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G7: Rich nations back deal to tax multinationals

bbc.co.uk

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Re: G7: Rich nations back deal to tax multinationals

#401

Post by [deleted] »

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).

[deleted]

Re: G7: Rich nations back deal to tax multinationals

#402

Post by [deleted] »

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…

[deleted]

Re: G7: Rich nations back deal to tax multinationals

#403

Post by reacharavindh »

alien_ wrote: post #382
njovin wrote: post #321

Earlier quoted context omitted.

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…

Confiscating profits wouldn't work, many companies are reinvesting their profits. Probably the best way would be to just make the fines hurt more, by using a fixed and non-negligible percentage of the monthly/yearly revenue, much like Finland does for traffic fines.

I can’t believe we as a society don’t adopt this idea more. Punishment should be a percentage of taxable income of that year. The impact should equally felt regardless of your current financial status. Extending this to a corporation would simply put them in back foot in a market.. which is indeed the punishment.

Re: G7: Rich nations back deal to tax multinationals

#404

Post by Ericson2314 »

relaxing wrote: post #348
odiroot wrote: post #283

Earlier quoted context omitted.

> If you’re going down this route, many will argue that all forms of income tax are equally “wrong”. I frequently come to a conclusion personal income tax should be abolished as it punishes work. CIT, VAT, capital gains and inheritance taxes should be enough to sustain a budget. These are all unrelated to performed work.

I frequently come to the conclusion that personal grocery bills should be free, as charging for food punishes existing.

I mean, socialism for basic needs and capitalism for status symbols is a pretty nice system. No problem doling out status symbols for productivity improvements which benefit basic needs production.

Re: G7: Rich nations back deal to tax multinationals

#405

Post by throwaway34241 »

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

Humans are taxed on their income. Corporations are taxed on their profits (they deduct their expenses).

Corporations can be taxed on the money coming in, that would look like a sales tax or VAT. The problem with that tax is it falls on the consumer (since what really matters is which transaction you tax, not which side pays the tax).

But this brings me to a solution to the corporate tax avoidance issue that has already been figured out by economists, but rarely gets discussed.

This is a simplification, but basically corporations have one place money goes in, and two places it goes out, like this:

sales = expenses + profits

If you tax the sales, but deduct the expenses, this leaves the incidence of the tax on the profits. Unlike profits, it's usually much clearer where the sale takes place so it's much harder to avoid than the existing corporate tax. It's called a border adjustment tax. [1]

Where this gets complicated is international trade - how this works is only domestic expenses are deductible. At first glance that seems protectionist, but apparently the currency exchange rates adjust which balances is it out and although it's not obvious it ends up trade-neutral.

It was actually seriously proposed as part of US tax reform in 2017, but some big companies were against it so it got killed.

[1] https://en.wikipedia.org/wiki/Border-adjustment_tax

Re: G7: Rich nations back deal to tax multinationals

#406

Post by dalbasal »

fighterpilot wrote: post #353
dalbasal wrote: post #223

Earlier quoted context omitted.

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 jus…

So if someone has a small company in Bermuda with 10 employees and they serve US customers primarily, will they be impacted by this?

There isn't a public "this" yet, so IDK. Also, Bermuda is unlikely to agree to this.

It sounds like the primary purpose here is residency definitions, which could mean that the US would be obligated or entitled to consider the Bermuda company american for tax purposes.

IRL, that Bermuda company is likely to be a shell company, receiving payment from a single client (EG msft) so that the parent company can book it as an expense.

That said, it's pretty much impossible to say anything at all before details go live, and accountants have had time to chew on it. Tax rules are all detail. Headlines really do mean nothing. "Where they do business" could mean a lot of things. Sales. employees, manufacturing, financing/listing.

Corporate income tax is applied to the net of revenues and expenses.

Some of the language in other statements seems to suggest there will be some sort of a quota system. MSFT will be defined as x% american, y% Bermudan, etc. This is pure speculation though.

Re: G7: Rich nations back deal to tax multinationals

#407

Post by Khaine »

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…

I’d also like to point out that for the longest time the Roman and Byzantine states taxed land and not commerce. It is not a new idea. In some ways it is an ancient idea. Land value and use is dependent on the climate and success of farming. It can be volatile, and while land may have an intrinsic value, the earnings to pay the tax can be highly variable (I.e. a drought).

I don’t think this is the best idea to solve tax issues in the modern world

Re: G7: Rich nations back deal to tax multinationals

#408

Post by fighterpilot »

dalbasal wrote: post #406
fighterpilot wrote: post #353

Earlier quoted context omitted.

So if someone has a small company in Bermuda with 10 employees and they serve US customers primarily, will they be impacted by this?

There isn't a public "this" yet, so IDK. Also, Bermuda is unlikely to agree to this. It sounds like the primary purpose here is residency definitions, which could mean that the US would be obligated or entitled to consider the Bermuda company american for tax purposes. IRL, that Bermuda company is likely to be a shell company, receiving payment from a single client (EG msft) so that the parent company can book it as…

That's good information.

  "Also, Bermuda is unlikely to agree to this."
Will it matter whether or not Bermuda agrees to it? It seems like their buy-in will be irrelevant, since if the company wants to keep serving US customers then they'll have to go along with the rules the US is setting up?

Re: G7: Rich nations back deal to tax multinationals

#409

Post by hbosch »

TomVDB wrote: post #332
IanCal wrote: post #253

Earlier quoted context omitted.

> You’re ignoring that the companies can just keep lots of cash without distributing it to individuals Nobody benefits from a company growing indefinite wealth without distributing it to actual people. > So for example the company can rent houses, cars, and airplanes for every employee If they could do this, all companies would do this already to avoid taxes. In reality, this is dealt with by (in the UK) considering…

> Nobody benefits from a company growing indefinite wealth without distributing it to actual people. Isn't this exactly what companies like Apple etc. are doing? As it accumulates wealth, the stock price (which is supposed to reflect the value of the company) goes up as well. And thus the shareholders benefit.

I believe actual cash hoards on hand is considered bad business. Apple having cash on hand is seen as okay, at present, because investors trust them to spend it well on expansion. Remember share price doesn’t indicate how well a company is doing today, it indicates how well people believe it will do In the future.

If you have piles of cash and don’t plan on spending it, somehow, on your business then you can’t expect your stock to rise and in fact if you’re so inept that you don’t know how to spend your billions your stock price may actually drop.

Re: G7: Rich nations back deal to tax multinationals

#410

Post by pydry »

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…

>Bad news for farmers, great news for the business running a 1000-person operation out of a skyscraper.

Not especially. The skyscraper land is probably 10000x more valuable per square foot so the tax will be 100x higher.

If you assume every square foot is taxed the same then you've kind of missed the point of a land value tax.

It won't fix the inherent problems with intellectual property though.

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