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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

#431

Post by reedjosh »

nojokes wrote: post #395
ericjang wrote: post #388

Earlier quoted context omitted.

I agree about the "corporate tax creates work in tax avoidance", but if corporate taxes are abolished, wouldn't it drive more individuals to incorporate their own businesses? The tax avoidance industry now shifts to servicing individuals, and again we find ourselves with inequality between individuals who can afford those services and those who cannot. An alternative way to tax would be to simply raise interest rates…

If they want to use their money then they have to pay dividends or wage.

Unless they run a catering business out of their home.

They need furniture, computer, food, and a home for that business, so boom...using the money 'for the business' tax free.

Re: G7: Rich nations back deal to tax multinationals

#432

Post by helsinkiandrew »

amelius wrote: post #6
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…

> 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. Why is this necessary, if countries can just tax companies based on the money they made in their country ?

Take for example an international coffee bar company with locations all over the world. They can transfer the ownership of the name, brand, styling, product recipes to a country with zero or low tax. Each cafe takes care of buying its own coffee but pays a license to use the name and branding

When someone in a small town in some part of the world goes to one of the branches instead of a local independent coffee house - isn't it a large part due to the branding of the company? the coffee is just a commodity costing a few pennies - all the value is made by the brand and the recipe owned by the company in the low tax country.

Re: G7: Rich nations back deal to tax multinationals

#433

Post by gorbypark »

fastball wrote: post #380

> It was reported this week that an Irish subsidiary of Microsoft had paid zero corporation tax on $315bn (£222bn) profit last year because it was resident in Bermuda for tax purposes. This is just flat wrong, right? MSFT's profits last year weren't even close to that.

I think the consensus is that Microsoft shifted some assets from it’s Irish shell company to another shell company and recorded a bunch of “profit“ because of it.

Re: G7: Rich nations back deal to tax multinationals

#434

Post by bobthechef »

I would love to know the real motives. I don't automatically buy the "ensure fairness for the middle class and working people" line. "Love for the people" is always the stated motive of all oligarchs and tyrants. And frankly, these politicians aren't exactly in some adversarial relationship, or at the very least a legal supervisory one, with corporations. That myth died a long time ago. Better to ask: why would corporations allow for something like this? Why would their political allies push for this? Somehow it must be in their interest. Perhaps they're hedging because they sense a real threat and have chosen to concede in some way, or perhaps this actually contributes to furthering some perceived advantageous end.

Re: G7: Rich nations back deal to tax multinationals

#435

Post by bumby »

throwaway34241 wrote: post #405
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

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 alrea…

Is this similar to a gross receipts tax?

Re: G7: Rich nations back deal to tax multinationals

#436

Post by throwaway34241 »

optimiz3 wrote: post #423
throwaway34241 wrote: post #405

Earlier quoted context omitted.

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 alrea…

> Humans are taxed on their income. Corporations are taxed on their profit Not true. States like WA have general B&O taxes which are a tax on revenue, not profit. This makes it much harder to operate thin margin businesses like groceries and manufacturing, while favoring high margin businesses like software.

Sure, I believe Ohio has something similar. More significantly I think (in percentage terms), there are already sales taxes and VATs.

But when people are discussing the corporate tax and corporate tax avoidance, usually they're talking about the corporate income tax, which is also what the article is about.

Re: G7: Rich nations back deal to tax multinationals

#437

Post by closeparen »

cycomanic wrote: post #209
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…

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…

What I generally hear is a wealth inequality frame: raise taxes on the rich so that they won’t accumulate savings so fast. Income inequality is much steeper than consumption inequality, and taxes are proposed at the top end of income, not consumption. So it is already sensitive to this concern, and steering clear of reducing personal spending.

Now it’s true that invested savings become goods and services, capital purchases, etc. for the companies you invest in. But the idea is that government will take over some of that role and invest the taxes collected in more socially beneficial activities, with returns accruing to the public.

Re: G7: Rich nations back deal to tax multinationals

#438

Post by hn_throwaway_99 »

TacticalCoder wrote: post #426

Is this really about taxing multinational companies or is this about establishing a "minimum 15% corporate tax rate" for every SME and mom and pop shop? TFA says that Ireland is going to accept the change: atm they've got a 12.5% tax rate. What about Hungary? Corporate tax rate at 9%. Once this shall be in place, the one sure thing is this "minimum 15%" is only ever go up, never down. There won't be any incentive eve…

> What about Hungary? Corporate tax rate at 9%.

That's the whole point of this agreement, it doesn't matter what Hungary does. I mean, if a business wants to only sell in Hungary, sure, but what this agreement does is prohibit multinationals that want to sell in any of these G7 nations from cooking up the corporate fiction where a company is "headquartered" in a low tax jurisdiction, and then the "real" company pays all of their income to this shell corp in "licensing fees".

Re: G7: Rich nations back deal to tax multinationals

#439

Post by trasz »

TacticalCoder wrote: post #426

Is this really about taxing multinational companies or is this about establishing a "minimum 15% corporate tax rate" for every SME and mom and pop shop? TFA says that Ireland is going to accept the change: atm they've got a 12.5% tax rate. What about Hungary? Corporate tax rate at 9%. Once this shall be in place, the one sure thing is this "minimum 15%" is only ever go up, never down. There won't be any incentive eve…

SMEs tend to already pay their taxes, as opposed to corporations.

Re: G7: Rich nations back deal to tax multinationals

#440

Post by eloff »

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 remember my economics professor arguing that would be the most efficient tax after he explained how all taxes have the side effect of reducing the thing being taxed.

So taxing something bad like CO2, great idea. Taxing something good like income or creating jobs - bad idea.

Land tax would be simple, and very progressive, the tax rate of most young people renting world now be 0. It's more complex than that because the landlord pays the tax and hikes the rent appropriately. It enforces that land is used efficiently, which is so dysfunctional in many large cities.

It's a great idea in my opinion. You'd solve taxation, eliminate personal accountants as a class, and solve the housing crises with one stroke (there is still zoning, but this makes poorly zoned land undesirable to hold because it bleeds money - creating an incentive for the land owners to vote for zoning the land better). But politicians deal with popular ideas, not smart ideas. The odds of any country trying it seem slim.

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