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G7: Rich nations back deal to tax multinationals

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Re: G7: Rich nations back deal to tax multinationals

#771

Post by gscott »

mistermann wrote: post #745
ncallaway wrote: post #681

Earlier quoted context omitted.

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 th…

Tyler Cowan seems unimpressed: https://marginalrevolution.com/marginalrevolution/2021/06/th... More smoke and mirrors perhaps?

It should be more of an alternative minimum tax. The corp ends up paying 0% due to tax write-offs the AMT kicks in and charges 5% or something.

Re: G7: Rich nations back deal to tax multinationals

#772

Post by cowl »

didip wrote: post #606
rjknight wrote: post #162

I do wonder if we wouldn't be better off eliminating corporation tax entirely. The revenue of a corporation can, roughly, be: 1. Spent on goods or services from another company (including freelancers, contractors, etc.) 2. Spent on rent 3. Spent on capital purchases 4. Spent on wages 5. Spent on debt repayment or other forms of financing 6. Paid out in dividends 7. Spent on share buybacks 8. Invested in something els…

I am with you, we should tax on things that are undodgeable and stop this wasted energy on corporate taxes. * Property tax is 1 obvious place, you want the land in this country? You pay the tax for it. * VAT is another obvious one. You want to sell in this country? You pay the tax. There are plenty of things that can be taxed which are undodgeable, we just have to be creative.

How is VAT the obvious one? The practice is far from theory. VAT is effectively a tax on consumers not on corporations.

Re: G7: Rich nations back deal to tax multinationals

#773

Post by Negitivefrags »

bgroat wrote: post #452
rjknight wrote: post #162

I do wonder if we wouldn't be better off eliminating corporation tax entirely. The revenue of a corporation can, roughly, be: 1. Spent on goods or services from another company (including freelancers, contractors, etc.) 2. Spent on rent 3. Spent on capital purchases 4. Spent on wages 5. Spent on debt repayment or other forms of financing 6. Paid out in dividends 7. Spent on share buybacks 8. Invested in something els…

I think this idea, but I always thought that a country or countries should just be on the cap table. Forget tax, but if I want access to the Canadian grant ecosystem they take 7%. I want Delaware Chancery courts the U.S takes 8% Swedish bank secrecy, 6% And we access states more like VCs and their value add. Obviously all numbers are made up

How is that functionally different than how tax works now?

Ownership gives you two things. It's a right to future profits, and the ability to resell that right to someone else. Company tax gives the government a percentage of the profit, and capital gains tax gives them a percentage when the shares are sold.

The only thing your proposal would do is delay when the government gets it's slice because the company doesn't have to pay a dividend right away.

Re: G7: Rich nations back deal to tax multinationals

#774

Post by presentation »

PragmaticPulp wrote: post #481
MrPowers wrote: post #286

Earlier quoted context omitted.

Land taxes are based on the value of the land, not the size of the land. The property tax system already performs land value assessments. Land taxes are highly progressive. Note that land taxes are only assessed on the value of the land, not the value of any buildings on the land. This incentivizes land owners to put the land to its highest and best use.

> Land taxes are highly progressive. Maybe in the 19th century, where this idea originated. Economics of business have changed too significantly to use it as a one size fits all taxation scheme. It may have made sense when revenue was somewhat proportional to the amount of land a business occupied, but that no longer holds true in the age of skyscrapers and digital revenue generation. An internet company in a 10-stor…

The presence of skyscrapers indicates a strong economic region, which makes the value of the underlying land orders of magnitude more valuable - the taxes would increase under LVT. Not sure if enough to account for the discrepancy in productivity, however.

Re: G7: Rich nations back deal to tax multinationals

#775

Post by Taniwha »

philjohn wrote: post #683
HWR_14 wrote: post #469

Earlier quoted context omitted.

> 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.

Yeah the whole US mortgage interest exemption is a special US thing, not a natural tax exemption available worldwide

Here in NZ there are NO tax exemptions for normal humans (well there is one single one for low income families with small children) - it means that our taxes are incredibly easy to file - if you have one employer you probably don't need to file at all, if you want to it's 2 pages on a web form, if you don't file and the IRD owes you money they'll probably pop it in your bank for you.

Oh, and our high marginal tax rates are ~10% lower than I was paying in California, and that includes free public healthcare

Re: G7: Rich nations back deal to tax multinationals

#776

Post by presentation »

aisengard wrote: post #306
throwaway894345 wrote: post #294

Earlier quoted context omitted.

The American tax system is similarly frustrating. I’m a senior engineer and I have a hard time navigating tax forms even with the help of Intuit, and it frustrates me that I have to pay Intuit (or someone else) to help me do taxes which are complicated in large part because Intuit et al lobby for complex tax codes and against the sort of Swedish model you describe. Worse, when I moved to Chicago the state of Illinois…

It's because they're trying to give people breaks on what they owe. The more money you make (and the more ways in which you make it), the more exemptions and breaks you tend to be eligible for, so the more complicated your taxes tend to be. A realistic simplified tax code would probably mean you, as a senior engineer, would pay much more in taxes, which would be fine with me! A properly-funded government can be a gre…

Governments that can print money don’t need taxes to be funded, they can just print money. Taxation is more useful for redistribution, incentivizing behavior, and controlling the money supply/inflation - not funding the government.

Re: G7: Rich nations back deal to tax multinationals

#777

Post by gnopgnip »

PragmaticPulp wrote: post #694
MrPowers wrote: post #425

Earlier quoted context omitted.

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) N…

Are there any places outside of PA that do this in modern times?

Re: G7: Rich nations back deal to tax multinationals

#778

Post by nearbuy »

pmalynin wrote: post #757
nearbuy wrote: post #728

Earlier quoted context omitted.

I'm not sure what you mean here. You can't write off a mortgage. You could write off interest, but not the value of the mortgage. Real estate tends to appreciate in value, especially in cities. The company would have to get unlucky with their real estate to be able to write off a loss. Buildings don't usually depreciate. They could allow their buildings to fall into a state of disrepair, hoping it would lower their v…

As a business I can take out a mortgage and give you a rental for the exact same price. The income and “expenses” cancel out, so the profit of your business is zero. Since this rental is an income producing activity the IRS (and other tax bodies) allow you to depreciate ( https://www.irs.gov/publications/p946 ) the value of additions on the land (I.e the building) on a straight line over a 28 year period. The basis o…

It's fair that you don't pay tax when don't make a profit after taking depreciation into account.

Depreciation isn't a cheat code that lets you avoid tax on profit. If you depreciate the building more than its actual market value depreciation, you owe back what you deducted when you sell the building.

Re: G7: Rich nations back deal to tax multinationals

#779

Post by yourapostasy »

PragmaticPulp wrote: post #481
MrPowers wrote: post #286

Earlier quoted context omitted.

Land taxes are based on the value of the land, not the size of the land. The property tax system already performs land value assessments. Land taxes are highly progressive. Note that land taxes are only assessed on the value of the land, not the value of any buildings on the land. This incentivizes land owners to put the land to its highest and best use.

> Land taxes are highly progressive. Maybe in the 19th century, where this idea originated. Economics of business have changed too significantly to use it as a one size fits all taxation scheme. It may have made sense when revenue was somewhat proportional to the amount of land a business occupied, but that no longer holds true in the age of skyscrapers and digital revenue generation. An internet company in a 10-stor…

> Land-only taxes may have been an interesting idea in the 19th century, but they aren’t relevant to a modern economy.

This is basically saying real estate isn't relevant to a modern economy for tax policy. Broadly true in 19th century United Kingdom in the midst of the Industrial Revolution [1]. Disputed by many millionaires today in the US [2]. Another way to track the relative weighting of land in wealthy portfolios is by aggregate measures.

The wealth of the US 1% grew 2.22X from 2005-2020 [3]. During the same period, the value of land held by the US 1% grew from $3,176,274 million to $4,607,729 million, 1.45X [4]. Not a proportional tracking of wealth increase, but I wouldn't call it "not relevant"; this is hardly rounding error territory where I would dismiss it for tax policy purposes. The sample period is also during an ahistorical secular trend when held across decades when securities were and are quite strong compared to real estate assets, so I don't know what a broader and more granular analysis would reveal, but my cursory glance across a one-generation span would make me hesitate to strongly take the "aren't relevant to a modern economy" position with our current set of policies.

The global urban real estate market so severely punishing younger generations for so long with such high prices relative to income and income precarity indicates some severe secular rent-seeking / gatekeeping taking place at an ahistorically wide scale, scope and duration. I have no dog in that hunt; I was purely lucky by timing to not live in that cohort, but I share their hostility to the status quo. If you favor the "modern economy making real estate not relevant" position, then tax, monetary, finance, social and industrial policies like LVT (though LVT is not without its challenges [5] [6]) that disincentivize such rent-seeking and favor a more efficient allocation of limited capital away from real estate towards such modern industries would be welcome, to the point that aggregate measures show little to no correlation between wealth concentration and real estate instead of our current situation.

I'm personally in favor of more metropolitan transit authorities consciously and deliberately using public transportation corridors as part and parcel of an explicit industrial policy that drives down residential costs over time. Residential development is planned more along Singaporean public housing lines with a goal of ever-decreasing DTI ratios (possible with more modern construction techniques like Lstiburek'ean Perfect Walls and Passive Net Zero in structures that last centuries, and co-operative financial organizational structures), than open market operations in the US. This doesn't have to come at the expense of open market operations; they're free to syndicate their own transit networks and monetize those networks. I'm advocating the free market advocates in US real estate becoming even stronger in the global market by practicing true free markets instead of relying upon the crutches of publicly-funded infrastructure to break the capital ground in front of them.

[1] https://www.hbs.edu/ris/Publication%20Files/Land_e202c898-eb...

[2] https://www.cnbc.com/2019/10/01/real-estate-is-still-the-bes...

[3] https://www.federalreserve.gov/releases/z1/dataviz/dfa/distr...

[4] https://fred.stlouisfed.org/series/WFRBLT01002

[5] https://www.lincolninst.edu/publications/articles/land-value...

[6] https://www.lincolninst.edu/sites/default/files/pubfiles/ass...

Re: G7: Rich nations back deal to tax multinationals

#780

Post by wolverine876 »

skissane wrote: post #739
wolverine876 wrote: post #607

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 It's not even that. Most international agreements are executed without a treaty.

> It's not even that. Most international agreements are executed without a treaty. Only in the US (and possibly a handful of other countries which copy the US approach). Under international law, all legally-binding international agreements are treaties. What the US calls "international agreements" are treaties from the non-US point of view.

Interesting. I would think a treaty requires all parties to it to think it's a treaty. Any idea where I can read a bit more about the fundamentals?

But regardless, not every agreement is ...

> legally-binding

That term has a different, and as I understand, more nebulous meaning under international law?

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