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

Re: G7: Rich nations back deal to tax multinationals

#501

Post by 542458 » Sat, Jun 05, 2021, 5:29 PM UTC

mohanmcgeek wrote: post #460

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…

> Google Ireland charges Google USA a license fee of 100% of the revenue they made. This can be solved by placing a duty on large cross border IP fee transactions. US is the country that's opposed to putting tariff on IP

There are lots of legitimate high-value cross border IP transfers, and since the US creates a lot of valuable IP it makes perfect sense that they’d oppose this.

Re: G7: Rich nations back deal to tax multinationals

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Post by gbear605 » Sat, Jun 05, 2021, 5:30 PM UTC

saddlerustle wrote: post #291

unreal37 wrote: post #290

Earlier quoted context omitted.

The company doesn't have an obligation to pay this money to their shareholders, ever. You might die (of old age) before you get your initial investment in Facebook shares back as dividends.

If that was deemed likely, the company's shares wouldn't be worth anything. Facebook and Google routinely do share buybacks these days (which is equivalent to paying dividends)

Shares, especially in big tech companies, are nowadays mostly valued as a commodity not for the dividend value. Even ignoring meme stocks like TSLA or GME, stocks like Facebook or Google are never going to pay back enough in dividends or buybacks to justify the price.

Re: G7: Rich nations back deal to tax multinationals

#503

Post by tonyedgecombe » Sat, Jun 05, 2021, 5:30 PM UTC

greenwich26 wrote: post #91

tonyedgecombe wrote: post #23

Earlier quoted context omitted.

>Why are governments allowed to collude like this? Because otherwise everything becomes a race to the bottom.

Countries competing with each other to offer attractive business environments with the lowest taxes is a race to the top, not the bottom.

Countries competing with each other to lower environmental standards, workers rights and social programs is a race to the bottom.

Re: G7: Rich nations back deal to tax multinationals

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Post by HWR_14 » Sat, Jun 05, 2021, 5:30 PM UTC

edoceo wrote: post #492

HWR_14 wrote: post #412

Earlier quoted context omitted.

> 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"?

Just tax the revenue in the country where the money changed hands. (The client's home) That's the taxable event. So, I think, for your case, Britain (UK)

How did the money change hands in Britain? The British person typed his CC number into a web form that routed to a server in the Cayman Islands that charged a bank in France. That bank in France will then demand repayment at the end of the month from the guy in Britain.

Re: G7: Rich nations back deal to tax multinationals

#505

Post by ben_w » Sat, Jun 05, 2021, 5:31 PM UTC

hutzlibu wrote: post #483

rmah wrote: post #480

Earlier quoted context omitted.

[edit] "all but the four largest"... my bad, I misread. Not sure why comparing mega-corps to small nations has much value though. Not sure where you got your info, but I'm afraid it seems inaccurate. The total wealth of the four largest EU nations, as of 2019, are as follows: Germany: $14.7T UK: $14.3T France: $13.7T Italy: $11.37T Just FYI, the three wealthiest nations are: the US at $106T, China at $64T, and Japan…

" of all but the four largest " So those 4 not included.

Was about to say much the same; as the UK isn’t in the EU, Spain was in the other country in my not-included-four.

Re: G7: Rich nations back deal to tax multinationals

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Post by crisdux » Sat, Jun 05, 2021, 5:32 PM UTC

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 currently the top comment and it includes obvious misinformation. 28% was never proposed by the Biden administration for the global minimum tax.

Re: G7: Rich nations back deal to tax multinationals

#507

Post by ulzeraj » Sat, Jun 05, 2021, 5:33 PM UTC

toyg wrote: post #202

etherael wrote: post #167

Earlier quoted context omitted.

This is just G7 isn't it? Seems to me like all the typical very low tax jurisdictions you'd select for as somebody optimizing tax with the freedom to locate wherever you choose are still open.

This is the first step. G7 can then strongarm or cajole their "client states" with coordinated action. Even just the fact that such action is finally happening, is a great step. This was considered a sci-fi scenario 20 or 30 years ago and now it's become reality.

They can't even prevent corporations within their own borders from using Uyghur slave labor.

Re: G7: Rich nations back deal to tax multinationals

#508

Post by dkersten » Sat, Jun 05, 2021, 5:33 PM UTC

mohanmcgeek wrote: post #475

dkersten wrote: post #170

Earlier quoted context omitted.

Maybe an import duty needs to be applied. Importing the Irish whiskey will incur a duty. Google US paying a 100% license to Google Ireland should also incur a duty charge for importing the license from Ireland. Something like that, anyway.

Yes! Exactly this. Except the reason it's not done today is because back in the 90s, people argued that it's not possible to tell if/when services/IP crossed borders because there's no fixed port of entry. (They were making this argument because software CDs were subject to import duties but downloads were not and that they were unfair) Today it's still the case and services/IT are not subject to duties.. but I think…

The solution is simple enough: look at the companies books, if money is leaving the country, duty is charged unless it can be accounted for by something else (like the existing duty on physical goods).

IRS: Hey Google, you said you made this much money, so you owe us tax.

Google: No, see, here we paid it to Google Ireland as IP license fees, so we in fact made $0

IRS: Great, you owe us duty on that payment

Re: G7: Rich nations back deal to tax multinationals

#509

Post by eloff » Sat, Jun 05, 2021, 5:33 PM UTC

ben_w wrote: post #248

amelius wrote: post #159

Earlier quoted context omitted.

> 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.

> Anyway this could be the push that the EU needed to start their own Silicon Valley. Given the combined market caps of Apple, Microsoft, and Amazon (~$5.6T) is larger than the national net worth of all but the four largest EU countries, I don’t think there’s a lack of motivation here.

You can't compare market cap to GDP. If you compare to actual net ( you're actually comparing GDP) worth the numbers are very different.

Re: G7: Rich nations back deal to tax multinationals

#510

Post by jdikatz » Sat, Jun 05, 2021, 5:34 PM UTC

refurb wrote: post #326

jdikatz wrote: post #270

Earlier quoted context omitted.

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 implement…

On (1), I’m speaking from an allocative efficiency standpoint (should have been more precise). For example, say I’m a company selling in NY, I can locate production in NJ or AZ, and pretax it is cheapest to locate in NJ. If AZ offers a tax incentive that makes it cheaper for me to locate in AZ I’ll do it, but if you sum up pretax revenue minus costs they are lower than had I located in NJ. So this is a transfer from NJ coffers to company profits + AZ coffers, but it is negative sum.

Not sure I understand what you’re saying on (ii). I think you’re saying that if countries have to compete for business, then, holding fixed their statutory tax rate, they have an incentive to improve bureaucratic efficiency to increase resources available (given the statutory tax rate). But I think the issue is you get competition on the statutory rate, which pushes rates towards zero. I actually think a minimum tax which binds and hence constrains the statutory rate could provide a great incentive along the lines youre talking about to optimize bureaucracy.

On (iii), I’m guessing a minimum tax wouldn’t bind in countries willing to explicitly expropriate FDI. Also having a minimum could limit the scope to vary effective rates for individual companies as carrots / sticks, which if anything could reduce corruption.