136 Countries agree to minimum corporate tax rate
cnn.com
cnn.com
We should be encouraging experimentation in governance.
It's the same how inflation doesn't just devalue the currency, it encourages riskier behavior because investors must seek higher returns.
Without minimum taxation, we see a race to the bottom for taxation, where elites benefit and everyone else looses.
I’m reminded of the (conspiracy?) theory that the recent Facebook whistleblower is a controlled opposition operative who deliberately seeks to increase the regularly burden on Facebook and other social media sites, because Facebook will benefit overall compared to smaller corporations who are not able to iterate and adapt as well.
Is this new tax plan comparable to regulatory capture by large multinational corporations? If so, how does it deal with these concerns?
1) UN resolutions don't have any enforcement weight, which is why they're so popular with politicians who run on the statement "nothing will fundamentally change."
2) Taxes should be paid by whoever retains earnings, and in that case corporate taxes make a lot of sense. And yes, buying back your own shares to drive share values higher for current shareholders is "retaining earnings" and should be taxed at not just capital gains, but individual income levels since individual income is what such activity creates.
That money is rendered worthless from an economic perspective. In a healthy economy the profits of corporations are spent on more facilities, more suppliers, more employees, who all in turn spend their profits on the same.
We don't have a healthy economy. We have corporations that lose money every single day of their entire existence, but manage to drive their share prices by tax scams, accounting fraud, government subsidies, and share buybacks financed with debt the would not be available to them but for the existence of the scams, frauds, and government subsidies.
In that sense these corporations do not do anything of value, they are merely ephemeral structures to facilitate tax and investment risk avoidance for a certain class of people, at the expense of a tax base they do not participate in so should logically be shut out of.
When a corporation uses that money to buy back shares the money is effectively destroyed by being circulated among a financial class that has (mostly) bribed their way out of the tax system.
Hence, any money used for share buybacks should logically be treated as net income for the company in question's next filing.
Only if those investments will create more profit. If capital cannot be allocated effectively (i.e. a company that returns $1 for every extra dollar invested above current ability) then the profit should be returned to the shareholders.
> We have corporations that lose money every single day of their entire existence, but manage to drive their share prices by tax scams, accounting fraud, government subsidies, and share buybacks financed with debt the would not be available to them but for the existence of the scams, frauds, and government subsidies.
Sure there are companies like this.
> at the expense of a tax base they do not participate in so should logically be shut out of.
I mean, you shouldn't pay taxes if you lose money... Shareholders/employees still pay taxes here.
> When a corporation uses that money to buy back shares the money is effectively destroyed by being circulated among a financial class that has (mostly) bribed their way out of the tax system.
Say we have 100 shares of a company. The company makes $100 per year. Each of those shares own $1 per year of the company. If they company pays $50 to buy back 50 shares then each of the remaining shares owns $2 of that $100. I mean, the market still decides what the stocks are worth, but eventually most if not all stocks get valued fairly. How is the money being destroyed?
Again, if the company cannot invest the money profitably to make more money, it should return it to the owners of the company. Are you against private ownership?
> Hence, any money used for share buybacks should logically be treated as net income for the company in question's next filing.
Why?
We've tried race-to-the-bottom. We've tried penalize-till-we-get-hitler. We've tried tickle-down. We've tried fascism-masquerading-as-communism. Let's try globally coordinated minimum tax!
Why is there such pessimism/paranoia about this deal in this thread?
Corporate tax can be controlled by the company itself. If you run your business economically, you pay more corporate tax. This is just wrong.
So what you incentivize is the misallocation of funds from their most beneficial use outside the organization to something in the organization.
Taxes should be taken into account in calculating where the best ROI would be here. Obviously it changes when you would return profit to shareholders.
There's no reason for a company to raise consumer prices in response to a change in the corporate tax rate - if a company can make more profits just by raising prices, they should do so anyway regardless of what the tax rate is.
Further, if all companies in an already low-competition marketplace are equally affected by the tax, then it's quite possible for all of them to ~simultaneously raise prices to offset the tax, with or without explicitly illegal coordination, knowing that the others will follow suit.
Since everything is tied together it's hard to reason through all of this. For companies making investment decisions the interest rate will obviously be one factor, but projected consumer demand will be another, and it's easy to imagine in some cases higher middle-class incomes and consumer demand might be more important than a lower interest rate for decisions around building new factories etc.
Obviously it's complex and I don't have a strongly-held opinion. But taking a historical perspective interest rates are near record lows and financial asset prices are at record highs. On those grounds policies that might nudge us back a little into where the economy has been operating for the past 50 years (regarding interest rates etc) seem less risky than ones that push us further away from our post-WWII historical experience.
So if the principles of software and politics are already so closely aligned, isn't it reasonable to assume that 136 independent governing bodies would be more robust than one?
You see, the way that we made exchange was translated from a moral domain to a material domain, which was finally transposed to a symbolic one. Dollar valuations of a lifetimes is an intrinsically abhorrent concept. A life can never be repaid, thus it can never be valued in real terms - yet it is, billions of times over. Globalism is just a long-range result of this. Exploitation and undervaluing of billions of lives in order to create increasingly competitive products to grow dollar values of a investments in the hands of an increasingly small proportion of the population. This itself founded on false pretense.
Every move towards globalism is increasingly dangerous, this is no exception.
> We made a wrong turn a very long time ago
What, inventing agriculture? Certainly some think that. Otherwise: what are you talking about?
> translated from a moral domain to a material domain, which was finally transposed to a symbolic one.
What? Can you explain what this is supposed to mean?
Could it be a lot of words to describe an interpretation of globalization as a perceived single point of failure across every subsection of civilization/humanity?
> What, inventing agriculture? Certainly some think that.
Are there really people who believe that? I've only read it in Sapiens by YN Harari, and it sounded like a ridiculous idea written to provoke thought, not an actual opinion. "Yes, hunter-gatherers could starve on a bad year, and they sometimes got eaten by tigers, but look at how un-alienated they were!"
The author probably wouldn't have been to write his book or share these thoughts to more than 30 people without the invention of agriculture...
The argument I saw put more emphasis on things like nutritional deficiencies after the switch [1], reflected in average male height going from 5'9" to 5'3". Obviously in the long run agriculture became very efficient, but he makes a reasonable case that in the short run individual quality of life went downhill, with the main advantage being reaching higher population densities before being at the limit of the food supply, and so winning any conflicts with hunter-gatherer societies.
The breakdown is basically:
* A statement of the premise: "Globalism is bad" without defining 'globalism'.
* Some vague ominous sentences that sound like they reinforce the premise but don't.
* A long paragraph that basically makes the statement "Human lives can't be assigned a dollar value" with no real attempt to tie it to the premise.
* Restatement of the premise.
I don’t really agree in the slightest unless you’re making the claim that all political systems above the family level are inherently fragile in which case it’s a moot point. The previous international standard was war when there were major disagreements. Globalism has helped make the entire planet relatively(relative is doing a lot of heavy lifting here but still counts) peaceful compared to the past
What's the previous % been so far in major western counries, anyone got a link?
China: 15%/25%
Japan: 29.74%
Germany: 29.65%
UK: 19%
France: 26.5%
India: 15%/22%
Italy: 27.9%
Countries with two values listed have different rates for different types of companies e.g. China has a lower rate for “high-tech” companies
https://en.wikipedia.org/wiki/List_of_countries_by_tax_rates
https://en.m.wikipedia.org/wiki/Corporation_tax_in_the_Repub...
"Ireland's "headline" corporation tax rate is 12.5%, however, foreign multinationals pay an aggregate § Effective tax rate (ETR) of 2.2–4.5% on global profits "shifted" to Ireland, via Ireland's global network of bilateral tax treaties."
https://www.oecd.org/tax/beps/statement-on-a-two-pillar-solu...
I agree they probably won't leave. Ireland is cheap for labour as well. (It has/had one of Google's lowest salary levels, for instance.)
However, it will make new companies question moving there. I was in Ireland when Brexit was becoming a reality. My guess was that Fintechs would flee London into Dublin, but it looked like many went to Amsterdam. English is fairly widespread in continental Europe now.
Even Switzerland (which already has four national/federation languages, depending on region) is slowly moving towards English as second language.
But on another level, this is very bad because national tax policy is now being set by unelected diplomats instead of congress. It's an ominous admission that western democracy is now unable to operate as it's meant to and set policy in a way that reflects the desires and interests of the citizens.
I know that worrying about national sovereignty is usually a right wing thing, but there is some truth to it- when the economy is international the bodies with the most power are the international economic agencies and banks. For example it's well known that Greek government policy after the financial crisis was dictated to them by the European Central Bank and the IMF. Likewise the World Bank and the IMF set policy for a large swath of the global south. And none of those people are elected.
That comes off as a little hyperbolic to me. Those governments are supposedly already taking choices they feel reflect the desires and interests of their citizens which means entering into this tax agreement is such a reflection.
There’s no world government enforcing that states remain a member of this agreement so they can always leave them later if their citizens feel that way as well.
It’s not like this was done entirely out of altruism from states looking out for their fellow man. Nation states are pretty nakedly self interested hence the phrase “nations have no friends only interests”. They all must feel they are getting something from the deal
Each nation will have to ratify the agreement.
It is nominally true that congress sets tax policy, though that overlooks the golden horde of lobbyists that descend upon Congress with ready-made bills. It is also true that a representative or senator ought to make decisions based on the best interests of their constituents, rather than donors and their lobbyist pals (who might land them a lucrative gig after office).
is that an apology for considering a right wing idea seriously?
Step 2) common monetary system
Step 3) global harmonization of tax structure
Step 3) one global government (similar to EU)
Is that a good thing or a bad thing ?
Yes.
What are the upsides of homogenization? Efficiency and predictability when all goes well.
What are the downsides of homogenization? Lack of innovation and fragility when everything stops going all that well.