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Global minimum corporate tax: 130 nations to support U.S. proposal

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Re: Global minimum corporate tax: 130 nations to support U.S. proposal

#141

Post by jeofken »

jhrmnn wrote: post #63
disposekinetics wrote: post #55

Earlier quoted context omitted.

But isn't it good that companies shop around for the cheapest tax rate?

In what sense is it good that a company can make profit through a business activity in some country, but instead of paying the tax there, it pays it somewhere else?

Competition in economics is the incentive that has brought the majority of westerners from Companies compete for shareholders by satisfying as many customers as possible. If states can compete for the best deal for international business, companies can better serve people, and those states can house centres of international trade.

It’s not just abstract talk, but incentives that drive us to live different everyday lives than people in guild-economy medieval times, or past slave economies, or how people lived in the GDR or other eastern bloc countries.

Re: Global minimum corporate tax: 130 nations to support U.S. proposal

#142

Post by conanbatt »

CrazyStat wrote: post #107
motohagiography wrote: post #36

The idea that politicians and bureaucracies can defer to external international conventions to be the bad-cop for wildly unpopular policy decisions - and then claim to be powerless to stop them - is anathema to democratic principles like national representation, consent of the governed, and other concepts of human rights. This proposal seems like a global group of government affiliated people colluding to fleece each…

Raising corporate taxes is generally popular, not "wildly unpopular." For example, in a recent poll 65% of Americans support raising corporate taxes [1]. This number has been fairly steady over time. It's even higher when you ask about closing loopholes that allow international tax havens, as this 15% minimum tax agreement is trying to do--70-85% support [2]. The only terrible shame here is you laundering your opinio…

65% is not enough to justify a loss of sovereignty. Once many countries agree to a treaty like this one, some country wont and becomes a tax haven and suddenly the target of sanctions and political pressure.

This is the case with the OCDE literally calling countries with favorable taxation "tax paradises".

Re: Global minimum corporate tax: 130 nations to support U.S. proposal

#143

Post by throwaway34241 »

Apparently it's also possible to address the issue of shifting corporate profits to tax-havens even without a large scale international agreement.

Basically, corporations have one place money comes in and two places it comes out, like so:

sales = expenses + profits

If you tax the sales, then deduct the expenses, that leaves the incidence of the tax on the profits. But importantly, unlike profits, it's usually clear to which country a sale belongs to.

Where this gets complicated is international borders, the solution there is to only deduct domestic expenses. At first this seems protectionist, but according to economists changes to the currency exchange rates eventually balance out the effect and it ends up trade neutral.

This idea was actually seriously proposed as part of US tax reform a few years ago (and I saw some praise from both left/right leaning economists), but it got killed because some big companies were against it. It's called a border adjustment tax. [1]

Even though the above is an interesting idea this recent attempt to come to an international agreement is probably also reasonable, since it should accomplish some of the same things and getting countries to agree to a headline number is probably more realistically achievable than in-depth reform (so it's likely solutions like this or nothing at least in the medium term).

[1] https://en.wikipedia.org/wiki/Border-adjustment_tax

Re: Global minimum corporate tax: 130 nations to support U.S. proposal

#144

Post by UnpossibleJim »

jbaudanza wrote: post #26

Imposing taxes on a legal entity always seemed fishy to me. Politically, it sounds great to say, "Make the corporations pay their share!", but who exactly are we targeting with these taxes? Is it the rich executives? Why not just raise taxes on the rich directly? I suspect in most cases the tax burden is just shifted onto the lower-income workers or the customers somehow.

One of the even bigger issues with this bill is the lack of accountability in government spending. This does nothing to tackle military spending or riders tacked on to bills that have nothing to do with the proposed spending bill.

If politicians really wanted to make people happy and get things under control, it would be transparency in spending and no riders on spending bills. This is just another way to wring more money out of a populace with a better sales pitch by saying, "Make the corporations pay their share!", knowing full well that people don't consider the down stream effects on middle and lower class economic systems.

Re: Global minimum corporate tax: 130 nations to support U.S. proposal

#145

Post by thescriptkiddie »

robertlagrant wrote: post #126
ineptech wrote: post #116

Earlier quoted context omitted.

...until a poorer country adopts a lower rate, and the corporation leaves. That's the trap this avoids.

It's not a trap. The money will just never go to those countries now.

https://en.wikipedia.org/wiki/Prisoner%27s_dilemma

Re: Global minimum corporate tax: 130 nations to support U.S. proposal

#146

Post by jeofken »

ginko wrote: post #97
disposekinetics wrote: post #70

Earlier quoted context omitted.

It minimizes the amount of taxes paid overall, which weakens the state.

How is weakening the state a good thing?

State leaders have no incentive to create value, but rather to keep power.

Companies must create valuable things people want, or be out of business in a very short time.

Re: Global minimum corporate tax: 130 nations to support U.S. proposal

#148

Post by nabla9 »

ppeetteerr wrote: post #32

The complexity of this agreement and its execution are incredible. Not only getting alignment from 130 members, but a system by which companies report their revenue _and the cost of the revenue_ for every country! Future tax avoidance schemes will most likely try to "divert" their costs towards high-revenue countries like the US. After all, what is the profit margin of an iPhone sold in Romania? For some context, cor…

You are mistaken. It's not that complicated and does not work that way.

1) No foreign country is required to collect minimum tax.

2) If some country is not collecting minimum tax, home country tops up the tax until minimum tax requirement is fulfilled.

3) It's up to the company to show evidence that it paid minimum tax in other countries so that it's not double taxed in country where it's hq is.

4) They need to report taxes in other countries only to their home countries.

Re: Global minimum corporate tax: 130 nations to support U.S. proposal

#149

Post by petermcneeley »

handrous wrote: post #122
petermcneeley wrote: post #110

In the limit of free flowing capital and goods this minimum is likely to also be the maximum. This will lead to a more homogenous and uniform financial situation across all countries. A much better idea would be tarrifs. A country can tax each corporation as they see fit and what is in line with their values. They can also then have corporate or other taxes in line with their values. This would lead to a diverse mena…

Why would this put downward pressure on the maximum corporate tax? The current minimum is 0%. Why isn't 0% also the de facto maximum, right now? Why would raising the minimum force it to (tend to) equal the maximum?

~0% is what many pay right now because various mechanisms are used to pay the tax of the lowest country tax rate. So if you enforce a minimum then likely they will pay ~min%.

This is a game theory problem not an economic or political one.

Re: Global minimum corporate tax: 130 nations to support U.S. proposal

#150

Post by riversflow »

coryrc wrote: post #90
cinntaile wrote: post #43

Earlier quoted context omitted.

While it may be a cowardly way to divert responsibility I don't agree that this is so bad. This problem can only be solved by cooperating, otherwise companies can just shop around for the cheapest taxation rate.

Gee, it's almost like taxing corporate profits twice has caused massive distortions everywhere: biggest stock price bubble, tax residency shopping, etc Tax the wealthy. Don't let them take "charitable" deductions or use tax-exempt IRAs. 100% inheritance tax above $4 million.

>Tax the wealthy. Don't let them take "charitable" deductions or use tax-exempt IRAs. 100% inheritance tax above $4 million.

Agree. especially about inheritance[1]. However, as I've said before corporate taxes are double taxation, corporation are paying their dues as every person involved with the corporation is freed from the liability of the business's actions by way of the state allowing liability limiting corporate entities to exist. When the business assumes liability from the owners, it also assumes tax responsibility.

>has caused massive distortions everywhere:

yeah, like in the global level of CO2, or the amount of plastic in the ocean, or the amount of mercury in fish, or....

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