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

Re: G7: Rich nations back deal to tax multinationals

#241

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

hervature wrote: post #206

Naga wrote: post #15

Earlier quoted context omitted.

It's complicated. "Money they made in their country" is hard to define. Large companies abuse intangible assets to shift profits around, but it's hard to say at what point abuse starts. For example, Google USA sells advertising to its clients. But, the assets it is selling are actually owned by Google Ireland. Google Ireland charges Google USA a license fee of 100% of the revenue they made. Suddenly, Google USA has n…

Except we already have a minimum tax worldwide - 0%. Perhaps every country should meet the others and offer 0% corporate tax. The solution isn't as simple as "minimum tax" as some places legitimately believe that corporate tax is not the most effective way to generate government profits (Wyoming and South Dakota at the state level).

So I register a limited company, undertake all my work through it and keep my revenue, money and saving in that company, paying no tax on them.

Then I have the company buy a car, laptop and every other possible expence I can get away with placing on company. You've solved nothing

Re: G7: Rich nations back deal to tax multinationals

#242

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

bradleyjg wrote: post #221

sudhirj wrote: post #217

Earlier quoted context omitted.

That’s usually the case of any kind of operation, no? If you use the infrastructure and services of a particular country its seems reasonable to pay taxes on your profits there.

It does seem like a reasonable principle, which makes abolishing the corporate tax unpersuasive. If there were only a single jurisdiction the argument would be more compelling.

It certainly isn't impossible for nations to tax foreign individuals operating companies locally without a corporate tax. A way would be:

a) similar to KYC laws, make knowing all persons who own part of a company mandatory, regardless of how many structures (corporations, trusts, whatever) you have to go through.

b) preemptively tax every individual on profits/salaries/perks/payments from the company at some established rate.

c) come tax season, ask for a global income statement from everyone taxed. Adjust their taxes based on whatever bracket they land in.

Re: G7: Rich nations back deal to tax multinationals

#243

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

antihero wrote: post #213

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…

1, 2, 3, 5, 8 also apply to normal people so why not get rid of income tax? The point of tax is for the government to gain money to spend on public services and what not, what you’re suggesting keeps money private.

Yes, that's also a very good follow-up idea to the OP's point.

Re: G7: Rich nations back deal to tax multinationals

#244

Post by ghiculescu » Sat, Jun 05, 2021, 2:31 PM UTC

antihero wrote: post #213

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…

1, 2, 3, 5, 8 also apply to normal people so why not get rid of income tax? The point of tax is for the government to gain money to spend on public services and what not, what you’re suggesting keeps money private.

No OP is suggesting that money get to the government via income tax. As opposed to the extra layer of complexity company tax adds.

There isn’t a clear equivalent where if you ditched income tax some other tax would make up for it.

Re: G7: Rich nations back deal to tax multinationals

#245

Post by trainsplanes » Sat, Jun 05, 2021, 2:31 PM UTC

greenwich26 wrote: post #24

trainsplanes wrote: post #12

Earlier quoted context omitted.

There are some countries that you can move to that are generally free of the laws of western nations. For some reason, people from “western neoliberal and socialist” countries generally don’t move to them, though.

On the contrary, those countries are extremely popular places to base your business activities or start a company or manage your finances from. Ever been to Bermuda? Or the Virgin Islands? You can't move for wealthy industrious Western expats and their business ventures. And also to a lesser extent Ireland, the Luxembourg, Singapore, Switzerland, etc. These are all some of the most popular countries to move to in the…

Are you implying Ireland, Luxembourg, Bermuda (part of the UK), the Virgin Islands (part of the US and UK), Singapore, and Switzerland aren't western countries part of or at very least allied with and influenced by other western "neoliberal" countries/G7?

Because that's a very, uh, unique idea. Also weird to jump from implying escape from western influence doesn't exist to listing western countries as a way to escape from the west.

Re: G7: Rich nations back deal to tax multinationals

#246

Post by BbzzbB » Sat, Jun 05, 2021, 2:31 PM UTC

ajmurmann wrote: post #231

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.

Isn't that just how every billionaire "spends" money tho?

Re: G7: Rich nations back deal to tax multinationals

#247

Post by kapuasuite » Sat, Jun 05, 2021, 2:34 PM UTC

cycomanic wrote: post #209

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 is brought up again and again. You can make similar arguments for every tax. In fact let's look at income tax. The money people spend on income tax they could spend on. 1. Spent on goods or services 2. Spent on rent 3. Spent on capital purchases 4. Spent on debt repayment or other forms of financing In fact income tax does not have the last two points that you admit are bad, so maybe we should eliminate income t…

Capital gains taxes (paid by shareholders) are completely separate from corporate income taxes (paid by corporations). You're also forgetting (or ignoring) that the legal incidence of a tax and the economic incidence are completely separate. For example, employers and employees are both legally responsible for paying a portion of payroll taxes, but economically speaking that tends to lead to lower wages, making the employer's portion fall at least partially on the employee.

https://voxeu.org/article/effects-employer-payroll-tax-cuts

Re: G7: Rich nations back deal to tax multinationals

#248

Post by ben_w » Sat, Jun 05, 2021, 2:34 PM UTC

amelius wrote: post #159

Naga wrote: post #15

Earlier quoted context omitted.

It's complicated. "Money they made in their country" is hard to define. Large companies abuse intangible assets to shift profits around, but it's hard to say at what point abuse starts. For example, Google USA sells advertising to its clients. But, the assets it is selling are actually owned by Google Ireland. Google Ireland charges Google USA a license fee of 100% of the revenue they made. Suddenly, Google USA has n…

> Probably the best solution is a minimum tax worldwide. Wouldn't that make companies pay taxes in countries they are based in (as opposed to where they make money)? Anyway this could be the push that the EU needed to start their own Silicon Valley.

> Anyway this could be the push that the EU needed to start their own Silicon Valley.

Given the combined market caps of Apple, Microsoft, and Amazon (~$5.6T) is larger than the national net worth of all but the four largest EU countries, I don’t think there’s a lack of motivation here.

Re: G7: Rich nations back deal to tax multinationals

#249

Post by ncallaway » Sat, Jun 05, 2021, 2:35 PM UTC

runarberg wrote: post #198

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…

I’m of the opinion that there should only be income tax (paid as a function of standard deviations from from the mean wage on the logistical curve). And all personal profits should be considered income, including sold shares, paid dividends, earned interest, etc. However I can see how that system would be abused. E.g. instead of buying that yacht from your personal money (which you need to pay 70% tax on when you tra…

This seems sensible to me, so long as I’m allowed to use corporate personhood to tax a company’s income under this scheme.

If your money counts as speech because you have first amendment rights, then your income counts as income because you have IRS obligations.

I’m 100% over letting corporations pick some of the benefits of citizens but skate away from all the obligations. If you want the rights, you get the obligations. If you don’t want the obligations, you don’t get the rights.

Re: G7: Rich nations back deal to tax multinationals

#250

Post by toyg » Sat, Jun 05, 2021, 2:35 PM UTC

etherael wrote: post #230

toyg wrote: post #202

Earlier quoted context omitted.

This is the first step. G7 can then strongarm or cajole their "client states" with coordinated action. Even just the fact that such action is finally happening, is a great step. This was considered a sci-fi scenario 20 or 30 years ago and now it's become reality.

It's one thing to get G7 to agree on something when they're literally in the same club, another to get their client states that might previously have been attractive options like Ireland or Estonia to get on board to some degree. But jurisdictions that are much more independent and less prone to leverage like Georgia or Malaysia on the other hand I just don't see it. And that's before you get off into the weeds of ju…

Low-tax countries in the EU are being ruthlessly isolated already. This has been happening for some 15 years now, and accelerated after Brexit; covid might well be the nail in the coffin.

I am also sceptical of your claim that jurisdictions like Georgia and Malaysia are "less prone to leverage" - their proximity to large adversaries actually makes them more dependent on soft-power diplomacy to maintain big friends.

Obviously the likes of Russia and China might not play ball - but they have much bigger issues to worry about, from a capitalistic perspective. You put your money into China, you can't pull it out ever again; you put your money into Russia, and tomorrow it might well be Putin's money.