Any increase in market productivity is quickly compensated by aggressive, wasteful government interference. Citizens can never enjoy the benefits of increased productivity, only politicians and government.
G7: Rich nations back deal to tax multinationals
741–750 of 931 posts
Re: G7: Rich nations back deal to tax multinationals
#742Earlier quoted context omitted.
rather than simple placeholder variables, we should employ placeholders for smoothly continuous functions over the relevant parameter space. for taxes, the parameter space might include revenue and profit, over which the tax is smoothly continuous. discontinuities just beg to be exploited.
Yeah, this is basically what got me to that idea of separating formula from parameter: whenever politics should care about some quality of a formula, it gets completely drowned in the noise of people screaming at each other trying to drag the parameters one way or the other. As evidenced by every single discussion about UBI. Sometimes the formula still turns out ok, but far too often not ok at all. It was in my secon…
yah, the lookup table is just discrete points of a stepwise function, so why not just use the underlying formula instead, and smooth it out while we're at it since it simplifies the calculation?
in this era of handheld supercomputers, we're well beyond having to manually multiply out the formulas anyway. and tax forms are already basically one long formula where you just plug in the variable values in a step-by-step manner (and usually have a computer do the math for you).
Re: G7: Rich nations back deal to tax multinationals
#743Earlier quoted context omitted.
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…
This is perhaps true of revenue tax. But for VAT You can deduct VAT of sales from VAT of purchases.
Indeed. Which is why VAT is a much better and more common structure of taxation than a tax on all revenue.
Re: G7: Rich nations back deal to tax multinationals
#744Earlier quoted context omitted.
Why can't VAT fund a modern government? The GP didn't say anything about the tax rates. VAT's regressiveness would probably become a real problem in that situation, but that's a different problem.
Yeah not sure what GP is saying. VAT can absolutely suck up a huge amount of money. The UBI makes it far less regressive, basically to the point I no longer care. (VAT + UBI is great for everyone but those 90th percentile luxury-car-and-McMansion-owning inner ring suburb types that are the Democrat's favorite constituency :/)
Coupling a regressive tax with money transfer creates an inverse "V" shaped effective tax rate that will squeeze some part of the society (probably on the middle class).
If the taxes and transfers are diverse enough, one can reduce that problem by making them compensating each other, but if you make VAT + UBI make the lion share of the government's money flow, it will be a really large problem.
Re: G7: Rich nations back deal to tax multinationals
#745Earlier quoted context omitted.
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%…
My analogy is really just a reference to what "reached a deal" colloquially means. "reached a deal" doesn't mean the deal absolutely 100% will be implemented. It means, the referenced parties have reached an agreement to something. In this case, the leaders of the G7 countries have reached an agreement among themselves to have a minimum corporate tax rate. Note that the United States has no obligation according to th…
Tyler Cowan seems unimpressed:
https://marginalrevolution.com/marginalrevolution/2021/06/th...
More smoke and mirrors perhaps?
Re: G7: Rich nations back deal to tax multinationals
#746Earlier quoted context omitted.
Then I suppose then I'm missing the last part of the trail. Enough tax study for me. No more.
Broadly, the point of these tax structures for US companies isn't for the company to completely avoid paying US corporate tax, it's to - Avoid paying corporate tax at a higher rate than in the US, and - Defer paying corporate tax, often for decades, until theres a more favourable tax situation in the US, or a better opportunity to reinvest their capital comes up. At the end of the day the profits belong to the shareh…
Avoiding paying more than the US rate doesn't require any of these shenanigans. They could just charge royalties to the US.
Beyond that, the arrangement essentially turns corporate income tax into a corporate dividend/buyback tax. Dividends are always much lower than profits, and many companies don't do them at all.
>> the only way to return the money to shareholders is by paying US corporate tax
"Return" is somewhat ambiguous here. Shareholders already own those profits, and cash is reflected pretty directly in share prices. They don't necessarily have to "return" value this way. Many don't.. eg Berkshire.
The parts that bother me most here is (a) all the wasted effort going into what is essentially a silly ritual. If we had to explain this to aliens, they'd bucket it into the same category that they use for whatever pharaonic priests. were up to. and (b) the unfairness. A small, unsophisticated company doesn't get to (eg) reinvest its profits tax free. If a farmer buys more land, its an investment. It isn't an expense. If Apple buys land, its effectively expensed.
Re: G7: Rich nations back deal to tax multinationals
#747Earlier quoted context omitted.
You can't compare market cap to GDP. If you compare to actual net ( you're actually comparing GDP) worth the numbers are very different.
No, I am not using GDP, when I wrote “national net worth”, I meant exactly that : https://en.wikipedia.org/wiki/List_of_countries_by_total_wea...
Yes, you're right. I'm not sure how why I was convinced it was GDP. I know offhand that's larger than the GDP of all EU countries. My bad.
Re: G7: Rich nations back deal to tax multinationals
#748Earlier quoted context omitted.
9. Pocketed by corporate executives / board members Trickle up economics, right? Now make a list of all of the things the money could do if it is taxed and gets to the government. Schools, roads, etc.
Pocketing corporate money is illegal. If they do it legally, it’s taxed as income/dividends/capital gain. I don’t see the problem.
if corporations paid less taxes that means more of the revenue could go into the profits section which would most likely end up in the pockets of greedy board members.
is that a bad assumption?
Re: G7: Rich nations back deal to tax multinationals
#749Earlier quoted context omitted.
> Firstly, the G7 want a global minimum tax rate so as to avoid a "race to the bottom" where countries can undercut each other with low tax rates. Why is this necessary, if countries can just tax companies based on the money they made in their country ?
This is the whole difference between a revenue tax and a profit tax. I don't actually know why exactly a revenue tax isn't more popular, say 1% revenue versus supposed 30% profit tax. (As if any corporation actually pays that tax rate).
Revenue taxes create predictably perverse incentives with fairly pathological outcomes. There is wide agreement that it is a poor way to tax business entities, with many undesirable side effects. Notably, the most tax efficient business structure is one that is maximally vertically integrated to minimize the number of transactions with suppliers.
Small companies end up paying a higher effective tax rate than larger more integrated companies and it discourages companies from specializing in what they are good at, neither of which is conducive to a robust and vibrant economy.
Re: G7: Rich nations back deal to tax multinationals
#750Earlier quoted context omitted.
> To get anything done, you need Republican votes. This seems to be the kind of financial thing that fits right into reconciliation, which means you don't need Republican votes.
Isn't ratifying a treaty something completely different?
> Isn't ratifying a treaty something completely different?
Sure, but there is a distinction between treaties in international law and those under the Constitution; by far the most common way for treaties in the international law sense to be adopted in tbe US in the last several decades is as Congressional-executive agreements, which are, procedurally, either normal legislation submitted after an executive-negotiated agreement or an executive-negotiated agreement under authority granted by normal legislation.