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

Re: G7: Rich nations back deal to tax multinationals

#211

Post by Pelam » Sat, Jun 05, 2021, 2:02 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…

9. Buying and controlling media for desired political outcomes.

10. Astroturfing

As different sectors of business have different structures of material costs, labor costs, profit and investing. Maybe having at least some kind of equal corporate tax can be seen as being fair across different types of businesses.

Additionally many forms of business have externalities which are negative for the rest of the humanity. Often it has been the public sector which has to pick up the slack or clean up the mess.

Also most people agree that there exist at least some forms of infrastructure which are best managed publicly and are difficult organize privately in a way that encourages competition. Also corporations often directly benefit from different forms of public infrastructure, so in this sense it can be seen as fair to directly tax them.

Re: G7: Rich nations back deal to tax multinationals

#212

Post by dalbasal » Sat, Jun 05, 2021, 2:03 PM UTC

amelius wrote: post #6

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…

> 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. Why is this necessary, if countries can just tax companies based on the money they made in their country ?

As always with tax, the concepts that we want to discuss are not discreet enough to translate into tax law. Revenue, profit, location and such are arbitrary decisions that can be made by an accountant.

Does Apple makes its money in the US, where the company is headquartered and listed? Does it make it in China, where products are manufactured? Does it make it wherever people buy the stuff. Ireland, where the IP is "located."

Since corporate tax is an income tax, it's taxed on profit... the not of revenue and expenses. Revenues and expenses are accrued everywhere. The entity booking them is arbitrary.

Re: G7: Rich nations back deal to tax multinationals

#213

Post by antihero » Sat, Jun 05, 2021, 2:03 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…

1, 2, 3, 5, 8 also apply to normal people so why not get rid of income tax? The point of tax is for the government to gain money to spend on public services and what not, what you’re suggesting keeps money private.

Re: G7: Rich nations back deal to tax multinationals

#214

Post by mrgordon » Sat, Jun 05, 2021, 2:04 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…

You’re ignoring that the companies can just keep lots of cash without distributing it to individuals in order to avoid taxation under your system. So for example the company can rent houses, cars, and airplanes for every employee to ensure there is not much money left to be taxed as income. On paper they look like corporate expenses but it’s really just a way to distribute money without it being taxable.

Re: G7: Rich nations back deal to tax multinationals

#215

Post by BurningFrog » Sat, Jun 05, 2021, 2:04 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…

This a typical economist analysis, and I think it's mostly right. But I don't think those making these decisions think in such terms at all.

People love to tax companies, because they think it's "someone else" paying those taxes.

Maybe there is also some anthropomorphising going on where you think of the company as another person who is much wealthier than you.

Re: G7: Rich nations back deal to tax multinationals

#216

Post by awillen » Sat, Jun 05, 2021, 2:05 PM UTC

nickpp wrote: post #200

awillen wrote: post #193

Earlier quoted context omitted.

People's attitude towards Amazon is the biggest counterexample of this. They have avoided a lot of taxes not through nefarious means, but by constant reinvestment (items 1-5). At some point, when a company is bringing in enough revenue, a lot of public attitude seems to be that it should be paying taxes regardless of whether it's investing that revenue in things that we generally see as positive.

Which "people"? Consumers are delighted with Amazon, otherwise Amazon's revenue would dwindle. Investors, even more. I think the attitude you are talking about is largely driven by media.

The main reason Amazon is paying a $15 minimum wage is because of substantial pressure from progressives - there's an extensive record of this. The media reporting has largely been coverage of Bernie Sanders and the like, so it's pretty clear that there are non-media folks who have been driving it.

Re: G7: Rich nations back deal to tax multinationals

#217

Post by sudhirj » Sat, Jun 05, 2021, 2:06 PM UTC

bradleyjg wrote: post #204

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…

One problem is that this would effectively distribute tax revenue from a company by the citizenship of the owners (6 and especially 7) but most countries think they are entitled to some tax revenue from companies operating in their nations even if the company is wholly owned by foreigners.

That’s usually the case of any kind of operation, no? If you use the infrastructure and services of a particular country its seems reasonable to pay taxes on your profits there.

Re: G7: Rich nations back deal to tax multinationals

#218

Post by nabla9 » Sat, Jun 05, 2021, 2:06 PM UTC

nickpp wrote: post #138

nabla9 wrote: post #74

Earlier quoted context omitted.

Don't worry. The proposed tax does nothing you think it does, as the article explains. Pillar one does not apply small companies. Small companies pay just corporate tax as they did before, as the article explains. Nothing changes in that front. Pillar two.

This time. Once the mechanism is in place and the large companies have complied, they will come for the small companies too.

Pillar two already takes care of the small companies.

There are two good mechanisms that apply for both cases.

Re: G7: Rich nations back deal to tax multinationals

#219

Post by ihsw » Sat, Jun 05, 2021, 2:07 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…

Like most discussions about taxes, it is less about the effectiveness in revenue collection and more about "fairness."

Re: G7: Rich nations back deal to tax multinationals

#220

Post by toyg » Sat, Jun 05, 2021, 2:08 PM UTC

BTinfinity wrote: post #109

dd36 wrote: post #99

Earlier quoted context omitted.

It’s where they’re sold.

If I buy online and have it shipped to the UK, is it sold in the UK, in another countries warehouse or wherever they have a web sever?

This has already been settled in the EU - from a tax perspective, the sale is happening where the customer placing the order lives, which typically coincides with an address in the same country.

Now something like this is bound to come, from the new treaty, to all G7 countries, which hopefully means it will trickle down to the G20 at the least.

The main issue is not rules on sales though - it's cracking down on profit-shifting masqueraded as IP transfers and licensing. Hopefully that too is being cracked down on.