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

Re: G7: Rich nations back deal to tax multinationals

#411

Post by Ericson2314 » Sat, Jun 05, 2021, 4:30 PM UTC

dalbasal wrote: post #203

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…

The actual rate is the least important part. What is important is jurisdictional issues, accounting standards, corporate law, deferral rules and the like. This is the problem with corporation tax generally. You can't really have a conversation about it in "normal" terms, that a journalist, politician or MOP can understand. It can only be understood via scenario plans and spreadsheets. It's a million little details. T…

And furthermore, I'd say however they harmonize the taxation shouldn't even matter, because the the G7 countries (or at least the euro ones acting zone wide) have no structural constraints preventing the money printer.

The real important thing here is establishing the importance in preventing the race-to-the-bottom, so more important things like multinational carbon taxes, developing country capital controls, etc. are newly inside the Overton Window.

Re: G7: Rich nations back deal to tax multinationals

#412

Post by HWR_14 » Sat, Jun 05, 2021, 4:30 PM UTC

amelius wrote: post #159

Naga wrote: post #15

Earlier quoted context omitted.

It's complicated. "Money they made in their country" is hard to define. Large companies abuse intangible assets to shift profits around, but it's hard to say at what point abuse starts. For example, Google USA sells advertising to its clients. But, the assets it is selling are actually owned by Google Ireland. Google Ireland charges Google USA a license fee of 100% of the revenue they made. Suddenly, Google USA has n…

> Probably the best solution is a minimum tax worldwide. Wouldn't that make companies pay taxes in countries they are based in (as opposed to where they make money)? Anyway this could be the push that the EU needed to start their own Silicon Valley.

> Wouldn't that make companies pay taxes in countries they are based in (as opposed to where they make money)?

If an American SaaS company sells a product hosted in Ireland to a company in Britain, where was that money "made"?

Re: G7: Rich nations back deal to tax multinationals

#413

Post by tablespoon » Sat, Jun 05, 2021, 4:31 PM UTC

njovin wrote: post #321

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

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…

> 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.

I agree, but like you mentioned, the externalities on innocent parties would be too great. Also a lot of companies do not issue dividends, so focusing on them would do no good in a lot of cases. I think a threefold strategy would need to be implemented:

1. Direct action against executives in the board (e.g. heavy fines amounting to a large fraction of their total compensation and/or jail).

2. Confiscation of dividends for a period of time.

3. Forced issuance of new shares to dilute existing shareholders, with sale proceeds going to the government.

One issue is that shares can be traded, so it's possible for a shareholder to benefit from some bad action, then avoid any punishment by selling the shares before the punishment is implemented. Maybe such people could be shared a per-share fine based on shares held at a particular date?

Re: G7: Rich nations back deal to tax multinationals

#414

Post by aero-glide2 » Sat, Jun 05, 2021, 4:31 PM UTC

logicchains wrote: post #229

dgb23 wrote: post #199

Earlier quoted context omitted.

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.

Even in US, they spend more on welfare than warfare. https://en.wikipedia.org/wiki/United_States_federal_budget#/...

Re: G7: Rich nations back deal to tax multinationals

#415

Post by closeparen » Sat, Jun 05, 2021, 4:32 PM UTC

world_peace42 wrote: post #268

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…

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.

Middle class families in single family homes are hoarding a scarce and essential resource. Billionaires in high rises aren’t. The idea is to punish bad behavior and reward good behavior, not to cut down the tall poppies.

Re: G7: Rich nations back deal to tax multinationals

#416

Post by closeparen » Sat, Jun 05, 2021, 4:32 PM UTC

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.

Groceries are exempt from sales tax.

Re: G7: Rich nations back deal to tax multinationals

#417

Post by nohuck13 » Sat, Jun 05, 2021, 4:33 PM UTC

pera wrote: post #335

nohuck13 wrote: post #322

Earlier quoted context omitted.

> 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 corpo…

To me "spent on wages" means on every employee's salary, not only the top 0.01% It would be pretty awesome if companies increased salaries for everyone at the same proportion of their interment of profit.

Yeah but you gotta use the tax code's definition of wages when arguing about the tax code ;)

> It would be pretty awesome if companies increased salaries for everyone at the same proportion of their interment of profit.

It would be pretty awesome if corporations didn't pollute our air too. But corporations are sociopathic profit maximizers. Presumably you support regulating their emissions, rather than just wringing your hands at the bad people. Moral suasion arguments are not effective as tax policies.

Re: G7: Rich nations back deal to tax multinationals

#418

Post by graphtrader » Sat, Jun 05, 2021, 4:35 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.

I know people personally that are always complaing about Amazon being too big and a monopoly while also being prime members and basically addicted to getting packages everyday in the mail. Sums things up pretty much.

Re: G7: Rich nations back deal to tax multinationals

#419

Post by rsj_hn » Sat, Jun 05, 2021, 4:36 PM UTC

toyg wrote: post #220

BTinfinity wrote: post #109

Earlier quoted context omitted.

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 profi…

First, this is not a treaty, it is an annoucement. To make the announcement a "real thing", each country needs to go back to their own legislatures and pass laws, and in those countries that are federal, they need to somehow get their states to pass laws. That then needs to trickle down into account changes, jurisdictional changes, etc. None of that has happened. What has happened is that leaders got together in a conference and issued a joint press release of an intention to address a certain problem within a framework of certain types of solutions. Think of it like the Kyoto agreement -- there is a big difference between popping some champagne corks and actually getting stuff done.

Re: G7: Rich nations back deal to tax multinationals

#420

Post by rubyn00bie » Sat, Jun 05, 2021, 4:37 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…

No. We would not be, just as we would not benefit from taxing corporations at 100% either.

There is a sweet spot, where the amount we tax generates more than it costs, this is known as the "fiscal multiplier." Tax breaks are among the worst incentives ever to exist and have the lowest net-return to society. A corporation paying no taxes, is then completely freeloading off of the countries they operate within. Tax breaks are handouts, full-stop. Tax breaks ONLY increase deficits by necessarily decreasing input (tax revenues) without a corresponding decrease in costs or increase in output. It's literally saying "you don't have to pay your share of taxes because you already make so much money." This is the precise reason Republicans run up the deficit. No one realizes tax breaks are a fucking hand out, we have a budget. "Tax breaks" are just the same kind of spending as food stamps, except they provide a negative return where as food stamps provides a positive one with something like a 1.73 multiplier (which is fucking awesome[1]). If we were taxing multinational corporations at a 70% tax rate, sure, then maybe a tax break might actually help stimulate some growth... but we sure as shit ain't even close yet.

The corporate tax rate should be something like 35% in the USA, but if you do the math it's closer to 17.5% on average that's paid (or was when I checked a couple years ago, I can't imagine it has improved). I can promise all of you, that the overwhelming majority of corporations aren't able deploy international tax avoidance strategies (and are paying really close to that 35%). So... then, 'cuz like averages, 'n' shit, that means (did I get a pun?) a handful of extremely large players are likely paying literally nothing in taxes to get the USA's average rate down to 17.5%.

It's pretty easy to go calculate these numbers for yourself, and to look into what things actually cost. I'd recommend anyone and everyone go take a gander at https://www.bea.gov/ and actually go do it.

[1] https://en.wikipedia.org/wiki/Fiscal_multiplier