136 Countries agree to minimum corporate tax rate
lite.cnn.com
lite.cnn.com
So, it's not going to happen then?
That’s very “on brand” for the US. All we need is a change in party running the White House to torpedo our own ideas. See also: TPP.
TPP was opposed by both major-party candidates by the time of the general election; Hillary Clinton flip-flopped her position on it to pander to Bernie-inclined voters (or charitably, in order to better represent her constituents' views).
Regardless, our withdrawal from it had nothing to do with "a change in party running the White House", and we would've likely withdrawn regardless of who won the election. It was just a consequence of the populist wave that swept America across the political spectrum (and is sweeping much of the world).
You can’t claim blackmail because a club charges you a cover to enter the door
That said, to your point, by definition a nation or group of nations can never commit extortion. They can treat other countries miserably and completely refuse to trade, if they want, and go to war if they choose to. Individuals have more restrictions on their interactions with others.
I noticed this sort of illogical argument that preventing access to a market was aggression with the GDPR drama as well. Americans(I say as one) seem to be completely incapable of handling when other countries use access to their markets in negotiations despite the US using that lever constantly.
That’s a position you can(and many countries have) take, but it’s an oxymoron to recognize a countries sovereignty and also expect a claim to their sovereign lands
If you mean we should expect everyone to forgo holding opinions that benefit them selfishly: perhaps, but any success wouldn’t last past the next perceived opportunity or threat.
I guess my point is that we don’t have to mangle the language and redefine words just because they have a double standard. They can call it blackmail and extortion all they want but it’s not something we should go along with
"just"?
These are 136 countries finding in agreement, not one country imposing its willpower on the rest of the world using threats of force.
This is likely one of the best agreements in decades. Will increase tax collection by decreasing incentive to avoid taxes. Little burrocracy, huge increase.
Previous mesh of transfer prices and other meassures added huge amount of burrocracy on a lot of companies, yet still did not make much difference for the biggest avoiders.
I always felt like we were being ruled by donkeys...
Some economists say that corporate taxes distort capital allocation.[0] A minimum global tax rate removes the ability for a country to decide for themselves whether they want this or not. Estonia, for example, is worried that their tax system has to change as a result, because they don't charge a corporate tax on money that's reinvested or retained.
Edit: apparently Estonia is banking on an exemption for reinvestment.
[0] https://ec.europa.eu/economy_finance/publications/economic_p...
It's not a high rate; 15% is low - is there a lower income tax rate for any entity?
It's important because societies need money to operate, including many things on which businesses depend such infrastructure; a good legal system; a healthy, educated, and prosperous population; security; stable, well-regulated markets; etc. If they don't pay their share, then others must or societies lose valuable things.
Ultimately, corporations are groups of people. Why isn't it sufficient to tax the money when the owners of the corporation are trying to cash out through dividends or in some other way? Why does it have to be taxed every year like income? Why is it necessary to tax money that the corporation would otherwise invest in R&D?
Yes, that is why the legal structure exists: They've always been 'fictional persons'. That's what a corporation is: A separate entity where money can be pooled and personal liability (and taxes) limited, with it its own rights and privileges. It's fundamental to a corporation.
> Ultimately, corporations are groups of people. Why isn't it sufficient to tax the money when the owners of the corporation are trying to cash out through dividends or in some other way? Why does it have to be taxed every year like income? Why is it necessary to tax money that the corporation would otherwise invest in R&D?
That's called a partnership, and you are free to setup your business in that way. I'd talk to a lawyer first; there might be a reason that every major business is setup as a corporation - there must be something they like about it.
Why must I personally pay taxes on money I'd use to invest in other things? All money in the economy is productive, yet we must tax something. Why does the corporation get off free while, requiring me to pay more?
It's not evil. Taxes are not evil at all. I want a functioning government, including the services it provides.
There's a trendy concept that all taxes are evil, but rationally that doesn't hold any water at all.
> definitely not all money is productive and it can be easily wasted on worthless products and services. Taxing the tools to create value is not the same as taxing for example vodka.
This undermines the free market, and basic freedom. I judge for myself, knowing my situation, the best place to spend my money. Sometimes vodka has the highest ROI, and don't forget that the money goes to the store which then spends it again. Macroeconomically, even if I gave the liquor store owner money for nothing, I haven't burnt the money. It's in new hands ready to be spent again (and the rate of transactions has a major impact on the economy).
But yes, we still can make some judgments about what to tax, and investment in fact often gets a tax break.
"This undermines the free market (...)" - yes taxes obviously affect the free market. They are often meant to skew (regulate) it, like tax that targets unhealthy products eg cigarrets.
Also, the way we spend money is not neutral to the economy. By buying one product over another we send an important signal about what is valuable. If we, as a sociaty choose junk, we will get more junk, if we choose good products, we will get even better products in the future.
I recommend you read about "the broken window fallacy", since it is related.
Always have been, legally. That’s the defining feature of the corporate form, as opposed to classic partnerships.
> Why isn’t it sufficient to tax the money when the owners of the corporation are trying to cash out through dividends or in some other way? Why does it have to be taxed every year like income?
Its the insurance premium for the liability shield that comes with the corporate form.
Corporations are treated the same as people in some legal contexts.
This is more practical than having two parallel sets of laws to keep in sync. It does not mean corporations are people.
Because failing to tax capital formation in situ leads to all sorts of abuses.
Exhibit A: The entire security-based lending industry [0], which allows you to realize the benefit of appreciated stock price while retaining stock ownership and without triggering a taxable event
[0] https://www.investopedia.com/terms/s/securitiesbased-lending...
That's why these countries offer a 0% tax rate. Because that's the only attraction they can provide.
This is a law that benefit the big rich countries.
Yes, there are plenty of entities that pay no tax. There'd be a great number of clubs for example. Churches, charity and trusts often get some sort of exemption too depending on country and circumstance. The only reason it might seem like all entities pay taxes is because once something is taxable it has to be given sharp, forceful boundaries otherwise it disappears and gets renamed.
I don't actually mind a 15% global minimum, to me that seems like it can only hurt poor countries in theory so if they want to sign up for it that is their problem. But companies are part of the things societies need to operate. A society with no Apple had to wait another decade - maybe more - to see real smartphones. A country without an Amazon has measurably worse logistics & distribution than one that does. It is not at all obvious that companies should be taxed. All they do is work to benefit consumers (within a moral-less, economic understanding of the word benefit).
Excellent point.
> companies are part of the things societies need to operate
Agreed, and so are individuals, and in fact individuals are what society exists for. Companies have no special place or status - they idea that they are somehow superior to rather inferior to real persons, is shocking.
> All they do is work to benefit consumers
The theory is that all they do is work to benefit their shareholders, to maximize profit. Certainly, they do many things that provide no benefit to their customers; as a simple example, Apple could charge much less, benefiting consumers, be just as effective (they don't need trillions of dollars of assets), but that would reduce profits for shareholders. Capitalism, for good or ill, benefits the capital-holders.
If we ignored 2nd order effects yes. In practice, no. This is the only way for other phone companies to realise that their products are bad and that they need to improve. We can observe that when Apple came in to the market and started selling their phone at absurd volumes and profit margins, the other phone OEMs moved like lightening to catch up. The market for mobiles completely reformed in a few years.
If Apple had charged razor thin margins, it would have been much less obvious how much value was being created, and Apple wouldn't have had the cash reserves to reshape the market as fundamentally as it did. Consumers would have been much worse off. Since nearly nobody is forced to buy an iPhone, all that money that Apple has represents at least value created in the past and that value probably wouldn't exist had Apple been forced to go slowly and work with slim profits.
One of the fun observations of economics is while capitalists would like very high rates of profit they can't actually achieve them long term in a relatively free market. Other capitalists will figure out what is valuable, muscle in and bring the rates of profit down to a return consistent with the risk.
If Apple charged less, they's have even more market share, reducing competitor profits even more. Other companies would get the message.
It seems quite reasonable to speculate that the margins they were charging on phones were just too low to attract capable people. Apple smelt blood and took on pretty much an entire industry, and attracted the focus of the likes of Samsung, Google, Microsoft, Huawei. Prior to that it was the focus of, y'know. Nokia. Who turned out to be way out of their depth when serious people got involved.
If they'd gone with a lets just not make money strategy, the market just wouldn't have the sort of energy behind it that it actually attracted. It would have taken a lot longer to figure out what was going on.
There's also the issue of resources. How is it that a corporation can own the oil under my land? Why should that common resource be controlled by some private entity rather than being used for the common good?
There's a balance in all things and attempting to boil this down to "there are two kinds of people" is reductive and unhelpful.
Personal income tax is not a solution for wealth inequality. The problem as stated is not what rich people are selling, it's what they own.
paid to whom?
I ask because I have read that (for example) a U.S. company may pay the U.S. taxes of less than 1% on foreign income, but that's because that income was generated by (example) a German subsidiary which fully paid taxes in Germany, where it was earned.
Point is, taxes internationally are really a mess.
> these narratives sometimes look scandalous when they're actually following tax laws of foreign countries "correctly".
It could be both; nobody said it was illegal. Following the law doesn't make something right - many horrible things are illegal; the law isn't designed as optimal behavior. And in many situations, they write the laws for themselves.
Regardless, clearly they need to pay their share, and their share is more than 1%.
It was less of a problem when steel needed to be bought here, and goods needed to be sold here. Can't very well claim that here is actually there.
But with intangible goods, you can! Who's to say what the fair price of using Google Nigeria using Google's brand is?
Which led to a game of "Where to put the profits, without being too obvious about it?" Which led to a race to the bottom in tax rates to attract business.
Effectively, this base rate is good for major developed countries (who typically didn't need to have the lowest rates), international businesses (who had to play convoluted shell games, without ever knowing the true rules, to stay competitive), and even smaller or developing countries (who now don't have to cut their own throats to attract businesses).
Which is probably why an agreement happened. Nobody liked the old game, but it was a competitive necessity.
> Which is probably why an agreement happened. Nobody liked the old game, but it was a competitive necessity.
Also a good explanation of how regulations benefit businesses. Unregulated markets are highly inefficient, diverting many resources to that kind of BS. Also, most people actually don't like cheating each other, even if it's legal, and want to operate in places where there's not competitive pressure to do it. (Of course, not every regulation is beneficial to everyone.)
Because US persons do as well.
> the USA IRS is always looking over their shoulder and they aren't in the USA making money
No the IRS wants you to pay the difference between local taxes and US taxes, no matter where you live and work.
And, btw, this applies to any US person, not just US citizens. A green card holder or temporary worker in the US inherits a rental property from a relative? Pay taxes on the rental income. Never mind that that property never had anything to do with the US.
> the "money" gets taxed multiple times
Yes, money does get taxed multiple times. I don't see how that matters.
> The vast majority of companies will not be impacted by the proposed increase in the 12.5 per cent corporate tax rate, Taoiseach Micheál Martin had said earlier in relation to this point.
> Speaking in Dublin ahead of a Cabinet meeting, he confirmed the Government’s intention was still to only apply the new 15 per cent rate to companies with turnovers of more than €750 million, in line with OECD proposals on the matter.
https://www.irishtimes.com/news/politics/ireland-s-corporate...
You can try to shut down these shenanigans playing legal whack a mole, but the law moves slower than the corporations. Or you can just set a global floor on taxes and not have to worry about keeping up with the latest corporate nonsense.
Germany and France are overwhelmingly supporting this, because they benefit from damaging competing nations that have lower corporate income tax rates (eg Lithuania, Ireland, Hungary, North Macedonia, Montenegro, Romania, Serbia, Switzerland, Albania, Armenia, Bosnia, Bulgaria, Croatia). Both Germany (30%) and France (26.5%) have higher corporate income tax rates than the US and stand to benefit more by forcing the rest of the world to a higher base and or otherwise preventing any further decline in rates. This helps those two nations re-level Europe to their advantage, and stop any further race to the bottom on rates (where Germany and France can't follow).
For those two nations it's a particularly relevant matter in Europe. They've watched as Ireland has rapidly become one of the richest nations in world history by leveraging a very low corporate income tax rate. Ireland is taking economy, growth, away from them. In the time that Ireland's GDP per capita has massively exploded higher, Germany has seen a GDP per capita decline over 26 years. Read that again. 26 years, an inflation adjusted GDP per capita decline ($31.6k in 1995; inflation adjusted that's $57k today; their present GDP per capita is around $46k). A generation has been nearly lost to economic stagnation in Germany. France is in the same stagnation boat. And how has Ireland's GDP per capita performed in that time? $19k to $84k; an inflation adjusted 150% gain roughly over 26 years. Yeah. Now you understand what's going on - it's about knee-capping countries like Ireland, stopping their incredible climb.
Ultimately this corporate income tax rule is a regressive attack by powerful nations on typically poorer, weaker or otherwise smaller nations. It dilutes a substantial means for them to compete to draw capital.
France and Germany on one side. All those other nations I listed before on the other. It's quite obvious what's going on.
So what stops a big corp from splitting itself into subsidiaries with turnover below that magic number?
Edit:
> There are two pillars to this agreement. Pillar 1 will see a reallocation of a proportion of profits to the jurisdiction of the consumer. Pillar 2 will see the adoption of a new global minimum effective tax rate applying to multinationals with global revenues in excess of €750m
https://www.gov.ie/en/press-release/59812-ireland-joins-oecd...
List of countries: https://www.oecd.org/tax/beps/oecd-g20-inclusive-framework-m...
Says who? Just because the it is characterized as a treaty under international law doesn't mean it won't be implemented as a congressional-executive agreement [0] in US law, just like virtually every other important economic treaty in the last several decades.
Simple majorities in both houses is a lot easier than 2/3 in the Senate.
[0] https://legal-dictionary.thefreedictionary.com/Congressional...
no thank you for being a teeny bit snarky about it, as if everybody obviously should already know this.
oh, and a small correction, it's not the "treaty under international law" aspect that's bothersome, it's the skirting of the treaty provisions of the US Constitution that raises eyebrows.
I was responding to the article text; anyone writing a news article speaking to the prospects for an international agreement coming into force in US law ought to have a basic understanding of how that actually happens in practice in US law.
> it's the skirting of the treaty provisions of the US Constitution that raises eyebrows.
The treaty provision is a permissive mechanism that allows the President, with strong Senate support, to make agreements with foreign nations while bypassing the House of Representatives role in normal legislation.
It is not skirting that to make law within the scope of the legislative power through the normal Constitutional legislative process, just because the content of the legislation was agreed with foreign parties. The treaty power doesn't silently reduce the scope of the legislative power.
Historically (pre-17th Amendment), the treaty power allows government-to-government agreements without the directly elected representatives of the people intervening to screw things up; their interference was feared to complicate diplomacy.
But other than procedural differences, there aren't any practical differences, a treaty ratified by the Senate and a congressional-executive agreement passed by both Houses and the President, and normal legislation (with the President or over his veto), or, I guess, a hypothetical sole-congressional agreement [0] all have exactly the same legal force.
> Is it that we aren't making any binding agreement with sovereign countries like we would when ratifying a treaty, instead we just happen to change our laws in line with the accord, but are free to change them again at anytime?
The Supreme Court has found (and the fact that Congress in Art. I, Sec. 8, is given the power to define what is and isn't an offense against the law of nations suggests that this is correct) that Congress is free to amend ratified treaties for the purpose of domestic law by normal legislation, so that's not a difference (though it is definitely also true of congressional-executive agreements, which are normal legislation.)
[0] where Congress takes a text, say, adopted by an international conference and adopts it over a Presidential veto; active negotiation of such an agreement might have some other legal issues.
I'm not saying that "you're wrong", I'm convinced that it's being done, but imho SCOTUS should overturn this style of treaty.
SCOTUS should overturn the Congress exercising using the legislative process to do things expressly within its legislative powers on...what basis?
OTOH, congressional-executive agreements aren't new, and have been litigated quite a bit. Heck, SCOTUS has even held a particular one to be included in the delegation by Congress of jurisdiction over treaty interpretation cases to the Courts of Appeal over a century ago. B. Altman & Co. v. United States, 224 U.S. 583 (1912).
That depends on the applicable Senate rules (including any special one-time exceptions) at the moment when it is considered. Constitutionally, no, because supermajority cloture isn’t a Constitutional requirement (and, indeed, a key motivation for the Constitution was frustration with the effect of supermajority requirements in the Articles of Confederation making legislation impossible.)
EDIT: To summarize some of the downthread discussion: Assuming no special action, if brought up right now under the existing rules, “yes”.
...and Manchin and Sinema will oppose any changes or exceptions to filibuster rules for it despite (or because of) all that, so it won't happen.
Generally, no, not currently.
(“Fast track” authority for trade agreements includes, IIRC about the procedures associated with it, an exception for a specific subset of such agreements, but applies to agreements under guidelines and priorities set by Congress, which this agreement would not.)
There will be a revenue treshold of 890$ million
This is good news for startups! Cancel that, this is good news for the vast majority of unicorns as well.
It's still early because we have to wait and see what the loophole seekers are gonna find, but in any event, as it stands it looks like a good development for startups and VCs.
Loophole seekers are disgusting and dumb, they engineer solutions that save billions in taxes for multinationals but aren't paid proportionally. A genius in the transfer pricing dept. at one of the big 4 makes like an above average lawyer in NYC or LA.
They are more instrumental to the public company profits than the CEO in many instances.
The 890 million treshold is calculated for the holding, not the subsidiaries
But this list:
https://en.wikipedia.org/wiki/List_of_sovereign_states
contains not 140 but 193 UN member states and 206 listed states.
Which are missing? Just to start, I don't see Algeria, Azerbaijan, Bangladesh, Bhutan, or Bolivia listed; to my knowledge those are ordinary nations like the four enumerated. Either it's not "all OECD" because those four are missing, or that list of four is very much incomplete. Or are they saying that those four support it but have not yet joined?
Either way, the hard part comes when individual countries have to legislate compliance with the treaty that their state departments have agreed to, and the really hard part comes when other countries have to collectively enforce the treaty when a signatory adds a loophole or ignores it...
The four countries mentioned are those that participated in the negotiation but are not signing the final agreement. Unfortunately the article doesn’t explain their objection.
Please provide some evidence, because I think only a narrow group of right-wing economists say that.
Taxes are generally applied where money is transacted, such as income and sales. For economic and legal purposes, corporations are entities just like people. They earn money, save it, pay it, invest it, etc. IME, they try to come up with every argument, sane or bizarre, to avoid contributing their share of taxes.
https://www.npr.org/sections/money/2012/07/18/156928675/epis...
no transcript unfortunately, but the summary seems to be that economists across the political spectrum agrees with it.
edit: listened to the podcast. the relevant section is at around 12:30. the reasoning seems to be that corporate taxes discourages corporations from reinvesting their profits, and if want corporate taxes because corporations are mostly owned by rich people, you should tax them directly.
Optimal for what objective?
Apple definitely benefits from many resources the US and China provide, from roads to police.
Roads are already financed by vehicle registration/fuel taxes. Police are funded partially from property taxes. Besides, most businesses don't crime by themselves. They're mostly caused by humans, which are already taxed.
But that’s besides the point, these were just two examples of the way businesses benefit from the societal infrastructure around them. They should pay a part of that infrastructure.
“general efficiency” is not a thing. A thing is efficient in terms of how much of some good it provides in return for how much of some cost.
You do realize that the debt eventually comes due, right? It's not like debt is a money printer. If you're against people being able to defer capital gains, there are other ways around it in addition to taxing corporations.
Very rich people don't ever want to spend every dollar they make , actually they are very restrained in their expenses ,so by using the margin loans against assets to finance what it is a proportionally modest lifestyle they get to have it their way while they are alive, which is having their number to be higher than everybody else, and being in the Forbes 400.
When the tax comes due at their death , they are not alive to witness their net worth cut in half or whatever it might be.
Society hates that because it wants to force rich people to do what they don't want and to face their own demise.
It has to be said, for all the hatred towards rich oil sheiks, they spend a lot because they know that their status in their country and in the Royal tribe is determined by the size and quality of their toys, their personal branding depends upon having the largest house, the most rare goldtop Ferrari etc.
America could use some of genuine appreciation for toys, because they dilute rich people into irrelevance.
In America people genuflect to a number instead. MarketCap, Unicorn status, Asset under managment, net worth. Once you decided to genuflect to something it might as well be toys.
How is this possibly true? The vote that the US takes should not affect what a company (wherever it is from) is being charged by e.g. France while doing business in France, that'd be up to local laws, right? Passing it in the US should only allow the US to tax international companies there, but they'd not get a say in other country's taxes?
Unless I'm misunderstanding it and it's the international treaty itself that needs to be approved locally (does that even make sense, having been approved already?), and not local laws based on the treaty.
Any cross border treaty provisions, or provisions relying on multi party agreement will be ineffective in the case of the French-US relationship until both sides harmonize. Depending on how the treaty is structured it may be that none of the provisions can enter into force until all provisions are able to. And various other possible complications can change the dynamic too of course.
International corporations routinely avoid tax in one country by having charging large fees to the foreign entity for instance, leaving little local profit to be taxed.
Basically, corporations have one place money comes in and two places it comes out, like so:
sales = expenses + profits
If you tax the sales, then deduct the expenses, that leaves the incidence of the tax on the profits. But importantly, unlike profits, it's usually clear to which country a sale belongs to.
Where this gets complicated is international borders, the solution there is to only deduct domestic expenses. At first that seems protectionist, but apparently changes to the currency exchange rates eventually balance out the effect and it ends up trade neutral.
This idea was actually seriously proposed a few years ago as part of a Republican tax reform initiative, and even economists like Paul Krugman seemed to think it checked out (who has a Nobel on trade, but is normally on the other side of the aisle). In the end it lost momentum after some big companies opposed it.
Even though that's maybe more ideal, just going for an agreement also seems reasonable since it's probably more achievable than in-depth reform (so it's likely solutions like this or nothing at least in the medium term).
Also, you do get to deduct expense when doing value adding business activities. Just incorporate. Likewise corporations can’t deduct (loopholes aside) “leisure activities”
You can get around that by only taxing the value added ($10-$8 etc) which is a VAT tax and a popular way for countries to raise revenue.
The bigger issue is companies transact with consumers, workers, and shareholders. But when you have a tax, what matters is really what transaction you tax and not which side of the transaction pays the tax. For example, payroll and income taxes both reduce wages. If you tax revenue, that's basically taxing the transaction from consumer->company, so that tax (VATs, sales taxes, etc) falls on the consumers.
Tbh some people here do have a decent point. A private individual can't deduct rent and such. One could argue those are neede to keep working.
If you're talking about taxing revenue and not deducting expenses like wages etc, yes that's basically how VATs work and they're very popular and can raise a lot of money. The main difference is that falls on consumers and not just shareholders.
basically it shifts the tax burden from multinationals onto the domestic consumers (and domestic producers for domestic market) and increases the tax on otherwise cheap foreign import like from China. No wonder the initiative didn't make it - while the government and multinationals are always happy to hit the consumers, that one is really too much.
>the solution there is to only deduct domestic expenses
it does nothing. A multinational will always be able to shift franchise fees, IP property leases, etc. so that would become "domestic expenses" where it will reduce the taxes most.
Global approach like the minimum tax rate is an adult step of recognition of reality of the borders being borders only for small players.
The domestic currency is supposed to appreciate in value in proportion to the tax, so for example 1 US dollar buying 20% more Yuan, which cancels out a 20% tax (although I have to admit this is not as intuitive as the other parts, so I'm trusting the economists to do the math there). I'm not sure if the Yuan specifically is a good example, since the Chinese government controls the exchange rate politics might be more important than economics there.
> and domestic producers for domestic market
If you have a pure domestic business, wouldn't you just deduct your domestic expenses and pay tax on what's left over? That's basically what happens now, so I don't see how it would make a difference.
> A multinational will always be able to shift franchise fees, IP property leases, etc. so that would become "domestic expenses" where it will reduce the taxes most.
You could set up a domestic subsidiary, but now that subsidiary will have to pay the tax. If it's not a domestic subsidiary, then you have to pay the tax (since you can't deduct it). I get that in the current system it's very easy to do these things, but can you explain in a little more detail how this would work with the border tax?
These taxes are poor, because they obscure who is really being taxed.
Is it the owners? The employees? The consumers? Most likely the last two groups.
Having said that the corporate tax is the worst way of doing that. Far better just to tax companies for using certain types of employee so they don't use that type of employee that much.
Which then leaves some of those types of employees unemployed by the private sector. At which point the public sector can hire them instead.
All straightforward once you realise tax has nothing to do with money or funding and everything to do with releasing people from the private sector so they can be hired by the public sector.
I doubt the jobs lost will be offset by the public sector and creating public jobs isn't incentivized in a free market. More public jobs just means tax money allocated more poorly any won't guarantee improved public services.
If you doubt that, then the government is overtaxing for the size of government they want.
If tax eliminates private jobs, then it is beholden on government to hire those so released.
If too many are released - reduce taxes.
"More public jobs just means tax money allocated more poorly any won't guarantee improved public services."
As I said tax doesn't pay for anything. The purpose of tax is to release people to be hired by the public sector - in furtherance of the elected mandate of the government.
If the government has been elected then you've already lost the argument about whether public services will be improved with more people or not.
already established your theory in the first comment, no need to waste a comment to repeat the exact same thing. Might be more helpful to use the comment to elaborate instead.
> government is overtaxing for the size of government they want... the purpose of tax is to release people to be hired by the public sector
This is the first time I hear this bizarre theory. If this is the case, there must be countless documents backing this, care to cite?
Will be interesting to see how Alibaba and other Chinese multinationals deal with this.
If they aren’t fully into this, then the whole thing will not work as intended.
I share your skepticism generally, but it seems like this agreement is a good step towards getting corporations to pay taxes. There's no point in starting a shell company in the Caymans if your taxes are paid based on where your products were purchased.
Sounds like this could devolve into record-industry accounting.
"Treasury also takes seriously the protection of the U.S. fisc. Our Greenbook proposals will bring corporate tax revenue as a share of our economy closer to its 21st century average before the 2017 corporate tax cut. Meanwhile, our Pillar 1 comprehensive scope proposal will be largely revenue neutral for the United States since we will be on both the receiving and giving end of the proposed profit reallocations. Indeed, one interesting feature of Pillar 1 estimates is that they demonstrate the extent to which both U.S. and foreign-headquartered corporations have managed to shift profits derived from sales to U.S. customers outside the United States for years, including under the 2017 tax act."
https://mnetax.com/wp-content/uploads/2021/06/Yellen_letter_...
The quote from the Secretary of the Treasury did answer the nature of your concern. She has been on reserve boards for almost 30 years, and is head of the department that is concerned with all financial matters in regards to the federal government. If that's not good enough, I'm not sure what would be satisfactory for you.
Also, businesses actually benefit from and prefer to operate in a well-funded, well-regulated, free society. Those are the societies with freedom, customers, competent and fair legal systems, safety, money, infrastructure, etc. The corporation is part of the society they operate in - they aren't a customer of it, they are the makers of it (just like you and me). They have a stake in making it work well. That will be true wherever they go.
They might observe that most leading businesses were developed in wealthy countries (wealthy localities, even) where those businesses pay taxes - more taxes than now in the US, for the most part. Even in the US - what great industry has come out of a low-tax area? Oil doesn't count.
https://news.ycombinator.com/item?id=28801537
Same domain, different url format.
Now let's create a wealth tax using the same international approach. The treaty could say that each country should have a wealth tax of say 8%, with the first $100m being tax free. For comparison, the average US household has a net worth of $120k and pays $10k in taxes every year.
If a billionaire lives in a country that doesn't join the treaty, then the countries which have joined can refuse to allow that billionaire to travel to or through their territory, or own any assets in their jurisdiction.
Why not?
They might also be suspicious of the motivations of the West.
Incorporation is a government act. It also is irrelevant if it is not recognized by the governments of the places where you try to do business.
Ugh.
After certain rounds of Mergers and Acquisitions to achieve ever bigger economies of scale incentivized by the tax system we end up with a few single players per market, if not only a single one. Such bureaucracies become almost indistinguishable from state owned companies operated under soviet union.
How that ended up you can find in history textbooks.
Biden won’t remember anyway ;)
Which is exactly why preventing capital flight is important. Otherwise, exploitative business practices can take advantage of previously built infrastructure, hide away any profits resulting from use of that infrastructure, and then leave others holding the bill for the maintenance of that infrastructure.
I have plenty of concerns with how my government is run and how their tax revenue is allocated, but tax avoidance is a basic problem of fairness and a problem to be solved.
Specifically, the playing field is being leveled between nations by their colluding against competitive countries to prevent capital from leaving them when their policies become unbearable.
Exactly! If a private organization tried something like this most major governments would be rushing to enforce anti-trust regulations against them. But when it's the governments colluding to set price floors, suddenly that's acceptable?