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

#231

Post by SkyBelow » Mon, Apr 20, 2020, 5:28 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…

>But if the answer is "to help workers keep their jobs", then the distinction might not be relevant.

But this sets up a relationship where now the company can use the employee's employment as a form of hostage.

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

#232

Post by justsid » Mon, Apr 20, 2020, 5:28 PM UTC

malandrew wrote: post #220

arcticbull wrote: post #162

Earlier quoted context omitted.

> "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.

Even more reason not to bail out companies that don’t pay taxes then.

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

#233

Post by nerdponx » Mon, Apr 20, 2020, 5:29 PM UTC

freeone3000 wrote: post #171

londons_explore wrote: post #75

Earlier quoted context omitted.

So why don't these conditions apply to all the aid, not just the aid after 8.8 million dollars? Otherwise it seems ripe for my company to claim 7 million dollars of aid as unsecured loans, then pay out nice big dividends claiming you are in a strong financial position because you are forecasting lots of business next year, then in 2 years time when the loan repayments become due, go bankrupt.

Because most companies want to exist longer than two years.

Bankruptcy does not mean the company dissolves.

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

#234

Post by [deleted] » Mon, Apr 20, 2020, 5:29 PM UTC

pinkfoot wrote: post #192

gruez wrote: post #186

Earlier quoted context omitted.

>so why should taxpayers face all the risk and none of the reward. Simple, bail the companies out (thus saving all the jobs), but wipe out (or significantly dilute) existing shareholders.

The problem then comes (regrettably) when national/regional/local government next tries to get another round of capital-intensive fixed investment form the captains of industry. They find themselves talking to themselves for the money. They hate that.

[deleted]

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

#235

Post by barkingcat » Mon, Apr 20, 2020, 5:32 PM UTC

dev_tty01 wrote: post #190

barkingcat wrote: post #182

Earlier quoted context omitted.

If you think at all about why a company was registered in a tax haven to begin with, then it's clear that they shouldn't even be in a line to get bailouts from "foreign entities" (from the point of view of the company) at all. If a company wants to be eligible for benefits inside a country, they have to follow all the laws. No ifs, buts, ands. If you feel that the company is "doing good work" why not ask them to be r…

>>If a company wants to be eligible for benefits inside a country, they have to follow all the laws. Minimizing tax liability is not necessarily doing anything outside the law.

That is only a very small part of why companies incorporate in tax havens.

Extradition policies, consumer protection laws, intellectual property status (ie whether you can use a tax haven incorporation to shield yourself from patent lawsuits or even to use it to hoard patents so you can use it as a base for launching law suits on others, forcing them to come to court in the tax haven jurisdiction for disputes)

There are so many things tax havens are used for. And that is why incorporating inside of the country where they are trying to get bailouts from is so important, otherwise the tax payer's money will be used against their own interests, with no way of enforcement.

Tax haven registered companies are the Nigerian Prince's of the corporate world. It is very possible they might be legit (and some very legit businesses are tax haven registered), but the very fact that they registered there on purpose is very telling in itself. Telling you they can swindle you with or without your consent.

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

#236

Post by tonyedgecombe » Mon, Apr 20, 2020, 5:32 PM UTC

xchaotic wrote: post #95

tonyedgecombe wrote: post #79

Earlier quoted context omitted.

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

You mean like Amazon? The stock price rises and if you want out you sell some.

The assumption there is at some point in the future they will start issuing dividends.

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

#237

Post by nerdponx » Mon, Apr 20, 2020, 5:33 PM UTC

1cvmask wrote: post #83

Why doesn’t the government just write a check to individuals and let them spend the money instead of bailing out companies in most countries?

In addition to the other replies: it's less costly to keep businesses solvent and just have them re-open and re-hire people in the near future, than to have a huge amount of businesses collapse and then have to start everything over again.

In the USA at least, the government did write a check to individuals (below a certain annual income).

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

#238

Post by indymike » Mon, Apr 20, 2020, 5:40 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.

A recipient of USA PPP money (our business disaster relief fund) who does not spend it on payroll will have a loan that is due in 18 months. If you spend on payroll (and there are rules to prevent abuse) most of PPP will be forgiven. The USA is clearly trying to keep employees solvent, and as a USA based business owner, I care deeply about my employees, and so do most other business owners I know.

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

#239

Post by NovemberWhiskey » Mon, Apr 20, 2020, 5:40 PM UTC

Saaster wrote: post #205

NovemberWhiskey wrote: post #198

Earlier quoted context omitted.

> Companies that intentionally run with razor-thin balance sheets and don't have any buffers built in to withstands shocks, are more fragile than companies with some buffer, all other things being equal. That's true; but it's not at all the statement you made originally, is it? Do you actually have some data that suggests that dividend-paying companies are more likely to be run as you described? Contrary example: AAP…

That was however the intent of the statement: Companies that pay dividends or make share buy-backs are more vulnerable in a crisis [compared to otherwise identical companies who build a cash buffer]. I disagree that companies that pay a dividend by definition have a buffer. If the income plummets (like in non-essential retail at the moment), they have no hypothetical dividend buffer to fall back on, that if not paid…

> That was however the intent of the statement: Companies that pay dividends or make share buy-backs are more vulnerable in a crisis [compared to otherwise identical companies who build a cash buffer].

That's a false dichotomy though.

Option three is what, for example, most of the profitable/zero-dividend tech firms do - which is to reinvest to boost market share, perform research and development and enter new businesses instead of returning a dividend to shareholders.

No dividends; but no cash pile either. Under your theory, those companies are no better equipped to deal with a crisis.

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

#240

Post by cies » Mon, Apr 20, 2020, 5:41 PM UTC

Certhas wrote: post #200

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…

For historic reasons states have built systems that prevent normal governments from inventing money at scale: Independent Central Banks. It's of course an important ongoing debate in economics whether this is still appropriate, but it's unrealistic to expect governments to so dramatically alter the fundamental structure of monetary policy. That said, of course it's even more unrealistic to expect them to do so absent…

> For historic reasons states have built systems that prevent normal governments from inventing money at scale: Independent Central Banks.

Could you explain this? I think the CB system does not quite prevent money creation, it just makes it less transparent. Inventing a jargon to nice sounding words to hide the creation of money (yes I look at you "quantative easing") also does not help.

If govts wanted to limit their power to create money, they could have made some constitutional law or smth.

I feel the CB system is more an invention by the bank(er)s, than by govts. If you look at the timing and trickery involved in singing the CBs into law all over the world, you will see this is not something done with full governmental/public awareness and consent. To the contrary.