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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

#821

Post by Infinitesimus »

alister wrote: post #807
Ericson2314 wrote: post #669

Earlier quoted context omitted.

Governments like the US today can borrow money or print it with very few constraints. Taxes are not primarily about raising revenue. For small, opening (usually developing) economies the matter is different, and they should have more capital controls accordingly.

> Taxes are not primarily about raising revenue That’s an intriguing comment. Can you explain further?

I suspect the parent is coming at this from the MMT angle: https://en.m.wikipedia.org/wiki/Modern_Monetary_Theory

For states like the USA that print their own currency and enjoy tremendous global demand for their currency, taxes are less about revenue and more about controlling behavior and unemployment outcomes. Some argue that taxes are just a way to force demand for a currency the government has a monopoly on to ensure it always has _some_ value.

(Note: this is a rather polarizing theory and still somewhat young. The US Fed pulled off printing trillions last year and things haven't gone to hell yet do there's something there )

Re: G7: Rich nations back deal to tax multinationals

#822

Post by dvainsencher »

nickpp wrote: post #225
awillen wrote: post #216

Earlier quoted context omitted.

The main reason Amazon is paying a $15 minimum wage is because of substantial pressure from progressives - there's an extensive record of this. The media reporting has largely been coverage of Bernie Sanders and the like, so it's pretty clear that there are non-media folks who have been driving it.

Artificially putting a floor under the price one's allowed to charge for one's services benefits only politicians proposing such populists ideas and the non-working.

That sounds like an argument about "if one's time is worth less than minimum wage, one cannot find a job". And sure that is true for some people, but saying it benefits _only_ ... sounds like it is never good for any worker, which is way too strong a conclusion, because other situations exist.

For example: hiring one of two candidates, Nick and Joe, would be profitable under 30$ per hour. Nick asks for 15$, its Joe's first job so he's willing to take 10$, I go to Nick and say, "look Joe will do it for 10, so I really can't justify paying more, but I'd prefer to pay you those 10, since you're experienced". If Nick has a better offer elsewhere, he has no problem. If not, Nick gets just 10.

If the state says 15 is the minimum wage, not only Nick but also Joe must get 15, so my best move is to take Nick at 15. Clearly, a higher minimum wage _can_ benefit the worker, and not only the very weakest one.

Capitalism allows each participant to seek only the best available deal that is agreeable to them, sure, but availability is subject to negotiating power, and that is distributed very unevenly.

Re: G7: Rich nations back deal to tax multinationals

#823

Post by throwaway34241 »

jfengel wrote: post #586
throwaway34241 wrote: post #544

Earlier quoted context omitted.

It does add more accounting, but one advantage of involving the companies in the middle is it makes cheating harder and less lucrative, since a bunch of companies have to coordinate to avoid paying the VAT instead of just one company at the end. Agree that VAT/sales taxes are regressive and shift more of the tax burden to lower-income people. Although the only US political candidate I can remember recently proposing…

VAT plus UBI does save problems for the poor, but it's still regressive. The net effect is to put the main burden on the middle class.

I don't know if Yang's math checks out, but I think his proposal was $1000/mo and a 10% VAT. So the breakeven point would be $120k spending on taxable items/yr for an individual, or $240k spending/yr for a couple, with people below that coming out ahead and above coming out behind.

Where you draw the line for "middle class" is somewhat arbitrary - I think you could be middle class and still earn over $120k, especially in a high cost of living area - but probably most people who consider themselves middle class would fall under that. Especially because people who earn $120k are probably not spending $120k/yr once you factor in retirement contributions, income taxes, etc.

A relatively high-profile economist wrote positively about the UBI idea last year. [1]

Not that you couldn't make it more progressive. I think I've seen proposals for a progressive individual consumption tax, which would look something like a progressive income tax but then removing the limits for IRA contributions. The theory being you would put money you want to save in the non-taxable account, then you would only withdraw what you want to spend in a given year, which could be taxed at a progressive rate.

[1] https://scholar.harvard.edu/files/mankiw/files/how_to_increa...

Re: G7: Rich nations back deal to tax multinationals

#824

Post by seanmcdirmid »

MrPowers wrote: post #261
PaulRobinson wrote: post #240

Earlier quoted context omitted.

If you’re going down this route, many will argue that all forms of income tax are equally “wrong”. Henry George - a 19th century political economist - proposed exactly this, and suggested the only thing that should be taxed should be land: impossible to hide from a tax inspector, potentially a waste to the public commons if useful land that could be exploited isn’t and you can even protect land you wish to keep prist…

The deadweight loss of taxation is much lower for a land tax than an income tax. The deadweight loss is the economic resources allocated to complying with the tax. The armies of tax lawyers would be able to perform other economically productive activities if they weren't pouring over the tax code. Pigovian taxation is even better. Taxing gas is a great example. Gas consumers emit carbon which has a cost for society.…

> Taxing gas is a great example. Gas consumers emit carbon which has a cost for society.

This isn't even why gas is tax heavily in developed economies. First, gas taxes pay for roads. Second, the negative externality that Europe, at least, is trying to reduce is dependency on Middle Eastern oil, since that opens a huge can of worms with respect to world stability. If they really cared about air pollution, they wouldn't have pushed diesel so much.

Re: G7: Rich nations back deal to tax multinationals

#825

Post by skissane »

anfilt wrote: post #819
skissane wrote: post #785

Earlier quoted context omitted.

I don't agree that domestic law always wins. It all depends on the situation. If a country's domestic law violates international law, the extent to which that country gets away with it depends a lot on how powerful that country is. Great powers have much more ability to violate international law with impunity than small countries do. And in this particular case, it is not that US law and international law are actuall…

Nations are sovereign they can do what they want. Short of going to war its hard to force a country todo something it does not want too. Although if you pull out of agreement don't expect the other country to continue following it. Also there are other countries not part of this talk nothings stops a company from setting up there and doing the same tax games. So i dont see how this idea does anything

> Nations are sovereign they can do what they want. Short of going to war its hard to force a country todo something it does not want too

In today's world economic pressure is a much bigger factor than war. If you upset enough countries, they can all start imposing trade and financial sanctions on you, which then ruins your economy. International law is a useful (even though of course not always perfect) guide in answering the question "is doing X going to upset a large number of countries?"

> Also there are other countries not part of this talk nothings stops a company from setting up there and doing the same tax games.

Most of these companies are actually headquartered in major economies – US, the EU, etc. What they've been doing is exploiting complex loophole interactions between the tax laws of those major economies and the tax laws of small countries with favourable tax regimes. If the major economies close those loopholes, they can stop most of this. The small countries only get away with it because the major economy tax law loopholes let them. Most of the time, companies don't want to move their actual headquarters to these small countries due to the negative consequences

Re: G7: Rich nations back deal to tax multinationals

#826

Post by yaa_minu »

viraptor wrote: post #194
yaa_minu wrote: post #168

Earlier quoted context omitted.

It's interesting that you're being downvoted but you make a solid point. People in government are no different than those not in government, we're the same human beings. To suggest that they should be able to do anything they want seems pretty backwards and quite contrary to the enlightenment ideas.

It's a philosophical point disconnected from reality. In most countries we've got some system of elected government with various branches who get more power and influence than other people. Having a solid philosophical point against it doesn't change the world.

How so? do remember that they can only do things supported by the general climate of opinion so them being in government isn't the point of contention here. It's what we as people tolerate (passively or actively) that matters. Besides, this greatly undermines the justification for anti-trust laws as they're clearly communicating to everyone that "it's OK to collude"

Re: G7: Rich nations back deal to tax multinationals

#827

Post by dvainsencher »

ffggvv wrote: post #374
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 really don’t get why people get upset over share buybacks but not dividends. they’re literally the same thing. as a stock holder there’s no difference between the stock going up 10 cents from a buyback versus me getting a 10 cent dividend. other than the fact that i can have more control as a shareholder in the buy back

FTFY: "they're _almost_ the same thing."

Dividends lower stock price by moving cash from company to owner, buybacks increase stock prices[1] by de-diluting, so only one of those is evidence of the CEO (whose compensation is often tied to stock price) acting on his own interests. Also taxation is different.

[1] https://www.investopedia.com/articles/active-trading/073015/...

Re: G7: Rich nations back deal to tax multinationals

#828

Post by simondotau »

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?

Yes, a bad assumption. Corporate profits cannot end up in the pockets of greedy board members without being taxed.

Re: G7: Rich nations back deal to tax multinationals

#829

Post by riffraff »

Aerroon wrote: post #796
riffraff wrote: post #278

Earlier quoted context omitted.

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.

Because the problem would be that "Jeff Bezos has extracted X money from France" instead of "Amazon has extracted X money from France".

The problem is not that the money disappears from earth, but that is shifted from one country to another.

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