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

Re: G7: Rich nations back deal to tax multinationals

#611

Post by a1369209993 » Sat, Jun 05, 2021, 7:36 PM UTC

codetrotter wrote: post #67

hliyan wrote: post #37

Earlier quoted context omitted.

Good. I didn't think such a global minimum was politically possible. There was recently an article on HN where the author claimed that high tax rates don't impact high net worth individuals because they have already made their money. It just makes it harder for others to join the club. Perhaps what we need is a global maximum wealth (rather than income) cap, as a multiple of global median per-capita wealth. Perhaps s…

https://www.wolframalpha.com/input/?i=y+%3D+10000+*+0.99%5Ex... It will then take slightly over 229 years until the multiplier has shrunk from 10,000 to 1,000. After another 229 years the multiplier will have shrunk another order of magnitude, from 1,000 to 100. And it makes sense mathematically that if it shrinks an order of magnitude in the first 229 years then it will shrink another order of magnitude in the next…

I mean, that clearly doesn't seem reasonable long-term to any mathematically literate layperson, since after ~917 years, the maximum wealth would be less than the median. (10'000x * .99^917 = 99.42%) But I suppose it's not like it'll last that long before corruption sets in anyway.

Re: G7: Rich nations back deal to tax multinationals

#612

Post by a1369209993 » Sat, Jun 05, 2021, 7:39 PM UTC

bluecalm wrote: post #541

thinkloop wrote: post #54

Earlier quoted context omitted.

The problem is a wealth tax is almost impossible to implement. People will form crappy charities or put the money in their kids' names or move it to the Caribbean or some other gymnastics that will make worse use of the money overall.

There is one asset you can't hide - land. Tax that.

I predict your proposal will significantly increase the demand for yachts.

Re: G7: Rich nations back deal to tax multinationals

#613

Post by saddlerustle » Sat, Jun 05, 2021, 7:40 PM UTC

gbear605 wrote: post #502

saddlerustle wrote: post #291

Earlier quoted context omitted.

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.

While yes liquidity drives share prices over the short term, as a general rule that's nonsense. What do you think it means for them to be "valued as a commodity"? Why do you think shares have any value at all, or have any connection with company performance? Over just the past 3 years facebook has paid out almost $30 billion to shareholders through repurchases and has plans to pay out $25 billion more. That's the majority of what its market cap was just 8 years ago, and it's still a growing company. Do you think it does that just for the fun of it?

Re: G7: Rich nations back deal to tax multinationals

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Post by Negitivefrags » Sat, Jun 05, 2021, 7:41 PM UTC

Naga wrote: post #15

amelius wrote: post #6

Earlier quoted context omitted.

> 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 ?

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…

In theory this is fixed by the the laws around “Transfer Pricing”.

You are supposed to be able to prove that the deal between your different international entities is an arms-length agreement. That is to say that the revenue sharing agreement is similar to what would be negotiated between unrelated companies.

In order to do that you are supposed to be able to show evidence that the deal is similar to other deals in your industry and such.

I don’t know how Google would get away with a licence fee of 100% under those laws so I kind of doubt that that is what they have in place.

However, let’s say they have a 30/70 split with 70% going to the IP holder (Ireland company) and 30% going to the selling agent (USA company).

Now it’s in the best interest of the company to attribute as many of the expenses of providing the service to the USA company so that we can get its profit down to zero. The profit margin of the US company might be 0% (so no tax) while the profit margin of the Ireland company is near 100%.

Re: G7: Rich nations back deal to tax multinationals

#615

Post by OJFord » Sat, Jun 05, 2021, 7:42 PM UTC

throwaway894345 wrote: post #554

xxpor wrote: post #494

Earlier quoted context omitted.

The US would sanction them, and then they'd be screwed.

Why don’t countries do this already? E.g., most European countries and presumably the US dislike that Ireland undercuts corp tax, so why don’t they penalize corporations who operate in their borders but are headquartered in a country that doesn’t have agreeable tax laws?

Well they sometimes do (e.g. fine them) but at a scale where it matters these are companies that also have leverage - if Amazon responded 'Ehhh we might stop delivering to the UK then, Brexit is already an expense, with this too ...' and then the Government is the government that lost/banned/there-is-no-good-spin Amazon.

Within the EU, (or EEA perhaps) I vaguely recall there's some restriction against penalising for things like this, as long as the other nation is also a member state. (Since viewed as a whole, 'one EU', it should be fine, I suppose.) Struggling for the right words ro search though.

Re: G7: Rich nations back deal to tax multinationals

#616

Post by YZF » Sat, Jun 05, 2021, 7:43 PM UTC

rufus_foreman wrote: post #603

ncallaway wrote: post #593

Earlier quoted context omitted.

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 contr…

>> After reaching satisfactory terms in the agreement, I need to run the agreement by my business partner and ensure he approves Do you think Mitch McConnell sees US Treasury Secretary Janet Yellen as his business partner? Or vice versa? That's your perception? >> The G7 has reached a deal—that doesn't mean the deal is now effective or legally binding So if I'm negotiating with you and you tell me we have a deal, I s…

There's all sorts of outcomes here. While you may be right that the US will not sign on to the deal it might still have to deal with some consequences. E.g. while Yellen may not have the ability influence US tax laws there are also foreign tax laws that are part of this over which McConnell has no control. Let's say the rest of the G7/G20/OECD changes the way they tax global companies, if the US doesn't ratify their side there's still plenty of real world consequences. I think Yellen's agreement does count as in this is the US's (sort of foreign policy?) position, i.e. the rest of the world can proceed to make changes based on that agreement even though Yellen does not have the authority to commit to changing US tax laws.

Re: G7: Rich nations back deal to tax multinationals

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Post by wolverine876 » Sat, Jun 05, 2021, 7:43 PM UTC

caymanjim wrote: post #543

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…

Not every international agreement is a treaty. You're right, though; this is merely an agreement in principle and has no force whatsoever. That doesn't mean it won't lead to actual legal changes, but this article is misleading.

> this is merely an agreement in principle and has no force whatsoever

You mean that it's unenforceable in a court, but that doesn't mean at all that it lacks force:

Court enforcement isn't the the only force. If your boss, client, spouse, etc. pressures you to do something, it can't be enforced in a court, but it can have great force. We all are subject to great social pressure in our behavior, conduct, life choices, etc. - we all generally speak the same language, dress the same, follow the same life and career paths, avoid socially unacceptable things (even those that are unfairly discriminated against), etc. HN mods have great influence here, even though they have no means of court enforcement (in any practical sense).

International relations in particular has no law, in the sense of a court that can make enforceable decisions. In a sovereign legal sense, it's anarchy. There is no international sovereign government (the UN is a conference of sovereign governments). But obviously a great deal is done which has real force. It's actually very interesting to see the creative ways in which 'international law' (again, not the same as a sovereign government's law) is crafted, given that very significant constraint, in order to give it force and effectiveness. Note that the G7 is exceptionally influential despite having no legal power - why do you think these very powerful, busy people are spending their time there?

The President controls the Executive Branch of the U.S. government. Their decisions have great legal force. Politically, those decisions mostly carry forward to future presidents.

Re: G7: Rich nations back deal to tax multinationals

#618

Post by chriscappuccio » Sat, Jun 05, 2021, 7:43 PM UTC

throwaway894345 wrote: post #554

xxpor wrote: post #494

Earlier quoted context omitted.

The US would sanction them, and then they'd be screwed.

Why don’t countries do this already? E.g., most European countries and presumably the US dislike that Ireland undercuts corp tax, so why don’t they penalize corporations who operate in their borders but are headquartered in a country that doesn’t have agreeable tax laws?

without the cabal agreeing on taxes and penalties, the corporations would simply move to the lower tax rate districts

Re: G7: Rich nations back deal to tax multinationals

#619

Post by rufus_foreman » Sat, Jun 05, 2021, 7:45 PM UTC

wolverine876 wrote: post #605

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…

> in the US, finance ministers don't have the power to agree to treaties The U.S. Secretary of the Treasury speaks for the President; it's a fundamental dynamic of organizations. Otherwise, effectively Yellen wouldn't be Treasury Secretary - Yellen would be powerless and meaningless - and would resign or be fired. Only Trump seemed to ignore this and undermine the people under him. Also, I expect that the Treasury Se…

Here's what it says in the Constitution:

"The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises"

Crystal clear.

Re: G7: Rich nations back deal to tax multinationals

#620

Post by indigo945 » Sat, Jun 05, 2021, 7:49 PM UTC

a1369209993 wrote: post #572

dalbasal wrote: post #542

Earlier quoted context omitted.

IDK what you mean by "constraints preventing the money printer," but in the eurozone we have the opposite problem. Only the ECB can "print" money, or rather, only the ECB can create primary loans to national governments. National banks can't. In practice, expanding national debt requires eurozone-wide unanimity. Ask Greece.

> Only the ECB can "print" money > expanding national debt I feel the need to point out that currency debasement is a fundamentally different thing from taking out loans/issuing bonds/other debt. If anything, currency debasement reduces national debt in real terms, by devaluing the currency it's denominated in. I'm not especially clear on the situation, but I was under the impression that Greece's problem was that no…

But Greece is prohibited from printing money because it's currency is the Euro, and like all countries that have it, Greece had to sign the stability pact and, more importantly, also had to sign off the right to print more Euros. Only the European Central Bank can print money, and Greece can't tell it when to.