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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

#901

Post by bonzini »

kgwgk wrote: post #857
bonzini wrote: post #852

Earlier quoted context omitted.

The difference is that "IP" production occurs where the R&D departments exist and salaries have to be paid, rather than where the corporate taxes are lowest.

The difference with what? The context was "If I’m a Canadian software company that does most of its sales in the US through an American subsidiary (not uncommon), the way it works is the American subsidiary pays the Canadian company back for the sales of the Canadian company’s IP." The IP production occurs in Canada where the R&D departments exist and salaries have to be paid and the US subsidiary company pays to the…

The difference between moving money in your situation and in Apple's, where there's no correspondence between where engineers are located and where IP is licensed from.

By forcing all revenue to go through a single point (the headquarters) it's much harder to establish fake licensing like Apple Ireland's.

Re: G7: Rich nations back deal to tax multinationals

#902

Post by rsync »

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…

"All that the corporation tax adds to this picture is the creation of work in tax avoidance services, and an unjust inequality between those firms that can afford those services and are structured to take advantage of the rules, and those that can not and are not."

This already exists in the United States.

An "S-Corp" is a passthrough corporate entity wherein the corporation (or partnership) is not taxed at all and all profits flow to the owners of the entity who are then bound to pay the taxes on their personal returns.

Almost all small businesses incorporated in the US are such entities. It is not exotic in any way and is totally accepted and normal.

The trick is ...

With some minor exceptions, all of the profits need to flush out of these passthrough entities every year. You can't just keep piling up untaxed profits in the company bank account. The corporation is required to disburse the profits and create taxable income for the owners.

Big coporations which are not passthrough entities can keep the money and do not have to disburse it ... but they have to pay taxes on it.

So there are pros and cons to these structures.

I personally feel that passthrough corporate entities are much simpler, much more comprehensible and do not have the societal inefficiencies (pursuing tax avoidance strategies, for instance) that you mention. But at the same time I think we're asking for trouble if we let (big multinationals) just pile up bigger and bigger mountains of cash in their bank accounts, untaxed.

So, in absence of a better solution, taxing non-passthrough entities seems like the least worse solution ...

Re: G7: Rich nations back deal to tax multinationals

#903

Post by kgwgk »

bonzini wrote: post #901
kgwgk wrote: post #857

Earlier quoted context omitted.

The difference with what? The context was "If I’m a Canadian software company that does most of its sales in the US through an American subsidiary (not uncommon), the way it works is the American subsidiary pays the Canadian company back for the sales of the Canadian company’s IP." The IP production occurs in Canada where the R&D departments exist and salaries have to be paid and the US subsidiary company pays to the…

The difference between moving money in your situation and in Apple's, where there's no correspondence between where engineers are located and where IP is licensed from. By forcing all revenue to go through a single point (the headquarters) it's much harder to establish fake licensing like Apple Ireland's.

Ok, I was commenting on the US subsidiary of Canadian firm example (which you didn't seem to agree on).

But I don't think that the meaning of "forcing all revenue to go through a single point" is clear at all.

From the point of view of most countries sending money out to Cupertino wouldn't be an improvement over sending it to Cork if that still means that they don't get to tax it.

Re: G7: Rich nations back deal to tax multinationals

#904

Post by anoncake »

bumby wrote: post #875
anoncake wrote: post #801

Earlier quoted context omitted.

As I wrote, there could be an exception for non-voting stock. At least temporarily. But ultimately, it's supposed to change the paradigm. Because currently the economy is run by paperclip maximizers that no human is held responsible for. Which is not ideal.

Non voting shares are a minority already. Combine that with the fact that literally trillions of dollars would be aligned against such a idea, i fear it unfortunately relegates it to a thought experiment rather than a pragmatic policy proposal.

That applies to literally everything that goes against business interests. It's not an insurmountable hurdle.

Re: G7: Rich nations back deal to tax multinationals

#907

Post by bumby »

anoncake wrote: post #904
bumby wrote: post #875

Earlier quoted context omitted.

Non voting shares are a minority already. Combine that with the fact that literally trillions of dollars would be aligned against such a idea, i fear it unfortunately relegates it to a thought experiment rather than a pragmatic policy proposal.

That applies to literally everything that goes against business interests. It's not an insurmountable hurdle.

The difference here is that you would be uniting all business interests. Normally they are a fractured group with competing interests. It would take a truly revolutionary movement to enact that kind of change. Not impossible, but also not no particularly likely.

Re: G7: Rich nations back deal to tax multinationals

#908

Post by gambiting »

walshemj wrote: post #899
gambiting wrote: post #872

Earlier quoted context omitted.

I'm not sure what you mean? At the point of acquisition if you are given shares worth say £10k, it's the same as being given £10k cash, or £10k gift of some sort - you pay income tax based on the value of what you were given. It's different if you were given options - then the difference between your purchase price and sale price is taxed as capital gains with separate rules. And no, it's a British company .

Insane then, why did they not set up a proper scheme https://www.gov.uk/tax-employee-share-schemes . Bit of a red flag that the company is so badly run.

Because while I work for a British company the shares are awarded by our French HQ, so unfortunately none of those share planes are available in this case. The company employs 50k+ people globally and only HQ awards shares.

Also I'm not sure how much tax this would actually save - you can only get £3600 worth of shares tax free per year on the employee incentive plan(which seems closest to what I'm getting, flat number of shares after 4 years). That's a very....low amount.

Re: G7: Rich nations back deal to tax multinationals

#909

Post by hervature »

a1369209993 wrote: post #599
hervature wrote: post #206

Earlier quoted context omitted.

Except we already have a minimum tax worldwide - 0%. Perhaps every country should meet the others and offer 0% corporate tax. The solution isn't as simple as "minimum tax" as some places legitimately believe that corporate tax is not the most effective way to generate government profits (Wyoming and South Dakota at the state level).

Actually, we don't - there is no legal/treaty reason why a government could not offer a negative corporate income tax rate (at least in the lowest N-1 tax brackets), and we may actually see that if corporate abuse of political processes is allowed to continue far enough.

You are saying that we could theoretically lower the minimum. As it stands, the minimum is 0%.

Re: G7: Rich nations back deal to tax multinationals

#910

Post by peteretep »

alentist wrote: post #837
peteretep wrote: post #58

Earlier quoted context omitted.

Are you trying to cite Singapore and Hong Kong as countries that aren’t neoliberal?

Are you trying to cite Singapore and Hong Kong as countries that are socialist?

Singapore? Yes, obviously: Temasek and GIC own more than 60% of market cap on the Singapore Stock Exchange and 80% of people live in public housing.
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