Earlier quoted context omitted.
Taxing the owners (as in a subchapter S corporation in the US). It's a pass-through. Then you don't have the incentive to do things like the double-Irish or similar unnatural acts.
That's one way of doing it, but means that if the majority of your stock is held by foreign nationals residing abroad, the U.S. gets much less income, even though the majority of the value is being generated in the U.S. using U.S. infrastructure and services.
Facebook Tax Bill Over Ireland Move Could Cost $5B
111–120 of 128 posts
Re: Facebook Tax Bill Over Ireland Move Could Cost $5B
#112My view is that corporate income tax is just a very bad idea. It will always introduce a lot of judgement problems and you will always need to assess every single transaction. Is it "fair price" or is it done to funnel money somewhere? Those questions are impossible to answer objectively and we shouldn't really care. Tax owners of the corporation. Tax people for living in a nice place (land tax, real estate tax, all…
> If you really want you can tax companies' revenue (not profits).
That one doesn't really work.
Some industries are very low margin and capital intensive. There is, realistically, no level of revenue based tax that a supermarket chain can pay. Maaaaybe 1%. Max. Same goes for airlines, steel mills, and a thousand other old-school bricks and mortar industries where a lot of money may come in the door, but then in goes right back out again as a cost of doing business.
Other industries are very high margin, including a lot of tech businesses that were all familiar with. A 1% revenue tax would represent a massive decrease in their total tax bill, but if you charge them a more realistic tax rate you've bankrupted everything that's not a highly profitable tech company, which is basically your entire economy.
(Yes, they'll try to pass it on, but a supermarket chain isn't going to be able to pass on a 20% tax on revenue. They're already making no profits, paying crap wages, and bargaining their supliers down to the wire; the only thing they could do is raise prices 20%, and people who aren't working at the aforementioned high-margin tech companies can't remotely afford a 20% surcharge on their food bill with no offsetting changes to their tax or benefits. Plus, if that's actually the policy result you wanted...maybe just enact a 20% VAT?)
Of course, you could adjust the tax rate based on how capital intensive the industry is and how high your margins are at which point...it's a tax on profit again. :)
The more you dig into it, the more it becomes clear (in my view) that revenue based taxation isn't the right lever to pull. Whatever policy outcome you want can be more easily gained via other methods.
Re: Facebook Tax Bill Over Ireland Move Could Cost $5B
#113Earlier quoted context omitted.
No, you don't end up paying 35%. Part of the advantages of a 401k come from distributing dollars being taxed at a high marginal rate to another year when they are taxed at a lower marginal rate.
It all depends. Sure, if you put almost nothing in a 401k, then when you pull it out, you'd be in a lower margin tax bracket (and living on very little money). But if you put a lot in, the fact you HAVE to start taking money out at a certain again AND it all gets taxed before you die means you pretty much end up paying the taxes anyways (or more if rates have gone up).
A lot of them even have no idea that they will be taxed anyways when they withdraw.
Re: Facebook Tax Bill Over Ireland Move Could Cost $5B
#114Earlier quoted context omitted.
Where did you get that from? Am I suggesting companies don't produce any computers any more? I'm suggesting having gov'ts compete on spending efficiency is a good thing. If I get the same level of services from country A and B and country A's tax rate is 25% lower, then guess where I'm going?
Companies do not care about long-term spending, that’s the thing. Education only makes an effect 30+years out. Most companies care about the next quartal, if you’re lucky.
Re: Facebook Tax Bill Over Ireland Move Could Cost $5B
#115My view is that corporate income tax is just a very bad idea. It will always introduce a lot of judgement problems and you will always need to assess every single transaction. Is it "fair price" or is it done to funnel money somewhere? Those questions are impossible to answer objectively and we shouldn't really care. Tax owners of the corporation. Tax people for living in a nice place (land tax, real estate tax, all…
I agree with your post and you list a number of good ideas. Except... > If you really want you can tax companies' revenue (not profits). That one doesn't really work. Some industries are very low margin and capital intensive. There is, realistically, no level of revenue based tax that a supermarket chain can pay. Maaaaybe 1%. Max. Same goes for airlines, steel mills, and a thousand other old-school bricks and mortar…
Re: Facebook Tax Bill Over Ireland Move Could Cost $5B
#116My view is that corporate income tax is just a very bad idea. It will always introduce a lot of judgement problems and you will always need to assess every single transaction. Is it "fair price" or is it done to funnel money somewhere? Those questions are impossible to answer objectively and we shouldn't really care. Tax owners of the corporation. Tax people for living in a nice place (land tax, real estate tax, all…
I agree with your post and you list a number of good ideas. Except... > If you really want you can tax companies' revenue (not profits). That one doesn't really work. Some industries are very low margin and capital intensive. There is, realistically, no level of revenue based tax that a supermarket chain can pay. Maaaaybe 1%. Max. Same goes for airlines, steel mills, and a thousand other old-school bricks and mortar…
Re: Facebook Tax Bill Over Ireland Move Could Cost $5B
#117Earlier quoted context omitted.
"If you really want you can tax companies' revenue (not profits)." How would that work if a company isn't profitable? Sounds like taxing profit makes more sense, although I agree that it does give ambiguity. But then, it also allows the government to incentivize certain kinds of spending over others by allowing it to be counted (or not) towards the tax bill.
That's prime argument for taxing revenue actually. Imagine you have two companies doing the same thing. They have the same product, use the same amount of resources, infrastructure, pollute at the same rate etc. The only difference is that one operates under famous trademark from country X which it licenses for 100M/year and brings 0$ profits while the other one developed its own trademark which it owns therefore mak…
Re: Facebook Tax Bill Over Ireland Move Could Cost $5B
#118Earlier quoted context omitted.
This is 100% about taxes. The only reason the IRS cares about valuing assets is for the amount of tax they can levy on them. And saving $5B sounds darn efficient to me.
I know for sure that if I underdeclare the value of my holdings or my income, I'll be punished when caught, and I don't consider that unfair. I might disagree with the amount I'm taxed, but I don't disagree that I should contribute something to society through paying tax. The difference as I see it is that companies usually operate as if they believe they shouldn't pay any tax. I realise that minimising tax burden is…
Companies don't know from 'dishonest.' The only question is where 'efficient' ends and illegal starts. Other than that, companies don't care.
(...and even then, in countries with corporate liability protection and simple fines for most corporate crimes, "illegal" is just another name for an economic cost going into the efficiency calculus.)
Re: Facebook Tax Bill Over Ireland Move Could Cost $5B
#119Earlier quoted context omitted.
Taxing the owners (as in a subchapter S corporation in the US). It's a pass-through. Then you don't have the incentive to do things like the double-Irish or similar unnatural acts.
That's one way of doing it, but means that if the majority of your stock is held by foreign nationals residing abroad, the U.S. gets much less income, even though the majority of the value is being generated in the U.S. using U.S. infrastructure and services.
Re: Facebook Tax Bill Over Ireland Move Could Cost $5B
#120I often wonder about a tax system that just works on inflation. Why does a govt go out of its way to collect taxes if it's also going to print money? To me it's so that you can tax different entities at different rates. But if we're willing to adopt a flat tax of X% I wonder if it could be collected through inflating everyone's dollar?