I rather we all agree to stop printing money.
Global minimum corporate tax: 130 nations to support U.S. proposal
111–120 of 362 posts
Re: Global minimum corporate tax: 130 nations to support U.S. proposal
#112Earlier quoted context omitted.
I don't think the New World Order conspiracy theorists were particularly paranoid about closing corporate tax haven loopholes.
I thought their whole schtick was "one world government," which is precisely what colluding to destroy tax competition is, as is banning capital flight which results from abusive policy.
> tax competition
It is not tax competition. It's tax fleecing. The issue is that companies are paying the rates of low-tax countries while operating by and large in "high"-tax countries and reaping all the benefits from their expensive infrastructure, law enforcement, healthcare, education, welfare (to top up absurdly low employee wages)... all of which gets paid for by "someone else" (you and me).
It might be tax competition if a company that decided to pay Bermudan tax rates also had to draw all its talent from Bermudan universities, had to build their massive shipping hubs in Bermuda using Bermudan transport, had to perform their complex legal cases through Bermudan courts, had to have their entire workforce cared for by the Bermudan healthcare system (or pay them enough to go private)...
(Nothing against Bermuda, picked totally at random)
Re: Global minimum corporate tax: 130 nations to support U.S. proposal
#113Imposing 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.
Yes, I agree. I myself have always wondered about the opposite strategy: literally zero corporation tax, compensated by an overarching income-agnostic personal income tax which would go up to stupidly high percents in the stupidly high income brackets, say for the sake of the argument 80% above 1 million €/$/£, 90% above 10 million, 95% above 100 million etc. I don't necessarily mean these specific values, but you ge…
If we did that, rich people would keep a corp as a piggy bank and only pay taxes on whatever they took out. Most of the money would stay in the corp and be use on various investments.
To a degree this is already what people do (eg contractors), except they have to pay some corp tax each year on what they made.
Re: Global minimum corporate tax: 130 nations to support U.S. proposal
#114“For decades, the United States has participated in a self-defeating international tax competition, lowering our corporate tax rates only to watch other nations lower theirs in response. The result was a global race to the bottom: Who could lower their corporate rate further and faster? No nation has won this race,” Translation, "We want to have these corporations in our country so badly that we keep paying more and…
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Re: Global minimum corporate tax: 130 nations to support U.S. proposal
#115“For decades, the United States has participated in a self-defeating international tax competition, lowering our corporate tax rates only to watch other nations lower theirs in response. The result was a global race to the bottom: Who could lower their corporate rate further and faster? No nation has won this race,” Translation, "We want to have these corporations in our country so badly that we keep paying more and…
Isn't it a consensus position among economists that corporate taxation is inefficient and badly targeted? That taxes on individuals (wages, goods&services, capital gains) and on land are easier to collect and better at providing desired incentives? Really, isn't a "race to the bottom" a virtuous cycle here? Kinda weird to see Yellen -- Treasury Secretary and former Fed Chair -- making this kind of statement.
The corporate profits that are being taxed normally would get distributed to shareholders via share buybacks or dividends (so will appear to them as capital gains or income).
Taxing this is basically taxing money earned from owning things vs money earned from working.
I'm not aware of a consensus that one is always better than the other. I would imagine it would depend on the circumstances of the economy and what the current tax rates are. If you tax income from owning things too much, that would probably discourage saving and investing money, but of course taxing wages discourages working (and lowers the after-tax income of workers).
I would say that in the current environment, the cost of money (interest rate) for companies that want to make investments (building housing, factories, etc), is already pretty low by historical standards.
One of the common problems with the corporate tax is that it's hard to say which country the profits belong to (global companies can shift the profits around very easily by changing the prices their international subsidiaries charge each other). The article is an attempt to address the profit-shifting issue. There are also other ways to address that, but they might be harder to implement since they would involve more substantial changes to the tax code.
Re: Global minimum corporate tax: 130 nations to support U.S. proposal
#116Earlier quoted context omitted.
I think you're misunderstanding the concept here, this has nothing to do with dodging responsibility for unpopular policies. If you think countries shouldn't tax corporate profits at all, great, but that's a separate discussion; this is predicated on the assumption that all countries desire a non-zero corporate tax, and just need a way to get there. The point of this measure is to avoid a coordination trap that leads…
Low Corporate tax rates invite corporations into your country. This benefits poor countries more.
...until a poorer country adopts a lower rate, and the corporation leaves. That's the trap this avoids.
Re: Global minimum corporate tax: 130 nations to support U.S. proposal
#117Earlier quoted context omitted.
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.
That’s what taxing corporate income (or more targeted, corporate assets ) attempts to do: tax the wealthy. Because by-and-large, wealthy people don’t accomplish the things they want to do by drawing an income and then spending it; but rather by setting up corporate vehicles that have their goal as the corporate mission statement, and then getting other corporations to fund its treasury (as negotiated compensation in…
> That’s what taxing corporate income does: tax the wealthy.
No it doesn't. It equally affects both large shareholders and small shareholders. E. g. pension funds will get lower gains, and regular dudes 401k (or whatever they are called in your country) will get smaller yields.
I don't have numbers, but I suspect the richest people get only small percent of large corporations income.
Re: Global minimum corporate tax: 130 nations to support U.S. proposal
#118How are developing countries going to catch up with developed ones if they agree on the same tax policies?
China didn't need to have ridiculously attractive taxes to catch up. Corporate taxes in China were ~33% when it was growing the fastest. Just having a low-cost labor force and scale and global politics not being anti-offshoring was enough. As China becomes more expensive, I'm not sure why Indonesia, Nigeria, Pakistan, Egypt, and/or Vietnam couldn't do something similar. India seems to be in that process. Unfortunatel…
China should be the exception in all cases. The don’t exactly act in a democratic or open way.
Re: Global minimum corporate tax: 130 nations to support U.S. proposal
#119Earlier quoted context omitted.
Restaurants and other low margin businesses would cease to exist under this plan.
That’s a common misunderstanding, restaurants are low margin due to competition. As long as the industry moves in lockstep with cost increases the margins stay the same. Sales taxes for example vary widely yet have minimal impact on low margin business. Lower them and customers save money but restaurants margins stay the same.
So what you're saying is this tax is effectively going to be paid by the consumers?
Re: Global minimum corporate tax: 130 nations to support U.S. proposal
#120Imposing 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.
Yes, I agree. I myself have always wondered about the opposite strategy: literally zero corporation tax, compensated by an overarching income-agnostic personal income tax which would go up to stupidly high percents in the stupidly high income brackets, say for the sake of the argument 80% above 1 million €/$/£, 90% above 10 million, 95% above 100 million etc. I don't necessarily mean these specific values, but you ge…
Don't own, rent everything. How will you handle that?