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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

#591

Post by ketzu »

rufus_foreman wrote: post #540

>> The G7 group of advanced economies has reached a "historic" deal to make multinational companies pay more tax No, it hasn't. Some finance ministers met and talked: "Finance ministers meeting in London agreed to battle tax avoidance by making companies pay more in the countries where they do business. They also agreed in principle to a global minimum corporate tax rate of 15% to avoid countries undercutting each ot…

I was under the impression that "agreed upon" for international diplomacy was regularly used before ratification by any national government or parliament, because that is usually the required first step. It might still fail later on before becoming law.

I think it is the same for national things as well, e.g., two government parties in a coalition "agreeing" to make a law, even though it was an out-of-parliament discussion and has not been voted on in parliament and might never make it that far.

Re: G7: Rich nations back deal to tax multinationals

#592

Post by nickysielicki »

rufus_foreman wrote: post #540

>> The G7 group of advanced economies has reached a "historic" deal to make multinational companies pay more tax No, it hasn't. Some finance ministers met and talked: "Finance ministers meeting in London agreed to battle tax avoidance by making companies pay more in the countries where they do business. They also agreed in principle to a global minimum corporate tax rate of 15% to avoid countries undercutting each ot…

They print the money, though! They can force businesses to denominate in dollars, inflate the dollar to construct a 15% tax, and make up the difference for individuals through transfer payments and UBI.

I’m making a rhetorical point here, but this isn’t as far fetched as it might sound at first. When you look at the numbers coming out of the fed, it’s pretty clear who is calling the shots and it’s not the Congress.

Re: G7: Rich nations back deal to tax multinationals

#593

Post by ncallaway »

rufus_foreman wrote: post #540

>> The G7 group of advanced economies has reached a "historic" deal to make multinational companies pay more tax No, it hasn't. Some finance ministers met and talked: "Finance ministers meeting in London agreed to battle tax avoidance by making companies pay more in the countries where they do business. They also agreed in principle to a global minimum corporate tax rate of 15% to avoid countries undercutting each ot…

You're referring to the process of finalizing a treaty. That would be conceptually similar to "executing" an agreement between parties—the most important step that makes it legally binding!

But "reaching a deal" and "executing the agreement" are often different steps. When we have discussions with a client, and we negotiate on the terms we can reach an agreement on the negotiation before we actually execute the contract.

After reaching satisfactory terms in the agreement, I need to run the agreement by my business partner and ensure he approves. Sometimes the person who actually signs the contract may be a different party that I've never met or talked with during any part of our discussions.

All of which is to say the language here seems appropriate. The G7 has reached a deal—that doesn't mean the deal is now effective or legally binding. Deals that have been reached can still fall through. But the G7 has reached a deal. What they haven't done is yet made it legally binding through a formal treaty process.

Re: G7: Rich nations back deal to tax multinationals

#594

Post by a1369209993 »

HWR_14 wrote: post #412
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.

> 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"?

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

Britain. If corporations want to pretend that (for example) China has the authority to restrict what users in China see on foreign websites (cf recent Bing tank man mess, among many others), they can apply the same reasoning to tax liability.

Re: G7: Rich nations back deal to tax multinationals

#595

Post by SMAAART »

Strom wrote: post #365
SMAAART wrote: post #265

Earlier quoted context omitted.

that is an idea that I've been floating for a while, unfortunately people who don't understand economics and rely mostly on their feelings don't approve, and those are the majority of votes hence the politicians don't want to commit political suicide by promoting something like that. Think about it, a no tax corporate tax, yet taxing the recipients of dividends and distributions would: * eliminate tax heavens * forei…

This is how corporate taxes work in Estonia. There is no income tax, but dividends/distribution is taxed. I think it's great overall. However there are some loopholes that companies still figure out. In Estonia's case we have big international banks that found a juicy loophole. The local Estonian branches pay no corporate tax, but they also never pay dividends. Instead they give out a no interest loan to their foreig…

Let's face it, no regulation can ever be perfect, make rule(s) and someone will find loopholes, then... close the loopholes and the cycle continues.

That is life.

And that should not be an excuse to impede improving society.

Re: G7: Rich nations back deal to tax multinationals

#596

Post by anticensor »

whatever1 wrote: post #148
saddlerustle wrote: post #137

Earlier quoted context omitted.

Companies shifting profits to compensation is better for states than booking corporate profits, because income is taxed at a higher rate.

It depends. In my country there are examples of employers who were paying extra their employees (who were not taxed due to their pity salaries) and were requiring them to return part of their salary as cash.

> requiring them to return part of their salary as cash.

I thought that was illegal.

Re: G7: Rich nations back deal to tax multinationals

#597

Post by rsj_hn »

floren wrote: post #588
cal5k wrote: post #556

Earlier quoted context omitted.

Top marginal income tax rates in many countries now exceed 50%, not even considering payroll tax, property tax, sales tax, etc. The question is: how can anyone seriously support tax rates that high? After a certain level, more than half your time is spent working for the government - failure to pay means fines and possible jail time. This is serfdom. Higher corporate tax rates should not be applauded by anyone. Highe…

Between 1951 and 1963, the highest marginal tax rate in the US exceeded 90% [0]. This is a period of time generally regarded as one of booming economic growth in the US, an exceptionally good time to be in the middle class, and a time span looked upon fondly by your stereotypical American conservative. Edit: Why do people put up with it? Because of the progressive tax system. If my choices are a) earn $517k b) earn $…

During the same period, only a handful of families paid that rate. There was an enormous amount of tax avoidance[0], with the real rate actually paid by top incomes under 50%[0]. When the official rate was lowered by JFK, tax receipts surged. This is the "real" laffer curve. Now it's not clear where the Laffer point is, but it's certainly to the left of 90%.

[0] https://www.latimes.com/business/la-fi-nocera-tax-avoidance-...

Re: G7: Rich nations back deal to tax multinationals

#598

Post by clairity »

usrusr wrote: post #520
dalbasal wrote: post #203

Earlier quoted context omitted.

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…

So true. It's a fixing the algorithm vs tweaking some parameters situation. PS: if I were to design a state I would make it a part of the constitution that laws must either be written with placeholder variables for any concrete numbers you'd want to put into them or specify only concrete values for those placeholders and nothing else. And no single vote can contain both kinds at once.

rather than simple placeholder variables, we should employ placeholders for smoothly continuous functions over the relevant parameter space. for taxes, the parameter space might include revenue and profit, over which the tax is smoothly continuous. discontinuities just beg to be exploited.

Re: G7: Rich nations back deal to tax multinationals

#599

Post by a1369209993 »

hervature wrote: post #206
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…

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).

Actually, we don't - there is no legal/treaty reason why a government could not offer a negative corporate income tax rate (at least in the lowest N-1 tax brackets), and we may actually see that if corporate abuse of political processes is allowed to continue far enough.

Re: G7: Rich nations back deal to tax multinationals

#600

Post by specialist »

clairity wrote: post #598
usrusr wrote: post #520

Earlier quoted context omitted.

So true. It's a fixing the algorithm vs tweaking some parameters situation. PS: if I were to design a state I would make it a part of the constitution that laws must either be written with placeholder variables for any concrete numbers you'd want to put into them or specify only concrete values for those placeholders and nothing else. And no single vote can contain both kinds at once.

rather than simple placeholder variables, we should employ placeholders for smoothly continuous functions over the relevant parameter space. for taxes, the parameter space might include revenue and profit, over which the tax is smoothly continuous. discontinuities just beg to be exploited.

I eagerly await the broad recognition that economies are non-linear complex adaptive systems.
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