Denmark: No aid for companies which pay out dividends or are reg. in tax havens • Hacker News Board

Re: Denmark: No aid for companies which pay out dividends or are reg. in tax havens

#131

Post by lidHanteyk » Mon, Apr 20, 2020, 4:02 PM UTC

barbegal wrote: post #116

flexie wrote: post #84

Danish lawyer here. The proposal only limits payments to companies that have received more than DKK 60 million (around EUR 8 million) in aid. So this is not your usual business owner. These are generally larger companies with a well paid management. As for companies registered in tax havens, the EU has made an official list of tax havens, which will be followed: https://en.wikipedia.org/wiki/European_Union_tax_haven_…

If these companies aren't allowed to pay a dividend until they have paid back the government aid, isn't the government effectively taking an ownership stake?

Ideally, as grandparent notes, yes. But no, there's an obvious way out: Instead of paying dividends, reinvest would-be outgoing cash back into the company. On the phone, claim to follow the Amazon playbook. In addition to not having to give up anything to the government, the company might find itself improving!

Re: Denmark: No aid for companies which pay out dividends or are reg. in tax havens

#132

Post by bigfudge » Mon, Apr 20, 2020, 4:03 PM UTC

chrismeller wrote: post #59

MrBuddyCasino wrote: post #33

Earlier quoted context omitted.

> Well first off, dividends are a normal method for business owners to make an income... they take all the risk, but reap some limited rewards by taking dividends rather than a salary. Shareholders should not just profit from the upside, but eat the downside too, which his exactly what this is. You can't take the dividends, claiming "I took all the risks", and then expect the state to bail you out. No upside without…

Yes, on the surface. You’re assuming that the business owner is some uber wealthy person that doesn’t mind missing the dividends because he’s happy on his yacht. While that is true for a lot of large companies (kind of like the ones that shouldn’t be asking for state aid), for the small ones it’s very different. As a small business owner myself, it matters hugely - if the company makes $100,000 in profit and I have t…

Why are you paying yourself in dividends rather than a salary? If you want the tax breaks associated with being a director, eat the risk too...

Re: Denmark: No aid for companies which pay out dividends or are reg. in tax havens

#133

Post by oconnor663 » Mon, Apr 20, 2020, 4:04 PM UTC

flexie wrote: post #84

Danish lawyer here. The proposal only limits payments to companies that have received more than DKK 60 million (around EUR 8 million) in aid. So this is not your usual business owner. These are generally larger companies with a well paid management. As for companies registered in tax havens, the EU has made an official list of tax havens, which will be followed: https://en.wikipedia.org/wiki/European_Union_tax_haven_…

> Why should tax payers bail out a tax avoiding company?

I think that depends on our answer to the prior question, "Why should tax payers bail out any company?" If the answer is "because we like them and we feel a patriotic/moral/righteous duty to help them", then the distinction between tax-paying and tax-avoiding companies does seem relevant. But if the answer is "to help workers keep their jobs", then the distinction might not be relevant.

Re: Denmark: No aid for companies which pay out dividends or are reg. in tax havens

#134

Post by bigfudge » Mon, Apr 20, 2020, 4:04 PM UTC

grahamburger wrote: post #110

chrismeller wrote: post #59

Earlier quoted context omitted.

Yes, on the surface. You’re assuming that the business owner is some uber wealthy person that doesn’t mind missing the dividends because he’s happy on his yacht. While that is true for a lot of large companies (kind of like the ones that shouldn’t be asking for state aid), for the small ones it’s very different. As a small business owner myself, it matters hugely - if the company makes $100,000 in profit and I have t…

> if the company makes $100,000 in profit and I have to pay two employees $40k each, I’m barely making ends meet. Honest question - how would paying yourself dividends change this math? Dividends have to come out of the same $100k right?

It's a tax dodge in the UK.

Re: Denmark: No aid for companies which pay out dividends or are reg. in tax havens

#135

Post by notahacker » Mon, Apr 20, 2020, 4:04 PM UTC

bitcurious wrote: post #96

yalogin wrote: post #69

I keep saying over and over but the economic policy is something trump fucked up big time. He gave away the corporate tax breaks in times of prosperity when there was no need and the companies just made bank. He was dealt a great hand, a strong economy that would chug along no matter who the president was. Those are the times to focus on the poor and lift people up. Instead he wasted his opportunity on the tax cuts.…

I don’t think corporate tax break would actually be a useful tool right now - corporate taxes are on profits and the profits are going to tank for most businesses.

I think the theory is if the US govt hadn't pumped the deficit on tax cuts for the profitable and rich in the good times, it would feel more free to spend it on bailouts for the vulnerable in the bad times due to less existing national debt. Although the Republican party's interest in making even the most token attempt to balance the federal budget over the economic cycle ended with the Obama presidency, so the debt's not going to be high on their list of priorities right now anyway.

Re: Denmark: No aid for companies which pay out dividends or are reg. in tax havens

#136

Post by bigfudge » Mon, Apr 20, 2020, 4:05 PM UTC

bzbarsky wrote: post #63

toomuchtodo wrote: post #35

Earlier quoted context omitted.

There is a wide expanse between running your business razor thin as a profit extraction machine and keeping 12 months of cash reserves. This policy simply looks upon the former as a poor choice.

Almost no one keeps 12 months of cash reserves. Apple, with is famous cash hoard, is around that mark.... I can't think of other large companies offhand that are.

Perhaps this should be a cost of doing business in the future? We all pay for this anyway, so why should taxpayers face all the risk and none of the reward.

Re: Denmark: No aid for companies which pay out dividends or are reg. in tax havens

#137

Post by bigfudge » Mon, Apr 20, 2020, 4:06 PM UTC

ethelward wrote: post #42

gruez wrote: post #31

Earlier quoted context omitted.

>If you didn’t keep enough cash on hand [...] This is implying you could keep enough cash on hand. Outside of tech giants, how many companies keep enough cash reserves to survive months without revenue?

There is a middle ground between having enough cash reserves to survive for months, and not having cash at all because everything has been bled out in dividends and buybacks; namely, having enough cash reserves to survive for some time, but not for several months.

Why not for several months. If you are a large corporate doing share buybacks why the f shouldn't you be able to weather several months of disruption?

Re: Denmark: No aid for companies which pay out dividends or are reg. in tax havens

#138

Post by tekdude » Mon, Apr 20, 2020, 4:07 PM UTC

tonyedgecombe wrote: post #79

Saaster wrote: post #27

It's a good common sense start. Companies that pay dividends or make share buy-backs are more vulnerable in a crisis (not only the current one), meaning they are riskier investments. Risk needs to be inversely correlated with reward for the markets to function. Investors in riskier companies deserve to get wiped out, not propped up. Companies registered in tax-havens should have no business applying for EU or US aid.…

Companies that pay dividends What’s the point of a company that never pays a dividend.

Commodities and precious metals don't pay dividends, yet people invest in them with the expectation that the value will rise so they can sell them later.

Re: Denmark: No aid for companies which pay out dividends or are reg. in tax havens

#139

Post by Ididntdothis » Mon, Apr 20, 2020, 4:08 PM UTC

chrisseaton wrote: post #86

throwaway2048 wrote: post #61

Earlier quoted context omitted.

Return from investment is nothing like salary.

Many workers are paid a majority of their income in the form of stock from the company they work for.

Most workers who receive majority of their income in the form of stock are in a very high income bracket and should not receive any government bailouts directly or indirectly.

Re: Denmark: No aid for companies which pay out dividends or are reg. in tax havens

#140

Post by thrill » Mon, Apr 20, 2020, 4:08 PM UTC

flexie wrote: post #84

Danish lawyer here. The proposal only limits payments to companies that have received more than DKK 60 million (around EUR 8 million) in aid. So this is not your usual business owner. These are generally larger companies with a well paid management. As for companies registered in tax havens, the EU has made an official list of tax havens, which will be followed: https://en.wikipedia.org/wiki/European_Union_tax_haven_…

So, companies acting completely legally by seeking to minimize their tax burden, which serves to further maximize the money available for their owners, get penalized. Likewise, companies acting completely ethically, by returning much of their profit to their shareholders via dividends instead of hoarding it themselves get penalized. And this gets celebrated?