There's no way one can get 130 nations to agree on anything without a stick.
Global minimum corporate tax: 130 nations to support U.S. proposal
211–220 of 362 posts
Re: Global minimum corporate tax: 130 nations to support U.S. proposal
#212Earlier quoted context omitted.
It does seem like e.g. the US could impose this unilaterally. You, a company, have to make two tax returns: one on all the money you made here, and one on all the money you and/or your relevant "parent" corporation made elsewhere. Same rules to calculate taxes in both cases. On the latter return, you can subtract the sum of the taxes you paid elsewhere from the tax owed. The rest belongs to the US government. At that…
I’m neither a lawyer nor an accountant but I’d expect it to run counter to all existing double taxation agreements. All those agreement would have to be cancelled or renegotiated - that’s a lot of work.
Why? The parent suggested to discount the tax paid abroad from the taxes to be paid in the US. It is the double-taxation prevention agreement.
Me being a cynical bastard will expect countries rallying to offer themselves to the US and reduce their cut to buy political favor.
Re: Global minimum corporate tax: 130 nations to support U.S. proposal
#213Apparently it's also possible to address the issue of shifting corporate profits to tax-havens even without a large scale international agreement. Basically, corporations have one place money comes in and two places it comes out, like so: sales = expenses + profits If you tax the sales, then deduct the expenses, that leaves the incidence of the tax on the profits. But importantly, unlike profits, it's usually clear t…
This is an interesting concept, and worthy of including in the discussion, but you are presenting Border Adjustment Tax as if the results are a certainty.
The Wikipedia article describes this as theoretical with quite a bit of uncertainty, and economists are far from concensus on what the outcomes would be.
There are also definitely winners and losers in this system, so it's not so simple to say it the proposal was killed just because some big companies were against it.
Re: Global minimum corporate tax: 130 nations to support U.S. proposal
#214Earlier quoted context omitted.
If the point is for every country to have the same tax rate then yes this solves that problem. Each country cannot impose a higher rate de jure for the same reason why now the effective rate is 0%.
... but they all have (effectively) the same rate either way, no? The point isn't for them all to have the same rate, it's for that existing same rate to be higher, right? That it would be, in effect, the same, isn't an outcome of this move. That that same rate would be non-zero is the outcome.
Well no they dont need to have the same rate they just need to implement tariffs.
With tariffs one could choose to tax with prejudice. You could tax specific corporations higher or lower or specific industries (gas/coal). Or even give tax breaks to specific industries.
This move is a move towards uniformity and specifically uniformity with the USA. I dont think the USA is the model of fiscal governance that much of the world wants to emulate. If one really cared to one could probably find the various loopholes of the powerful in this new minimum as well. However this is just investing time and effort into thinking about a bad idea.
Re: Global minimum corporate tax: 130 nations to support U.S. proposal
#215Classic anti-competitive behaviour.
Re: Global minimum corporate tax: 130 nations to support U.S. proposal
#216Imposing 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.
What stops a person from creating a legal entity to funnel your activities through to personally avoid taxes? If the corporate tax rate is 0% and the individual tax rate tops out at 40%, the incentives to practice this kind of avoidance are strong.
Existing tax law already covers this. If you use a corp to fund personal activities that is a benefit-in-kind and subject to income tax same as if you received the money directly.
Re: Global minimum corporate tax: 130 nations to support U.S. proposal
#217Earlier quoted context omitted.
You'll own nothing, and you'll be happy. https://www.youtube.com/watch?v=lBBxWtKKQiA
Sounds scary out of context, but it's hardly a silly prediction. Uber, AirBnB, clothing rental, device upgrade plans...
It is not bad as long as you own stocks, which you can exchange into material goods.
Like some of my friends can afford a decent house, but prefer renting because it gives greater flexibility (they can rent a small flat in the center of the city in a walking distance to the office and meet with friends often while they don't have children instead of investing into big house in the suburbs with empty rooms they wouldn't use).
But if you own nothing and don't save, this is bad.
The UK did a great thing last year, they increased to minimum payment to private pension (equivalent of US 401k) to 8% of salary, so even irresponsible people will have some savings at retirement age. And I think the UK should continue gradually increasing these contributions.
Re: Global minimum corporate tax: 130 nations to support U.S. proposal
#218Earlier quoted context omitted.
colluding: to act together secretly or illegally in order to deceive or cheat someone. And please: capital flight being the results of abusive policy? Corporations and wealthy individuals will always try to avoid giving the fair share to the society that enabled their wealth in the first place: the case where wealth moves because of abusive policies is so marginal in the ocean of pure greed. Some countries are fiscal…
Rich people are the only ones paying anything at all. If that's not paying their fair share, how are the 50% of people who don't pay any income taxes at all paying their fair share?
Poor people pay a lot more taxes overall in relation to their wealth and income than the extra-rich. We have a regressive tax system.
Re: Global minimum corporate tax: 130 nations to support U.S. proposal
#219Surprised to see the negative comments, despite HN comments' usual bent. As someone that moved around multiple countries, I was impressed by the US' tax by citizenship on global income. About time we apply the same to corporations as we do to individuals, given how much easier it is for corporations to move their income around.
Re: Global minimum corporate tax: 130 nations to support U.S. proposal
#220Earlier quoted context omitted.
An agreed upon international base tax rate is the wrong solution. This becomes a minimum wage for nations and removes the incentive to compete to be the home of corporate headquarters. Border adjustment tax removes the tax shelter loophole and strengthens the incentive to be a good place to headquarter a corporation.
The “incentive to compete” is currently “who has the lowest number and the least attentive auditors”
Right, that would continue to be true. However, now, a corporation can be headquartered in one country to have access to labor and shunt all profit through a subsidiary in a low tax country. They get the benefit of a skilled labor force without paying tax on the profits created by that labor. Fix the tax shelter problem and the incentive for countries becomes "make a labor force worth the tax rate or lower the tax rate".