oh, and since it's "paper profits…

how is reinvesting profits a government subsidy? Literally any company that wants to grow can do that What subsidies are you even talking about? Most of your post sounds like stuff you just pulled out of your ass

What they're saying is their tax advantage over a competitor translates directly into more competitive advantage being bought. If it all went to dividends paid out, it would actually be more fair to the competitors in this way. But since it's reinvested, it makes competing with them even more difficult.

Re: The missing profits of nations

#74

Post by mistermann »

baumy wrote: post #47
candiodari wrote: post #34

Earlier quoted context omitted.

You forget the effects of the "full reinvestment" policy. Amazon barely paid any tax at all. Not on sales, not on storage space, not on profits, not on ... (note: Jeff Bezos DID get enough money out of it to become the richest man on earth, but not through profit. Rather he got "capital gains on his shares", which is the same thing in practice, but a very different thing for the IRS. Oh, and since it's "paper profits…

This entire comment seems absurd to me, am I missing something? > You forget the effects of the "full reinvestment" policy. Amazon barely paid any tax at all Is there anything stopping other companies, Amazon competitors like Wal-Mart or otherwise, from following this same policy? If no, your claim that companies like Amazon are government sponsored holds no water. > Jeff Bezos DID get enough money out of it to becom…

> And as somebody who currently is working on supply chain logistics involving shipping items to the US from China, I was also unaware that there was a program where the US taxpayer would fund our costs. Can you point me to such a program please? It would help me tremendously.

I think the grandparent is referring to this:

https://www.quora.com/Why-are-Chinese-goods-so-cheap-to-ship...

"Under current rules, those charges (called terminal dues) are set ludicrously low for certain countries, among them China. (Under UPU rules, for example, China, the world’s second-largest economy, gets the same break on terminal dues as do Gabon and Botswana.) This means that the USPS actually charges China Post less to deliver a package from China into the U.S. than it charges a U.S. business or customer to deliver a similar size package within the 48 states. The post office is losing money on every package it delivers from China — costs it has to pass on to its own American customers, not to mention U.S. taxpayers."

Are you saying shipping from China has no advantages whatsoever?

Can you explain how this product costs $1 and ships worldwide for free?

https://www.fasttech.com/products/1299/10003175/1236402-1000...

Re: The missing profits of nations

#75

Post by woodpanel »

Yes, foreign direct investment is a poor measure in many regards and using foreign affiliates statistics instead seems very helpful. But referencing controversial Piketty doesn't help in advocating for their policy suggestions.

I would have liked to see an exploration of how high-tax countries encourage those differences in "Pre-tax corporate profits (% of compensation of employees)" and how the taxing of individuals has changed in the same time.

Germany for example has a progressive income tax capped at 42% yet while incomes rose over the decades, the tax exemption limits did not, effectively reducing the salary needed to reach that cap from 24-times-the-mean-wage two 2-times-the-mean-wage.

Re: The missing profits of nations

#76

Post by Retric »

candiodari wrote: post #68
adventured wrote: post #43

Earlier quoted context omitted.

> if these loopholes were all closed, the internet "revolution" would end. All these companies would rapidly shrink to 10% of their current size That's wrong and impossible to support in fact. You can spot a fraudulent claim like that easily because it wings an arbitrary number that on the surface appears absurd (and as it turns out, is). Tax Microsoft at the OECD median, their net income for 2018 would be about ~$25…

You just pick out their corporate tax and then state all this like it's the only tax in existence ??? This is not what I mean. Replace Microsoft tax with an auto repair shop's taxes. Everything produced and installed and serviced locally. 1) Sales tax/VAT. On the full amount of the sales, not just the lowest they can get away with. That's 10-27% depending on the location. No interstate commerce exception. No import/e…

You don’t add percentages that way. 20% tax on a 20% tax on a 20% tax = 48.8% tax not 60% tax.

Re: The missing profits of nations

#77

Post by candiodari »

Retric wrote: post #76
candiodari wrote: post #68

Earlier quoted context omitted.

You just pick out their corporate tax and then state all this like it's the only tax in existence ??? This is not what I mean. Replace Microsoft tax with an auto repair shop's taxes. Everything produced and installed and serviced locally. 1) Sales tax/VAT. On the full amount of the sales, not just the lowest they can get away with. That's 10-27% depending on the location. No interstate commerce exception. No import/e…

You don’t add percentages that way. 20% tax on a 20% tax on a 20% tax = 48.8% tax not 60% tax.

I did calculate them like that, actually.

Re: The missing profits of nations

#78

Post by marcosdumay »

flexie wrote: post #3

And this is where the main issue is. Local newspapers, local advertising companies, global search companies that could have been; all of them are competing with Google on vastly unfair terms. Google is not paying tax. The others have to.

What is stopping countries from taxing the importation of services?

Re: The missing profits of nations

#79

Post by digi_owl »

marcosdumay wrote: post #78
flexie wrote: post #3

And this is where the main issue is. Local newspapers, local advertising companies, global search companies that could have been; all of them are competing with Google on vastly unfair terms. Google is not paying tax. The others have to.

What is stopping countries from taxing the importation of services?

I'm no accountant, but i have the impression that there are various international agreements in place that basically says that earnings are to be taxed where they are made.

This is why there has been a bunch of hoopla over Irish tax incentives for example, as it allowed the likes of Microsoft, Apple and Google to claim all sales inside EU was done by their Irish office. The rest simple earned just enough to cover expenses...

Re: The missing profits of nations

#80

Post by jaredklewis »

tomp wrote: post #70
jaredklewis wrote: post #67

Earlier quoted context omitted.

> E.g. they could simply prohibit countries incorporated/owning/owned by countries in tax havens from selling in the US. Yea, I don't think there would be anything "simple" about this, for all of the reasons listed in my reply above. > Seems to work well for China. We have very different definitions of "work well." I assume you are referring to the recent tariffs, in which case we gave China an ultimatum, and they sa…

> I assume you are referring to the recent tariffs, in which case we gave China an ultimatum No, I'm referring to the fact that foreign (Western) companies cannot sell in China unless part of the products are made there, and can't own Chinese companies without Chinese co-ownership. It all resulted in a massive transfer of IP to China, simply because for most companies, the tradeoff still made sense (short-term at lea…

Interesting. Comment makes more sense now.

The amount of law and international agreements that would be overturned by such a change is truly staggering, so I’d still say this is the antithesis of simple.

Further, I’m not sure China’s model, and protectionism in general, is a better strategy. No way to know, but I expect China’s economy would be stronger if it didn’t have these protections.

Like I said, there are a hundred things we can tax; why do we only want to tax the one that’s easy to evade?

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