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Comment by temphn | Hacker News Reader

According to many people in favor of higher taxes, quantitative easing has no ill effects. Why don't they just ease $5B into existence?

And why don't people concerned with "unfair" taxes call for Gaga's rate to be lowered rather than Zuck's to be raised?

Miller doesn't seem to understand that the superwealthy also tend to be highly intelligent and resourceful. They are not stationary targets. A tax like this would push growing startups to grow outside the US a few years before IPO. A multinational can change its base of incorporation, and many people can and will change their citizenship over a million bucks, let alone a billion. This kind of foolish proposal would just drive more US businesses overseas.

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Tomfoolery.

>According to many people in favor of higher taxes, quantitative easing has no ill effects. Why don't they just ease $5B into existence?

It increases inflation. Right now, it's better to have more people employed/have the economy growing than it is to have inflation below 2%.

QE isn't exactly a progressive tool of choice, and I'm only minimally informed, but iirc that's the broad keynesian view as to why in theory it's at least better than doing nothing at all.

>And why don't people concerned with "unfair" taxes call for Gaga's rate to be lowered rather than Zuck's to be raised?

Because I'm not worried about Gaga's overall income. In fact, she probably ought to be taxed at a higher rate, because people like her comprise of almost zero per cent of the population. Cry me a river, in other words; it's not at her income range we're concerned with inequality.

>A tax like this would push growing startups to grow outside the US a few years before IPO.

Serious question time. Is this even reasonable?

If Zuck could have saved a cool billion in taxes, what's stopping him from doing just that?

If I'm say a Canadian citizen and I live in Canada but I own a fuckload of Facebook stock that qualifies as a salary, where do I file income taxes?

>This kind of foolish proposal would just drive more US businesses overseas.

These kind of astronomical windfall events are extremely rare and as I've denoted above, what you describe is already currently possible. So… why don't we already see this?

Other than the fact that you there are many advantages to having lots of engineering staff located in the United States/North America.

> > According to many people in favor of higher taxes, > > quantitative easing has no ill effects. Why don't they > > just ease $5B into existence? > > It increases inflation. Right now, it's better to have > more people employed/have the economy growing than it is > to have inflation below 2%.

There's an orthodox misconception here that is taking some time to be fixed / properly understood by economists.

Quantitative easing is nothing more than an asset swap for banks. It increases the reserves in the banking system, yes, but it does not actually put more money into the hands of people who will spend it in the real economy. Its effect is at best indirect: it pushes the interbank lending rate down, and that can increase the pool of potential borrowers. But the effect is marginal at best.

Note in particular how the "money multiplier" dropped after QE: http://research.stlouisfed.org/fred2/series/MULT?cid=25

Right. I tried to caveat myself, for I forgot the exact reason I wasn't supposed to like it.

Institutionally, we seem adverse to any sort of intervention that does not go through a banking intermediary.

> A multinational can change its base of incorporation, and many people can and will change their citizenship over a million bucks, let alone a billion.

I see this argument, but it is completely non-sensical. Someone who just cashed in to the tune of $5 billion is going to leave the US to avoid paying $2 billion in tax? To where? Europe, with its super low tax rates? The developing world? Every place worth living has higher tax rates than the U.S.

Singapore and Hong Kong would like to talk to your about you theory that every major domicile has higher taxes than the US.

Plus, if you enjoy living in a sea of sandcastles, Dubai has no income tax.

I said every place worth living.

Singapore and Hong Kong collectively are smaller than Los Angeles or New York. Last I checked, the local tax rates in Los Angeles and New York are pretty damn low.

Scale changes everything. It's possible to do things in a nation of only 7 million that isn't possible in a nation of more than 300 million.

Yes! It's so amazing that engineers understand all about scale when it comes to databases but so many completely fail to appreciate issues of scale when it comes to political systems.

Both Singapore and Hong Kong are embedded in the most populous region on earth: the far east. Hong Kong is indeed part of the most populous nation. The concept that they're some kind of run down backwaters next to "real" big cities like LA, NY et al is just silly -- they're major global centres in their own right and have far lower taxes than pretty every other such centre that I can think of.

Do you have any data to support the claim that they are highly intelligent?

I believe that he's referring to all the schemes they currently use for evading taxes and (at least for the likes of Zuck and Buffet) the way they got their money to begin with. Regardless of whether they or merely their accountants are intelligent, they won't take a massive tax hike lying down.

A multinational can change its base of incorporation, and many people can and will change their citizenship over a million bucks, let alone a billion. This kind of foolish proposal would just drive more US businesses overseas.

I do international tax for a living. I laughed so hard at this line I started crying.

Businesses will do business in any nation where they can make money, taxes be damned. Moreover, taxes are the price of doing business in a country -- if they don't want to pay taxes in a country they won't get to do business there either. Multinationals will focus on miniziming taxes where feasible, but taxes usually aren't the biggest costs on their books.

The U.S. corporate tax rate is the "highest" in the world, but it only taxes profits (most other countries base corporate income taxes on revenue), which results in effective income taxation rates in the low single digits for all but a tiny handful of companies.

Businesses will do business in any nation where they can make money, taxes be damned. Moreover, taxes are the price of doing business in a country -- if they don't want to pay taxes in a country they won't get to do business there either. Multinationals will focus on miniziming taxes where feasible, but taxes usually aren't the biggest costs on their books.

Thank you for your comment. So many people seem trapped in the media doublethink loop that they forget corporations will form anywhere you can make money from forming a corporation. Taxation is rarely a hurdle to starting a successful company and if you are relying on a very thin margin (say, about the size of the effective tax rate) you probably won't be successful in five years.

Well, if you are an international tax lawyer, obviously moves like the Double Irish show that the base of incorporation matters quite a bit:

  http://en.wikipedia.org/wiki/Double_Irish_arrangement

  The Double Irish arrangement is a tax avoidance strategy 
  that U.S. based multinational corporations use to lower 
  their corporate tax liability. The idea is to use payments 
  between related entities in a corporate structure to shift 
  income from a higher-tax country to a lower-tax country. 
  It relies on the fact that Irish tax law does not include 
  U.S. transfer pricing rules.[1]

Obviously there are many more things one can do to avoid (not evade) US taxes through various international arbitrage opportunities and offshore tax havens.

And I don't see why any company wouldn't do that. Why would you want more of your money wasted in Iraq and Afghanistan?

For starters, there are restrictions on the use of the Double Irish structure that generally limit the benefits to IP-based companies (i.e., technology, media, etc.), which is why most of the companies structured this way are technology companies.

Manufacturing companies would derive little if any benefit from the Double Irish structure, though this depends on the circumstances of their businesses.

Also, in regards to Iraq and Afghanistan, Ireland does not maintain treaties with either nation, so there is no special low rate that would shield such income.

(Sorry for the late reply; I don't read HN every day.)

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