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

Re: G7: Rich nations back deal to tax multinationals

#701

Post by bumby » Sat, Jun 05, 2021, 9:18 PM UTC

anoncake wrote: post #641

reasonabl_human wrote: post #635

Earlier quoted context omitted.

Well this is just false. You are not at all responsible for a company’s actions just because you are a shareholder. HN is evidently quite out of its depth with these kinds of threads.

Why not? Don't shares represent ownership of a company? Aren't you responsible for your property?

Just to underscore what was previously stated, I think this philosophy would drastically change the paradigm. I’m guessing it would severely restrict the money flowing into stocks which would have repercussions in other areas like pensions etc. Point being, I don’t think it can just be layered onto the existing system without serious blowback.

Re: G7: Rich nations back deal to tax multinationals

#702

Post by fairity » Sat, Jun 05, 2021, 9:21 PM UTC

For anyone wondering if this will actually have a sizable impact on FAANG and their aggregate tax burden, my guess is no based on the following quote:

> Tech firms say they welcomed the move. Facebook vice president Nick Clegg said they recognised it could mean the company "paying more tax, and in different places".

Re: G7: Rich nations back deal to tax multinationals

#703

Post by Hermel » Sat, Jun 05, 2021, 9:23 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…

I agree with the minimum tax rate. But I think the criterion for taxing profits should not be where the products are sold (for that, we have the sales tax or the VAT). The right criterion is where the value is created, which is usually the country where the most expenses/employees are.

For example, if an Australian mining company digs up iron ore and sells it to China, it would seem unnatural to tax the company's profits in China. Of course, China might impose tariffs or a sales tax, but the profits should be taxed in Australia.

A strange side effect of this would be that the law of one price on international markets would no longer hold. Imagine you manufactured a product for 10$ that you could either sell for 50$ in a country with a low profit tax of 15% or for 60$ in a country with a profit tax of 40%. Then the rational choice would be to sell it for 50$ in the low-tax country, because after taxes, you still get 44$, whereas in the high-tax country, you would only get 40$ after taxes.

Consequently, a destination-dependent profit tax will lead to lower prices for consumers in low-tax countries and higher prices for consumers in high-tax countries, essentially making the consumers pay for it just like with a sales tax or VAT.

Re: G7: Rich nations back deal to tax multinationals

#704

Post by saddlerustle » Sat, Jun 05, 2021, 9:24 PM UTC

dalbasal wrote: post #700

saddlerustle wrote: post #687

Earlier quoted context omitted.

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'…

> Once the cash is in Bermuda, the game is done. The Bermuda company can hold it, buy shares, etc.

A Bermuda subsidiary can't repurchase shares in the US parent company without booking those profits in the US.

Re: G7: Rich nations back deal to tax multinationals

#705

Post by ipaddr » Sat, Jun 05, 2021, 9:25 PM UTC

salawat wrote: post #539

ipaddr wrote: post #296

Earlier quoted context omitted.

If a tax on revenue was used the outcome would be companies would try to increase profits but reduce revenue so high margin products would be the goal which would mean higher prices / fewer sales. I think the solution should be market based. Whatever rate google US gets from google Ireland should be available to any company and google Ireland should be forced to sell any services/ip to any company who requests it at…

Congratulations, by forcing a company to sell to everyone indiscriminately, you've effectively seized their assets. I don't really see the whole "let's unmake ownership and property rights" thing being feasible, but I've been wrong before.

If you wish to use this tax credit you can choose this path.

Re: G7: Rich nations back deal to tax multinationals

#706

Post by manmal » Sat, Jun 05, 2021, 9:29 PM UTC

ed25519FUUU wrote: post #189

csomar wrote: post #89

Earlier quoted context omitted.

> This sounds like it will be hell for small software companies with customers all over the world. Uh, no, this will bring required tax profits for rich governments from these predatory countries that will finally fix their budget deficits and insure equality between its citizens. /just kidding, this will break small companies and make it almost impossible to sell/export to richer countries for small new comers. The…

Interesting narrative here. Ireland is “predatory” because they create an extremely low tax environment for competitiveness. Is Texas also predatory for having no income tax versus CA, NY etc 10%+ income tax?

I think Ireland are. They are actively trying to shoot down a case where Apple would need to pay them billions in taxes: https://www.irishtimes.com/business/economy/ireland-wins-app...

What government in their right mind fights taxes they would receive? They want to keep Apple (and others) happy so they don’t take their income elsewhere.

So I‘d say this smells of predatory pricing.

Re: G7: Rich nations back deal to tax multinationals

#707

Post by bjt » Sat, Jun 05, 2021, 9:29 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…

The US corporate tax rate is already 21%. Agreeing to "at least 15%" should not be a tough sell.

Re: G7: Rich nations back deal to tax multinationals

#708

Post by wongarsu » Sat, Jun 05, 2021, 9:30 PM UTC

fairity wrote: post #702

For anyone wondering if this will actually have a sizable impact on FAANG and their aggregate tax burden, my guess is no based on the following quote: > Tech firms say they welcomed the move. Facebook vice president Nick Clegg said they recognised it could mean the company "paying more tax, and in different places".

Paying taxes, just like employing people, gives you leverage and generally more friendly conditions (including court rulings). With Facebook (and FAANG in general) coming under increasing scrutiny I imagine they would happily pay a bit more if their tax is spread over more territories and thus influences more politicians and courts.

Re: G7: Rich nations back deal to tax multinationals

#709

Post by TomVDB » Sat, Jun 05, 2021, 9:31 PM UTC

IanCal wrote: post #676

TomVDB wrote: post #332

Earlier quoted context omitted.

> Nobody benefits from a company growing indefinite wealth without distributing it to actual people. Isn't this exactly what companies like Apple etc. are doing? As it accumulates wealth, the stock price (which is supposed to reflect the value of the company) goes up as well. And thus the shareholders benefit.

Why would the stock price go up for a company that explicitly did not distribute the money ever to real people? And don't apple pay dividends?

Company A has $X in revenue, $Y in profits, and $0 in cash.

Company B has X revenue, Y in profits, and $1T in cash.

Which of the two would fetch a higher price in an acquisition?

Re: G7: Rich nations back deal to tax multinationals

#710

Post by cozzyd » Sat, Jun 05, 2021, 9:32 PM UTC

dragonwriter wrote: post #658

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.

> To get anything done, you need Republican votes. This seems to be the kind of financial thing that fits right into reconciliation, which means you don't need Republican votes.

Isn't ratifying a treaty something completely different?