4 ms·

Indeed, I've heard the reverse argument, that with extremely high corporate taxes, companies find paying their employees more money a better use of their money

Indeed, I've heard the reverse argument, that with extremely high corporate taxes, companies find paying their employees more money a better use of their money than giving it away to the government, since at least they get something out of it, however marginal they think the gains might be.

blahi 10y ago
So where are those high salaries in Denmark?
- listentojohan 10y ago
  The corporate tax rate in Denmark is only around 23% (as far as I remember), a lot lower than the US tax rate.
- Amezarak 10y ago
  Denmark's corporate tax rates don't appear to be that high. Their nominal tax rate is lower than the US tax rate. US corporate tax rates were once 52%, and it was in that context as well as very high income tax rates on top earners (i.e., the business elite) that this argument appeared to have generally been made.
deelowe 10y ago
Extremely high taxes don't work because it forces companies to move operations over seas.
- tomp 10y ago
  That's a political decision. You could simply enact laws that prevent or dis-incentivise that. But unfortunately, most politicians aren't paid to do that...
  - deelowe 10y ago
    Yeah. Simply make it difficult to do business in the US. That'll work!
- candiodari 10y ago
  What I don't get about the US is that when a US employee works overseas, the government taxes them -under US rules- anyway. Even if they don't work in the US at all. The same arrangement, as I understand it, goes for people who work part of the year in the US. You work 1 day in the US under a US work visa, you pay US taxes. On everything. Why not do the same for companies ? If you want to do business in the US, you pay US taxes. Not on what you sell in the US, but everything, all your earnings worldwide. You get to deduct local taxes as a cost, but other than that, there is no accomodation. If the rule is good enough for people, it is good enough for business. And if your criticism is that businesses will go overseas, that's the exact same argument for people. People drop their US citizenship just to avoid US taxes for crying out loud.
  - seanmcdirmid 10y ago
    If you are a non-resident you don't get taxed on worldwide income. If you are a foreign company with US income you don't get taxed in worldwide income. And why should SAP pay less taxes than IBM...could IBM compete with SAP if they weren't held to the same standards? You do have to report worldwide income to figure out your rate. Also, many countries have different tax systems, so does a fee count as tax paid or as a deduction to operating income? If a country organizes its burden purely as fees, then are you getting screwed on income? For countries with tax rates less than the US, an expat can still get screwed by higher fees and cost of living to go with that. So much so that the usa introduced an overseas housing deduction just for people who work in Singapore, Hong Kong, Switzerland. Complicated, because most tax systems are not very comparable.
    - coredog64 10y ago
      Not entirely true (expat from 2011 to 2013, please seek qualified tax professional advice). The US grants an exemption of something like $60K/year for income earned entirely outside the US. It has to be paid by a non US entity in local currency. And, IIRC, there were a few other requirements. They will also credit you with any income tax you may have paid in your country of residence. You are correct that you're pretty well screwed in a high cost-of-living country as the base exemption won't go far. But then, you're pretty well screwed by the IRS sticking its nose into the bank accounts of US citizens looking for transactions of $10,001.

blahi 10y ago

So where are those high salaries in Denmark?

listentojohan 10y ago
The corporate tax rate in Denmark is only around 23% (as far as I remember), a lot lower than the US tax rate.
Amezarak 10y ago
Denmark's corporate tax rates don't appear to be that high. Their nominal tax rate is lower than the US tax rate. US corporate tax rates were once 52%, and it was in that context as well as very high income tax rates on top earners (i.e., the business elite) that this argument appeared to have generally been made.

deelowe 10y ago

Extremely high taxes don't work because it forces companies to move operations over seas.

tomp 10y ago
That's a political decision. You could simply enact laws that prevent or dis-incentivise that. But unfortunately, most politicians aren't paid to do that...
- deelowe 10y ago
  Yeah. Simply make it difficult to do business in the US. That'll work!
candiodari 10y ago
What I don't get about the US is that when a US employee works overseas, the government taxes them -under US rules- anyway. Even if they don't work in the US at all. The same arrangement, as I understand it, goes for people who work part of the year in the US. You work 1 day in the US under a US work visa, you pay US taxes. On everything. Why not do the same for companies ? If you want to do business in the US, you pay US taxes. Not on what you sell in the US, but everything, all your earnings worldwide. You get to deduct local taxes as a cost, but other than that, there is no accomodation. If the rule is good enough for people, it is good enough for business. And if your criticism is that businesses will go overseas, that's the exact same argument for people. People drop their US citizenship just to avoid US taxes for crying out loud.
- seanmcdirmid 10y ago
  If you are a non-resident you don't get taxed on worldwide income. If you are a foreign company with US income you don't get taxed in worldwide income. And why should SAP pay less taxes than IBM...could IBM compete with SAP if they weren't held to the same standards? You do have to report worldwide income to figure out your rate. Also, many countries have different tax systems, so does a fee count as tax paid or as a deduction to operating income? If a country organizes its burden purely as fees, then are you getting screwed on income? For countries with tax rates less than the US, an expat can still get screwed by higher fees and cost of living to go with that. So much so that the usa introduced an overseas housing deduction just for people who work in Singapore, Hong Kong, Switzerland. Complicated, because most tax systems are not very comparable.
  - coredog64 10y ago
    Not entirely true (expat from 2011 to 2013, please seek qualified tax professional advice). The US grants an exemption of something like $60K/year for income earned entirely outside the US. It has to be paid by a non US entity in local currency. And, IIRC, there were a few other requirements. They will also credit you with any income tax you may have paid in your country of residence. You are correct that you're pretty well screwed in a high cost-of-living country as the base exemption won't go far. But then, you're pretty well screwed by the IRS sticking its nose into the bank accounts of US citizens looking for transactions of $10,001.