Microsoft Irish subsidiary paid zero corporate tax on £220bn profit last year • Hacker News Board

Re: Microsoft Irish subsidiary paid zero corporate tax on £220bn profit last year

#231

Post by dalbasal » Thu, Jun 03, 2021, 12:58 PM UTC

TimPC wrote: post #196

Most economists around the world support eliminating the corporate tax and raising capital gains to compensate. In addition to vastly reducing the amount of accounting needed it would make structures like this pointless. Perhaps governments should get on this as a priority. It seems like early movers would attract a lot of investment.

It's extremely easy to speculate about this stuff academically. Economists tend to delight in theory-adjacent discussions. These have very little bearing on the real world.

TRW, in this case, is a cascading infinity of corporate law, tax law, accounting practices, jurisdictions, lobbyists, parliaments and special interests. None of these exist in economist's models, unless they're modeling public choice theory or somesuch.

Capital gains is just as gameable as corporate income, in practice... and more politically explosive.

IMO, if there is an actual interest in taxing wealth, just tax wealth. Assume 5%-8% return on wealth, and tax total wealth on this basis.

Re: Microsoft Irish subsidiary paid zero corporate tax on £220bn profit last year

#232

Post by pembrook » Thu, Jun 03, 2021, 12:58 PM UTC

It sounds sinister in a headline, but from a general theory perspective, why shouldn't we just dump corporate tax altogether and simply raise personal capital gains taxes to match income taxes?

Corporate tax is ultimately a double-tax. All of those profits will eventually be paid to investors (dividends, buybacks, acquisition) or employees (bonuses, profit sharing, stock options), where it will be taxed.

If both types of income were taxed the same...it wouldn't matter who got the money, or how.

Companies creating bizarre international corporate structures and governments spending time competing to untangle them is a giant waste of human bandwidth.

We should just dump this charade altogether and focus on more important things.

Re: Microsoft Irish subsidiary paid zero corporate tax on £220bn profit last year

#233

Post by aembleton » Thu, Jun 03, 2021, 12:58 PM UTC

EMM_386 wrote: post #164

What is the solution to this? I've wracked my brain and can't come up with anything. Companies will just continue to flee to whatever country is now offering 0%. Christmas Island has a new 0% corporate tax policy? Let's go buy a mailbox there and move our "headquarters". The old-school thinking is that low corporate tax policies encourage business, creating jobs in the process and boosting that country's economy. In…

Tax based on value extracted from a country. For example, in the UK I would tax corporations based upon UK Sales - UK Costs. For this I would require Amazon to set up a UK subsidiary.

Once they have set up a UK subsidiary then they will need to pay a corporation tax based on their total UK sales - UK costs. Sales are sales to the UK; any sales made to other countries, then no tax needed as those countries might (and probably should) have their own tax schemes. Costs would be employee costs, payments made to other UK companies such as an advertising agency or truck leasing and any other taxes they have to pay like rates or VAT.

Re: Microsoft Irish subsidiary paid zero corporate tax on £220bn profit last year

#234

Post by nivenkos » Thu, Jun 03, 2021, 12:59 PM UTC

fallingknife wrote: post #12

Why can't governments learn that taxing corporations is pointless? The same revenue is can be raised more simply through sales tax and personal income tax on salaries and distributions.

That punishes working people just for working!

How are you meant to afford a house and stuff with taxes like that?

We need wealth tax - go after the shareholders and landowners, who don't directly create value and dodge a lot of tax.

Re: Microsoft Irish subsidiary paid zero corporate tax on £220bn profit last year

#235

Post by tonfa » Thu, Jun 03, 2021, 12:59 PM UTC

nly wrote: post #32

tonfa wrote: post #4

Isn't the US levying corporate tax on worlwide income anyway (since the last tax reform). So it's "only" a matter of deciding whether those taxes should be paid in US vs. other countries (and if the intellectual property was developped mostly in the US, it seems fair for the US to get most of it).

Microsoft Ireland isn't a US company and therefore not subject to US laws. Presumably they're free to charge Microsoft USA whatever they want for their services and licensing their IP.

Isn't it a subsidiary of a US company (in the end)?

That was the main change of the TCJA, it stopped companies from doing the deferred taxation trick.

Re: Microsoft Irish subsidiary paid zero corporate tax on £220bn profit last year

#236

Post by hemantv » Thu, Jun 03, 2021, 12:59 PM UTC

I am wondering if as an individual I can do these same arrangement so I am not taxed to death in California

Re: Microsoft Irish subsidiary paid zero corporate tax on £220bn profit last year

#237

Post by ProAm » Thu, Jun 03, 2021, 1:00 PM UTC

pembrook wrote: post #232

It sounds sinister in a headline, but from a general theory perspective, why shouldn't we just dump corporate tax altogether and simply raise personal capital gains taxes to match income taxes? Corporate tax is ultimately a double-tax. All of those profits will eventually be paid to investors (dividends, buybacks, acquisition) or employees (bonuses, profit sharing, stock options), where it will be taxed. If both type…

There are a thousands ways to change taxes and there will be a thousand more to skirt paying them. Flat tax, eliminate tax loop holes, eliminate all deductions, only corp tax, only personal gains, only income, none will work because people are inherently greedy.

Re: Microsoft Irish subsidiary paid zero corporate tax on £220bn profit last year

#238

Post by cheph » Thu, Jun 03, 2021, 1:01 PM UTC

m12k wrote: post #83

kowlo wrote: post #5

Meanwhile my (single-person) company is paying around 20% corporation tax, and then I'm getting taxed a further 20-40% on top of that when I pay myself.

Yep, the current corporate tax laws basically punish single-nation companies, while giving multinationals a free pass. International tax laws desperately need an overhaul.

Is Ireland not a democracy? Can't they vote to change their own tax laws if they have a problem with them?

Re: Microsoft Irish subsidiary paid zero corporate tax on £220bn profit last year

#239

Post by nivenkos » Thu, Jun 03, 2021, 1:01 PM UTC

EMM_386 wrote: post #164

What is the solution to this? I've wracked my brain and can't come up with anything. Companies will just continue to flee to whatever country is now offering 0%. Christmas Island has a new 0% corporate tax policy? Let's go buy a mailbox there and move our "headquarters". The old-school thinking is that low corporate tax policies encourage business, creating jobs in the process and boosting that country's economy. In…

Sort out those countries with sanctions and gunboat diplomacy.

The sanctions can also be used against the shareholders and executives of the companies taking advantage of these situations.

And use some protectionist measures to help grow national industry - see Baidu, Yandex, etc.

Re: Microsoft Irish subsidiary paid zero corporate tax on £220bn profit last year

#240

Post by gruez » Thu, Jun 03, 2021, 1:01 PM UTC

dalbasal wrote: post #57

malux85 wrote: post #2

I have to pay 40% of my income as income tax. I have HAD ENOUGH. This is infuriating. What can we do?

>>What can we do? It's a tough question. The tendency is to react superficially: Moralizing reactions, emotional reaction, first principles takes. The way tax actually works is via accounting "standards," tax law and corporation law... across multiple jurisdictions. A thousand-detail complex , where morals, emotions and first principles are literally meaningless. Actual meaning can only be derived with scenario plans…

>Another, more radical approach is rethinking the idea of public wealth. The currently ongoing collapse of monetarism is, perhaps, an opportunity. Tax public companies x% of their shares per year.

1. this disproportionately affects companies with higher capital requirements than lower ones. Think spacex compared to a SaaS.

2. this doesn't solve the underlying issue of moving to a jurisdiction with lower taxes. let's say US taxes 1% of shares every year, but the company offshores to bermuda. then what?