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

Re: G7: Rich nations back deal to tax multinationals

#691

Post by dragonwriter » Sat, Jun 05, 2021, 9:03 PM UTC

rsj_hn wrote: post #679

ncallaway wrote: post #654

Earlier quoted context omitted.

You don't need to ratify a treaty through reconciliation. There's no need for this to be done with a formal treaty. It could simply be each of the nations passing laws that do the same thing. If the Senate passes a law that changes the corporate tax rate to a certain amount, that is a budgetary measure that could absolutely be passed with reconciliation. Yes, this law wouldn't be a treaty, but it could have a similar…

> If the Senate passes a law that changes the corporate tax rate to a certain amount, that is a budgetary measure that could absolutely be passed with reconciliation. If it was revenue-neutral, sure. That is unlikely to be the case with changes to corporate tax rates. And even then, you are going to have a hard time getting even 50 votes.

> If it was revenue-neutral, sure.

No, revenue-neutrality doesn't weigh in favor of being eligible for reconciliation; a measure must principally address either spending, revenue, or the debt limit to be eligible for that process.

Re: G7: Rich nations back deal to tax multinationals

#692

Post by imtringued » Sat, Jun 05, 2021, 9:03 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…

Extremely short analysis. After 2008 Greece's GDP crashed by 50% over several years and stabilized 2016. It's pretty obvious that when you have a shrinking economy that your real debt burden is going up over time. 100% debt to GDP will turn into 200% and it's not because of irresponsible spending or low taxation.

If anything you have to lend more money to Greece and only give the most productive companies/sections of the government access to loans, if Greece's GDP was 355 billion € in the past it can recover up to that old level.

Re: G7: Rich nations back deal to tax multinationals

#693

Post by nickflood » Sat, Jun 05, 2021, 9:03 PM UTC

jakozaur wrote: post #163

Essentially countries are forming a cartel to set bottom income tax. Forming cartels by private companies to „fix” prices is illegal, but countries are free to do it. However, the actual mechanics of that tax is hard: 1. Countries can still do subsidies, but avoid touching income tax. 2. Taxing by income where revenue is generated is hard to compute. It would make sense to enforce it only on big multinationals. E.g.…

Countries are supposed to in the end benefit people who live in those countries. There are many things that countries do that private companies can't, like jail people without their consent, for example.

Re: G7: Rich nations back deal to tax multinationals

#694

Post by PragmaticPulp » Sat, Jun 05, 2021, 9:04 PM UTC

MrPowers wrote: post #425

klipt wrote: post #385

Earlier quoted context omitted.

Do you think that's a problem with existing property taxes? The main difference between property and land tax is that with a land tax, the structure isn't taxed. So you can build up "for free" wrt taxes, which encourages more density on the most valuable land. E.g. land in the middle of downtown San Francisco that's currently rented out as a flat parking lot, could instead be built up into multi level parking or hous…

San Francisco is an interesting case cause they used to have a land tax and economists argued that's what cause San Fran to be quickly rebuilt after it was burned to the ground in 1906. Land owners were still taxed the same, even though their building was gone. They'd have to either sell or rebuild. Contrast that with New Orleans after Hurricane Katrina. Property owners had their buildings destroyed, so taxes went to…

> San Francisco is an interesting case cause they used to have a land tax

Property taxes on land aren't unique to San Francisco. It's basically standard practice in most cities to have one tax for property and one tax for improvements.

> Contrast that with New Orleans after Hurricane Katrina. Property owners had their buildings destroyed, so taxes went to zero (taxes based on the property value, not the land value)

New Orleans has separate property taxes on land and structures, so property taxes did not go to $0 after Katrina.

Overall property tax rates went up because income from taxes on structures went down, but unimproved lots still get a tax bill.

Re: G7: Rich nations back deal to tax multinationals

#695

Post by kgwgk » Sat, Jun 05, 2021, 9:10 PM UTC

bonzini wrote: post #559

542458 wrote: post #546

Earlier quoted context omitted.

Two reasons: they’re not always actually intra company. Apple and Apple Ireland are different companies - and while intuitively it feels like you can just lump them together, it’s often much more complicated than that. Second, because it is actually moving money. If I’m a Canadian software company that does most of its sales in the US through an American subsidiary (not uncommon), the way it works is the American sub…

One is a wholly owned subsidiaries of the other. It's not of course a sufficient condition, but I m sure it's possible to distinguish the relationship between Apple and Apple Ireland from that between say Dell and EMC, or IBM and Red Hat, or the daughter companies of conglomerates like Berkshire Hathaway. > Otherwise the money would never get back to Canada and I wouldn’t be able to pay my developers! It doesn't have…

> You can just move all revenue back into headquarters' coffers

So it's actually moving money! And you need a reason to move money from one company (in the US) to another (in Canada). Call it sale, call it IP licensing...

Re: G7: Rich nations back deal to tax multinationals

#696

Post by nostrademons » Sat, Jun 05, 2021, 9:10 PM UTC

thinkloop wrote: post #54

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…

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.

If the wealth tax is uniform it doesn't matter if they put it in crappy charities or their kids names or whatever - the crappy charity or kids will still need to pay the tax.

I see bigger problems with evasion and valuation. Evasion can be solved by coupling the wealth tax with enforcement of property rights. You own an offshore bank account, somebody steals from that offshore bank account, you show up in court to prosecute them, and the government says "I'm sorry, we don't have any record of your ownership of this bank account, and you have never paid taxes on it." Oops. Also makes logical sense, as the function of the state is to enforce property rights.

Valuation is tricky, as a lot of wealth-producing assets are illiquid and it's hard to pin a specific value on them in the absence of a specific transaction. The way LVTs handle this is through statistics: you know what comparable land sells, you know what improvements are on it, you can run a regression against all the features that impact valuation and subtract them out to get a reasonable estimate of the value of the land itself. Something similar could work for income-producing assets: you know all the cash flows from the asset (because you've been declaring your income, right?), you can do a discounted cash flow analysis that smooths them out and arrives at an estimate of the NPV of the asset under current cash flow & interest rate conditions.

Re: G7: Rich nations back deal to tax multinationals

#697

Post by dragonwriter » Sat, Jun 05, 2021, 9:11 PM UTC

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…

> Treaties in the US require a super-majority (two thirds) vote in the Senate.

That's misleading, because what are called “treaties” in international law include more than what are called “treaties” in US domestic law, but also “Congressional-executive agreements” and some (but, IIRC, not all) “sole executive agreements.”

Virtually all “treaties” in the international sense that have come into force in US law in recent decades have been Congressional-executive agreements.

Re: G7: Rich nations back deal to tax multinationals

#698

Post by rufus_foreman » Sat, Jun 05, 2021, 9:14 PM UTC

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.

There's a term, G7, what are the 7?

Re: G7: Rich nations back deal to tax multinationals

#699

Post by bumby » Sat, Jun 05, 2021, 9:15 PM UTC

lostcolony wrote: post #584

bumby wrote: post #429

Earlier quoted context omitted.

Well they have a right to petition the government in the US at least. Would you say the same about what citizens prefer does not matter in a representative democracy?

Citizens tend to be all over the place when it comes to taxation. Traditional corporations are pure profit seeking entities. What they would -prefer- is to pay no taxes at all, while benefiting from all tax paid services they can. So I'm not really sure, given we're talking hypotheticals here anyway, that designing a system to tax corporations based on what they -prefer- is really going to get us anywhere. The curren…

>would -prefer- is to pay no taxes at all, while benefiting from all tax paid services they can.

I think you could probably preface the above with the word “citizens” and it would still be true. But both citizens and corporations have the right to lobby their representatives in their own interest. It’s the politicians job to try and create policy that balances the interests of all their constituents.

Re: G7: Rich nations back deal to tax multinationals

#700

Post by dalbasal » Sat, Jun 05, 2021, 9:16 PM UTC

saddlerustle wrote: post #687

dalbasal wrote: post #657

Earlier quoted context omitted.

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…

OK so... wikipedia has a pretty good summary.

You're right. I was wrong. There is no IP licensing payment from the US entity to Ireland.

IP licensing happens between 3rd party countries and Ireland. Irish tax law (to our great pride) gives IP licensing revenue tax exemption. It doesn't count as revenue for tax purposes. Once here, it can be transferred to a proper tax haven like Bermuda. Since its tax free, it doesn't matter that Ireland (like everyone) doesn't recognise the transaction to Bermuda as a legitimate expense. It didn't count as revenue anyway.

I guess that invoicing to Ireland is neither here nor there, just more convenient when the money needs to come here anyway.

Once the cash is in Bermuda, the game is done. The Bermuda company can hold it, buy shares, etc. This is why Apple (And MSFT) have moved all their IP to Ireland though.

https://en.wikipedia.org/wiki/Double_Irish_arrangement

Here's the good bit:

Without such IP, if Microsoft charged a German end-customer, say $100, for Microsoft Office, a profit of circa $95 (as the cost to Microsoft for copies of Microsoft Office is small) would be realised in Germany, and German tax payable. With such IP, Microsoft can additionally charge Microsoft Germany $95 in IP royalty payments on each copy of Microsoft Office, ensuring that its German profits are zero. The $95 is paid to the location in which the IP is legally housed. Microsoft would prefer to house this IP in a tax haven; however, higher-tax locations like Germany do not sign full tax treaties with tax havens, and would not accept the IP charged from a tax haven as deductible against German taxation. The Double Irish fixes this problem.[8][9]

The Double Irish enables the IP to be charged-out from Ireland, which has a large global network of full bilateral tax treaties.[g] The Double Irish enables the hypothetical $95, which was sent from Germany to Ireland, to be sent-on to a tax haven like Bermuda, without incurring any Irish taxation.