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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

#681

Post by ncallaway »

rayiner wrote: post #645
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…

Your analogy is flawed because you seem to be assuming that the people with execution authority are the ones who reached an agreement in principle. You’d expect them to succeed in papering it up. That’s not the case here. The agreement in principle was reached by someone who has no power to do anything with regards to corporate taxes. Congress sets U.S. tax law and agrees to treaties. To do that, you need 60% or 66%…

My analogy is really just a reference to what "reached a deal" colloquially means.

"reached a deal" doesn't mean the deal absolutely 100% will be implemented. It means, the referenced parties have reached an agreement to something.

In this case, the leaders of the G7 countries have reached an agreement among themselves to have a minimum corporate tax rate. Note that the United States has no obligation according to this deal—only Joe Biden has agreed the deal. And Joe Biden has no legal obligation under the deal, he merely has a reputational one.

Since the agreed minimum corporate tax rate is 15%, and the United States corporate tax rate is 21% there's literally nothing Joe Biden needs to do in order to meet the terms of the deal he made with the other G7 leaders.

If they want to turn this into an international treaty, absolutely, GOP Senate votes will be needed (though, given that the treaty would create a floor that's 6 percentage points below our current tax rate, I would imagine those would be attainable votes—if the GOP created a global floor that was lower than our tax rate, they could use it to argue for lowering our corporate tax rate).

Re: G7: Rich nations back deal to tax multinationals

#682

Post by dwaltrip »

rufus_foreman wrote: post #675
ncallaway wrote: post #664

Earlier quoted context omitted.

> > "The G7 group of advanced economies has reached a historic deal to make multinational companies pay more tax" > Is that true? Yep! Because a "deal" can be something that is provisional. "Reached a deal" to me doesn't in any way mean that the deal has been executed, finalized and is legally binding. It means the first step of negotiations has been completed and all parties are agreeing to the terms of the deal. Lo…

If I say we had a deal and you say well we did last Tuesday but not now, I know not to make deals with you ever again.

Couldn’t you first ask to finalize it in writing?

Re: G7: Rich nations back deal to tax multinationals

#683

Post by philjohn »

HWR_14 wrote: post #469
Ericson2314 wrote: post #329

Earlier quoted context omitted.

But then it's highly unfair to tax humans on revenue , but corporations on profit . I think the right answer is VAT + externalities taxes (LVT, Cabon tax, etc.) + UBI, which is both very easy to enforce and perhaps net progressive enough. Re "progressive enough": I don't so much care if BWM owners are screwed over relative to private jet owners on paper, I think reducing work hours and propping up demand at the botto…

> But then it's highly unfair to tax humans on revenue, but corporations on profit. Wow, it's a good thing we don't do that. Good news, the income you spend to further your business is deductible. We include a personal exemption for generic costs, child exemptions, mortgage exemptions, healthcare cost exemptions, retirement savings exemptions, and numerous others. Additionally, the whole concept behind a progressive…

In some countries, true. In the UK about the only things you can deduct are:

1. Pension (up to a maximum amount, and tapered down from 40k to 4k depending on income) 2. Cycle to Work bike 3. Childcare vouchers

There's also some allowance if you're required to purchase things for your job, e.g. a uniform or tools, but vans, cars etc. are out.

Re: G7: Rich nations back deal to tax multinationals

#684

Post by IanCal »

ashtonkem wrote: post #478
IanCal wrote: post #253

Earlier quoted context omitted.

> You’re ignoring that the companies can just keep lots of cash without distributing it to individuals Nobody benefits from a company growing indefinite wealth without distributing it to actual people. > So for example the company can rent houses, cars, and airplanes for every employee If they could do this, all companies would do this already to avoid taxes. In reality, this is dealt with by (in the UK) considering…

> Nobody benefits from a company growing indefinite wealth without distributing it to actual people. And yet companies actually do this. Perhaps your model of what motivates companies is wrong?

Companies tend to pay wages, dividends or use capital for growth to pay for those.

Re: G7: Rich nations back deal to tax multinationals

#685

Post by kergonath »

YZF wrote: post #655
rufus_foreman wrote: post #625

Earlier quoted context omitted.

>> I think Yellen's agreement does count as in this is the US's (sort of foreign policy?) No it doesn't work like that. To get anything done, you need Republican votes. I have no idea, I haven't checked this afternoon, how many Republican votes do you have for a minimum corporate tax? That's what I want to know, I'm guessing it is zero, but let me know what the number is.

I'm not sure why Canada imposing a tax on Google's revenue in Canada requires US Republican votes? Or what the Republicans would do about it? So seems like we can get a lot of things done without those votes. Most of these companies are US based and they are effectively dodging taxes in other countries, it's not the US tax laws that impact those for the most part.

Indeed. Luckily, “the world” ≠ ”the US”.

Re: G7: Rich nations back deal to tax multinationals

#686

Post by jedberg »

cm2187 wrote: post #662
jedberg wrote: post #629

Earlier quoted context omitted.

An agreement can be reached without a treaty. But that's not even super relevant here. The US doesn't need to change any laws to meet this agreement. We already tax our corporations more than 15%. What the US wants is for other countries to tax that much, to discourage our own multinationals from booking revenue outside the US to avoid US tax. The EU wants companies to book revenue where they make it, which they can…

The agreement changes the way a company revenue is recognized and allocated between jurisdictions. I suspect it may require to change the tax treaties between those countries. It's not just changing the corporate tax rate.

From what I can tell with what's out there on there internet, the main change is allowing local jurisdictions to tax a company on the money they make in that country, even if they have no presence there.

So again, it would just increase revenue for the US, and I see no reason they wouldn't agree to it.

At the end of the day, I don't think the US had to compromise here. I think it's universally better for the US government, just not US based companies, but it gives the GOP enough air cover to agree to it anyway.

It mostly benefits the European countries that are missing their tax revenue.

Re: G7: Rich nations back deal to tax multinationals

#687

Post by saddlerustle »

dalbasal wrote: post #657
saddlerustle wrote: post #623

Earlier quoted context omitted.

That's not how it works at all. Apple Ireland is used to defer taxation on non-US sales, but those profits still needs to be eventually repatriated in order to pay out dividends and fund US R&D, which is the majority of its fixed costs. Profits from US sales stay in the US, and on net Apple Ireland pays Apple US 10's of billions a year. You can see their filings here: https://core.cro.ie/e-commerce/company/112189

How does Apple's money get to Ireland in the first place? I haven't read those filings (not gonna either, I have drinking to do), but I was under the impression that it was IP licensing. Google Ireland takes payment directly. Unless they've changed recently, all non-US adwords invoices are paid to here. Repatriation to pay dividends is fairly moot, since they don't pay dividends. Maybe this is one of the reasons buyb…

Apple pays a regular dividend and does regular share repurchases. Since 2012 its paid out about a half trillion dollars to shareholders. These are equivalent from a corporate accounting point of view, share buybacks are paid out after US corporate taxes are paid. Buybacks are preferred recently just because of the better tax treatment from an investor point of view, it changes nothing for the company.

As for how the money gets to Ireland, most of Apple's non-US operations are subsidiaries of Apple Ireland. For illustration, there's this (somewhat outdated) graph of the revenue flows on wikipedia: https://upload.wikimedia.org/wikipedia/commons/a/a5/Apple%27...

Re: G7: Rich nations back deal to tax multinationals

#688

Post by dalbasal »

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…

I feel like I need to point out that they are identical, inasmuch as debasement means anything in our current currency systems.

Debasement of gold happens because gold isn't printed. You need to dilute it in order to make more coins. In a gold currency system, it's the gold that's the "real" currency. Gold value rises and falls, but that's not debasement. The coins are debase. It's theoretically possible for a gold coin to be debased, but also worth more because the value of gold has increased by more than the coin has been diluted.

Euros and dollars aren't redeemable for anything, so debasement doesn't really mean anything.

In the Eurozone, when a national government runs a deficit (all of us, currently) then the ECB issues a loan. That money is then available for the government to spend. This is where Euros come from.

The ECB refused to loan/print money to the Greek government until they agreed to certain demands. Ireland, my country, did agree to the demands and the ECB made some euros for us to pay our banks with.

It works in a similar way in the US. The Federal Reserve Bank gives their government dollars, and they US government give them bonds in exchange... a loan. The Fed can then sell those bonds to anyone who wants them, or hold them.

The one unbreakable eurozone rule is no printing your own money. The "Greek Crisis" was a fear the Greece would try to issue its own bonds, which would trade at a different rate & effectively create their own separate euro... confusing everyone.

Re: G7: Rich nations back deal to tax multinationals

#689

Post by dragonwriter »

rsj_hn wrote: post #639
toomuchtodo wrote: post #631

Earlier quoted context omitted.

Reconciliation requires no Republican votes. https://www.brookings.edu/blog/up-front/2021/02/05/what-is-r...

You are not going to ratify a treaty with the required 2/3 votes in the Senate via reconciliation.

> You are not going to ratify a treaty with the required 2/3 votes in the Senate via reconciliation

Which is among the reasons this won’t technically be a treaty in US law (even if it is in international law), but a Congressional-executive agreement [0].

[0] https://legal-dictionary.thefreedictionary.com/Congressional...

Re: G7: Rich nations back deal to tax multinationals

#690

Post by ncallaway »

rufus_foreman wrote: post #675
ncallaway wrote: post #664

Earlier quoted context omitted.

> > "The G7 group of advanced economies has reached a historic deal to make multinational companies pay more tax" > Is that true? Yep! Because a "deal" can be something that is provisional. "Reached a deal" to me doesn't in any way mean that the deal has been executed, finalized and is legally binding. It means the first step of negotiations has been completed and all parties are agreeing to the terms of the deal. Lo…

If I say we had a deal and you say well we did last Tuesday but not now, I know not to make deals with you ever again.

That's totally fair! I don't disagree that people who reach a deal shouldn't change the deal after that point (though the UK government seems to think it's fine).

But, suppose the following events happen:

- we reach a deal on some cool project

- reporters announce that we have a deal on the cool project

- I decide to back out of our agreement and not go forward with the cool project

- reporters announce that I backed out of our agreement

- You condemn me for my treachery, and tell everyone that I'm a backstabbing two-faced used-car dealer

- reporters announce that you have condemned me

The reporters aren't wrong at any step in this! We did have a deal, and it's correct to report on it and correct to say we had a deal. Even if the deal ultimately fell through to my used-car treachery.

I'm not saying people shouldn't hold to the deals that they make (though you seem to think that's my argument, so I must've made my point poorly somewhere along the way). 100% of my point is "reached a deal" doesn't mean it's final, and it's OK and even correct to say that a group of people have reached a deal—even if you don't think that deal is feasible.

Another example: Let's say that I form a deal with 10 investors that I will guarantee them a risk-free 50% annual return on their investment. You would be absolutely correct to say that I was probably lying! You would be correct to say it's clear that malfeasance exists! But you would be wrong to say that we didn't reach that deal. We did reach that deal, even if you think there is a 0% chance that the deal will actually be accomplished in the real world.

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