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

Re: G7: Rich nations back deal to tax multinationals

#221

Post by bradleyjg » Sat, Jun 05, 2021, 2:09 PM UTC

sudhirj wrote: post #217

bradleyjg wrote: post #204

Earlier quoted context omitted.

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.

It does seem like a reasonable principle, which makes abolishing the corporate tax unpersuasive. If there were only a single jurisdiction the argument would be more compelling.

Re: G7: Rich nations back deal to tax multinationals

#222

Post by todd8 » Sat, Jun 05, 2021, 2:09 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…

Corporations pass the tax expenses on to consumers as higher prices of produced goods, lower wages to employees, and lower returns to owners that supply capital. These taxes are all paid by us but they are largely invisible and justified to the voters as making corporations “pay their fair share”.

Re: G7: Rich nations back deal to tax multinationals

#223

Post by dalbasal » Sat, Jun 05, 2021, 2:09 PM UTC

throwaway13337 wrote: post #44

This sounds like it will be hell for small software companies with customers all over the world. Paying taxes differently for each country of the customer you sell to is a ridiculous hardship. It only benefits the large multinationals to reduce their competition. These sorts of rules centralize markets to fewer and fewer companies able to spend the resources to fulfill more and more complex rules. The end result is h…

It's neither here nor there, for that.

If you are a simple, single entity, your income tax is calculated there. It's hard to say what if anything will actually come of this. Tax legislation has a tendency to hide the main point. But currently, small businesses disadvantaged by the things this legislation ostensibly wants to curb. Multinationals have the resources and complexity to avoid tax entirely. It's usually just sole traders that pay full income tax.

Re: G7: Rich nations back deal to tax multinationals

#224

Post by NovemberWhiskey » Sat, Jun 05, 2021, 2:13 PM UTC

mrgordon wrote: post #214

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.

Perks/fringe benefits for employees are imputed income in virtually every tax system.

Re: G7: Rich nations back deal to tax multinationals

#225

Post by nickpp » Sat, Jun 05, 2021, 2:13 PM UTC

awillen wrote: post #216

nickpp wrote: post #200

Earlier quoted context omitted.

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.

Artificially putting a floor under the price one's allowed to charge for one's services benefits only politicians proposing such populists ideas and the non-working.

Re: G7: Rich nations back deal to tax multinationals

#226

Post by charlesdm » Sat, Jun 05, 2021, 2:14 PM UTC

mrgordon wrote: post #214

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.

That should be taxable in the hands of the employee, obviously. Estonia seems to be doing well with their tax system, and it's pretty much exactly what is described above.

Re: G7: Rich nations back deal to tax multinationals

#227

Post by toyg » Sat, Jun 05, 2021, 2:14 PM UTC

rjknight wrote: post #145

H12 wrote: post #136

Earlier quoted context omitted.

Thank you for your reply. In hindsight it makes a ton of sense that this would only apply to companies with a physical presence in multiple countries. Tracking country of origin for every online purchase and grouping them in order to pay international taxes would be an absolutely ludicrous requirement. No matter how low your opinion of the G7 is, they're not that dumb.

The European Union did introduce a system similar to this for VAT, where the rate paid depends on the country of the buyer, not the seller: https://europa.eu/youreurope/business/taxation/vat/cross-bor... It might be a bad idea but it's not beyond the realms of possibility.

TBH the bad idea in the EU scheme is allowing different countries to have different taxes on digital sales. There should be one rate across the whole Union, to be paid to the Union itself. This can then be redistributed to national governments in various ways, or reinvested in digital infrastructure that benefits the whole continent.

Enforcing fair taxation is not a bad idea, making it awkward is.

Re: G7: Rich nations back deal to tax multinationals

#228

Post by toyg » Sat, Jun 05, 2021, 2:17 PM UTC

allengeorge wrote: post #173

“The rules on making multinationals pay taxes where they operate - known as "pillar one" of the agreement - would apply to global companies with at least a 10% profit margin. Twenty percent of any profit above that would be reallocated and taxed in the countries where they operate, according to the G7 communiqué.” How will taxing authorities determine which companies meet the 10% profit margin threshold? Which jurisd…

These are details that inevitably will be hammered out in the following months.

In the end, most of these companies are public, their profit margins are already disclosed.

Re: G7: Rich nations back deal to tax multinationals

#229

Post by logicchains » Sat, Jun 05, 2021, 2:17 PM UTC

dgb23 wrote: post #199

Proven wrote: post #9

Sight, those socialist thugs... All of them are above the minimum, so what does that really achieve? Message for the central planners: you can't tax me anything if I don't work. Or if I work but not here. And let's not forget that involuntary taxation is theft.

The massive infrastructure and education is free then?

If you actually looked at any western country's budget, you'd see the vast mmajority of tax revenue is spent on welfare (and in the US case, warfare); only a miniscule amount is spent on infrastucture. Singapore for instance has way better education outcomes and infrastructure than most western countries in spirte of way lower taxes.

Re: G7: Rich nations back deal to tax multinationals

#230

Post by etherael » Sat, Jun 05, 2021, 2:18 PM UTC

toyg wrote: post #202

etherael wrote: post #167

Earlier quoted context omitted.

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.

This is the first step. G7 can then strongarm or cajole their "client states" with coordinated action. Even just the fact that such action is finally happening, is a great step. This was considered a sci-fi scenario 20 or 30 years ago and now it's become reality.

It's one thing to get G7 to agree on something when they're literally in the same club, another to get their client states that might previously have been attractive options like Ireland or Estonia to get on board to some degree. But jurisdictions that are much more independent and less prone to leverage like Georgia or Malaysia on the other hand I just don't see it. And that's before you get off into the weeds of jurisdictions that are more accurately described as oppositional and are raising their own efforts to attract offshore investment which it seems would be even less likely to kiss the ring.

It's easy to forget that the legacy brand countries with the extremely high tax rates and absurd conditions like citizenship based taxation in the most abhorrent cases internationally are the exception, not the rule. Their residents with their political biases make up the majority of participants in forums like this, and this contributes to the perception that their regime is enormously more widely adopted than it actually is, but if you look at the actual numbers by the actual areas that's just not the case.

And worst case scenario then you have crypto, where it goes from the legally difficult realm into the technically impossible realm.

This is just a fight they're guaranteed to lose on a long enough timeline.