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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

#861

Post by jokoon »

mnouquet wrote: post #562
jokoon wrote: post #158

I already said that the pandemic would force the entire world to lean to the left in terms of politics. It's inevitable. I'm very happy about that decision, but I'm not really confident it will lead to something. I'm also a bit cynic that it took a pandemic to make countries realize they need money. I'm also waiting to see if government are really planning to fight against tax havens. The problem is that it's impossi…

> I already said that the pandemic would force the entire world to lean to the left in terms of politics. It's inevitable. Do you mean totalitarian, correct ?

Are you trolling?

Left as in liberal in the US, socialist in europe.

Re: G7: Rich nations back deal to tax multinationals

#862

Post by sokoloff »

cletus wrote: post #134

The first proposal of having a minimum corporate tax rate probably doesn't mean a lot because you to then start policing what subsidies governments give to effectively discount below 15%. The more interesting part is what I hope is the start of serious efforts to tackle profit-shifting, which is a name invented for "transfer pricing" because that is technically illegal. But it's the same thing. A good starting point…

Transfer pricing is an accounting practice that is required by regulations to be computed/stated in many circumstances. Transfer pricing is not on its own an illegal practice as suggested above.

Re: G7: Rich nations back deal to tax multinationals

#863

Post by atopuzov »

einpoklum wrote: post #853
cletus wrote: post #134

The first proposal of having a minimum corporate tax rate probably doesn't mean a lot because you to then start policing what subsidies governments give to effectively discount below 15%. The more interesting part is what I hope is the start of serious efforts to tackle profit-shifting, which is a name invented for "transfer pricing" because that is technically illegal. But it's the same thing. A good starting point…

While it's true that corporate influence over governments may result in subsidies to effectively give a discount - it is less likely than you describe, because the taxation is international. To illustrate why that is, think about a state like Ireland. So far, Ireland has gotten corporations to be HQ'ed there, or pay taxes there, because the tax rate is only 12.5%. The detriment for Ireland has been minimal, if any, f…

It's not like MNCs in Ireland actually pay any tax anyway (various loopholes and agreements provided by the Irish government). To quote from [1] "the revelations shone a fresh spotlight on Irish tax policy that “has been designed precisely to facilitate this kind of avoidance”."

[1] https://www.theguardian.com/world/2021/jun/03/microsoft-iris...

Re: G7: Rich nations back deal to tax multinationals

#864

Post by rswail »

briandear wrote: post #735
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…

> They also agreed in principle to a global minimum corporate tax rate of 15% to avoid countries undercutting each other. Why? If a country can be more efficient, why must they be penalized by being required to raise taxes? This is the equivalent of a price floor. Why should a country be required to have higher taxes to appease those that make different policy decisions? It should be up to the government (voters) wha…

Ireland is part of the EU, so how it taxes corporations is something it has to negotiate with the rest of the EU. That is its problem, not something the G7 care about. Ireland has attracted investment and revenue by undercutting other nations, while providing access to the EU. Not surprisingly, the rest of the EU is not happy about that.

No one is denying nations the right to set their own tax rates for corporations. What has happened here is that a number of nations have come together, negotiated, and agreed that they will each set their lowest rate at 15%.

The reason for that is deliberately to stop countries undercutting each other. They have all agreed that undercutting each other has lead to consequences that have affected them all equally in a "race to the bottom" and of corporate tax avoidance.

> If they are economically harmed by someone else having a 10% rate...

The G7 nations have agreed that they don't want to be economically harmed. Their agreement is to pass laws in each of their environments to stop that. They've also agreed that each of them can tax the profits made locally to them. They agreed to limit that to a maximum of 20% of the corporate's global profits.

As for the 2/3rds rule for US treaties, that's because the Senate, representing the States (not the people), is given a "check" over the President unilaterally making treaties, as far as the United States is concerned, because treaties made in this way are considered equal in power to the Constitution. Each treaty is effectively an amendment to the US Constitution.

So it's not about 51 vs 49%, it's about 2/3rds of the US states, as represented in the Senate, agreeing with a treaty.

Re: G7: Rich nations back deal to tax multinationals

#865

Post by rswail »

ridgeguy wrote: post #484
cvwright wrote: post #323

Earlier quoted context omitted.

Tax intellectual property too then. This would also help push back against ridiculous patents and eternal copyright.

This would prevent me, an individual inventor of (I'll claim) non-ridiculous inventions, from monetizing my efforts. The monetary barriers to patent protection and enforcement are already significant to me. I can't be the only one in this circumstance. Eternal copyright, however - yes, sucks.

Taxation of your intellectual property rights would cause you to seek out the best use of those rights.

If you have a good idea and patent it, then taxation of that patent right would force you to license it or lose your monopoly protection granted by the government.

If you have a good expression of an idea and copyright it, then taxation of that copyright would force you to license it or lose your monopoly protection granted by the government.

Either way, you are still granted the IPRs, on a "pay for it" basis that captures some of that value back.

Re: G7: Rich nations back deal to tax multinationals

#866

Post by einpoklum »

atopuzov wrote: post #863
einpoklum wrote: post #853

Earlier quoted context omitted.

While it's true that corporate influence over governments may result in subsidies to effectively give a discount - it is less likely than you describe, because the taxation is international. To illustrate why that is, think about a state like Ireland. So far, Ireland has gotten corporations to be HQ'ed there, or pay taxes there, because the tax rate is only 12.5%. The detriment for Ireland has been minimal, if any, f…

It's not like MNCs in Ireland actually pay any tax anyway (various loopholes and agreements provided by the Irish government). To quote from [1] "the revelations shone a fresh spotlight on Irish tax policy that “has been designed precisely to facilitate this kind of avoidance”." [1] https://www.theguardian.com/world/2021/jun/03/microsoft-iris...

Oh, well, that's worse than I thought, but I think it basically bolsters my argument: A subsidy for them could not even be checked off against their tax contributions to the state's economy.

Re: G7: Rich nations back deal to tax multinationals

#867

Post by kekeblom »

One thing I rarely see discussed anywhere is that a corporate tax is essentially a subsidy to existing companies and is anti-capitalistic.

The reason is that an existing corporation turning a profit can tax-free reinvest their profits in, for example, product development to improve their market positioning and profits in the future.

If they were to book that profit and pay it out as a dividend to their owners, who would then invest it into other companies, the money would get taxed twice before ending up in the investment target. The first time as a corporate tax and the second in the form of a capital gains tax on the owners.

Intuitively, it seems like this could have a significant effect on markets and might be one of the reasons we see so many markets dominated by big companies, even in non winner-take-all markets.

Re: G7: Rich nations back deal to tax multinationals

#868

Post by walshemj »

gambiting wrote: post #849
walshemj wrote: post #738

Earlier quoted context omitted.

Normally shares are not taxed as income in the UK dependent on how they are structured -dividends are though. To follow on it is easy to hit the limit on dividend allowance if you have shares outside of your ISA

I've received shares several times from the company where I work in the UK and every single time they have been taxed as income. If you are just given shares straight up then yes, they are subject to income tax on their worth at the time of acquisition.

They didn't bother to set up an HMRC approved scheme?

Where these US companies? employee share holders in the USA really get screwed

Re: G7: Rich nations back deal to tax multinationals

#869

Post by intricatedetail »

sokoloff wrote: post #862
cletus wrote: post #134

The first proposal of having a minimum corporate tax rate probably doesn't mean a lot because you to then start policing what subsidies governments give to effectively discount below 15%. The more interesting part is what I hope is the start of serious efforts to tackle profit-shifting, which is a name invented for "transfer pricing" because that is technically illegal. But it's the same thing. A good starting point…

Transfer pricing is an accounting practice that is required by regulations to be computed/stated in many circumstances. Transfer pricing is not on its own an illegal practice as suggested above.

In the UK if an individual gets paid with a loan, then have to repay it within a tax year or otherwise pay tax on it as if it was regular income (disguised remuneration). This has actually been applied retrospectively and drove many people to bankruptcy.

Why this cannot be applied to transfers between companies if they are related?

Re: G7: Rich nations back deal to tax multinationals

#870

Post by CryptoPunk »

kwere wrote: post #854
CryptoPunk wrote: post #782

Earlier quoted context omitted.

>>An internet company in a 10-story building would love this scheme, though, because they could generate billions in revenue but be taxed at the same rate as a local neighborhood of people who owned their homes for a few decades. That's irrelevant, because the ultimate owners of the corporation - the shareholders - will always be in demand of land. Real estate explains most of the growth in wealth inequality in the U…

yes but the majority of wealthy people would be satisfied with few million of real estate for personal use. RE investing would drastically change if incentives change

Fair point. I'd be satisfied nonetheless, because the land-ownership component of real estate investment is rent-seeking, that gains the holder value without generating value for society at large. If investment was redirected from land buying to purchasing other types of assets, it would lead to the production of more value in the economy, as unlike land, most asset classes involve man-made resources in which rising demand leads to rising production.

For example, if fewer wealthy individuals bought sprawling estates, and more bought high-rise apartments, we'd see more production of the latter, which would increase housing concentrations in high-productivity urban areas, and in doing so, apply downward pressure on rental rates in areas which offer the most economic opportunities.

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