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EU adopts global minimum 15% tax on big business

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Re: EU adopts global minimum 15% tax on big business

#201

Post by cwkoss »

spywaregorilla wrote: post #196
cwkoss wrote: post #164

Earlier quoted context omitted.

Is this a tax on profits? If so, I worry it will remain weak to hollywood-accounting attacks: it's easy to spend money until there are no 'profits'. I'd really love to see progressive taxation of corporate revenue: the bigger a company is the higher the tax rate. Huge corporations benefit from economies of scale, so there is an incentive for power concentration. This power concentration is bad for society: it deliver…

Great way to kill off low margin important industries like steel

Steel just barely makes the list of top 100 US companies by revenue at #100.

https://en.wikipedia.org/wiki/List_of_largest_companies_in_t...

Would steel consumers be better off if the largest steel companies were broken in to smaller pieces?

Re: EU adopts global minimum 15% tax on big business

#202

Post by trentnix »

pclmulqdq wrote: post #174
diggernet wrote: post #163

Earlier quoted context omitted.

That would instantly bankrupt every single company in the many industries with single-digit profit margins.

I would personally be in favor of a ~5% flat tax on corporate revenue across the board if it meant replacing the convoluted profit-based tax schemes that currently exist. The costs of compliance and "tax minimization" are already a couple percent of revenue for many companies, so replacing that cost seems very reasonable.

That would adversely affect new businesses and discourage competition for well-entrenched businesses. The net results is that it would handicap growth.

Consequently, it’s a terrible idea.

Re: EU adopts global minimum 15% tax on big business

#203

Post by woodruffw »

LawTalkingGuy wrote: post #141
woodruffw wrote: post #41

Earlier quoted context omitted.

I'm not a troll. And I don't think most people, including the majority of strident believers in social justice, would consider the 20th century Soviet Bloc to be a paradise.

Perhaps the more ideological wouldn't enjoy the Soviet union but they approve of and use their methods. The current focus on purity of thought is remarkably like the communist struggle sessions, how they tortured people to correct their thinking not just to achieve a confession, how there was always room for more ideology and more purges as the party continually turned on its heroes. Here's an example. At ~25s the of…

I have no idea what this has to do with taxation. It feels like a culture war diatribe.

Re: EU adopts global minimum 15% tax on big business

#204

Post by Faark »

cwkoss wrote: post #193
red_trumpet wrote: post #176

Earlier quoted context omitted.

> it's easy to spend money until there are no 'profits'. If they have to spend the money in the same country as they gained the profits, that might work as intended.

I like that. There is a nice justice to that idea.

Basically, it implies going back to local currencies, with all the good and bad this involves.

Re: EU adopts global minimum 15% tax on big business

#205

Post by spywaregorilla »

cwkoss wrote: post #201
spywaregorilla wrote: post #196

Earlier quoted context omitted.

Great way to kill off low margin important industries like steel

Steel just barely makes the list of top 100 US companies by revenue at #100. https://en.wikipedia.org/wiki/List_of_largest_companies_in_t... Would steel consumers be better off if the largest steel companies were broken in to smaller pieces?

> Steel just barely makes the list of top 100 US companies by revenue at #100.

What does your imagined tax bracket structure look like if the top 100 companies aren't at the highest, most painful bracket? "Barely being in the top 100" means you're enormous.

> Would steel consumers be better off if the largest steel companies were broken in to smaller pieces?

Well pretty much everything in the economy runs on steel, and you're proposing removing their economies of scale and taxing them on revenue. Do you think they're going to be better off?

Let's imagine it's a true perfect competition world. Steel producers make basically 0 profit on average (this is not the case). Next year supply crunch. Costs go up 10%. Steel producers need to raise prices by 10% to stay profitable. But wait, now their taxes are based on their revenues, so if they raise their prices by 10%, they take on at least 10% more taxes, so now they're losing money. They'll need to raise their prices high enough to earn enough revenue to offset the increased taxes. But wait, turns out other countries make steel too, and these companies are realistic enough to tax on profits only. So now American steel is too expensive to compete.

When you have high fixed costs and low variable costs, a revenue tax is brutal because you need high revenues to even begin to break a profit.

Re: EU adopts global minimum 15% tax on big business

#206

Post by KMag »

cwkoss wrote: post #192
anonuser123456 wrote: post #181

Earlier quoted context omitted.

Individuals (in the US) have standard deduction, which approximates the minimum value to sustain one's person. It's a bad approximation, but it is what it is. It's assumed that corporations spend as little as possible on operations. Individuals obviously don't. Whereas a corporation wouldn't rent employees 500 sqft / person, individuals regularly rent/purchase that density for themselves. Similarly, while a corporati…

With progressive taxation of corporations, we could disincentivize the existence of trillion dollar corporations, opening up the market for thousands more million to billion dollar businesses to exist. Regulatory capture would be much harder to coordinate which would lead to much less corruption. Greater marketplace competition would lead to better quality services and products for consumers. The curve used to shape…

> With progressive taxation of corporations, we could disincentivize the existence of trillion dollar corporations

In my misspent youth, I worked on a 10% project that helped consolidate and free-up racks of servers so that they could be physically forklifted between space leased/owned by different subsidiaries of one of the world's 5 largest corporations (by market cap). I heard through the grapevine that the main reason for this arrangement was so that these subsidiaries qualified for small business discounts on electricity, and they wanted to keep physical separation in different parts of the datacenters to bolster the case that the various subsidiaries were in fact separate entities.

When you adjust taxes and rates based on company size (or things correlated with company size), you need to be careful about subsidiary loopholes.

Re: EU adopts global minimum 15% tax on big business

#207

Post by twoodfin »

im3w1l wrote: post #168
jandrewrogers wrote: post #112

Earlier quoted context omitted.

Taxing revenue has turned out to be a terrible idea every time it has been tried. It creates perverse incentives that encourage companies to be inefficient and wasteful. One of the biggest policy problems with revenue taxes is that the effective tax rate is much higher on smaller companies than larger companies. A large vertically integrated company like Apple would pay a lower effective tax rate on an iPhone than an…

What about only taxing B2C revenue? Then the degree of vertical integration wouldn't matter.

It’s much easier to do that with something called a sales tax!

Re: EU adopts global minimum 15% tax on big business

#208

Post by twoodfin »

ClumsyPilot wrote: post #122
nickff wrote: post #102

Earlier quoted context omitted.

This would benefit large and established companies with stable margins, while penalizing smaller businesses and startups. I don’t think this is the intended result. It also discourages long-term investments, and further rewards short-termism (which everyone seems to dislike).

you can apply a rule only to companies with over 10 billion in revenue

And now you have companies inefficiently splitting themselves up into <$10B chunks, and paying lawyers and accountants lots of dead-weight costs to ensure their degree of coordination (think “Amazon West Virginia Ltd.”) doesn’t cross some ill-defined legislative or judicial threshold.

Re: EU adopts global minimum 15% tax on big business

#209

Post by rkagerer »

martinald wrote: post #25

This isn't really as big a deal as it's been made out to be, IMO. This is Pillar 2 of the OECDs tax reform for corporations. Pillar 1 is much more interesting, and would require corporations to actually book profits where they are made (so not putting everything through Ireland for example). This will have a much bigger impact imo than this 15% ruling, because right now there are a bunch of tricks you can use to get…

How do you determine where they're made? Where the employees are? The customers?

Re: EU adopts global minimum 15% tax on big business

#210

Post by rkagerer »

anonuser123456 wrote: post #181
treewalking wrote: post #165

Earlier quoted context omitted.

It’s weird that individuals are taxed on revenue but corporations are (usually?) taxed on profit.

Individuals (in the US) have standard deduction, which approximates the minimum value to sustain one's person. It's a bad approximation, but it is what it is. It's assumed that corporations spend as little as possible on operations. Individuals obviously don't. Whereas a corporation wouldn't rent employees 500 sqft / person, individuals regularly rent/purchase that density for themselves. Similarly, while a corporati…

Counterpoint, there are plenty of corporations that exist with net losses carried over several years.
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