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

Re: G7: Rich nations back deal to tax multinationals

#791

Post by Aerroon » Sun, Jun 06, 2021, 2:22 AM UTC

CalChris wrote: post #362

todd8 wrote: post #222

Earlier quoted context omitted.

Corporations pass the tax expenses on to consumers as higher prices of produced goods, lower wages to employees, and lower returns to owners that supply capital. These taxes are all paid by us but they are largely invisible and justified to the voters as making corporations “pay their fair share”.

Corporate taxes are not expenses. An expense is the cost of operations that a company incurs to generate revenue, either on cost or accrual basis. Corporate taxes are based on declared profits, gross revenue net of these expenses. Furthermore, these taxes are not paid by all of us. They are paid by the owners of the corporation who and which receive considerable benefit from the government services they are paying fo…

Effectively they're paid by the customers though. Investors will want to get their return on the money they invested regardless what happens. If they can't get their return they will simply invest in something else and the business never gets off the ground.

Re: G7: Rich nations back deal to tax multinationals

#792

Post by refurb » Sun, Jun 06, 2021, 2:22 AM UTC

humaniania wrote: post #766

reacharavindh wrote: post #403

Earlier quoted context omitted.

I can’t believe we as a society don’t adopt this idea more. Punishment should be a percentage of taxable income of that year. The impact should equally felt regardless of your current financial status. Extending this to a corporation would simply put them in back foot in a market.. which is indeed the punishment.

Percentage of revenue seems like the least likely to be gamed metric.

Two companies with $100M in revenue, one with 2% margin and one with 50% margin.

You’d fine then the same amount?

Re: G7: Rich nations back deal to tax multinationals

#793

Post by skissane » Sun, Jun 06, 2021, 2:23 AM UTC

wolverine876 wrote: post #780

skissane wrote: post #739

Earlier quoted context omitted.

> 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?

> I would think a treaty requires all parties to it to think it's a treaty.

Well, even the US agrees that "international agreements" are "treaties" in the international law sense, despite not being "treaties" in the US domestic law sense.

> Any idea where I can read a bit more about the fundamentals

A lot of what I know about this topic I learned from reading the Third Restatement of the Foreign Relations Law of the United States – https://www.ali.org/publications/show/foreign-relations-law-...

Unfortunately it isn't easy to get your hands on. You can buy a hardcopy for US$173 plus shipping. Or you can do what I did, and read it for free in a university library. (It is also included in Westlaw subscriptions, but unless you already have access to one, buying the hardcopy would probably be cheaper.)

The international law on this topic is mostly contained in the Vienna Convention of the Law of Treaties of 1969 – https://legal.un.org/ilc/texts/instruments/english/conventio...

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

The most common way to make an international agreement not legally binding is to put a clause in there explicitly stating that it isn't legally binding. When the agreement explicitly states it isn't legally binding, then it clearcut isn't.

If an agreement is in the usual written form of a finalised formal agreement, it is generally going to be assumed to be legally binding unless it explicitly states it isn't.

Generally speaking, to be binding under international law, the parties have to have "international legal personality". That basically means the parties must be the national governments of sovereign states, or international organizations established by treaty. An agreement involving private corporations, private individuals, subnational governments, non-governmental organisations, etc, generally isn't going to be legally binding under international law, even if it also includes national governments among its parties. Occasionally, dependent territories are granted power by the national government to sign legally binding international treaties on certain topics (such as Hong Kong and Macau), but that is an exception to the general rule.

There are grey areas which lawyers and scholars will debate, but it rarely turns into a live issue in practice.

Re: G7: Rich nations back deal to tax multinationals

#794

Post by wolverine876 » Sun, Jun 06, 2021, 2:29 AM UTC

skissane wrote: post #793

wolverine876 wrote: post #780

Earlier quoted context omitted.

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?

> I would think a treaty requires all parties to it to think it's a treaty. Well, even the US agrees that "international agreements" are "treaties" in the international law sense, despite not being "treaties" in the US domestic law sense. > Any idea where I can read a bit more about the fundamentals A lot of what I know about this topic I learned from reading the Third Restatement of the Foreign Relations Law of the…

Much appreciated. I may try to read the Vienna Convention, at least.

Out of curiosity, what makes you so interested? I'm interested, but I'm usually alone in that.

Re: G7: Rich nations back deal to tax multinationals

#795

Post by redler » Sun, Jun 06, 2021, 2:29 AM UTC

valenterry wrote: post #354

peoplefromibiza wrote: post #330

Earlier quoted context omitted.

the fact that streets are illuminate at night and pollice patrols them is using services provided by taxpayer's money. Uber benefits from streets more than the average citizen. if corporations had to pay per use, they would prefer to build their private infrastructures and police forces, while public infrastructure would lag behind chronically underfunded.

I don't think building "private infrastructure" in the sense of streets on public ground would make any sense or ever be allowed. The company could just pay for the usage of the road (in some way) and the government makes sure the roads exist. Besides the bureaucratic overhead, I don't see why that couldn't work.

I think you just described corporate taxes.

Re: G7: Rich nations back deal to tax multinationals

#796

Post by Aerroon » Sun, Jun 06, 2021, 2:30 AM UTC

riffraff wrote: post #278

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…

This does not address the issue this new tax agreement is supposed to tackle: that big companies produce income in country X but shift profit to country Y where it is taxed less, effectively extracting wealth from the first. If you only taxed dividends the problem would not go away.

How would it not go away? If there's no corporate tax then the profit is going to be taxed at 0%. Moving that money around won't help you. But if an investor wants to personally use that money, then they'll have to pay personal income tax in the country he's in or is a citizen of.

Re: G7: Rich nations back deal to tax multinationals

#797

Post by Aerroon » Sun, Jun 06, 2021, 2:31 AM UTC

Misdicorl wrote: post #347

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…

The problem I don't see addressed is that no/low corporate tax leads to bad market incentives. It is more efficient for my company to buy me things than for me to buy me things. But my company will inevitably buy inoffensive/cheap things that appeal to all employees rather than what I really want. This is most often implemented as a food perk or car perk, but obviously extends to almost any consumable purchase.

Aren't those usually limited though? Ie a company can only give $x in perks per employee and everything above that is taxed in some way?

Re: G7: Rich nations back deal to tax multinationals

#798

Post by Aerroon » Sun, Jun 06, 2021, 2:34 AM UTC

MuffinFlavored wrote: post #748

simondotau wrote: post #337

Earlier quoted context omitted.

Pocketing corporate money is illegal. If they do it legally, it’s taxed as income/dividends/capital gain. I don’t see the problem.

if corporations paid less taxes that means more of the revenue could go into the profits section which would most likely end up in the pockets of greedy board members. is that a bad assumption?

And they would pay personal income taxes on that money.

Re: G7: Rich nations back deal to tax multinationals

#799

Post by Aerroon » Sun, Jun 06, 2021, 2:37 AM UTC

ashtonkem wrote: post #476

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…

Absolutely not. Not only is this massively regressive, it ignores how much of our public infrastructure is built to support the economy. This proposal would effectively allow shareholders to turn infrastructure tax dollars into shareholder money without having to kick a single dime into the bucket. That’s absolutely nuts.

The economy is part of the infrastructure. That's why governments go to extreme lengths during economic problems. If the only store in the village shuts down it sucks for the store owner, but it sucks even more for the villagers who now have no access to the goods.

Re: G7: Rich nations back deal to tax multinationals

#800

Post by Aerroon » Sun, Jun 06, 2021, 2:41 AM UTC

jedberg wrote: post #788

Aerroon wrote: post #786

Earlier quoted context omitted.

It will also massively increase the complexity of doing taxes for smaller businesses. It wouldn't surprise me if it lead to even more websites going "sorry, we value customers from your country, but we cannot serve this content to you". Imagine running a small business and somebody from Algeria wishes to purchase your software. Is the $5 you make worth having to file Algerian taxes? I mention this, because this is so…

Part of the agreement is that you have to have $10M in profit in that country before the rules apply. So that would never happen. You’d have to make a ton of money there before you have to file taxes. And it’ll be worth it by then.

Ah, I missed that part. You're right in that case! I'm just so used to the EU coming up with new rules without reasonable exemptions that I assumed the same here.

It's my mistake!