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

Denmark: No aid for companies which pay out dividends or are reg. in tax havens

bloomberg.com

Post reply on HN
Print view View original

141–150 of 308 posts

Re: Denmark: No aid for companies which pay out dividends or are reg. in tax havens

#141

Post by bigfudge »

chrismeller wrote: post #67
toomuchtodo wrote: post #51

Earlier quoted context omitted.

Depends on scale. American Airlines in the US used 80 percent of their profits for several years for share buybacks ($12.5 billion from 2010-2019). Not R&D, not salary increases for workers. Does that deserve a bailout that preserves existing ownership? That’s the target. That sort of behavior should be nuked from orbit. I’d agree it’d be different if your business is small (less than $10M/year in turnover); you’d lo…

That’s the point. You are assuming that every applicant is AA size... the reality is that 99% of businesses are not, and you’re killing those business, their employees, their owners, and their families.

I don't think anyone has clarified the actual rules in play here. Why should the taxpayer bail out firms which go on to pay dividends within 5 years? Why shouldn't the state simply take stock as a guarantee for loans in these companies?

Re: Denmark: No aid for companies which pay out dividends or are reg. in tax havens

#142

Post by mrfredward »

wsc981 wrote: post #107
tonyedgecombe wrote: post #79

Earlier quoted context omitted.

Companies that pay dividends What’s the point of a company that never pays a dividend.

The stock value can still rise. Apple didn't pay dividends for a large part of its existence, yet especially after the year 2000 it would have been a great stock to own. > Apple's long stretch of not paying any dividends reflected Jobs' opposition to them. During Jobs' second tenure at Apple from 1997 to 2012, the tech giant didn't pay a single dividend, even as its cash hoard ballooned to over $50 billion in 2011. "…

And the underlying economic reason for Apple's shares to go up when it wasn't paying a dividend is that as Apple accumulated cash and became more profitable, the chances that it would pay a fat dividend someday (even if not in the near future) kept going up.

If companies didn't ever pay a dividend or buyback shares, the whole thing would be a ponzi scheme. The company takes money in an IPO, and then investors shuffle money among themselves to make it look like they have a profit, but it would collapse if people want to cash out. When companies eventually distribute profit to investors however, it becomes possible for cash to leave the system without all the paper value disappearing into thin air.

Re: Denmark: No aid for companies which pay out dividends or are reg. in tax havens

#143

Post by bigfudge »

Saaster wrote: post #36
smnrchrds wrote: post #26

Earlier quoted context omitted.

I think the "in tax havens" part applies to "pay out dividends" as well. Perhaps someone who speaks Danish can refer to the official sources and confirm?

Firms applying for Danish state aid must promise not to pay dividends or make share buy-backs in 2020 and 2021. Companies would be allowed to pay dividends again if they pay back the aid. This makes perfect sense, otherwise it's a textbook case of socializing the losses and privatizing the profit. Paying dividends (and stock buybacks) is a trade-off that companies make, that makes the company less resilient. Risk/rew…

I personally don't see why it's such a limited time frame.

Re: Denmark: No aid for companies which pay out dividends or are reg. in tax havens

#144

Post by ardy42 »

chrisseaton wrote: post #86
throwaway2048 wrote: post #61

Earlier quoted context omitted.

Return from investment is nothing like salary.

Many workers are paid a majority of their income in the form of stock from the company they work for.

> Many workers are paid a majority of their income in the form of stock from the company they work for.

A very small "many." I'd imagine that class consists mostly of highly-placed executives (who can be assumed to be rather wealthy) and some number of people playing the startup lottery.

Re: Denmark: No aid for companies which pay out dividends or are reg. in tax havens

#145

Post by peterwoerner »

notahacker wrote: post #135
bitcurious wrote: post #96

Earlier quoted context omitted.

I don’t think corporate tax break would actually be a useful tool right now - corporate taxes are on profits and the profits are going to tank for most businesses.

I think the theory is if the US govt hadn't pumped the deficit on tax cuts for the profitable and rich in the good times, it would feel more free to spend it on bailouts for the vulnerable in the bad times due to less existing national debt. Although the Republican party's interest in making even the most token attempt to balance the federal budget over the economic cycle ended with the Obama presidency, so the debt'…

Don't worry, it will begin again if and only if Biden wins.

Re: Denmark: No aid for companies which pay out dividends or are reg. in tax havens

#146

Post by rapsey »

tekdude wrote: post #138
tonyedgecombe wrote: post #79

Earlier quoted context omitted.

Companies that pay dividends What’s the point of a company that never pays a dividend.

Commodities and precious metals don't pay dividends, yet people invest in them with the expectation that the value will rise so they can sell them later.

Technically that is speculation not investing.

Re: Denmark: No aid for companies which pay out dividends or are reg. in tax havens

#147

Post by jdmichal »

kilo_bravo_3 wrote: post #28
Nextgrid wrote: post #2

Maybe I'm not understanding something but why do they consider paying dividends as something bad? They are essentially excluding the majority of businesses using this criteria.

There's a lot of misinformation about this out there. The article does a bad job at explaining it, but companies that take aid cannot pay dividends or buy back stock until they return the aid. This is so that aid is not redirected into the pockets of shareholders and is instead used to keep people employed. >The Government and all parties to the Parliament agree that the extended and extended fixed cost scheme introd…

TARP in the US worked exactly the same way with the banks, BTW. Banks which took TARP money had their dividends reduced to a penny per share maximum until the money was repaid. Here you can see that for Bank of America, it took until 2014(!) for their dividend to go above that:

https://www.nasdaq.com/market-activity/stocks/bac/dividend-h...

Re: Denmark: No aid for companies which pay out dividends or are reg. in tax havens

#148

Post by Saaster »

MiroF wrote: post #90
Saaster wrote: post #27

It's a good common sense start. Companies that pay dividends or make share buy-backs are more vulnerable in a crisis (not only the current one), meaning they are riskier investments. Risk needs to be inversely correlated with reward for the markets to function. Investors in riskier companies deserve to get wiped out, not propped up. Companies registered in tax-havens should have no business applying for EU or US aid.…

> Companies that pay dividends or make share buy-backs are more vulnerable in a crisis All public companies are anticipated to pay dividends or buy-back at some point in time, it's what underlies stock pricing.

And they can definitely still do that. AFTER they've paid back the state aid they received.

Re: Denmark: No aid for companies which pay out dividends or are reg. in tax havens

#149

Post by bigfudge »

MereInterest wrote: post #53
chrismeller wrote: post #21

> The government also said that companies which pay out dividends, buy back own shares or are registered in tax havens won’t be eligible for any of the aid programs... Well first off, dividends are a normal method for business owners to make an income... they take all the risk, but reap some limited rewards by taking dividends rather than a salary. Buying back shares I’m fine with. While that could actually be seen a…

> Well first off, dividends are a normal method for business owners to make an income... they take all the risk I'd disagree strongly on that account. The business owners take the monetary risk, but that is a small portion compared to the overall risk of the workers. If somebody moves across the country, that is a risk. If somebody invests time in learning a skillset, that is a risk. If somebody is going to need to c…

Plus, the state takes the risk that you commit fraud or run the business recklessly and put everyone out of work.

I agree with your point - and all of these risks are completely unrecognised in our current system. They need to be.

Re: Denmark: No aid for companies which pay out dividends or are reg. in tax havens

#150

Post by sanderjd »

oconnor663 wrote: post #133
flexie wrote: post #84

Danish lawyer here. The proposal only limits payments to companies that have received more than DKK 60 million (around EUR 8 million) in aid. So this is not your usual business owner. These are generally larger companies with a well paid management. As for companies registered in tax havens, the EU has made an official list of tax havens, which will be followed: https://en.wikipedia.org/wiki/European_Union_tax_haven_…

> Why should tax payers bail out a tax avoiding company? I think that depends on our answer to the prior question, "Why should tax payers bail out any company?" If the answer is "because we like them and we feel a patriotic/moral/righteous duty to help them", then the distinction between tax-paying and tax-avoiding companies does seem relevant. But if the answer is "to help workers keep their jobs", then the distinct…

What if the answer is "to strike a balance between many workers being able to keep their jobs and disincentivizing tax-avoidance"?
Post reply on HN