5 ms·

I cannot understand the indignation, the system is working exactly as designed- board members have responsibilities to the shareholders to maximise profits, it

by drcross 10y ago

I cannot understand the indignation, the system is working exactly as designed- board members have responsibilities to the shareholders to maximise profits, it would be imprudent if they didn't move to reduce tax burden. The miles of column inches written on this topic is being tediuos. Solutions are simple, anyone telling you otherwise are the same people who hold economists in high regard- 1. Reduce your local tax to compete with the lowest one. Or- 2. Stop the company from trading in your country. Or- 3. Tax profits derived from local business if they are earning them in your country.

lossolo 10y ago
No, it's not that simple. 1. What if you can't ? You have your budget that can't go lower. 2. And what if it employs 100 000 people in your country? Good luck with that. 3. You know what costs are ? Because they can have 0 earning in your country when mother company will take all for licensing.
- tvanantwerp 10y ago
  I don't know of anyone choosing #2, but #1 and #3 are extremely common. The US surprisingly has one of the highest corporate tax rates in the OECD and is one of very very few countries with a worldwide rather than territorial tax system. Those two points taken together are why US tech firms transfer their IP to Ireland in the first place. It's also why so many US companies (at least pre-Brexit) would merge with European countries and establish new headquarters in London rather than the US. The American corporate tax system strongly incentivizes US companies to move.
  - gooserock 10y ago
    But this whole game is inherently one where some governments will lose. If countries are free to set their own corporate tax rates, you'll get some with high rates and some with lower, and corporations - which can relocate in a way that a state cannot - will just gravitate from the high end to the low end, screwing over those at the high end. That is the problem: we live in a world where business can be global, but our states are regional. It's asymmetric warfare: because of the structure of the game, the corporations always have the upper hand.
    - refurb 10y ago
      will just gravitate from the high end to the low end, screwing over those at the high end Gov'ts are providing a service. Competition is a good thing. If one company was charging $1K for a computer and another charging $500k for the exact same thing, would you say consumers are screwing over the first company when they buy from the 2nd company?
      - kuschku 10y ago
        So you propose we have no social services, schools, etc?
        refurb 10y ago
        Where did you get that from? Am I suggesting companies don't produce any computers any more? I'm suggesting having gov'ts compete on spending efficiency is a good thing. If I get the same level of services from country A and B and country A's tax rate is 25% lower, then guess where I'm going?
        kuschku 10y ago
        Companies do not care about long-term spending, that’s the thing. Education only makes an effect 30+years out. Most companies care about the next quartal, if you’re lucky.
        refurb 10y ago
        Really? Total private R&D budgets are greater than $100B per year. I'd say that's long term focus.
        kuschku 10y ago
        Lol. That's nothing. Alone the German government spends more than that on publicly funded research, and there's about 200 countries more on the planet. If companies would be so long-term focused, have you ever seen one lobby for higher corporate taxes in exchange for free public colleges and schools of highest quality, to ensure they get the best possibly educated workers? No? Exactly. Have you seen companies spend their money with plans of how the world will look like in 50 or 100 years? The most ambitious projects are from Musk, who is doing them with lots of subsidies because even he couldn't fund them otherwise, and they're about 5 years out in the future. Have you seen a private company spend hundreds of billions every year into fusion research, because it might have results in decades? Have you seen private companies focus on building transit networks and cities of the next century, slowly, part by part? No. The most ambitious private project ever planned was Walt Disneys epcot, but it was never built, and the name just reused for a themepark attraction. Private companies have more available funds combined than most governments, yet still soend orders of magnitudes less on education for the next generation, on optimizing cities for the future. You see companies actively destroy cities so they can get a little cheaper results for themselves this quarter. Saying "private companies will be willing to pay twice the tax if they get more profit in 100 years" is just wrong, because no private company has ever planned like that, and will ever plan like that. Except for the German Mittelstand and a handful of Japanese medium businesses, most comoanies haven't even existed for a century or longer.
ryanhuff 10y ago
Wouldn't #1 result in a race to the bottom? Why wouldn't a foreign country use tax policy to lower their corp rates towards zero in order to attract foreign tax revenue? After all, some tax is better than no tax.
- revelation 10y ago
  Well, they do that, the trick is doing it in a foreign country that has access to a market that matters. Sure you get zero tax on some island state but what good is that if you then pay prohibitive taxes to buy/sell something to the EU because it becomes foreign trade, for example. So they use Ireland, where they can get a special deal: http://www.wsj.com/articles/eu-may-decide-on-apple-tax-probe-in-july-1466087469 http://www.wsj.com/articles/eu-may-decide-on-apple-tax-probe...
- refurb 10y ago
  You'd end up with a country like Singapore, where the taxes are lower, but more wisely spent.
  - karma_vaccum123 10y ago
    Singapore would be overrun by poorer neighbors in a week if not for the blue-water navies that other nations "waste" their money on
    - refurb 10y ago
      Most EU countries spend at most a few percent on defense, yet they have high taxes!
  - kuschku 10y ago
    In Singapore it only works because of so little expenses. If Germany would, tomorrow, decide to not provide any services outside of the cities, we could save a lot more taxes, too – and reduce them even further. But there’s some running costs countries have, which you can’t go below. If you want public schools and universities for free that can rival US private elite unis, if you want first-class public transit everywhere, if you want a social net, you end up with high taxes around 25% corporate and 30% private. There’s not much of a way around that, except for going deeper and deeper into debt. Yet if you want a country with a minor tax surplus, and good services, you need high tax rates.

by drcross 10y ago

lossolo 10y ago

No, it's not that simple. 1. What if you can't ? You have your budget that can't go lower. 2. And what if it employs 100 000 people in your country? Good luck with that. 3. You know what costs are ? Because they can have 0 earning in your country when mother company will take all for licensing.

tvanantwerp 10y ago
I don't know of anyone choosing #2, but #1 and #3 are extremely common. The US surprisingly has one of the highest corporate tax rates in the OECD and is one of very very few countries with a worldwide rather than territorial tax system. Those two points taken together are why US tech firms transfer their IP to Ireland in the first place. It's also why so many US companies (at least pre-Brexit) would merge with European countries and establish new headquarters in London rather than the US. The American corporate tax system strongly incentivizes US companies to move.
- gooserock 10y ago
  But this whole game is inherently one where some governments will lose. If countries are free to set their own corporate tax rates, you'll get some with high rates and some with lower, and corporations - which can relocate in a way that a state cannot - will just gravitate from the high end to the low end, screwing over those at the high end. That is the problem: we live in a world where business can be global, but our states are regional. It's asymmetric warfare: because of the structure of the game, the corporations always have the upper hand.
  - refurb 10y ago
    will just gravitate from the high end to the low end, screwing over those at the high end Gov'ts are providing a service. Competition is a good thing. If one company was charging $1K for a computer and another charging $500k for the exact same thing, would you say consumers are screwing over the first company when they buy from the 2nd company?
    - kuschku 10y ago
      So you propose we have no social services, schools, etc?
      - refurb 10y ago
        Where did you get that from? Am I suggesting companies don't produce any computers any more? I'm suggesting having gov'ts compete on spending efficiency is a good thing. If I get the same level of services from country A and B and country A's tax rate is 25% lower, then guess where I'm going?
        kuschku 10y ago
        Companies do not care about long-term spending, that’s the thing. Education only makes an effect 30+years out. Most companies care about the next quartal, if you’re lucky.
        refurb 10y ago
        Really? Total private R&D budgets are greater than $100B per year. I'd say that's long term focus.
        kuschku 10y ago
        Lol. That's nothing. Alone the German government spends more than that on publicly funded research, and there's about 200 countries more on the planet. If companies would be so long-term focused, have you ever seen one lobby for higher corporate taxes in exchange for free public colleges and schools of highest quality, to ensure they get the best possibly educated workers? No? Exactly. Have you seen companies spend their money with plans of how the world will look like in 50 or 100 years? The most ambitious projects are from Musk, who is doing them with lots of subsidies because even he couldn't fund them otherwise, and they're about 5 years out in the future. Have you seen a private company spend hundreds of billions every year into fusion research, because it might have results in decades? Have you seen private companies focus on building transit networks and cities of the next century, slowly, part by part? No. The most ambitious private project ever planned was Walt Disneys epcot, but it was never built, and the name just reused for a themepark attraction. Private companies have more available funds combined than most governments, yet still soend orders of magnitudes less on education for the next generation, on optimizing cities for the future. You see companies actively destroy cities so they can get a little cheaper results for themselves this quarter. Saying "private companies will be willing to pay twice the tax if they get more profit in 100 years" is just wrong, because no private company has ever planned like that, and will ever plan like that. Except for the German Mittelstand and a handful of Japanese medium businesses, most comoanies haven't even existed for a century or longer.

ryanhuff 10y ago

Wouldn't #1 result in a race to the bottom? Why wouldn't a foreign country use tax policy to lower their corp rates towards zero in order to attract foreign tax revenue? After all, some tax is better than no tax.

revelation 10y ago
Well, they do that, the trick is doing it in a foreign country that has access to a market that matters. Sure you get zero tax on some island state but what good is that if you then pay prohibitive taxes to buy/sell something to the EU because it becomes foreign trade, for example. So they use Ireland, where they can get a special deal: http://www.wsj.com/articles/eu-may-decide-on-apple-tax-probe-in-july-1466087469 http://www.wsj.com/articles/eu-may-decide-on-apple-tax-probe...
refurb 10y ago
You'd end up with a country like Singapore, where the taxes are lower, but more wisely spent.
- karma_vaccum123 10y ago
  Singapore would be overrun by poorer neighbors in a week if not for the blue-water navies that other nations "waste" their money on
  - refurb 10y ago
    Most EU countries spend at most a few percent on defense, yet they have high taxes!
- kuschku 10y ago
  In Singapore it only works because of so little expenses. If Germany would, tomorrow, decide to not provide any services outside of the cities, we could save a lot more taxes, too – and reduce them even further. But there’s some running costs countries have, which you can’t go below. If you want public schools and universities for free that can rival US private elite unis, if you want first-class public transit everywhere, if you want a social net, you end up with high taxes around 25% corporate and 30% private. There’s not much of a way around that, except for going deeper and deeper into debt. Yet if you want a country with a minor tax surplus, and good services, you need high tax rates.