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

Re: G7: Rich nations back deal to tax multinationals

#321

Post by njovin » Sat, Jun 05, 2021, 3:28 PM UTC

Taniwha wrote: post #292

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 to legally treat corporations the same as actual humans - then tax them the same. We pay taxes for services we expect from governments, defence, policing, justice, water, sewers etc etc I don;t see why corporations that use all these things shouldn't pay their share

I look forward to the day that we punish corporations by removing their freedom (ability to operate) instead of fining them laughably small percentages of their yearly revenue for serious violations of laws and regulations.

In reality I understand that this would harm the employees and the public to an unacceptable degree so maybe some form of “jail time” whereby all profits go directly to non-executive employees and price discounts would be more effective. Depriving shareholders of dividends may lead investors to “vote with their wallets” and we’d see more of an actual free market instead of what we have today where economy-destroying decisions go effectively unpunished and in some cases are rewarded by bail outs.

Re: G7: Rich nations back deal to tax multinationals

#322

Post by nohuck13 » Sat, Jun 05, 2021, 3:28 PM UTC

pera wrote: post #305

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…

When companies generate more profit they very rarely do any of the things you mention, why would they start doing it if they didn't have to pay taxes at all? In reality when a company gets to generate more profit the result is an even bigger gap between C-levels and normal employees salaries. Here is a better idea: companies should be the only entities paying taxes in a capitalist society. If you think about it it re…

> when a company gets to generate more profit the result is an even bigger gap between C-levels and normal employees salaries.

This is #4 "spent on wages" no?

We already tax wages. A graduated income tax targets specifically the problem you are flagging here. Taxing corporations exclusively would do away with this.

If you're making an equity argument, why not argue for the opposite of what you're saying: reduce corporate taxes to zero, then make up for it by taxing only the highest earners' wages? Not advocating for a policy position here, just pointing out that the argument in the GP post is precisely that they lack of those granular policy levers is a drawback of taxing corporate income. Policy levers which could be used to nudge the income gap down by taxing the "excessive" executive comp at a higher rate, for example, don't work if you collect that tax revenue as a monolithic corporate profits tax.

Re: G7: Rich nations back deal to tax multinationals

#323

Post by cvwright » Sat, Jun 05, 2021, 3:29 PM UTC

PragmaticPulp wrote: post #275

PaulRobinson wrote: post #240

Earlier quoted context omitted.

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…

> Henry George - a 19th century political economist - proposed exactly this, and suggested the only thing that should be taxed should be land That may have made sense in the 19th century when agriculture dominated the economy, but it’s irrelevant today. At scale it becomes a tax on how space-inefficient your business is. Bad news for farmers, great news for the business running a 1000-person operation out of a skyscr…

Tax intellectual property too then.

This would also help push back against ridiculous patents and eternal copyright.

Re: G7: Rich nations back deal to tax multinationals

#324

Post by flavius29663 » Sat, Jun 05, 2021, 3:29 PM UTC

EMM_386 wrote: post #252

This is absolutely necessary. Think about this Microsoft Irish subsidiary that "made" $200 billion with ZERO EMPLOYEES. Not even a single person to go buy a sandwich at lunch and "help the local economy". Nobody. The only beneficiary is Microsoft because nobody gets any tax revenue. And Microsoft can just hoard cash, it's not like they are going to rain it down to everyone's paycheck. This is a global problem, it req…

they do have some employees - the directors

> Microsoft Round Island One, the registered address of which is at an office of the law firm Matheson in Dublin, states in its accounts that it has “no employees other than the directors”.

https://www.theguardian.com/world/2021/jun/03/microsoft-iris...

What the Guardian is not saying (but I am not surprised, since it's a rag) is that MS has a huge presence in Ireland, in a different company, probably.

Ireland has been MS base in Europe for decades, they have 2000 employees there, and it's where Azure had it's first European data center. I know because I applied to them back in the day, and my company had a one day outage in 2011 because of a lighting strike to the data center...

MS should pay a minimum of 5-10% of those money in taxes, where they are produced, for sure. But let's get our facts straight, so we have a better voice when we say this.

Re: G7: Rich nations back deal to tax multinationals

#325

Post by hervature » Sat, Jun 05, 2021, 3:29 PM UTC

ClumsyPilot wrote: post #241

hervature wrote: post #206

Earlier quoted context omitted.

Except we already have a minimum tax worldwide - 0%. Perhaps every country should meet the others and offer 0% corporate tax. The solution isn't as simple as "minimum tax" as some places legitimately believe that corporate tax is not the most effective way to generate government profits (Wyoming and South Dakota at the state level).

So I register a limited company, undertake all my work through it and keep my revenue, money and saving in that company, paying no tax on them. Then I have the company buy a car, laptop and every other possible expence I can get away with placing on company. You've solved nothing

I didn't claim to solve anything. Merely that a world wide corporate tax rate isn't as simple as everyone thinks. For what it's worth, a corporate tax rate doesn't prevent you from doing what you suggest. In fact, you are encouraged to do so to avoid the tax.

Re: G7: Rich nations back deal to tax multinationals

#326

Post by refurb » Sat, Jun 05, 2021, 3:30 PM UTC

jdikatz wrote: post #270

refurb wrote: post #35

Earlier quoted context omitted.

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 compet…

First, companies don’t optimize for tax at the exclusion of everything else. And calling tax optimization and inefficiency is interesting considering it directly impacts returns.

Second, the innovation isn’t in the tax policy, it’s in the use of the tax revenue. If I come up with a less bureaucratic and less costly administrative process for companies, why shouldn’t I pass the along if I want to?

Third, the implementation goal is global. That’s been stated by Biden.

And I’m guessing the lower income countries will suffer. You want to pay t a similar tax rate for the US for say Myanmar? Abundant corruption, questionable private property rights, untrustworthy courts?

Re: G7: Rich nations back deal to tax multinationals

#327

Post by konart » Sat, Jun 05, 2021, 3:30 PM UTC

dane-pgp wrote: post #308

konart wrote: post #197

More taxes = higher prices. In the end buyer is the one who will be charged. +50$ for an iPhone in the US, +50€ in EU and +5000₽ in Russia. People in rich nations will spend proportionally less than people in poor ones obviously. (no serious analytics, just thoughts)

If we're being simplistic, then I could just as well say: More corporation taxes = lower income taxes A citizen should be happy that their government is seeking a greater share of its tax revenue from corporations, especially foreign-owned corporations, because it is easier for the citizen to avoid buying an iPhone than to avoid earning income.

>More corporation taxes = lower income taxes

Not in my country though. Why not raise both and steal some money?

Re: G7: Rich nations back deal to tax multinationals

#328

Post by elcritch » Sat, Jun 05, 2021, 3:30 PM UTC

another_poster wrote: post #273

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…

All taxes are avoided (or illegally evaded) to some degree, and the most taxed (i.e. the wealthiest people and firms) will always have the largest incentive to avoid taxes. To reduce the incentive to avoid taxes, countries often tax capital (or labor) at multiple stages but with lower rates (e.g. a corporate tax, dividend tax, and sales tax). As you point out, the corporate tax is redundant to other forms of taxation…

> I personally like Michael Pettis's argument that continued economic growth depends on increasing economic demand through redistributing wealth from capital (or more generally the wealthy) to labor [3], so I am skeptical of reforms that stop taxing capital.

This is an important point, and is misunderstood in (US) politics and deabtes, IMHO. Supporting capitalism and taxation aren't mutually exclusive positions. Well thought out taxation is crucial to balance the inherent network effects of large corporations. There's huge network effects, especially in tech [1], that leads to less ability for smaller firms or new players to compete. If anything, I'd wager that appropriate taxation of network effects is crucial to a well functioning capitalist society, especially as so much of success is due to luck and network effects in addition to hard work and talent [2].

Just because you have capital doesn't mean you have capitalism, where most any individual(s) can access capital to bring about new companies and products. The trick is defining empirically and scientifically sound taxation measures rather than giving into simplistic models of Socialism or Reganism.

1: https://medium.com/@nfx/70-of-value-in-tech-is-driven-by-net... 2: https://arxiv.org/abs/1802.07068

Re: G7: Rich nations back deal to tax multinationals

#329

Post by Ericson2314 » Sat, Jun 05, 2021, 3:33 PM UTC

Taniwha wrote: post #292

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 to legally treat corporations the same as actual humans - then tax them the same. We pay taxes for services we expect from governments, defence, policing, justice, water, sewers etc etc I don;t see why corporations that use all these things shouldn't pay their share

But then it's highly unfair to tax humans on revenue, but corporations on profit.

I think the right answer is VAT + externalities taxes (LVT, Cabon tax, etc.) + UBI, which is both very easy to enforce and perhaps net progressive enough. Re "progressive enough": I don't so much care if BWM owners are screwed over relative to private jet owners on paper, I think reducing work hours and propping up demand at the bottom with UBI will have a trickle-up effect.

There might be room for a wealth tax, but I think it might be less loophole-prone and better theoretically to attack that problem more directly and less monetarily in terms of socializing key natural monopolies, promoting coops, etc. Trying to financialize the big question of "who controls the means of production" I think might be just too difficult.

Re: G7: Rich nations back deal to tax multinationals

#330

Post by peoplefromibiza » Sat, Jun 05, 2021, 3:33 PM UTC

valenterry wrote: post #316

Taniwha wrote: post #292

Earlier quoted context omitted.

If you're going to legally treat corporations the same as actual humans - then tax them the same. We pay taxes for services we expect from governments, defence, policing, justice, water, sewers etc etc I don;t see why corporations that use all these things shouldn't pay their share

Exactly this. Imagine a company that has makes X dollars and spends X dollars. So the company pays no tax. What that means is that all the other tax payers pay for all the infrastructure. And that's fine, but if such a company ever needs to call the police and go to court, etc., they then would have to pay all of that out of their pockets (i.e. the work of the police, the lawyers and judges, and so on).

the fact that streets are illuminate at night and pollice patrols them is using services provided by taxpayer's money.

Uber benefits from streets more than the average citizen.

if corporations had to pay per use, they would prefer to build their private infrastructures and police forces, while public infrastructure would lag behind chronically underfunded.