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

Re: G7: Rich nations back deal to tax multinationals

#671

Post by IanCal » Sat, Jun 05, 2021, 8:46 PM UTC

jk7tarYZAQNpTQa wrote: post #391

IanCal wrote: post #253

Earlier quoted context omitted.

> You’re ignoring that the companies can just keep lots of cash without distributing it to individuals Nobody benefits from a company growing indefinite wealth without distributing it to actual people. > So for example the company can rent houses, cars, and airplanes for every employee If they could do this, all companies would do this already to avoid taxes. In reality, this is dealt with by (in the UK) considering…

> Nobody benefits from a company growing indefinite wealth without distributing it to actual people. Shareholders do. And shareholders own the company.

Shareholders don't benefit unless the company is or is expected to distribute it to actual people.

Re: G7: Rich nations back deal to tax multinationals

#672

Post by scythe » Sat, Jun 05, 2021, 8:46 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…

Why not just tax buybacks? When a company buys its own stock, it pays a tax on the value of that stock to the government.

Sure, this makes stock prices lower. But it encourages dividends by comparison, which is probably a good thing, or at least everyone seems to think it is, and then these are taxed as regular income (not usually subject to gains rate).

Re: G7: Rich nations back deal to tax multinationals

#673

Post by alasdair_ » Sat, Jun 05, 2021, 8:46 PM UTC

boolemancer wrote: post #530

ipaddr wrote: post #296

Earlier quoted context omitted.

If a tax on revenue was used the outcome would be companies would try to increase profits but reduce revenue so high margin products would be the goal which would mean higher prices / fewer sales. I think the solution should be market based. Whatever rate google US gets from google Ireland should be available to any company and google Ireland should be forced to sell any services/ip to any company who requests it at…

The problem in this case is that no other company would agree to pay 100% of revenue to Google Ireland for their services. Google Ireland is overcharging, not undercharging.

I would pay 100% revenue. I’d then just give it all away for free so my revenue was zero.

Re: G7: Rich nations back deal to tax multinationals

#674

Post by IanCal » Sat, Jun 05, 2021, 8:47 PM UTC

tw04 wrote: post #274

IanCal wrote: post #253

Earlier quoted context omitted.

> You’re ignoring that the companies can just keep lots of cash without distributing it to individuals Nobody benefits from a company growing indefinite wealth without distributing it to actual people. > So for example the company can rent houses, cars, and airplanes for every employee If they could do this, all companies would do this already to avoid taxes. In reality, this is dealt with by (in the UK) considering…

That is completely avoided if the person makes less than 12k/year though. So there is already a loophole, there just hasn’t been enough incentive to use it yet. Although I’d question if that’s why some executives take a $1 salary and the rest in stock. All of their benefits are now tax free*. yes I realize it’s nuanced and depends on country.

That is absolutely not true in the UK. Again, this would just be what every business would do if that were the case.

Re: G7: Rich nations back deal to tax multinationals

#675

Post by rufus_foreman » Sat, Jun 05, 2021, 8:47 PM UTC

ncallaway wrote: post #664

rufus_foreman wrote: post #660

Earlier quoted context omitted.

"everything is provisional until the final agreement is written down and signed" Here's what I read: "The G7 group of advanced economies has reached a historic deal to make multinational companies pay more tax" Is that true?

> > "The G7 group of advanced economies has reached a historic deal to make multinational companies pay more tax" > Is that true? Yep! Because a "deal" can be something that is provisional. "Reached a deal" to me doesn't in any way mean that the deal has been executed, finalized and is legally binding. It means the first step of negotiations has been completed and all parties are agreeing to the terms of the deal. Lo…

If I say we had a deal and you say well we did last Tuesday but not now, I know not to make deals with you ever again.

Re: G7: Rich nations back deal to tax multinationals

#676

Post by IanCal » Sat, Jun 05, 2021, 8:49 PM UTC

TomVDB wrote: post #332

IanCal wrote: post #253

Earlier quoted context omitted.

> You’re ignoring that the companies can just keep lots of cash without distributing it to individuals Nobody benefits from a company growing indefinite wealth without distributing it to actual people. > So for example the company can rent houses, cars, and airplanes for every employee If they could do this, all companies would do this already to avoid taxes. In reality, this is dealt with by (in the UK) considering…

> Nobody benefits from a company growing indefinite wealth without distributing it to actual people. Isn't this exactly what companies like Apple etc. are doing? As it accumulates wealth, the stock price (which is supposed to reflect the value of the company) goes up as well. And thus the shareholders benefit.

Why would the stock price go up for a company that explicitly did not distribute the money ever to real people?

And don't apple pay dividends?

Re: G7: Rich nations back deal to tax multinationals

#677

Post by alasdair_ » Sat, Jun 05, 2021, 8:49 PM UTC

Perhaps we can simply state that AMT applies to corporations.

Re: G7: Rich nations back deal to tax multinationals

#678

Post by IanCal » Sat, Jun 05, 2021, 8:51 PM UTC

rsj_hn wrote: post #459

IanCal wrote: post #253

Earlier quoted context omitted.

> You’re ignoring that the companies can just keep lots of cash without distributing it to individuals Nobody benefits from a company growing indefinite wealth without distributing it to actual people. > So for example the company can rent houses, cars, and airplanes for every employee If they could do this, all companies would do this already to avoid taxes. In reality, this is dealt with by (in the UK) considering…

> Nobody benefits from a company growing indefinite wealth without distributing it to actual people. No, many would benefit in very obvious ways, if you just think about it a little bit: if you want to accumulate wealth you prefer to be taxed on what you spend rather than what you earn. That allows you to save more quickly, it allows you to create a dynasty where wealth is passed to your offspring, who in turn would…

Your explanation requires paying out money to real people, so I don't see how it relates to the idea of a company that does not pay out money to real people.

> So in summary, one can argue that the purpose of money is consumption so "nobody benefits" by acquiring money that they don't spend on consumption. But this is a naive view that ignores the role of risk, time and inter-generational concerns.

It's also not what I've said.

Re: G7: Rich nations back deal to tax multinationals

#679

Post by rsj_hn » Sat, Jun 05, 2021, 8:52 PM UTC

ncallaway wrote: post #654

rsj_hn wrote: post #639

Earlier quoted context omitted.

You are not going to ratify a treaty with the required 2/3 votes in the Senate via reconciliation.

You don't need to ratify a treaty through reconciliation. There's no need for this to be done with a formal treaty. It could simply be each of the nations passing laws that do the same thing. If the Senate passes a law that changes the corporate tax rate to a certain amount, that is a budgetary measure that could absolutely be passed with reconciliation. Yes, this law wouldn't be a treaty, but it could have a similar…

> If the Senate passes a law that changes the corporate tax rate to a certain amount, that is a budgetary measure that could absolutely be passed with reconciliation.

If it was revenue-neutral, sure. That is unlikely to be the case with changes to corporate tax rates. And even then, you are going to have a hard time getting even 50 votes.

Re: G7: Rich nations back deal to tax multinationals

#680

Post by lukeschlather » Sat, Jun 05, 2021, 8:52 PM UTC

rayiner wrote: post #645

ncallaway wrote: post #593

Earlier quoted context omitted.

You're referring to the process of finalizing a treaty. That would be conceptually similar to "executing" an agreement between parties—the most important step that makes it legally binding! But "reaching a deal" and "executing the agreement" are often different steps. When we have discussions with a client, and we negotiate on the terms we can reach an agreement on the negotiation before we actually execute the contr…

Your analogy is flawed because you seem to be assuming that the people with execution authority are the ones who reached an agreement in principle. You’d expect them to succeed in papering it up. That’s not the case here. The agreement in principle was reached by someone who has no power to do anything with regards to corporate taxes. Congress sets U.S. tax law and agrees to treaties. To do that, you need 60% or 66%…

> The agreement in principle was reached by someone who has no power to do anything with regards to corporate taxes

I think you are considerably understating the power of the G7 finance ministers including the US Secretary of the Treasury. Sure, they can't ratify a treaty without the cooperation of congress. They're still extraordinarily powerful individuals and have loads of direct authority to shape tax policy.