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

#211

Post by greendave » Mon, Apr 20, 2020, 5:03 PM UTC

dehrmann wrote: post #183

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? Tax avoidance also tends to be on profits. A lot of companies in the US have done corporate inversions, but they're still paying local payroll, property, and sales taxes. Freezing dividends and buybacks punishes the people who benefited from the tax avoidance, but you have to be careful not to do this at the expense of workers. The other argument, and this is f…

I think the response would be that most of these governments* are not spending the money to keep the businesses open - they're spending it to keep employees solvent. To accomplish that, not all businesses need to be saved.

*The USA is an obvious exception where for at least a substantial group of people, the purpose is to keep the businesses intact. They really couldn't care less about the employees.

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

#212

Post by _se » Mon, Apr 20, 2020, 5:03 PM UTC

NovemberWhiskey wrote: post #180

_se wrote: post #158

Earlier quoted context omitted.

418 pay dividends.

Right, and I believe roughly half of the Russell 3000 constituents pay dividends as well. Given that the Russell 3000 represents about 98% of all U.S. equity market capitalization, is there a sense in which the statement: > You are correct that the vast majority of publicly traded companies do not pay dividends. ... is usefully true?

My original point was that the vast majority of _companies_ don't pay dividends, not that most _public_ companies don't. I'm not sure where that came from.

Someone else made the comment that plenty of private companies pay "dividends" (e.g. USA K-1), but a cursory read of the Danish policy indicates that these private dividends are probably not affected.

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

#213

Post by jmckib » Mon, Apr 20, 2020, 5:05 PM UTC

sanderjd wrote: post #150

oconnor663 wrote: post #133

Earlier quoted context omitted.

> 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 distinct…

What if the answer is "to strike a balance between many workers being able to keep their jobs and disincentivizing tax-avoidance"?

The best way to disincentive tax avoidance would be to not allow it in the first place. A one-off policy like this punishes tax avoidance without necessarily discouraging it in the future. It depends on how likely businesses think it is for something like this to happen again.

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

#214

Post by malandrew » Mon, Apr 20, 2020, 5:07 PM UTC

jmckib wrote: post #210

komali2 wrote: post #155

Earlier quoted context omitted.

The government has unilateral ability to invent jobs and even invent money if the goal is to help workers keep their jobs and/or remain fed and housed. So I feel that no company should get a bailout. If they fail, they fail, and the government can scoop up the workers and create an agency or just government-staked company that does the same thing, find some work in the country that needs doing and put the workers on…

The government can invent jobs, but it can't invent infinite jobs that accomplish something that people want, and even when it can the task won't generally be accomplished as efficiently as a private company would. It's also very difficult to remove a government agency once one is created. Government has all kinds of incentive problems that private companies don't, so generally (IMO) it's best to only use government…

On top of organizational capital, you're also losing tacit knowledge when a business dissolves.

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

#215

Post by Erwin » Mon, Apr 20, 2020, 5:08 PM UTC

drsim wrote: post #172

ThomPete wrote: post #154

Earlier quoted context omitted.

Denmark is a tax haven itself though.

I strongly doubt it. The corporate tax provisions are stricter than most developed economies. All indexes I've seen have Denmark pretty far down tax haven friendliness. Genuinely curious on your source.

There is a type of company structure similar to a limited partnership, but where the ownership was anonymous: https://en.wikipedia.org/wiki/Kommanditselskab

That was apparently misused by a relatively small companies abroad, where passing profits through this company would keep the information from the right authorities. Not really sure what happened with the case, new rulesets were applied to combat potential abuse.

Another high profile case was the "Danish Bank" (not to be confused with the national Bank of Denmark) which was involved in some huge money laundering in Estonia, potentially allowing as much as 200 billion EUR pass through it without asking too many questions.

A report from the Tax Justice Network: https://fsi.taxjustice.net/PDF/Denmark.pdf

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

#216

Post by chrisseaton » Mon, Apr 20, 2020, 5:08 PM UTC

calcifer wrote: post #165

chrisseaton wrote: post #112

Earlier quoted context omitted.

> lining investor pockets Investors are often normal people like you and me, using dividends and the sale of shares to put food on their families' tables.

I've never once met a person who would otherwise go hungry if they didn't get dividends, have you? What you really mean is those "normal people" would have to sell their third car or maybe rent out their summer home without that dividend, which is just fine by me.

> I've never once met a person who would otherwise go hungry if they didn't get dividends, have you?

Many pension funds pay pensions by taking a dividend from investments.

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

#217

Post by bialpio » Mon, Apr 20, 2020, 5:09 PM UTC

oconnor663 wrote: post #133

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 distinct…

I think "to help workers keep their jobs" is not a good enough reason. I might be wrong but to me the main beneficiaries of companies staying open are not regular workers, but the owners / CEOs / shareholders.

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

#218

Post by eloff » Mon, Apr 20, 2020, 5:09 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_…

These days dividends are less popular than share buybacks (in part because the former is taxed as income and the latter as deferred capital gains taxed at the time of sale).

I hope politicians weren't sufficiently stupid as to close one avenue and leave the other wide open.

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

#219

Post by rpiguy » Mon, Apr 20, 2020, 5:10 PM UTC

greendave wrote: post #211

dehrmann wrote: post #183

Earlier quoted context omitted.

> Why should tax payers bail out a tax avoiding company? Tax avoidance also tends to be on profits. A lot of companies in the US have done corporate inversions, but they're still paying local payroll, property, and sales taxes. Freezing dividends and buybacks punishes the people who benefited from the tax avoidance, but you have to be careful not to do this at the expense of workers. The other argument, and this is f…

I think the response would be that most of these governments* are not spending the money to keep the businesses open - they're spending it to keep employees solvent. To accomplish that, not all businesses need to be saved. *The USA is an obvious exception where for at least a substantial group of people, the purpose is to keep the businesses intact. They really couldn't care less about the employees.

There are 30.2 million small businesses in the US, which comprise a whopping 99.9% of all United States businesses and make up for the lion's share of employment. This is very different from Europe.

By bailing out the small business owners, you have a better chance at maintaining employment or for employment to re-emerge after a crisis.

Small business ownership is also a huge source of middle class wealth here in the US. Bailing out small business is essentially bailing out 30 million owner/employers and preserving their middle class wealth.

Obviously big businesses get bailouts here as well, and I happen to agree that if they use money for buy backs, dividends, etc. they should not get stimulus money.

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

#220

Post by malandrew » Mon, Apr 20, 2020, 5:10 PM UTC

arcticbull wrote: post #162

oconnor663 wrote: post #133

Earlier quoted context omitted.

> 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 distinct…

> "because we like them and we feel a patriotic/moral/righteous duty to help them" Sounds like an abusive relationship. Again, if a company wants to be bailed out by the tax payer, I don't think it's a stretch to ask that they pay taxes . Otherwise it's like me, a foreigner with no connection to Denmark other than that I've 'helped the economy' when I went on vacation there last year asking for a bailout. > But if th…

> In many European countries, social safety nets exist

They only exist because they are funded by taxing economic activity. If governments could just will them into being without restriction than every country in the world could have European level social safety nets.

If economic activity declines, so does the money faucet funding the social safety nets.