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Comment by forrestthewoods | Hacker News Reader

Growth is globalized. Global companies get a disproportionate share of growth. Therefore giants will become increasingly large relative to non-global entities.

I'm not sure what the specific problems are. Which makes prescribing a fix impossible.

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In my (uneducated) opinion, the specific problem is that the people, through their governments, lose control over these large, global entities that affect their daily lives. When they get this big, there's no way to tax them and no way to punish them for wrongdoing - they could just move to a friendlier country, use loopholes, etc. Of course, thanks to various trade agreements, they will still have access to our markets...

And the consumer can't always go elsewhere - there may be no viable competition, or that competition gets bought by the larger company for what is essentially pocket change.

Too big to fail = too big to control

I know it's not an too popular opinion here on HackerNews and I'd say you're sort of right, but you got it in reverse. The problem is not that it's hard to control or tax companies, the problem is that it's not as easy for you or me to do the same.

You have to have significant resources to break free from local restraints, which is really unfortunate. It's also a lot of resources that gets spent, just so people or companies can do whatever they want with their own resources. In other words, it's possibly a loss of production - those resources could have gone elsewhere.

Please be gentle, I'm open for discussing these things.

It's not that you cant get there,

but indeed that they are out of control: they can remove money from an arbitrary economy and not necessarily put it back (see apple that sitting in an incredible amount of cache) => (they dont need to hire people locally.. at least not as much) => they -at the moment are- making poor countries/people even poorer, rich ones even richer => they have more and more power in less and less hands

One specific problem is that global companies are currently able to engage in tax arbitrage where they get to shuffle their profits around the world to wherever the most favorable tax rate is. This leaves many of the countries that actually host these companies and provide services to them - like educated employees, transportation infrastructure, and a judicial system - without any tax revenue from the company.

The solution is simple. Stop taxing profits. Tax consumption. Defining "profit" is nigh impossible.

Starbucks is headquarted in the United States. Their research in Canada. Their beans from Columbia. European distribution is out of Germany. London finances new franchises. A location in France sells a latte for 4€.

How much of that 4€ is profit and how big of a slice does each country get? Because each country has a very fair claim to say that they deserve a slice of the profit pie.

It's impossible. There is no single answer. There is no moral system that precisely describe to which countries go which dollar.

But the consumption is already taxed in Europe: out of that 4 euros, 80 cents goes to France immediately in the form of VAT.

Then they shouldn't complain about Starbucks paying too little corporate tax. If they want more then raise VAT. It's nigh unavoidable.

VAT is not progressive, which is why many don't like it.

In other words, use VATs, not income taxes...

It seems that every country that use them decide to apply them in addition to income taxes. And that means the VAT is never big enough, and there is no political climate to gradually replace one with the other.

In theory, a VAT, land taxes, and universal income should form the perfect taxation system together.

Actually removing profit tax and simply add VAT to the final consumer sale seems like a decent starting point for simplifying the system and prevent tax evasion.

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