Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

The new tax havens

cbsnews.com

Post reply on HN
Print view View original

21–30 of 36 posts

Re: The new tax havens

#21

Post by temphn »

justincormack wrote: post #3

Of course Google, Microsoft et al were telling Ireland the other month that they couldnt raise their rates or they would leave. There is too much power here. Aligning tax rates globally will be necessary, like the EU did in Europe. On the other hand if GE is paying 3.6% then some loopholes need closing. Remove the ways to avoid tax and you can cut the basic rate. That was the plan for the abortive Reagan tax simplifi…

Even small governments generally have more financial resources than all but the very largest corporations. They also have militaries and police forces and can compel people within their borders at gunpoint. The only card the company really has to play is the ability to leave.

Playing the "exit" card is a desperation move, but its importance can be seen by the fact that it was actually revoked in every communist country. This was the purpose of the Berlin Wall, for example: to stop the brain drain of the skilled and talented, and keep them in a country with a 100% tax rate (the abolition of private property = 100% tax).

Therefore, it is somewhat arguable that governments are the "weak" ones here. Playing the exit card for MS or Google would cost them many millions and is a last resort.

Re: The new tax havens

#22

Post by yummyfajitas »

Atropos wrote: post #14
DanielBMarkham wrote: post #7

There is a lot of loaded language in that report, and I got the feeling that the reporter should have taken an economics class before doing it. It was like watching a ignorant economics student get lectured about reality and she not wanting to accept any of it. So, instead of pulling down a bunch of theory from the shelf and going over it, I'll just point out the obvious flaw: she believes that the country "owns" all…

I agree with your view of what the realities are. But I don't see why should applaud them: What happens if a country like Switzerland or Singapore has a sustainable competitive advantage over the USA or Germany, that simply cannot be overcome? They can achieve some efficiencies by "freeloading" that bigger countries cannot match, for example Switzerland doesn't train enough doctors at their own universities but relie…

They can achieve some efficiencies by "freeloading" that bigger countries cannot match, for example Switzerland doesn't train enough doctors at their own universities but relies heavily on hiring doctors from Germany.

How is this "freeloading"? Medical schools located in Germany train doctors, who then pay the medical school. People in Switzerland pay the doctors for services.

Is Germany also freeloading on Switzerland if they purchase Swiss chocolates or watches? Is the US freeloading off India because the US buys BPO services from India?

Re: The new tax havens

#23

Post by jacques_chester »

Atropos wrote: post #20
jacques_chester wrote: post #18

Earlier quoted context omitted.

> What happens if a country like Switzerland or Singapore has a sustainable competitive advantage over the USA or Germany, that simply cannot be overcome? You may find the theory of absolute and comparative advantage to be enlightening in its detail; but the broad conclusion is that even if country A is better than country B at everything, it will still make sense for A to focus on some things and B on other things.

I know comparative advantage, but does it really apply to competition with tax rates? For example inside the European Union it doesn't matter in which country a company is based, you have basically freedom of trade for goods and services. In Germany the medium age is 45 years, in Ireland it is 35 years; Population > 65 years is 20,6% vs.11,6%. Even if all other regulation in Germany + Ireland was identical, it seems…

You seem to labour under the illusion that if the money isn't taxed in a particular country, it somehow disappears from that country altogether. Yet wages are paid to employees and profits are distributed to shareholders. Lower taxes allow companies either to lower their prices or distribute more wages and profits. That's generally considered to be A Good Thing. If Germans want a slice of those profits, they can buy shares in the Irish-domiciled companies like everyone else.

Re: The new tax havens

#24

Post by s1rech »

I think this 'tax amnesty' borders on extortion. So all these companies used every loophole they could find to pay lower taxes, and now they want to bring the booty back, and it has to be for free. Assuming this happens, what prevents them from doing the same thing again?

Re: The new tax havens

#25

Post by Atropos »

yummyfajitas wrote: post #22
Atropos wrote: post #14

Earlier quoted context omitted.

I agree with your view of what the realities are. But I don't see why should applaud them: What happens if a country like Switzerland or Singapore has a sustainable competitive advantage over the USA or Germany, that simply cannot be overcome? They can achieve some efficiencies by "freeloading" that bigger countries cannot match, for example Switzerland doesn't train enough doctors at their own universities but relie…

They can achieve some efficiencies by "freeloading" that bigger countries cannot match, for example Switzerland doesn't train enough doctors at their own universities but relies heavily on hiring doctors from Germany. How is this "freeloading"? Medical schools located in Germany train doctors, who then pay the medical school. People in Switzerland pay the doctors for services. Is Germany also freeloading on Switzerla…

Not entirely comparable. Most universities don't have tuition fees in Germany, the highest fees are 1000€/year, while it is estimated that the costs of educating a medical student are at least 30,000€ / year. Basically the education is heavily subsidized by the German taxpayer, so if a huge number of doctors later work and pay taxes in Switzerland it is somewhat suboptimal.

Re: The new tax havens

#26

Post by Atropos »

jacques_chester wrote: post #23
Atropos wrote: post #20

Earlier quoted context omitted.

I know comparative advantage, but does it really apply to competition with tax rates? For example inside the European Union it doesn't matter in which country a company is based, you have basically freedom of trade for goods and services. In Germany the medium age is 45 years, in Ireland it is 35 years; Population > 65 years is 20,6% vs.11,6%. Even if all other regulation in Germany + Ireland was identical, it seems…

You seem to labour under the illusion that if the money isn't taxed in a particular country, it somehow disappears from that country altogether. Yet wages are paid to employees and profits are distributed to shareholders. Lower taxes allow companies either to lower their prices or distribute more wages and profits. That's generally considered to be A Good Thing. If Germans want a slice of those profits, they can buy…

Employees and shareholders do not get their money from the government. But what about old people, government employees, social services? It just seems to me that the "assets" of the government move to a low tax country, but the "liabilities" stay the same...

If there was a hypothetical "ZeroTaxCountry", to which companies could declare their allegiance and pay no taxes at all. Would you consider that "A Good Thing" as well, since it seems to have all the benefits you alluded too?

Re: The new tax havens

#27

Post by yummyfajitas »

Atropos wrote: post #25
yummyfajitas wrote: post #22

Earlier quoted context omitted.

They can achieve some efficiencies by "freeloading" that bigger countries cannot match, for example Switzerland doesn't train enough doctors at their own universities but relies heavily on hiring doctors from Germany. How is this "freeloading"? Medical schools located in Germany train doctors, who then pay the medical school. People in Switzerland pay the doctors for services. Is Germany also freeloading on Switzerla…

Not entirely comparable. Most universities don't have tuition fees in Germany, the highest fees are 1000€/year, while it is estimated that the costs of educating a medical student are at least 30,000€ / year. Basically the education is heavily subsidized by the German taxpayer, so if a huge number of doctors later work and pay taxes in Switzerland it is somewhat suboptimal.

Ok, so the real problem is that Germany is forcing it's citizens to subsidize doctors and the Swiss, rather than that the Swiss are freeloading.

The obvious solution (for Germany's citizens, if not their politicians) would be to charge market rates for medical education.

Re: The new tax havens

#28

Post by jacques_chester »

Atropos wrote: post #26
jacques_chester wrote: post #23

Earlier quoted context omitted.

You seem to labour under the illusion that if the money isn't taxed in a particular country, it somehow disappears from that country altogether. Yet wages are paid to employees and profits are distributed to shareholders. Lower taxes allow companies either to lower their prices or distribute more wages and profits. That's generally considered to be A Good Thing. If Germans want a slice of those profits, they can buy…

Employees and shareholders do not get their money from the government. But what about old people, government employees, social services? It just seems to me that the "assets" of the government move to a low tax country, but the "liabilities" stay the same... If there was a hypothetical "ZeroTaxCountry", to which companies could declare their allegiance and pay no taxes at all. Would you consider that "A Good Thing" a…

You're right that future liabilities are a mess. In Australia in the early 1990s the government introduced a program of compulsory superannuation. Already something like a trillion dollars has been saved by Australians against their retirement under the scheme. Singapore does something similar. Australia has also put away tens of billions of dollars against the future liabilities of public service pensions.

Will it completely do away with government liabilities? No. Australia too will face higher health care costs. But some of those costs will be defrayed by the superannuation and taxes levied on an economy that grew faster without the taxes than with them.

I am ambivalent about the Euro-US situation. On the one hand, it sucks that you face a period of painful adjustment to inescapable economic reality. On the other hand, your politicians have steadfastly refused to face up to those realities. As an Australian I find it annoying that profligate governments in Europe and the USA are hurting my prospects, even though here we've largely enjoyed fairly sensible economic policy for the past 25 years.

Re: The new tax havens

#29

Post by Kyotoku »

Atropos wrote: post #26
jacques_chester wrote: post #23

Earlier quoted context omitted.

You seem to labour under the illusion that if the money isn't taxed in a particular country, it somehow disappears from that country altogether. Yet wages are paid to employees and profits are distributed to shareholders. Lower taxes allow companies either to lower their prices or distribute more wages and profits. That's generally considered to be A Good Thing. If Germans want a slice of those profits, they can buy…

Employees and shareholders do not get their money from the government. But what about old people, government employees, social services? It just seems to me that the "assets" of the government move to a low tax country, but the "liabilities" stay the same... If there was a hypothetical "ZeroTaxCountry", to which companies could declare their allegiance and pay no taxes at all. Would you consider that "A Good Thing" a…

That's what happen when you tie yourself to a company whose business is to tax away income from a movable source. Economics is about learning the rules of the game, not changing it. If it could be changed, than the economists would look for what can't be changed. And then optimize for that.

As if it is good thing the company moving to a no tax country. From the point of view of the company's clients, it actually would, since it would mean that its products have the potential to be the cheapest of the market.

Re: The new tax havens

#30

Post by rmc »

yummyfajitas wrote: post #10
rmc wrote: post #9

"Almost everybody is in Ireland," Sullivan said. "All the pharmaceutical companies, all the high tech companies. You're stupid if you're not in Ireland," he replied. And this is why it doesn't change These big companies are telling everyone, the US public, the Irish public, the Irish government that the low tax rate works . The goal of the low Irish corportion tax is exactly this. Create job in Ireland, bring compani…

It sounds like the Irish government is behaving quite responsibly. Many other governments would be tempted to try to take a bigger piece of the pie from their corporations in order to get reelected, not realizing that they might be killing the goose that laid the golden egg. It sounds like the Irish have their collective heads on straight.

Many other governments would be tempted to try to take a bigger piece of the pie from their corporations in order to get reelected,

That was never suggested. Only the far left socialist (i.e. let's nationalise everything) parties suggested raising the corporate tax rate.

The vast majority of the population knew that there aren't loads of jobs here. Some high profile US companies left Ireland (e.g. Dell's assembly plant). The majority of the population knew that raising the corporate tax rate would cause these companies to close and there would be some massive layoffs.

Suggestions to raise the corporate tax rate would have damaged the chances of getting reelected. Why else would the left wing Labour party (who suggested nationalising the banks (they are all nationalised now anyway)), not suggest raising the tax rate?

Post reply on HN