4 ms·
People here are commenting on Ireland (and other jurisdictions) engaging in tax arbitrage to attract companies and jobs. Competing on tax rates and negotiating
by noir-york 10y ago
People here are commenting on Ireland (and other jurisdictions) engaging in tax arbitrage to attract companies and jobs.
Competing on tax rates and negotiating tax deals were a huge MNC like Apple pays a ridiculous 0.005% is bad: morally wrong, cuts to public services, increases unjustifiable economic inequality and is just not fair on other much smaller firms who have to pay full whack on the tax.
Apple, FBK, etc don't see it like that - they will engage in aggressive tax planning to minimise their tax, hoarding billions of dollars. And its not like they do anything productive with their cash pile; its not like it goes to higher pay checks for their Asian workers. Instead, its spent on share buybacks to prop up sagging share prices and keep Wall St happy.
Here's a better approach: tax companies on their profits and remove or reduce income tax and capital gains tax. This aligns incentives to:
1. encourage and reward founders to start new business
2. the most valuable employees tend to be mobile ones - a core EU principle is free movement so compete for the best employees by lowering taxes and giving them great public services. Companies will follow.
3. tax company profits and everyone is on the same level playing field: provides an incentive for companies to reinvest their profits into growth (and indirectly jobs).
- khuey 10y agoCompanies are already taxed on their profits. The hard question is determining what is a profit and where it is located. And share buybacks are returning capital to the owners of the business, which is why they invested in it in the first place. The owners can then make their own choices about how to allocate capital productively.
- noir-york 10y ago> Companies are already taxed on their profits In theory. We are having this debate because in practice some are taxed at 20% and others practically nil. I'm arguing for no negotiated tax arrangements, indeed I have been giving thought to a progressive tax regime for companies. That would be interesting to evaluate. > And share buybacks are returning capital to the owners of the business Which is why I am not sure buy backs should be taxed. Either a company invests its earnings, or else it returns them to shareholders who can decide to identify growth opportunities, as you suggest.
- makomk 10y agoCompanies like Apple achieved a tax rate of almost zero by exploiting the definition of "profits" to argue that they didn't earn more than a trivial amount of profits in any of the countries they operated in. The definition is the problem here.
- jnordwick 10y agoTaxing corporate profits is taxing capital gains by definition.
- martinald 10y agoYou do realise that taxing company profits is corporation tax, the tax that is being discussed here?
- noir-york 10y agoApologies, writing "tax company profits" may come across as some new tax. Its indeed corporation tax. My point was that we should not only keep it, we should apply it without giving exemptions to any individual companies.
- pjriot 10y agoWithout these arrangements it could be (convincingly) argued that Ireland would be down 5000 jobs. (and iirc an estimated 18000 jobs created indirectly) I think I'd rather see lower unemployment than higher corporation tax take if that was the choice.