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Comment by keithpeter | Hacker News Reader

>> Edelman said that people tend to trust businesses more than governments, in part because “business gets stuff done” while government is seen as “incapable.” People trust technology companies in particular because “they deliver value.” <<

UK Brexit vote: most (not all) business leaders were advising a remain vote. Apart from the 'immigration' trigger, the 'take back control' trigger does come up in my conversations with those who voted leave.

The Labour party spokesbeing on the radio this morning was developing a vaguely anti-globalist line about spreading the fruits of recovery more evenly and defending social spending. We shall see.

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The latest plan seems to be to cut corporate taxes to try to stop the larger companies from leaving the UK, and possibly to attract new ones.

The race to the bottom started with Ireland, suggestions are to cut the tax to 15% in the rest of the UK, with some voices pushing for 10% or even 5% corporate tax. Of course this has nothing to do with using the opportunity created by the brexit power vacuum to reward some special interests.

Race to the bottom (i.e. competition) is a good thing, it reduces waste and inefficiency.

In lala-economic-theory-land yes. But this is not companies competing for the favors of customers. This is nation states competing for the favors of companies and that is a totally different matter.

In the real world you need taxes to operate a country and with big business being able to relocate their capital and their profits at a moments notice corporations have a substantial advantage over nation states (which are by definition somewhat immobile).

So the 'inefficiency' that you seek to eliminate is the oil required to keep the machine running. Note that a company couldn't care less if your country roads fall into disrepair, healthcare sucks and education starts to fall behind. It won't show up in the quarterly reports for a long time and by the time it does they can easily move on to another place.

Having a very low corporate tax is only possible if your country does not require major infrastructure and that's one of the reasons why most tax havens are either nearly un-inhabitable (Cyprus, Panama) or extremely small (Monaco, Lichtenstein, Vaduz, Luxemburg).

Ireland is the exception and it only succeeded there for reasons that the UK will find hard to emulate.

>Having a very low corporate tax is only possible if your country does not require major infrastructure and that's one of the reasons why most tax havens are either nearly un-inhabitable (Cyprus, Panama) or extremely small (Monaco, Lichtenstein, Vaduz, Luxemburg).

Infrastructure spending represents an incredibly low percentage of government spending in most countries, see e.g https://www.nationalpriorities.org/budget-basics/federal-bud... and http://www.ukpublicspending.co.uk/uk_budget_pie_chart.

>Note that a company couldn't care less if your country roads fall into disrepair, healthcare sucks and education starts to fall behind.

East Asian countries like Korea, Taiwan, Singapore and Hong Kong maintain achieve better healthcare and education outcomes than most western countries in spite of lower government spending. While they may have less welfare spending and greater economic inequality, this certainly isn't an impediment to productivity.

> In lala-economic-theory-land yes. But this is not companies competing for the favors of customers. This is nation states competing for the favors of companies and that is a totally different matter.

Why is it bad when businesses find that conditions for them constantly get better everywhere? Is there something inherently evil or bad about businesses? This is usually a position hardcore Socalists would take.

> In the real world you need taxes to operate a country and with big business being able to relocate their capital and their profits at a moments notice corporations have a substantial advantage over nation states (which are by definition somewhat immobile).

No corporation can move its operations and profits within a moments notice. This takes usually years and the absolute majority of businesses do not even have the option to ever do this.

The problem of most Western societies is that the top 10% basically pay for 75%+ of everything, the middle class pays an acceptable amount and then theres 30% of free loaders with 29,9% being the ones at the bottom and 0,1% on the top.

The top 10% also have more than 75% of the money, so this makes a lot of sense. They have more than 75% of the money, so I imagine it's a good bit higher than you imagine.

How do the freeloaders pay taxes like the rich if they can't afford life circumstances that allow them to get educations similar to the rich?

Healthy countries need taxes to boost their populace up to an optimal level of health and education. Maximize the people that could potentially become high-value.

>Why is it bad when businesses find that conditions for them constantly get better everywhere?

If those conditions are getting better at the expense of the local populace, then it most certainly can be bad.

Because nations need taxes, not a few rich people or organisations at the top.

Countries aren't machines built to serve companies. Whole countries shouldn't be made to become "more efficient" (or poorer) for the sake of companies.

Countries are there to work in the interest of it's population and business owners are a part of any free and democratic society.

If you don't have a mechanism of business owners and private enterprise that are determined by the vote of the population (via spending money privately on products) then you'll need a state controlled market and I doubt you would like the results. (Venezuela, North Korea, Soviet Union)

Just imagine some government committee is deciding on what the national variant of the new iPhone should look like.

Back to OA and my UK perspective. You've seen the reaction to the mild austerity (compared to, say, Greece or even Spain) in the Brexit vote. Go too far down the 'race to the bottom' thing and you'll see a lot more reacting. There are political limits and neo-libralism is only one possible perspective, not a natural law.

Thats why so many big businesses are setting up in undeveloped countries.

> The latest plan seems to be to cut corporate taxes to try to stop the larger companies from leaving the UK, and possibly to attract new ones. < The same taxes that the larger corporates avoid in the first place? This seems a flawed plan.

It's just some nice pork for the friends of those that made this decision, other than that I don't think it has even a remote chance of working.

Businesses favor stability over almost everything else and the way the UK has been going in the last couple of weeks the degree of uncertainty is so large that they'd have to set the rate at a negative percentage to attract new business. Nobody in their right mind is looking to move their currently successful business to the UK unless it is a business that can be moved out at a moments notice.

Let's cut corporate income taxes to 0%. And increase income taxes on investors and employees to make the change revenue neutral. That would increase economic growth and efficiency by allowing corporations to focus on generating real customer value instead of financial engineering for tax avoidance.

This only works if you'd do it in a larger body of entities (such as... the EU), otherwise it will just lead to companies taking advantage of the fact that they are mobile and countries are not.

The UK has made a step in that direction, the last budget increased taxes on dividends.

You really can't rule out the "they took our jobs!" angle[1], whether it is legitimate or not.

[1] http://southpark.cc.com/clips/104259/they-took-our-jobs

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