G7: Rich nations back deal to tax multinationals • Hacker News Board

Re: G7: Rich nations back deal to tax multinationals

#161

Post by seaourfreed » Sat, Jun 05, 2021, 1:33 PM UTC

Finally a politician (Joe Biden) is fixing one of the major area of the rigged economy. If workers auto-deposited their paycheck overseas and didn't pay taxes, they would be in jail. If small businesses did fraud that their profits were over seas, they would be in jail.

Our politicians have been selling us out, as big corporations did this. Big corporations are doing fraud at saying their profits are happening in these other countries.

Hopefully Joe Biden can actually fix this. Big corporations will fight him hard.

Re: G7: Rich nations back deal to tax multinationals

#162

Post by rjknight » Sat, Jun 05, 2021, 1:34 PM UTC

I do wonder if we wouldn't be better off eliminating corporation tax entirely.

The revenue of a corporation can, roughly, be:

1. Spent on goods or services from another company (including freelancers, contractors, etc.)

2. Spent on rent

3. Spent on capital purchases

4. Spent on wages

5. Spent on debt repayment or other forms of financing

6. Paid out in dividends

7. Spent on share buybacks

8. Invested in something else

Items 1-5 are all good things that we want companies to do, and corporation tax is normally applied after this spending is accounted for. Items 6 and 7 ought to be taxed, and frequently are (dividends and buybacks create income for individuals who will pay tax on that income). Item 8 is a bit vaguer, but probably shouldn't be taxed in most cases (if we're worried about companies parking cash in very low-risk assets, then super-low yields are effectively a tax on that anyway).

All that the corporation tax adds to this picture is the creation of work in tax avoidance services, and an unjust inequality between those firms that can afford those services and are structured to take advantage of the rules, and those that can not and are not.

It's not obvious to me that corporation tax /can/ be fixed, and so it may be better simply to scrap it and replace it with something more difficult to dodge.

EDIT: formatting

Re: G7: Rich nations back deal to tax multinationals

#163

Post by jakozaur » Sat, Jun 05, 2021, 1:34 PM UTC

Essentially countries are forming a cartel to set bottom income tax. Forming cartels by private companies to „fix” prices is illegal, but countries are free to do it.

However, the actual mechanics of that tax is hard:

1. Countries can still do subsidies, but avoid touching income tax.

2. Taxing by income where revenue is generated is hard to compute. It would make sense to enforce it only on big multinationals. E.g. Big tech pay income taxes proportional to revenue from different countrues or/and where they employees are located.

3. Looking at statistics the ideal income tax floor should be around 19%.

Re: G7: Rich nations back deal to tax multinationals

#164

Post by boublepop » Sat, Jun 05, 2021, 1:35 PM UTC

Putting the safety nets in place so the nations can gear up against corporations when time comes due to reap back everything that has been poured int the economy during the pandemic. Your can’t really raise interest rates and taxes if corporations will just move to Ireland. And you can’t fault Ireland for accepting them with open armes in times when they need money.

Re: G7: Rich nations back deal to tax multinationals

#165

Post by lotsofpulp » Sat, Jun 05, 2021, 1:35 PM UTC

KingOfCoders wrote: post #124

lotsofpulp wrote: post #83

Earlier quoted context omitted.

What?

The trick is to not own things (personally) but control them, e.g. if you want a yacht, you create a holding somewhere that buys the yacht and owns the yacht, and you can use it whenever you like. The holding then has contracts with other companies renting you out. And you work for 0 EUR for the holding and have no income. The holding also owns the house you live in. If you're a high risk person the company can be ow…

That semantic/legal quirk stuff will get harder and harder as the government’s need for funds grows:

https://www.loeb.com/en/insights/publications/2021/02/new-tr...

The only protection I would count on is if you were high up politically, like Putin or a Saudi prince.

Re: G7: Rich nations back deal to tax multinationals

#166

Post by obventio56 » Sat, Jun 05, 2021, 1:36 PM UTC

rjknight wrote: post #162

I do wonder if we wouldn't be better off eliminating corporation tax entirely. The revenue of a corporation can, roughly, be: 1. Spent on goods or services from another company (including freelancers, contractors, etc.) 2. Spent on rent 3. Spent on capital purchases 4. Spent on wages 5. Spent on debt repayment or other forms of financing 6. Paid out in dividends 7. Spent on share buybacks 8. Invested in something els…

I think some people would find issue with the distribution of wages paid in #4.

Re: G7: Rich nations back deal to tax multinationals

#167

Post by etherael » Sat, Jun 05, 2021, 1:36 PM UTC

refurb wrote: post #35

orf wrote: post #2

Summary: > Firstly, the G7 want a global minimum tax rate so as to avoid a "race to the bottom" where countries can undercut each other with low tax rates. > Secondly, the rules will aim to make companies pay tax in the countries where they are selling their products or services, rather than wherever they end up declaring their profits. Good. It’s a shame that Biden had to back down from the initial 28% because of do…

This is a terrible idea. This “race to the bottom” is what drives efficiency and better ways of doing things. It’s why we don’t have $10,000 desktops in our homes with 386 processors. If computer chip manufacturers decided to create a floor price for their products that would be collusion and bad for consumers. Same here. It’s bad for citizens of a country. You damn know some developing country is going to be told “n…

This is just G7 isn't it? Seems to me like all the typical very low tax jurisdictions you'd select for as somebody optimizing tax with the freedom to locate wherever you choose are still open.

Re: G7: Rich nations back deal to tax multinationals

#168

Post by yaa_minu » Sat, Jun 05, 2021, 1:37 PM UTC

greenwich26 wrote: post #60

ko27 wrote: post #30

Earlier quoted context omitted.

The answer to your question is simple. Governments are the highest sovereign bodies. They can agree on whatever they want.

You are right, of course. But Rousseau made it quite clear that the sovereignty of a government is discretionary. This sort of thinking isn't convincing on an ideological or theoretical level to anyone but a medieval peasant, and it only increases my indignation.

It's interesting that you're being downvoted but you make a solid point. People in government are no different than those not in government, we're the same human beings. To suggest that they should be able to do anything they want seems pretty backwards and quite contrary to the enlightenment ideas.

Re: G7: Rich nations back deal to tax multinationals

#169

Post by viraptor » Sat, Jun 05, 2021, 1:37 PM UTC

bodono wrote: post #5

The US tax code is absolutely riddled with tax loopholes. Many of these loopholes were designed to act as an incentive, such as tax breaks for hiring former felons, building factories in certain locations, investing in R&D etc etc. Major corporations often pay far lower than the US corporate tax rate precisely because they respond to these tax incentives (and sometimes abuse them, but that's a different story). Does…

> Many of these loopholes were designed to act as an incentive, such as tax breaks for hiring former felons

I wouldn't call all of those incentives loopholes. There's an incentive to hire felons because it's better to have them working secure jobs than having to spend more tax money getting them through the legal system and months/years of jail again. It's an incentive because it's a cheaper solution overall. It's not the same class of an issue as double-Irish.

I'm not sure what the solution for mixing this with the minimum tax is, but if there's a good reason for the incentive, it may even be beneficial to the country to essentially match the missing tax itself. That's assuming the incentives have the real impact they should.

Re: G7: Rich nations back deal to tax multinationals

#170

Post by dkersten » Sat, Jun 05, 2021, 1:37 PM UTC

bertil wrote: post #112

sumedh wrote: post #29

Earlier quoted context omitted.

> So Ireland, Luxenburg and other corporate tax over-friendly countries Why cant US pass laws banning companies registered in tax haven countries to operate in the US?

Both Ireland and Luxembourg have legitimate activities: Irish whiskey isn’t a big deal compared to tech, but there’s no real reason to ban it. Defining a line is hard, especially when the country’s traditional advantage _is_ finance, like it is in Luxembourg, even outside of tax-optimisation. It’s easier to have rules against countries with less credibility, but then again, you risk making things complicated for Seyc…

Maybe an import duty needs to be applied. Importing the Irish whiskey will incur a duty. Google US paying a 100% license to Google Ireland should also incur a duty charge for importing the license from Ireland.

Something like that, anyway.