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G7: Rich nations back deal to tax multinationals

bbc.co.uk

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Re: G7: Rich nations back deal to tax multinationals

#851

Post by wildfire »

lars512 wrote: post #282
MrPowers wrote: post #261

Earlier quoted context omitted.

The deadweight loss of taxation is much lower for a land tax than an income tax. The deadweight loss is the economic resources allocated to complying with the tax. The armies of tax lawyers would be able to perform other economically productive activities if they weren't pouring over the tax code. Pigovian taxation is even better. Taxing gas is a great example. Gas consumers emit carbon which has a cost for society.…

As an Australian who moved to Sweden, I was amazed at how efficient the Swedish income tax process was. The government already knew everything they needed to calculate your return, and gave it pre-filled. There were not endless exemptions. Nobody at my work used an accountant, most approved their tax with a few clicks and were done. So much more efficient than in Australia!

However, what are you missing is that there are exemptions available to you.

You could choose to use them (for example, the self education one) and get SEK5000-SEK10000 (~€500-€1000) BUT then you would have to fill out a tax return.

That is just one exemption. Another one relevant for our field is working from home. Similar amount.

In order to claim those, though, you will need to file a tax return. If you do not consider that money to be worth the time, then not filing one is a good choice.

The Australian system - which could definitely be improved by at least pre-filling things - forces you to actively choose to leave the money behind. The default in the UK, Europe and the Nordic countries is that the money is kept by the taxaxtion office.

Defaults are powerful. And they thank you for entrusting them with your extra SEK that you do not want to claim.

Re: G7: Rich nations back deal to tax multinationals

#852

Post by bonzini »

kgwgk wrote: post #695
bonzini wrote: post #559

Earlier quoted context omitted.

One is a wholly owned subsidiaries of the other. It's not of course a sufficient condition, but I m sure it's possible to distinguish the relationship between Apple and Apple Ireland from that between say Dell and EMC, or IBM and Red Hat, or the daughter companies of conglomerates like Berkshire Hathaway. > Otherwise the money would never get back to Canada and I wouldn’t be able to pay my developers! It doesn't have…

> You can just move all revenue back into headquarters' coffers So it's actually moving money! And you need a reason to move money from one company (in the US) to another (in Canada). Call it sale, call it IP licensing...

The difference is that "IP" production occurs where the R&D departments exist and salaries have to be paid, rather than where the corporate taxes are lowest.

Re: G7: Rich nations back deal to tax multinationals

#853

Post by einpoklum »

cletus wrote: post #134

The first proposal of having a minimum corporate tax rate probably doesn't mean a lot because you to then start policing what subsidies governments give to effectively discount below 15%. The more interesting part is what I hope is the start of serious efforts to tackle profit-shifting, which is a name invented for "transfer pricing" because that is technically illegal. But it's the same thing. A good starting point…

While it's true that corporate influence over governments may result in subsidies to effectively give a discount - it is less likely than you describe, because the taxation is international.

To illustrate why that is, think about a state like Ireland. So far, Ireland has gotten corporations to be HQ'ed there, or pay taxes there, because the tax rate is only 12.5%. The detriment for Ireland has been minimal, if any, from that corporate presence. It _could_ have gotten more but that's just theoretical.

If this goes into effect, then a corporation will no longer benefit as much from being Ireland-based: It will pay 12.5% corporate income tax annually, but will pay extra in other countries it's active in. Who's going to subsidize the extra 2.5%? Ireland? Technically possible, but it's unlikely for Irish politicians to subsidize the taxes a private corporation pays _elsewhere_. Showering a corporation with money to that extent requires corruption on a whole new level.

Re: G7: Rich nations back deal to tax multinationals

#854

Post by kwere »

CryptoPunk wrote: post #782
PragmaticPulp wrote: post #481

Earlier quoted context omitted.

> Land taxes are highly progressive. Maybe in the 19th century, where this idea originated. Economics of business have changed too significantly to use it as a one size fits all taxation scheme. It may have made sense when revenue was somewhat proportional to the amount of land a business occupied, but that no longer holds true in the age of skyscrapers and digital revenue generation. An internet company in a 10-stor…

>>An internet company in a 10-story building would love this scheme, though, because they could generate billions in revenue but be taxed at the same rate as a local neighborhood of people who owned their homes for a few decades. That's irrelevant, because the ultimate owners of the corporation - the shareholders - will always be in demand of land. Real estate explains most of the growth in wealth inequality in the U…

yes but the majority of wealthy people would be satisfied with few million of real estate for personal use. RE investing would drastically change if incentives change

Re: G7: Rich nations back deal to tax multinationals

#855

Post by bildung »

rufus_foreman wrote: post #698
YZF wrote: post #655

Earlier quoted context omitted.

I'm not sure why Canada imposing a tax on Google's revenue in Canada requires US Republican votes? Or what the Republicans would do about it? So seems like we can get a lot of things done without those votes. Most of these companies are US based and they are effectively dodging taxes in other countries, it's not the US tax laws that impact those for the most part.

There's a term, G7, what are the 7?

This isn't set in stone, and indeed was G8 a few years ago.

Re: G7: Rich nations back deal to tax multinationals

#856

Post by [deleted] »

saddlerustle wrote: post #751
dalbasal wrote: post #746

Earlier quoted context omitted.

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…

> Avoiding paying more than the US rate doesn't require any of these shenanigans. They could just charge royalties to the US. I'm not sure exactly what you mean by this > Dividends are always much lower than profits, and many companies don't do them at all. Dividends are lower than profits only for companies that have opportunities to reinvest profits into growth. For companies that don't, in principal, you'd expect…

[deleted]

Re: G7: Rich nations back deal to tax multinationals

#857

Post by kgwgk »

bonzini wrote: post #852
kgwgk wrote: post #695

Earlier quoted context omitted.

> You can just move all revenue back into headquarters' coffers So it's actually moving money! And you need a reason to move money from one company (in the US) to another (in Canada). Call it sale, call it IP licensing...

The difference is that "IP" production occurs where the R&D departments exist and salaries have to be paid, rather than where the corporate taxes are lowest.

The difference with what?

The context was "If I’m a Canadian software company that does most of its sales in the US through an American subsidiary (not uncommon), the way it works is the American subsidiary pays the Canadian company back for the sales of the Canadian company’s IP."

The IP production occurs in Canada where the R&D departments exist and salaries have to be paid and the US subsidiary company pays to the Canadian parent company.

They cannot just "move all revenue back into headquarters' coffers."

Re: G7: Rich nations back deal to tax multinationals

#858

Post by [deleted] »

alentist wrote: post #836
tonyedgecombe wrote: post #503

Earlier quoted context omitted.

Countries competing with each other to lower environmental standards, workers rights and social programs is a race to the bottom.

Economic freedom reduces poverty. https://rd.springer.com/chapter/10.1057/9780230114319_3 > Compared to those that were less free, countries with higher economic freedom ratings during 1980–2005 had lower rates of both extreme and moderate poverty in 2005. More importantly, countries with higher levels of economic freedom in 1980 and larger increases in economic freedom during the 1980s and 1990s achieved larger pove…

[deleted]

Re: G7: Rich nations back deal to tax multinationals

#859

Post by dalbasal »

saddlerustle wrote: post #751
dalbasal wrote: post #746

Earlier quoted context omitted.

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…

> Avoiding paying more than the US rate doesn't require any of these shenanigans. They could just charge royalties to the US. I'm not sure exactly what you mean by this > Dividends are always much lower than profits, and many companies don't do them at all. Dividends are lower than profits only for companies that have opportunities to reinvest profits into growth. For companies that don't, in principal, you'd expect…

>shenanigans.. not sure exactly what you mean

I mean that they could have just paid royalties to the US entity, avoiding Ireland and Bermuda.

Beyond that, you're taking a very naive, textbook approach. Tomorrow never comes, in the sense that you are talking about. Tax deferral should be thought of like an accounting equivalent of equilibrium in economics. It's never reached, but affects how some things work in the present. DividendsBerkshire's "special case" is not arbitrary. They're structured in such a way for tax advantage. Restructuring can happen, as do rule changes. One of the reasons why tomorrow never comes.

>> It (small, simple company) absolutely can reinvest its profits tax free!

Ask a farmer what happens when they buy land. Ask a store what happens when they increase stock. This is emphatically untrue. If it were, we wouldn't call this an income tax. We'd call it a dividend tax.

As with the first point, if the tax was intentionally applied only to dividends, there would be no need for shenanigans. Apple & MSFT could be housing their cash where they are actually headquartered.

I don't have any opinion on corporate tax generally. IMO, the whole thing advantages financial & software firms unfairly, relative to companies that need to make real capital investments in order to grow. I do have an opinion on the fairness of it.

Re: G7: Rich nations back deal to tax multinationals

#860

Post by tonyedgecombe »

alentist wrote: post #836
tonyedgecombe wrote: post #503

Earlier quoted context omitted.

Countries competing with each other to lower environmental standards, workers rights and social programs is a race to the bottom.

Economic freedom reduces poverty. https://rd.springer.com/chapter/10.1057/9780230114319_3 > Compared to those that were less free, countries with higher economic freedom ratings during 1980–2005 had lower rates of both extreme and moderate poverty in 2005. More importantly, countries with higher levels of economic freedom in 1980 and larger increases in economic freedom during the 1980s and 1990s achieved larger pove…

The Heritage Foundation is an American conservative think tank[1]. I think I'll take what they have to say with a pinch of salt.

[1] https://en.wikipedia.org/wiki/The_Heritage_Foundation

Anyway we aren't really talking about removing peoples economic freedoms, you can have a strong economy whilst retaining workers rights, social support and environmental controls. It's the poorest parts of the world that don't have a handle on this stuff.

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