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U.S. Backs 15% Global Minimum Tax to Curb Profit Shifting Overseas

nytimes.com

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Re: U.S. Backs 15% Global Minimum Tax to Curb Profit Shifting Overseas

#41

Post by onlyrealcuzzo »

hellow0rldz wrote: post #27
germinalphrase wrote: post #19

Earlier quoted context omitted.

“It's a problem caused by US and US corporation and now they come to provide a solution” Shouldn’t the responsibility for US corporate problems be (presumably) addressed by the US government? I’m not understanding your point here.

Precisely. But instead of solving this problem inside US they want to re-engineer the whole globe. Most countries are mad about multinationals, most of them rich US multinationals. If the US would do a proper job of taxing their own corporations none of this would be necessary. Interesting how this is just in time for the Dutch sandwich scheme to expire. Clearly something else was missing!

How else do you solve this in the US?

Company A sells all of its IP to Ireland. They have the Irish company charge them 100% of the profits for IP. Poof. No US taxable income.

What's your magic beans solution for this beside what the IRS plans to do?

Re: U.S. Backs 15% Global Minimum Tax to Curb Profit Shifting Overseas

#42

Post by ericmay »

hellow0rldz wrote: post #27
germinalphrase wrote: post #19

Earlier quoted context omitted.

“It's a problem caused by US and US corporation and now they come to provide a solution” Shouldn’t the responsibility for US corporate problems be (presumably) addressed by the US government? I’m not understanding your point here.

Precisely. But instead of solving this problem inside US they want to re-engineer the whole globe. Most countries are mad about multinationals, most of them rich US multinationals. If the US would do a proper job of taxing their own corporations none of this would be necessary. Interesting how this is just in time for the Dutch sandwich scheme to expire. Clearly something else was missing!

Could you walk us through your proposed solution? Like what the United States could be doing that would be a proper job of taxing its own corporations?

Re: U.S. Backs 15% Global Minimum Tax to Curb Profit Shifting Overseas

#43

Post by gamblor956 »

codeecan wrote: post #37

If they would just close the loop holes that allow things like having Apple, setup a subsidiary that licenses its own stuff back to itself so it can move profits around the world ... you'd solve this problem. Make a rule, if you own >50% of a company, you can't buy trademarks, patents, whatever from yourself.

Most of the West treats transactions between companies and their disregarded subsidiaries as not occurring for tax purposes (i.e., the transactions are "disregarded").

They should expand that principle to simply disregard transactions between all members of a conglomerated or commonly owned group.

Re: U.S. Backs 15% Global Minimum Tax to Curb Profit Shifting Overseas

#45

Post by ramtatatam »

option wrote: post #38

we need jurisdictions to compete on how much they can provide in return for as little as possible in collected taxes.

Well said. Each amount of money will find a "good" reason to be spent, so less money collected means less money wasted (or spent on weapons and armies).

Re: U.S. Backs 15% Global Minimum Tax to Curb Profit Shifting Overseas

#46

Post by arrosenberg »

hellow0rldz wrote: post #30
Analemma_ wrote: post #24

Earlier quoted context omitted.

Read the proposal: it doesn't matter whether small countries agree to it. The idea is that if any country levies less tax than the global minimum, the IRS will automatically charge the difference. i.e. if the global minimum is 15% and a company based in Luxembourg is paying only 5%, the IRS will levy an additional tax burden to bring it up to the minimum. No coordination or cooperation is required.

The US can tax US corporations anyway it sees fit. What do other countries have to do with it? Read the subtitle: >The Biden administration wants other countries to back a minimum tax as part of its plan to raise the U.S. corporate tax rate to 28 percent from 21 percent. This makes no sense. Is the IRS a global institution now?

> This makes no sense. Is the IRS a global institution now?

It makes perfect sense if you take them as separate concepts.

1. Joe Biden wants other countries to work with the US and set a tax floor for corporate taxation.

2. The US Congress can pass a law that brings corporate foreign taxation in line with how real people (not just fictional ones) are taxed on foreign profits. This doesn't make the IRS any more global than they have been for 100 years.

Re: U.S. Backs 15% Global Minimum Tax to Curb Profit Shifting Overseas

#47

Post by gamblor956 »

coliveira wrote: post #23
nostromo wrote: post #11

Earlier quoted context omitted.

This isn't a great article. It's more about the politics than the actual proposal. Bloomberg has a better write up: https://www.bloomberg.com/news/articles/2021-04-08/plans-for... To answer your question, this wouldn't create a new organization to collect a global tax. Instead it would give the IRS the authority to tax American companies (say, Google) an additional amount on their overseas earnings. So, if they paid…

I think the point is that to do this, tax agencies around the world would have to cooperate with American tax agencies, which just creates another level of overseeing that has never happened before. It is another instance of Americans trying to force their wishes on the rest of the world.

We have these things called "tax treaties" that have existed for decades.

Tax agencies around the world already cooperate with American tax agencies on matters similar to this. In fact, the proposal would actually reduce the amount of inter-agency cooperation required as it would great reduce the amount of treaty-related work the tax agencies have to carry out.

Re: U.S. Backs 15% Global Minimum Tax to Curb Profit Shifting Overseas

#48

Post by 0xB31B1B »

Pretty hype about this TBH. There is a long history of companies domiciling in say, Monaco, The Cayman Island, Panama etc to avoid taxes and regulations where they mainly operate. My understanding is that the current process in vogue for the mega cap companies is the "double irish dutch sandwich" https://www.investopedia.com/terms/d/double-irish-with-a-dut...

No one, including tax lawyers, will tell you with a straight face that this is the way things were expected/designed to work. All of these tax avoidance strategies are emergent properties of complex systems that are the result of uncoordinated action amongst individual actors that cannot be fixed without collective organization. I support this and 15% seems reasonable to me.

Re: U.S. Backs 15% Global Minimum Tax to Curb Profit Shifting Overseas

#49

Post by Retric »

prepend wrote: post #9

It’s interesting to see a multinational standard to set a “standard” for taxation. Seems odd to start with corporate income taxes as it seems pretty efficient to not tax corporations and encourage more distribution to individuals and tax there. I remember in my microeconomics101 course how taxes on corporate profit are easy to squish around with tax deductible benefits that reduce profit (eg, country club dues are an…

The issue is not all owners live within a country. So, in practice it’s significantly less efficient to tax people than companies even if in theory it’s beneficial.

Also, increasing employ income tax rates incentives the company to provide tax deductible benefits and lower salary. The actual solution is to make employee benefits non tax deductible. For example personal use of a Company Car by an employee is taxable to the employee as a non-cash fringe benefit, which is why company provided cars have become uncommon.

Re: U.S. Backs 15% Global Minimum Tax to Curb Profit Shifting Overseas

#50

Post by jsnnxjsn »

zionic wrote: post #32
adamsvystun wrote: post #15

While I have never looked deeply into the topic of big business corporate taxes, I do share a strong suspicion that the corporate tax system is flawed, and would be supportive of reform in the system. Including international cooperation for solving this. But the way they went about this is disappointing. There should be a way to solve this that would still allow countries to compete in attracting businesses. They tal…

As a US taxpayer who sees the fraud, abuse, and general mismanagement of my tax money why would I willingly support the same government getting more? It is incredibly depressing how little I get from the government vs how much they take from me. The entire system is a sham and I honestly don't want to support it anymore. I'm working as hard as I can to try and escape it at the earliest possible moment.

The US is actually not that bad. One thing I think many ppl who have not spent time in developing countries overlook is how much stuff just works in the US. Compared to most EU countries US taxes are much lower. People like to point to Singapore as low tax example, but the difference in scale is such that the comparison is not meaningful.
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