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

Re: G7: Rich nations back deal to tax multinationals

#261

Post by MrPowers » Sat, Jun 05, 2021, 2:43 PM UTC

PaulRobinson wrote: post #240

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…

If you’re going down this route, many will argue that all forms of income tax are equally “wrong”. Henry George - a 19th century political economist - proposed exactly this, and suggested the only thing that should be taxed should be land: impossible to hide from a tax inspector, potentially a waste to the public commons if useful land that could be exploited isn’t and you can even protect land you wish to keep prist…

The deadweight loss of taxation is much lower for a land tax than an income tax. The deadweight loss is the economic resources allocated to complying with the tax. The armies of tax lawyers would be able to perform other economically productive activities if they weren't pouring over the tax code.

Pigovian taxation is even better. Taxing gas is a great example. Gas consumers emit carbon which has a cost for society. We should make them pay for this negative externality via a gas tax, so their consumption is economically optimal. This is how to prevent the Tragedy of the Commons.

I'd argue that some taxes are objectively better than others and not all equally wrong.

Re: G7: Rich nations back deal to tax multinationals

#262

Post by ncallaway » Sat, Jun 05, 2021, 2:44 PM UTC

reader_mode wrote: post #113

mediocregopher wrote: post #100

Earlier quoted context omitted.

Shod google not be taxed twice in this example? Once on the income made in the USA when they sold the actual thing, and once in Ireland when the Irish branch sold the thing to the USA branch? Not to mention sales tax....

You aren't paying taxes on revenue, you pay tax on profit

That’s a choice, and one we could change.

My company is taxed on revenue (under the Washington State B&O tax scheme, and similar local tax schemes).

Taxing based on revenue is viable, it just needs to be done with a little more care up front.

Re: G7: Rich nations back deal to tax multinationals

#263

Post by world_peace42 » Sat, Jun 05, 2021, 2:44 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…

Wouldn’t that exacerbate the tech giant problem? Currently their war chests only get opened to vulture up fledgling companies. I’m not saying it can be instantaneously transmuted into gold if the government tried to take more, but I can’t see your proposal alleviating that problem.

Re: G7: Rich nations back deal to tax multinationals

#264

Post by ipaddr » Sat, Jun 05, 2021, 2:46 PM UTC

todd8 wrote: post #222

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”.

These taxes are paid by various stakeholders and entities around the business. The public gets the tax income and uses it for services to allow the business to operate.

Do you feel the cost/value of having the ability to a call a number and have a well trained team put out a fire in minutes that could ruin your business is 0 or free? What about rules/services that allows your business to have an advantage over another in a different region?

Taxes need to be paided by everyone. Corporations use more services than you would think and rely on a stable government that they need to contribute to.

Re: G7: Rich nations back deal to tax multinationals

#265

Post by SMAAART » Sat, Jun 05, 2021, 2:46 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…

that is an idea that I've been floating for a while, unfortunately people who don't understand economics and rely mostly on their feelings don't approve, and those are the majority of votes hence the politicians don't want to commit political suicide by promoting something like that.

Think about it, a no tax corporate tax, yet taxing the recipients of dividends and distributions would:

* eliminate tax heavens * foreign companies would come to the US * stimulate the economy * benefit the shareholders at large

Of course the shareholders would pay taxes, and distributions to foreign entities could be taxed at the source.

Easy, smart, logic.

Re: G7: Rich nations back deal to tax multinationals

#266

Post by elbasti » Sat, Jun 05, 2021, 2:47 PM UTC

StopHammoTime wrote: post #201

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…

Here’s an idea, let’s charge tax on revenue and it can just be the cost of doing business. Small businesses get a tax holiday for the first few years. Problem solved.

Most countries on earth--US being a notable exception--have a better version of this: the VAT.

It's a very elegant tax on paper, but significantly complicated from an accounting POV. It's one of those areas where there are huge gains to be had from digitizing financial records, and countries that have succeeded in this (like Mexico) create a very powerful revenue source.

Re: G7: Rich nations back deal to tax multinationals

#267

Post by cycomanic » Sat, Jun 05, 2021, 2:47 PM UTC

kapuasuite wrote: post #247

cycomanic wrote: post #209

Earlier quoted context omitted.

This is brought up again and again. You can make similar arguments for every tax. In fact let's look at income tax. The money people spend on income tax they could spend on. 1. Spent on goods or services 2. Spent on rent 3. Spent on capital purchases 4. Spent on debt repayment or other forms of financing In fact income tax does not have the last two points that you admit are bad, so maybe we should eliminate income t…

Capital gains taxes (paid by shareholders) are completely separate from corporate income taxes (paid by corporations). You're also forgetting (or ignoring) that the legal incidence of a tax and the economic incidence are completely separate. For example, employers and employees are both legally responsible for paying a portion of payroll taxes, but economically speaking that tends to lead to lower wages, making the e…

I'm a bit confused by your post, it seems you are agreeing with me, but you say you disagree?

I am aware of the difference between capital gains tax and corporate tax (also note that not every country has a capital gains tax). My argument applies to both, i.e. one of the reasons for raising inequality is the inbalance of labour and capital and the low corporate and capital gains taxes definitely contribute.

About the effect of income tax on salar, I'm not quite sure what that has to do with my points. I was not arguing that we should eliminate corporate tax and just let income tax handle it. Unless your argument is we should use income tax instead of corporate tax because it lowers salary?

Re: G7: Rich nations back deal to tax multinationals

#268

Post by world_peace42 » Sat, Jun 05, 2021, 2:48 PM UTC

PaulRobinson wrote: post #240

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…

If you’re going down this route, many will argue that all forms of income tax are equally “wrong”. Henry George - a 19th century political economist - proposed exactly this, and suggested the only thing that should be taxed should be land: impossible to hide from a tax inspector, potentially a waste to the public commons if useful land that could be exploited isn’t and you can even protect land you wish to keep prist…

George’s ideas are interesting to ponder now and then. I’d definitely want to be a billionaire in that system, though, you’d pay pennies on your penthouses split with everyone living below you. If only taxes were that easy to figure out.

Re: G7: Rich nations back deal to tax multinationals

#269

Post by sbacic » Sat, Jun 05, 2021, 2:48 PM UTC

vanilla-almond wrote: post #85

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…

Small software companies with customers all over the world are not multinational companies. These small software companies are located in one country i.e. one physical presence, unlike tech companies where their presence is in multiple countries. So this tax change won't affect small software companies located in one country with international customers. Edited to add ... The article states: " the rules will aim to m…

If it's going to be anything like the digital services tax, then the answer is a resounding yes as the US is where your customers are.

I see two things come out of this:

1. Companies selling their B2C services digitally will be paying both their sales (or VAT) AND their corporate income tax in countries where their customers are. This will be a benefit for countries with large markets and leave smaller countries where the companies are headquartered wondering what the value of these companies to their economies is.

2. A major problem for digital businesses will be the fixed costs of compliance. I suspect that a lot of side-projects and lifestyle businesses won't see the light of day on account of how expensive it will be to keep them running for years while they build up revenue.

Re: G7: Rich nations back deal to tax multinationals

#270

Post by jdikatz » Sat, Jun 05, 2021, 2:49 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…

First, tax competition creates its own inefficiencies —- companies locate production in low tax jurisdictions instead of optimal locations given local skills, factor prices, etc.

Second, this argument only makes sense if you think tax competition leads to “innovation” in tax policy, but it’s not clear why that would be the case. Almost any kind of tax structure is jurisdictional and would be undone by zero-sum competition between countries.

Third, would this hurt developing countries? Right now this is a voluntary agreement between developed countries to achieve a common goal, so that complaint isn’t super relevant. Think of multilateral tariff reduction agreements —- it’s often a good idea to unilaterally put up tariffs if everyone else lowers them, which can result in a high-tariff equilibrium even if each player would like lower global tariffs. Multilateral agreements are the way to achieve the collectively desired outcome that can’t be achieved in a decentralized way.

But a global minimum tax could be also be a good idea for lower income countries, if it’s not set too high. Typically the economic incentives are there to locate especially production in the developing world. If all developing countries had the same minimum tax, then companies couldn’t play developing countries off one another to get lower tax. Lower income countries would reap more gains from globalization and have more funds to eg invest in infrastructure and development.