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Small city-states can use strategies that don't scale. Being a tax haven essentially leeches businesses from neighboring countries, but if everyone was a tax ha

by JDDunn9 10y ago

Small city-states can use strategies that don't scale. Being a tax haven essentially leeches businesses from neighboring countries, but if everyone was a tax haven, then no-one would be. Economies based on tourism or oil also are not duplicatable.

autokad 10y ago
exactly. i started to type reasons why but then i considered they'd have to be data blind to not see a problem with it, and would argue over semantics and exceptions, etc etc.
wyager 10y ago
> but if everyone was a tax haven, then no-one would be. But there's a good chance that the world would be more productive as a whole. Governments typically trade economic productivity (by increasing friction) for ostensible social benefits (via tax-funded programs). Of course, it's not clear if this tradeoff always works out, because governments may spend sub-optimally or divert funds towards things like war.
- JDDunn9 10y ago
  Your hypothesis seems to be that companies in low-tax countries have a higher growth rate than higher-tax countries in the same industries. If that were true, then companies in those countries would eventually dominate the world's market share. Instead, it's companies in higher tax countries that are the largest. Governments often increase productivity. Try investing in a country with no laws, education, or infrastructure. They can also help make an economy more efficient by maximizing positive externalities and minimizing negative ones. Social benefits can also be beneficial economically as an externality. Companies don't have the incentive to keep someone from starving or to educate them from kindergarten, but having a larger, more educated work force certainly benefits the economy as a whole.
  - wyager 10y ago
    >then companies in those countries would eventually dominate the world's market share. Has "eventually" happened yet? US tax policy has gotten worse in recent years; give it some time. >Instead, it's companies in higher tax countries that are the largest. The biggest companies are in the US, which is a huge country with lots of historical capital. There are hundreds of reasons big companies tend to be here, and you haven't demonstrated that excessive taxes are one of them. Interestingly, many young tech companies like Google have their EU HQs (and sometimes global HQs) in Ireland for tax reasons.
refurb 10y ago
Offering a more friendly business climate is leeching? So if I open a store and sell you a computer for less than the next store over, am I leeching from my neighbors?
- JDDunn9 10y ago
  If those countries were so business friendly, why aren't companies started there? Where is the Silicon Valley of Ireland or Singapore? Those businesses were built and grew because of the quality of infrastructure and supports provided by taxes. A better comparison to your computer analogy would be a company that sells knock-offs and counterfeit products. Trying to just reap the rewards without doing the hard work to get there.

by JDDunn9 10y ago

autokad 10y ago

exactly. i started to type reasons why but then i considered they'd have to be data blind to not see a problem with it, and would argue over semantics and exceptions, etc etc.

wyager 10y ago

> but if everyone was a tax haven, then no-one would be. But there's a good chance that the world would be more productive as a whole. Governments typically trade economic productivity (by increasing friction) for ostensible social benefits (via tax-funded programs). Of course, it's not clear if this tradeoff always works out, because governments may spend sub-optimally or divert funds towards things like war.

JDDunn9 10y ago
Your hypothesis seems to be that companies in low-tax countries have a higher growth rate than higher-tax countries in the same industries. If that were true, then companies in those countries would eventually dominate the world's market share. Instead, it's companies in higher tax countries that are the largest. Governments often increase productivity. Try investing in a country with no laws, education, or infrastructure. They can also help make an economy more efficient by maximizing positive externalities and minimizing negative ones. Social benefits can also be beneficial economically as an externality. Companies don't have the incentive to keep someone from starving or to educate them from kindergarten, but having a larger, more educated work force certainly benefits the economy as a whole.
- wyager 10y ago
  >then companies in those countries would eventually dominate the world's market share. Has "eventually" happened yet? US tax policy has gotten worse in recent years; give it some time. >Instead, it's companies in higher tax countries that are the largest. The biggest companies are in the US, which is a huge country with lots of historical capital. There are hundreds of reasons big companies tend to be here, and you haven't demonstrated that excessive taxes are one of them. Interestingly, many young tech companies like Google have their EU HQs (and sometimes global HQs) in Ireland for tax reasons.

refurb 10y ago

Offering a more friendly business climate is leeching? So if I open a store and sell you a computer for less than the next store over, am I leeching from my neighbors?

JDDunn9 10y ago
If those countries were so business friendly, why aren't companies started there? Where is the Silicon Valley of Ireland or Singapore? Those businesses were built and grew because of the quality of infrastructure and supports provided by taxes. A better comparison to your computer analogy would be a company that sells knock-offs and counterfeit products. Trying to just reap the rewards without doing the hard work to get there.