G7: Rich nations back deal to tax multinationals • Hacker News Board

Re: G7: Rich nations back deal to tax multinationals

#231

Post by ajmurmann » Sat, Jun 05, 2021, 2:20 PM UTC

rjknight wrote: post #162

I do wonder if we wouldn't be better off eliminating corporation tax entirely. The revenue of a corporation can, roughly, be: 1. Spent on goods or services from another company (including freelancers, contractors, etc.) 2. Spent on rent 3. Spent on capital purchases 4. Spent on wages 5. Spent on debt repayment or other forms of financing 6. Paid out in dividends 7. Spent on share buybacks 8. Invested in something els…

Buybacks to a large degree end up not being taxed or only much later. Most people are holding on to stock for long periods now. Behavior can also often be easily be adjusted to capital gains tax. Extreme example is Larry Ellison buying in island with a loan backed by his stock rather than selling the stock and buying the island from that directly.

Re: G7: Rich nations back deal to tax multinationals

#232

Post by raverbashing » Sat, Jun 05, 2021, 2:21 PM UTC

rjknight wrote: post #162

I do wonder if we wouldn't be better off eliminating corporation tax entirely. The revenue of a corporation can, roughly, be: 1. Spent on goods or services from another company (including freelancers, contractors, etc.) 2. Spent on rent 3. Spent on capital purchases 4. Spent on wages 5. Spent on debt repayment or other forms of financing 6. Paid out in dividends 7. Spent on share buybacks 8. Invested in something els…

Ending corporate tax would be an interesting proposition and it would be interesting to study the possible effects of that

However I think the main downside on the abolition of corporate tax is that companies are hiring even fewer people with time (automation, subcontracting, etc) so the taxation "opportunities" are reduced if you only have "payroll"/income taxes and sales taxes.

The current situation leads to things like Starbucks having an exaggerated advantage over local cafes for example, since they 1) pay much lower effective tax 2) can have more advantageous rental agreements which leads to some ridiculous situations where one Starbucks is visible from another.

(Though yes, governments do overtax people and companies IMHO)

Re: G7: Rich nations back deal to tax multinationals

#233

Post by sokoloff » Sat, Jun 05, 2021, 2:21 PM UTC

StopHammoTime wrote: post #201

rjknight wrote: post #162

I do wonder if we wouldn't be better off eliminating corporation tax entirely. The revenue of a corporation can, roughly, be: 1. Spent on goods or services from another company (including freelancers, contractors, etc.) 2. Spent on rent 3. Spent on capital purchases 4. Spent on wages 5. Spent on debt repayment or other forms of financing 6. Paid out in dividends 7. Spent on share buybacks 8. Invested in something els…

Here’s an idea, let’s charge tax on revenue and it can just be the cost of doing business. Small businesses get a tax holiday for the first few years. Problem solved.

Taxes on revenue create strong incentives for vertical integration and consolidation (because there are fewer links in the chain to be taxed).

If one entity owns the farm, the food distribution, and the grocery store, they have one revenue transaction to be taxed. A small farmer selling their eggs to a distributor who sells them to the grocer who sells them to you is taxed three times on what amounts to same activity.

Re: G7: Rich nations back deal to tax multinationals

#234

Post by philjohn » Sat, Jun 05, 2021, 2:21 PM UTC

todd8 wrote: post #222

rjknight wrote: post #162

I do wonder if we wouldn't be better off eliminating corporation tax entirely. The revenue of a corporation can, roughly, be: 1. Spent on goods or services from another company (including freelancers, contractors, etc.) 2. Spent on rent 3. Spent on capital purchases 4. Spent on wages 5. Spent on debt repayment or other forms of financing 6. Paid out in dividends 7. Spent on share buybacks 8. Invested in something els…

Corporations pass the tax expenses on to consumers as higher prices of produced goods, lower wages to employees, and lower returns to owners that supply capital. These taxes are all paid by us but they are largely invisible and justified to the voters as making corporations “pay their fair share”.

Corporate tax, as a share of total taxation in the US, has dropped from 30% to 10% since the 50's ... yet wages have been pretty stagnant since the 80's (in real terms).

Re: G7: Rich nations back deal to tax multinationals

#235

Post by toyg » Sat, Jun 05, 2021, 2:24 PM UTC

runarberg wrote: post #177

jokoon wrote: post #158

I already said that the pandemic would force the entire world to lean to the left in terms of politics. It's inevitable. I'm very happy about that decision, but I'm not really confident it will lead to something. I'm also a bit cynic that it took a pandemic to make countries realize they need money. I'm also waiting to see if government are really planning to fight against tax havens. The problem is that it's impossi…

If the tax havens are democratic (and most are) then government boycotts + divestment + sanctions could go a long way. Imagine being a panama citizen, your government is hellbent on protecting foreign billionaires from paying taxes in their home country. Now the Panama Canal is seeing only 50% of the traffic with resulting job-loss, the national team is no longer allowed to play in Copa America, and your countrymen h…

Panama is probably the one country that could hold it out - retaliation on the Canal would escalate matters to a point where rich countries have to choose between a dangerous military occupation or sitting at the table with the local government.

But yes, isolation of countries like Bermuda and Cayman Islands could achieve a lot very quickly. To be brutally honest, the UK government could shut down most of them tomorrow, if they wanted to; but they have a few incentives to do only just enough to appear like they want to, without actually doing so (going from nefarious "their own moneyed citizens want to keep money flowing" to relatively innocent "they risk losing whatever little formal power they still have on former colonies that they can't directly occupy anymore").

Re: G7: Rich nations back deal to tax multinationals

#236

Post by dogma1138 » Sat, Jun 05, 2021, 2:25 PM UTC

rjknight wrote: post #162

I do wonder if we wouldn't be better off eliminating corporation tax entirely. The revenue of a corporation can, roughly, be: 1. Spent on goods or services from another company (including freelancers, contractors, etc.) 2. Spent on rent 3. Spent on capital purchases 4. Spent on wages 5. Spent on debt repayment or other forms of financing 6. Paid out in dividends 7. Spent on share buybacks 8. Invested in something els…

Salaries come out of pre-tax revenue, any corporation can reduce their tax liability to about zero by handing out cash to their employees, yet that (almost) never happens.

Same goes for financing, while dividends can only be paid out from post tax profits loan payments and even stock buybacks can be structured in a very tax efficient manner. Yet that doesn’t happen that often either.

Re: G7: Rich nations back deal to tax multinationals

#237

Post by [deleted] » Sat, Jun 05, 2021, 2:28 PM UTC

todd8 wrote: post #222

rjknight wrote: post #162

I do wonder if we wouldn't be better off eliminating corporation tax entirely. The revenue of a corporation can, roughly, be: 1. Spent on goods or services from another company (including freelancers, contractors, etc.) 2. Spent on rent 3. Spent on capital purchases 4. Spent on wages 5. Spent on debt repayment or other forms of financing 6. Paid out in dividends 7. Spent on share buybacks 8. Invested in something els…

Corporations pass the tax expenses on to consumers as higher prices of produced goods, lower wages to employees, and lower returns to owners that supply capital. These taxes are all paid by us but they are largely invisible and justified to the voters as making corporations “pay their fair share”.

[deleted]

Re: G7: Rich nations back deal to tax multinationals

#238

Post by acomjean » Sat, Jun 05, 2021, 2:28 PM UTC

BurningFrog wrote: post #215

rjknight wrote: post #162

I do wonder if we wouldn't be better off eliminating corporation tax entirely. The revenue of a corporation can, roughly, be: 1. Spent on goods or services from another company (including freelancers, contractors, etc.) 2. Spent on rent 3. Spent on capital purchases 4. Spent on wages 5. Spent on debt repayment or other forms of financing 6. Paid out in dividends 7. Spent on share buybacks 8. Invested in something els…

This a typical economist analysis, and I think it's mostly right. But I don't think those making these decisions think in such terms at all. People love to tax companies, because they think it's "someone else" paying those taxes. Maybe there is also some anthropomorphising going on where you think of the company as another person who is much wealthier than you.

In the US at least companies have many rights like they’re people.

https://en.m.wikipedia.org/wiki/Corporate_personhood#Case_la...

Re: G7: Rich nations back deal to tax multinationals

#239

Post by kapuasuite » Sat, Jun 05, 2021, 2:29 PM UTC

mrgordon wrote: post #214

rjknight wrote: post #162

I do wonder if we wouldn't be better off eliminating corporation tax entirely. The revenue of a corporation can, roughly, be: 1. Spent on goods or services from another company (including freelancers, contractors, etc.) 2. Spent on rent 3. Spent on capital purchases 4. Spent on wages 5. Spent on debt repayment or other forms of financing 6. Paid out in dividends 7. Spent on share buybacks 8. Invested in something els…

You’re ignoring that the companies can just keep lots of cash without distributing it to individuals in order to avoid taxation under your system. So for example the company can rent houses, cars, and airplanes for every employee to ensure there is not much money left to be taxed as income. On paper they look like corporate expenses but it’s really just a way to distribute money without it being taxable.

Those would be taxable for the employees receiving those perks, giving away shareholders' money to employees to reduce a tax bill is absolutely nonsensical in financial, and if a publicly traded company were to do this for "every employee" (or even just management) there would be an immediate lawsuit.

Re: G7: Rich nations back deal to tax multinationals

#240

Post by PaulRobinson » Sat, Jun 05, 2021, 2:30 PM UTC

rjknight wrote: post #162

I do wonder if we wouldn't be better off eliminating corporation tax entirely. The revenue of a corporation can, roughly, be: 1. Spent on goods or services from another company (including freelancers, contractors, etc.) 2. Spent on rent 3. Spent on capital purchases 4. Spent on wages 5. Spent on debt repayment or other forms of financing 6. Paid out in dividends 7. Spent on share buybacks 8. Invested in something els…

If you’re going down this route, many will argue that all forms of income tax are equally “wrong”.

Henry George - a 19th century political economist - proposed exactly this, and suggested the only thing that should be taxed should be land: impossible to hide from a tax inspector, potentially a waste to the public commons if useful land that could be exploited isn’t and you can even protect land you wish to keep pristine more easily (tax it very, very highly).

His ideas are now considered eccentric, but I do wonder if the World would be a great deal simpler if globally we moved to a Henry George system and stopped trying to tax sales, income and everything else going we do.