G7: Rich nations back deal to tax multinationals

Oh, well, that's worse than I thought, but I think it basically bolsters my argument: A subsidy for them could not even be checked off against their tax contributions to the state's economy.

That’s not true at all. Your example is a special situation.

https://www.irishtimes.com/business/economy/top-10-companies...

The top 10 corporate tax payers, including Pfizer, Apple and Intel made up 50% of all corporate tax revenue in Ireland, $6B.

Ireland has 4M people, that means the top 10 companies contribute $1500 for every man woman and child in Ireland. That’s a hell of a deal for the country.

I’m not sure what you mean. Transfer pricing does happen within a tax year.

A gizmo is 95% assembled in Country A with 50% tax rate. Company wants to sell that 95% gizmo for 10% of the actual price to their subsidiary in Country B with a 5% tax rate. Finish the product there then book 90% of the revenue in the low tax country.

That’s transfer pricing. There are account regulations that define how that price is set. That said it’s hard with IP and other assets with less tangible value.

I agree with your main point but I wouldn't say executive orders lack binding legal force. They derive binding legal force from congress or the constitution first telling the executive branch "you go figure out the details here."

Foreign policy.

The SEC.

Heck, the emancipation proclamation was an executive order. Everyone knew Lincoln and his contemporaries wanted to abolish slavery, but Lincoln was absurdly careful at the time to frame the proclamation as a wartime measure aimed at crippling the south's economy. He went out of his way to appeal to existing commander-in-chief powers in order to make it lawful.

> They can make all the agreements they want, but it's not a legal treaty until 2/3 of the Senate agrees

That's not true under international law. The confusing thing here is that "treaty" means different things under international law and US law.

Under international law, any legally binding agreement between two countries is a treaty.

Under US law, there are three types of agreements between the US and foreign states (or international organizations): treaties, congressional-executive agreements, and sole executive agreements. The first are approved by two-thirds vote in the Senate, the second by an ordinary Act of Congress, the third by the President acting alone (without Congressional involvement.) But all these three are considered equally to be treaties under international law. The distinction between the three is purely a US domestic law distinction. Article 46 of the Vienna Convention on the Law of Treaties says that domestic law does not determine the validity of treaties under international law unless the violation is manifest, which means that for most purposes the rest of the world can just ignore this US-internal distinction.

The authority to ratify treaties, in the international law sense of "ratify" and "treaties", solely belongs to the President (and the Secretary of State, and ambassadors, acting on the President's behalf). When the US constitution speaks of "ratifying" a treaty by the Senate, that is not ratification under international law. That's actually a domestic US legislative procedure which confusingly happens to have the same name.

> many laws affecting jurisdiction, accounting standards, and the tax laws themselves. None of this can be done with an executive agreement.

In practice this will likely be done by an ordinary Act of Congress (a "congressional-executive agreement") which only requires an ordinary (not two-thirds) vote in the Senate.

However, one needs to understand that ratifying a treaty under international law, and passing domestic legislation to implement it, are independent things. Under international law, the President or Secretary of State can legally submit the instrument of ratification for the treaty even if Congress hasn't passed any implementing legislation. International law doesn't care about implementation legislation, that's a domestic law concern. Now in practice the President or Secretary of State wouldn't do that, because that is not the traditional practice of the US. But other countries in the world do sometimes ratify treaties before the implementing legislation is passed. That generally happens in systems – whether Westminster democracies or non-democracies – in which the executive can be confident they'll get the implementing legislation passed.

There's all sorts of outcomes here. While you may be right that the US will not sign on to the deal it might still have to deal with some consequences. E.g. while Yellen may not have the ability influence US tax laws there are also foreign tax laws that are part of this over which McConnell has no control. Let's say the rest of the G7/G20/OECD changes the way they tax global companies, if the US doesn't ratify their side there's still plenty of real world consequences. I think Yellen's agreement does count as in this is the US's (sort of foreign policy?) position, i.e. the rest of the world can proceed to make changes based on that agreement even though Yellen does not have the authority to commit to changing US tax laws.

>> So if I'm negotiating with you and you tell me we have a deal, I should consider that to be something that may or may not happen, may or may not be effective, and may or may not be legally binding?

I hope you don't touch contracts in your job. Until a contract is signed nothing is official.

Assume we’re going back and forth in negotiations. After a few back and forth a, with small changes each time, I send you over some language and you say: “That’ll work, I’ll draw up a contract and send it over to you”.

At that point, I would tell people internally to my company that we have a deal with that client.

But we don’t count on that revenue arriving, until we have a signed contract in place. Anything can happen between the negotiation and the contract being signed. The client could come back to us and say “there’s been a sudden change in priorities on our end, and we’re cancelling the project”. Or they might come back with any other change that they want “when I sent this to my VP, he said the top line number wouldn’t work, and we need to move it again, I’m so sorry!”

Yes, we don’t consider anything to be legally binding until the contract is signed. We “had a deal”, but deals can fall through.

If you deal in any contract worth more than a few hundred dollars, I really recommend you take the same attitude: everything is provisional until the final agreement is written down and signed.

> Which car company do you work for?

Was that necessary? Really? You can make your point without attempting to attack people.

> It's not even that. Most international agreements are executed without a treaty.

Only in the US (and possibly a handful of other countries which copy the US approach). Under international law, all legally-binding international agreements are treaties. What the US calls "international agreements" are treaties from the non-US point of view.

> 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.

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 this deal—only Joe Biden has agreed the deal. And Joe Biden has no legal obligation under the deal, he merely has a reputational one.

Since the agreed minimum corporate tax rate is 15%, and the United States corporate tax rate is 21% there's literally nothing Joe Biden needs to do in order to meet the terms of the deal he made with the other G7 leaders.

If they want to turn this into an international treaty, absolutely, GOP Senate votes will be needed (though, given that the treaty would create a floor that's 6 percentage points below our current tax rate, I would imagine those would be attainable votes—if the GOP created a global floor that was lower than our tax rate, they could use it to argue for lowering our corporate tax rate).

There are actually many steps. In this case:

1. The finance ministers reach an agreement. This is what has happened.

2. A treaty is written and signed, normally by the head of state, but sometimes by the head of government (for the US in both cases the President). At this point the treaty in not yet legally binding, although according to international law the signatory country has an obligation "to refrain, in good faith, from acts that would defeat the object and the purpose of the treaty."[1]

3. The parliament (for the US the Senate) ratifies the treaty, making it binding.

4. The parliament (House and Senate in the US) creates the necessary national legislation to implement the provisions of the treaty.

5. The government creates the secondary legislation for the application of the national legislation created at 4.

Usually after 2. the other steps follow more or less smoothly, but there are some high profile cases where the ratification never happened (e.g. the Kyoto protocol).

[0] https://treaties.un.org/pages/overview.aspx?path=overview/gl...

There is far more to U.S. government than the Constitution, which is only a framework. There are an enormous body of law, court precedents, institutional customs, federalized government, and of course public opinion.

Among that body of law are existing tax rates, which are currently over 15% for corporations. Under the Constitution, the President must agree to changes in tax rates unless their veto is overridden.

You're right that Congress theoretically could violate the agreement, but in practice, it's almost irrelevant. They could theoretically pass a bill tomorrow that eliminates every tax and every law in the U.S.

The Queen of England has the power to declare war, but we shouldn't expect her to use it unilaterally.

From what I can tell with what's out there on there internet, the main change is allowing local jurisdictions to tax a company on the money they make in that country, even if they have no presence there.

So again, it would just increase revenue for the US, and I see no reason they wouldn't agree to it.

At the end of the day, I don't think the US had to compromise here. I think it's universally better for the US government, just not US based companies, but it gives the GOP enough air cover to agree to it anyway.

It mostly benefits the European countries that are missing their tax revenue.

Evidently you know little or nothing about the EU. Taxation by member states of the EU is a sovereign national competence and the Irish have both a veto over change and a likely requirement to hold a national referendum over any change.

If you do some research you'll find that there is zero evidence of any EU countries shifting profits to Ireland. Almost all of the profit shifting which Ireland is blamed for facilitating is undertaken by a handful of US MNCs enriching their shareholders at the expense of US taxpayers via mechanisms enabled first and foremost by the US govt

https://economic-incentives.blogspot.com/2018/06/who-shifts-...

I recommend spending some time reading https://irisheconomy.ie

No, as has been pointed out to you - multiple times - reaching a deal is not equivalent to a contract.

The fact that your experience tells you that "deal equals contract" is strange.

In my experience I have had plenty of "deals" not materialise for one reason or another.

To extrapolate that the BBC is printing bullshit is basically to say that if you have not experienced something, then it is worthless.

The BBC is not lying. You are being shrill for no good reason and are relying on and extrapolating from your limited experience of deals.

The main reason Amazon is paying a $15 minimum wage is because of substantial pressure from progressives - there's an extensive record of this. The media reporting has largely been coverage of Bernie Sanders and the like, so it's pretty clear that there are non-media folks who have been driving it.

I know people personally that are always complaing about Amazon being too big and a monopoly while also being prime members and basically addicted to getting packages everyday in the mail. Sums things up pretty much.

They would pay property taxes at the city level and other fees still.

Indeed. Which is the reason why my conclusion was opposite to the opinion. The real world gets in the way of it being practical.

But in my ideal world inheritance is considered income and is taxed as such. And on a logistical curve a billionaire inheritance is taxed really close to 100%. Anybody that has earned so much money they no longer need to work has paid as much in taxes (and continue to do so as interest is taxed as income). Additionally on a logistical curve it is almost impossible anyway to earn this much since a huge earning is taxed close to 100%. For example, someone making 5 standard deviations above the mean pays 99.33% tax on it, so they will probably end up with less after taxes then someone earning 2 standard deviations below the mean (11.92% tax).

As for the farmer who is self sustaining. I guess they are not using up much of the shared infrastructure anyway, I see no need for them to be paying taxes.

This is incorrect, capital gains rates in the US are currently similar to or higher than many European countries. Federal (20%) + NIIT (3.8%) + State (up to 13.3%) puts you firmly in the middle of the pack for European countries. The proposed changes would make them the highest in the developed world, by a large margin.

The elephant in the room is that the main difference between US and European tax rates is that the middle-class tax rates in the US are much lower than their European counterparts. If you are in the top tax bracket in California, the income taxes aren’t that much different than in most of Europe and the capital gains taxes are typically lower.

This is perhaps true of revenue tax. But for VAT You can deduct VAT of sales from VAT of purchases.

Well, the shareholders may live in a different area or country than the one in which the company operates. If a corporation is largely owned by American investors, but does its production largely in a developing nation (relying on their infrastructure to operate), then I think it's fair to say that both the developing country and the US should both get a slice of the pie: 1 for providing the infrastructure and labor market, and the other for providing the comforts of a developed country to shareholders.

It does seem like a reasonable principle, which makes abolishing the corporate tax unpersuasive. If there were only a single jurisdiction the argument would be more compelling.

Even without a corporate income tax companies would still generate tax income in foreign countries where they sell goods and services, e.g. VAT/sales tax. They would also pay property tax on any physical presence they maintain and probably a myriad of other taxes depending on the country.

I'm a bit confused by your post, it seems you are agreeing with me, but you say you disagree?

I am aware of the difference between capital gains tax and corporate tax (also note that not every country has a capital gains tax). My argument applies to both, i.e. one of the reasons for raising inequality is the inbalance of labour and capital and the low corporate and capital gains taxes definitely contribute.

About the effect of income tax on salar, I'm not quite sure what that has to do with my points. I was not arguing that we should eliminate corporate tax and just let income tax handle it. Unless your argument is we should use income tax instead of corporate tax because it lowers salary?

Those bonuses are then taxed too, which should give you a hint why corporate tax is a bit daft to begin with.

Corporate tax is, by and large, a fiction to placate voters. It could (should?) be replaced with a more flexible system that isn't as susceptible to the usual deduction and profit shifting.

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.

> 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.

> Nobody benefits from a company growing indefinite wealth without distributing it to actual people.

Shareholders do. And shareholders own the company.

> 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 prefer to pay taxes on their consumption rather than their income.

So if a company served as a type of money making engine but didn't distribute anything, you can save by purchasing shares and letting compound interest work to your benefit and then spend some of that in your retirement by selling some of your shares and give the rest to your kids. You would have a lower overall tax burden as you could earn like a king but live just a middle class lifestyle, allowing your kids to live like kings even if they earned just a middle class lifestyle, and with some left over due to the magic of interest.

This is why if your income >> your consumption, you really want only consumption taxes.

There is also the issue of precautionary saving. Most people prefer to have money in the bank to insure themselves against future loss of income, and this type of precautionary savings benefits people even if there is no consumption, just as having insurance provides a benefit even if you never get into an accident. So if you don't need to pay taxes on savings, then you can shield yourself more easily from future income losses and smooth consumption so you always prefer taxes on consumption, which do not make consumption smoothing more difficult, than taxes on income, which do. Think of it in this way -- a tax on insurance makes insurance more costly and thus more difficult. But financial savings are a form of insurance for when you lose your job or face some other financial setback.

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.

> Nobody benefits from a company growing indefinite wealth without distributing it to actual people.

And yet companies actually do this. Perhaps your model of what motivates companies is wrong?

To the point that we call the bundle of rights corporations get “corporate personhood”. (https://en.m.wikipedia.org/wiki/Corporate_personhood)

Frankly, if OP doesn’t want me to anthropomorphize corporations for tax purposes, they’ll need to go back in time and stop the courts from anthropomorphizing them for various rights.

If a company gets 1A rights under citizens united, then it can have tax obligations as well.

I’m pretty over this double standard where companies are handed various rights, but not commensurate obligations.

I see that mostly as "code reuse".

Instead of writing separate but very similar laws for personal and corporate property, you say that the law is the same for both cases, aside for a few exceptions.

The top corporate tax rate had been ~35% for roughly 25 years ; in 2018 it dropped to 21% and wage growth has indeed increased since 2018. Were wages positively affected by the lower corporate tax rate? I don’t know, so many factors affect the economy; corporations might choose to lower prices or do more research on better products or issue greater dividends to attract capital for expansion. I was just making the point that we humans end up paying somehow for the spending that the government chooses for us and that I would rather make these tax costs more visible to the people actually paying the taxes.

> Do you feel cost/value ... is 0 or free?

No, of course not. (Why the insulting tone of your rhetorical question?)

> Corporations use more services than you would think ...

How many publicly traded companies have you started?

Getting more money in the hands of governments is not going to do to us any good, they will just increase spending.

It will end up being: increase in price -> increase in government spending. Everyone will pay the increased prices, governments will pocket a % to keep their employees busy or employ their friends for public work, some of it will be redistributed to a portion of the population.

I believe taxes shouldn't be paid by anyone and governments should disappear.

Effectively they're paid by the customers though. Investors will want to get their return on the money they invested regardless what happens. If they can't get their return they will simply invest in something else and the business never gets off the ground.

If it is, it undermines the point that buybacks get taxed

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!

The deadweight loss is different than the overhead cost. What you're describing is the overhead cost, which indeed is much lower for a land value tax.

The land tax has zero deadweight loss, because what it's taxing is pure economic rent, rather than production of value:

https://en.wikipedia.org/wiki/Land_value_tax

Any tax imposed on anything except scarce natural resources will be penalizing the creation of wealth, and impose deadweight losses.

> Taxing gas is a great example. Gas consumers emit carbon which has a cost for society.

This isn't even why gas is tax heavily in developed economies. First, gas taxes pay for roads. Second, the negative externality that Europe, at least, is trying to reduce is dependency on Middle Eastern oil, since that opens a huge can of worms with respect to world stability. If they really cared about air pollution, they wouldn't have pushed diesel so much.

Well, the hope would be that you would have never become a billionaire in the first place because somewhere along the line that wealth was predicated on holding cheap real estate and collecting rents.

Now, that argument doesn't help with switching too an LVT, but there are other reasons to be optimistic. Taxing Jeff Bezos at any level is worthless in comparison to a) Paying enough UBI that the warehouses would unionize, b) directly expropriating the warehouses into the postal system. (post : IP :: warehouse sku system : content-address based networking).

Basically, trying to account for the power of billionaries and mega corps in monetary terms is a dangerous exercise where they can probably out-loophole you.

Middle class families in single family homes are hoarding a scarce and essential resource. Billionaires in high rises aren’t. The idea is to punish bad behavior and reward good behavior, not to cut down the tall poppies.

Land taxes are based on the value of the land, not the size of the land. The property tax system already performs land value assessments.

Land taxes are highly progressive.

Note that land taxes are only assessed on the value of the land, not the value of any buildings on the land. This incentivizes land owners to put the land to its highest and best use.

Tax intellectual property too then.

This would also help push back against ridiculous patents and eternal copyright.

It’s bad news for farmers that are farming in the middle of a city, yes. But farms in rural areas will hardly get taxed at all, because the land couldn’t be used for much else, so has very little intrinsic value.

Land value taxes adjust based on how desirable a plot is: basically, you get to keep any value you generate above and beyond the value the society surrounding the land gave it. If you leave a plot of land empty in downtown, you’re preventing someone else from using that plot productively, and adding a net negative cost to the surrounding properties. So you should be taxed accordingly.

>Bad news for farmers, great news for the business running a 1000-person operation out of a skyscraper.

Not especially. The skyscraper land is probably 10000x more valuable per square foot so the tax will be 100x higher.

If you assume every square foot is taxed the same then you've kind of missed the point of a land value tax.

It won't fix the inherent problems with intellectual property though.

I was under the impression that CITs were far, far more distortionary than well structured progressive PITs.

Why is punishing adding value not wrong? Isn't adding value a good thing?

I frequently come to the conclusion that personal grocery bills should be free, as charging for food punishes existing.

If "bogus assessments" lead to an incentive to declare a low value for your land, then that will be caught if and when you try to sell it or rent it out for a higher price. So if people just stick with a low valuation to pay less land tax, this will have the effect of greatly decreasing land prices, which are the principal cause of housing unaffordability, which seems like a good thing to me.

Gaming of tax systems by large capital players is a big challenge. I have wondered whether bogus assessments could be mitigated through some kind of open market price discovery with unlevered, unencumbered cash with full party disclosure.

Make residential, owner-occupied homes and special categories (like public transit-related or infrastructure-related improvements like healthcare/power/water/waste/telecomms/etc. property) exempt. All other property post their assessments at tax jurisdiction's office. Anyone, at any time, can post to that office cash that is 10% more than the assessment upon the property. If the owner does not challenge the cash assessment, they must accept the cash offer within 180 days or are evicted. The catch is, that cash must be absolutely unlevered and unencumbered, the property is carried on everyone's books as a cash asset of the prospective new owner, and the property cannot be pledged as collateral, for the next 21 years (with an upward adjustment for deep-pocketed backers of offers) or until the property is sold, whichever comes first. The offering party must provide full disclosure and auditability of the source of the cash and the "Source Of Truth" controlling interest, no shell games. The legal jurisdiction enforces this transactional structure by refusing all cases entangling the property.

The owner can respond to the price discovery cash offer by paying the tax jurisdiction the "back taxes" implied by the cash offer, back to the last time the property transacted on the open market. No penalty. If the owner can deliver proof that the offering party hid their ties to deeper (ultimate beneficial controlling interest) funding sources, then the entire offer is forfeit to the owner.

This creates an incentive to discover badly out-of-alignment prices, but the intention is to gate out anyone playing financialization games or asymmetrically deep pockets parking cash badly distorting a small player-dominated market's historic valuations.

I actually love this idea, although I would just do a wealth tax. Anyone who owns wealth gets taxed a bit. If you only taxed land, then lots of people would just move all their assets into stocks instead of land.

LVT has been tried in Pennsylvania, actually: https://www.strongtowns.org/journal/2019/3/6/non-glamorous-g...

It's worked well in some cities but been repealed in others because people were upset that mansions weren't taxed enough relative to smaller SFH.

This is very similar to Modern Monetary Theory, which views taxation as a means to control inflation rather than a source of funds for a sovereign government. Maybe only applies to a country whose currency is the reserve currency of the world tho…

Let's face it, no regulation can ever be perfect, make rule(s) and someone will find loopholes, then... close the loopholes and the cycle continues.

That is life.

And that should not be an excuse to impede improving society.

Because the problem would be that "Jeff Bezos has extracted X money from France" instead of "Amazon has extracted X money from France".

The problem is not that the money disappears from earth, but that is shifted from one country to another.

the fact that streets are illuminate at night and pollice patrols them is using services provided by taxpayer's money.

Uber benefits from streets more than the average citizen.

if corporations had to pay per use, they would prefer to build their private infrastructures and police forces, while public infrastructure would lag behind chronically underfunded.

I agree. Just charge everyone a monthly fee for essential gov services. And do I mean essential. If you want extra programs from the gov, you need to pay voluntarily.

Right, actually impairing a corporation leads to a monopoly and less competition which the state doesn’t want to be directly responsible for

This guides the trend in enforcement actions or lack thereof

There are some books on this

Confiscating profits wouldn't work, many companies are reinvesting their profits. Probably the best way would be to just make the fines hurt more, by using a fixed and non-negligible percentage of the monthly/yearly revenue, much like Finland does for traffic fines.

> I look forward to the day that we punish corporations by removing their freedom (ability to operate) instead of fining them laughably small percentages of their yearly revenue for serious violations of laws and regulations.

I agree, but like you mentioned, the externalities on innocent parties would be too great. Also a lot of companies do not issue dividends, so focusing on them would do no good in a lot of cases. I think a threefold strategy would need to be implemented:

1. Direct action against executives in the board (e.g. heavy fines amounting to a large fraction of their total compensation and/or jail).

2. Confiscation of dividends for a period of time.

3. Forced issuance of new shares to dilute existing shareholders, with sale proceeds going to the government.

One issue is that shares can be traded, so it's possible for a shareholder to benefit from some bad action, then avoid any punishment by selling the shares before the punishment is implemented. Maybe such people could be shared a per-share fine based on shares held at a particular date?

> maybe some form of “jail time” whereby all profits go directly to non-executive employees

In theory this would give an incentive to some employees to mess up if they know they won't get caught.

One of my more radical political views is I'm 100% behind a corporate death penalty, as well as direct personal criminal consequences for company principals that engage in fraud or similar.

The sad reality of the world is that once a business is past a threshold of power, it's nearly impossible to hold them accountable. Craven sociopaths know they can do what they do, and worst case, suffer some bad press while they move on to the next thing, banking 100's of millions the whole way.

Make those people truly terrified of the consequences of their actions and politics will be utterly transformed.

If you can deduct work-related expenses, income tax is a tax on "profit".

> But then it's highly unfair to tax humans on revenue, but corporations on profit.

Wow, it's a good thing we don't do that. Good news, the income you spend to further your business is deductible. We include a personal exemption for generic costs, child exemptions, mortgage exemptions, healthcare cost exemptions, retirement savings exemptions, and numerous others.

Additionally, the whole concept behind a progressive income tax is to tax people in a similar way to taxing them on profit. After all, percent of income spent on necessary goods goes down as income goes up.

But I don't think anyone wants a system where this is done by itemized receipts instead of with generalizations.

VAT + LVT + misc. pigeovian taxes probably wouldn't be enough to power society as is, let alone fund a UBI. You could maybe replace income tax with a progressive consumption tax or a wealth tax, but you'd need to replace it with something.

> Humans are taxed on their income. Corporations are taxed on their profit

Not true. States like WA have general B&O taxes which are a tax on revenue, not profit.

This makes it much harder to operate thin margin businesses like groceries and manufacturing, while favoring high margin businesses like software.

Is this similar to a gross receipts tax?

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?

To me "spent on wages" means on every employee's salary, not only the top 0.01%

It would be pretty awesome if companies increased salaries for everyone at the same proportion of their interment of profit.

Only if it's not a legitimate business expense. Which in practice means if you get a meal with coworkers and talk about work it counts. Even easier if you have clients

Unless they run a catering business out of their home.

They need furniture, computer, food, and a home for that business, so boom...using the money 'for the business' tax free.

I have difficulties to come up with current examples.

Maybe some could argue that pre Soviet Afghanistan (in the ‘60) was such a place. But today?

Are you implying Ireland, Luxembourg, Bermuda (part of the UK), the Virgin Islands (part of the US and UK), Singapore, and Switzerland aren't western countries part of or at very least allied with and influenced by other western "neoliberal" countries/G7?

Because that's a very, uh, unique idea. Also weird to jump from implying escape from western influence doesn't exist to listing western countries as a way to escape from the west.

Are you trying to cite Singapore and Hong Kong as countries that aren’t neoliberal?

Singapore has Common Law inherited from the British. Hong Kong also used to have British-style laws, until, as you said, it was "swallowed by China" (and even then, it's fairly Western on paper).

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

Then be indignant I guess? Countries pressuring each other to do things dates back as far as the existence of countries. And it isn't like this is a broadly unpopular idea either. Most people do actually believe that multinational corporation should pay their fair share of taxes.

It's interesting that you're being downvoted but you make a solid point. People in government are no different than those not in government, we're the same human beings. To suggest that they should be able to do anything they want seems pretty backwards and quite contrary to the enlightenment ideas.

> requiring them to return part of their salary as cash.

I thought that was illegal.

Ah, government, those who don't even pretend.

Deduction means hiring people to do your deductions. Flat rate for everyone means less money spent on tax consultants.

Restrict expense claims of that nature and/or tax on revenue and minimum expected profit for large companies?

AFAIU proposals for taxing companies wherever they do business rather than where they are headquartered often involve paying MAX(X% of profits, Y% of sales), precisely to avoid these kinds of shenanigans.

Of course it could be argued that the second company is also making the money in the first country where it’s IP, trademark etc. gets used and has to be taxed there.

Tax authorities already try to control for arbitrary cross country bills that try to shift profits (at least in some jurisdictions). The downside is more bureaucracy and unproductive friction of course.

Though whole accountancy process has many parallels to a pyramid selling, with the IP being the top of the pyramid located in some tax favourable country of the moment.

What stops individuals, sole traders and the self employed from doing this?

A 100% license fee seems like a non arms length transaction at a non market rate.

Shod google not be taxed twice in this example? Once on the income made in the USA when they sold the actual thing, and once in Ireland when the Irish branch sold the thing to the USA branch? Not to mention sales tax....

What you're describing is a method of deferring taxation, not avoiding taxation. Google is a US publicly traded company so its profits ultimately belong to its shareholders, and it can only pay that out via the US.

> Probably the best solution is a minimum tax worldwide.

Wouldn't that make companies pay taxes in countries they are based in (as opposed to where they make money)?

Anyway this could be the push that the EU needed to start their own Silicon Valley.

Except we already have a minimum tax worldwide - 0%. Perhaps every country should meet the others and offer 0% corporate tax. The solution isn't as simple as "minimum tax" as some places legitimately believe that corporate tax is not the most effective way to generate government profits (Wyoming and South Dakota at the state level).

> Google Ireland charges Google USA a license fee of 100% of the revenue they made.

This can be solved by placing a duty on large cross border IP fee transactions.

US is the country that's opposed to putting tariff on IP

> Probably the best solution is a minimum tax worldwide.

I saw a similar comment earlier this week. I don't understand why first world people think developing countries would agree to this minimum tax and not undercut them on day 1 to attract investments and jobs.

There are no global tax authorities. Nobody is going to enforce these things. Even this G7 treaty is going to be a mess in practice because multilateral treaties are flawed like that.

> It's complicated. "Money they made in their country" is hard to define. Large companies abuse intangible assets to shift profits around, but it's hard to say at what point abuse starts. For example, Google USA sells advertising to its clients. But, the assets it is selling are actually owned by Google Ireland. Google Ireland charges Google USA a license fee of 100% of the revenue they made. Suddenly, Google USA has net profit of 0 and Google Ireland has a large net profit.

I have an even easier solution, and it doesn't require an International Tax Police or Global Government. Lower taxes. Perhaps even eliminate them. There are many ways to achieve this such as eliminating government pensions, removing entitlements, and cutting defense spending and foreign aid. Instead of robbing Apple or Google to buy F35's and ship cash to the Middle East, perhaps we could cut them a break to hire and build things in the USA.

> Google Ireland charges Google USA a license fee of 100% of the revenue they made. Suddenly, Google USA has net profit of 0 and Google Ireland has a large net profit.

That's irrelevant; Google USA made a gross profit of X G$ and should be taxed accordingly. If they want to claim some of that as a tax-deductable business expense, the burden of proof[0] is on them to demonstrate that it's a legitimate business expense.

0: If accused of tax evasion, the burden of proof would on the IRS to demonstrate that they intentionally misreported and should suffer criminal penalties, but if they're innocent, they still owe back taxes plus nominal interest.

(Edit: In case it wasn't obvious, I'm talking about what the law should require, not what laws paid for by corporations currently do.)

This is a terrible solution because it eliminates tax competition between states. The corporate tax rate should be zero-- that is the best solution, as it would free up all of this ridiculous accounting and financial compliance machinery for actual productive uses. Corporate profits are already taxed at the individual owner-level as a capital gain or dividend. The corporate income tax is grand-standing political tax with no basis in science or economics.

Could they create a special category for the clearly profitable tech titans where they are taxed simply on local turnover regardless of whatever legal accounting bullshit they use to avoid paying tax?

In theory this is fixed by the the laws around “Transfer Pricing”.

You are supposed to be able to prove that the deal between your different international entities is an arms-length agreement. That is to say that the revenue sharing agreement is similar to what would be negotiated between unrelated companies.

In order to do that you are supposed to be able to show evidence that the deal is similar to other deals in your industry and such.

I don’t know how Google would get away with a licence fee of 100% under those laws so I kind of doubt that that is what they have in place.

However, let’s say they have a 30/70 split with 70% going to the IP holder (Ireland company) and 30% going to the selling agent (USA company).

Now it’s in the best interest of the company to attribute as many of the expenses of providing the service to the USA company so that we can get its profit down to zero. The profit margin of the US company might be 0% (so no tax) while the profit margin of the Ireland company is near 100%.

It’s where they’re sold.

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.

That's throwing the baby out with the bath water. Apple has a legitimate need for a subsidiary in countries they operate. What needs to stop is the shenanigans around revenue & costs designed solely to generate profit in low tax countries.

Because that would lead to a trade war?

The fact that they could levy such inducements and everybody knows it is probably why this deal is happening.

Tax havens require the complicity of larger, more powerful states to exist. They are by no means inevitable.

Both Ireland and Luxembourg have legitimate activities: Irish whiskey isn’t a big deal compared to tech, but there’s no real reason to ban it. Defining a line is hard, especially when the country’s traditional advantage _is_ finance, like it is in Luxembourg, even outside of tax-optimisation.

It’s easier to have rules against countries with less credibility, but then again, you risk making things complicated for Seychelles, Curaçao, St-Martins. It’s easier to define a minimum tax so that they don’t have to pick between tourism and tax optimisation.

This is the first step. G7 can then strongarm or cajole their "client states" with coordinated action. Even just the fact that such action is finally happening, is a great step. This was considered a sci-fi scenario 20 or 30 years ago and now it's become reality.

First, companies don’t optimize for tax at the exclusion of everything else. And calling tax optimization and inefficiency is interesting considering it directly impacts returns.

Second, the innovation isn’t in the tax policy, it’s in the use of the tax revenue. If I come up with a less bureaucratic and less costly administrative process for companies, why shouldn’t I pass the along if I want to?

Third, the implementation goal is global. That’s been stated by Biden.

And I’m guessing the lower income countries will suffer. You want to pay t a similar tax rate for the US for say Myanmar? Abundant corruption, questionable private property rights, untrustworthy courts?

There is one asset you can't hide - land. Tax that.

If the wealth tax is uniform it doesn't matter if they put it in crappy charities or their kids names or whatever - the crappy charity or kids will still need to pay the tax.

I see bigger problems with evasion and valuation. Evasion can be solved by coupling the wealth tax with enforcement of property rights. You own an offshore bank account, somebody steals from that offshore bank account, you show up in court to prosecute them, and the government says "I'm sorry, we don't have any record of your ownership of this bank account, and you have never paid taxes on it." Oops. Also makes logical sense, as the function of the state is to enforce property rights.

Valuation is tricky, as a lot of wealth-producing assets are illiquid and it's hard to pin a specific value on them in the absence of a specific transaction. The way LVTs handle this is through statistics: you know what comparable land sells, you know what improvements are on it, you can run a regression against all the features that impact valuation and subtract them out to get a reasonable estimate of the value of the land itself. Something similar could work for income-producing assets: you know all the cash flows from the asset (because you've been declaring your income, right?), you can do a discounted cash flow analysis that smooths them out and arrives at an estimate of the NPV of the asset under current cash flow & interest rate conditions.

I mean, that clearly doesn't seem reasonable long-term to any mathematically literate layperson, since after ~917 years, the maximum wealth would be less than the median. (10'000x * .99^917 = 99.42%) But I suppose it's not like it'll last that long before corruption sets in anyway.

They pretend they don't.

What?

Or you can request their books, highlight fake arrangements that hide profits, slap tax on them. Job done. Easy. Don't even need to change any laws.

E.g. what is this IP charge by Cayman company that belongs to you as well? NON DEDUCTIBLE.

Top marginal income tax rates in many countries now exceed 50%, not even considering payroll tax, property tax, sales tax, etc.

The question is: how can anyone seriously support tax rates that high? After a certain level, more than half your time is spent working for the government - failure to pay means fines and possible jail time. This is serfdom.

Higher corporate tax rates should not be applauded by anyone. Higher corporate tax rates invariably increase cost of living because companies can simply raise prices to compensate. If all of your competitors have to pay the same (higher) tax rates as you, the correct game theoretic move is for everyone to simply bake the higher tax rates into the price of their products/services.

Almost all forms of taxation ultimately impact the middle class in one way or another, either directly or indirectly. So while nobody is "seriously arguing" for, say, a 70% top marginal tax rate, it's easy to get there when you actually look at the entire tax burden across all levels of government, including price increases caused by higher tax rates.

IDK what you mean by "constraints preventing the money printer," but in the eurozone we have the opposite problem. Only the ECB can "print" money, or rather, only the ECB can create primary loans to national governments. National banks can't.

In practice, expanding national debt requires eurozone-wide unanimity. Ask Greece.

Expand on this please? What would be excluded in the "nothing else"? And what good would it do to ban single votes on both parameters and constants?