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But this race to the bottom for tax rates is clearly bad. Luxembourg could next make their rate 1%. Then Eire could come back with 0.5%. There's no good that co

But this race to the bottom for tax rates is clearly bad. Luxembourg could next make their rate 1%. Then Eire could come back with 0.5%. There's no good that comes of this - even the countries with the low rates are hurting their ability to raise enough money from tax. It only works in the short term when you have companies that cheat and book revenue from outside into that country. It's wrong and I would strongly support both (1) trying to stop the low rates, and (2) book money in other countries than you earn it. It's all just a bs tax dodge.

SamReidHughes 9y ago
The EU governments could just stop taxing corporate income entirely, and only tax personal income, sales, and property. There's no reason in principle why corporations must be income taxed.
- nitwit005 9y ago
  And then everyone stops being an employee to become a tax free one person contracting company, with car, home office, and anything else they can think of, considered business expenses.
  - gsnedders 9y ago
    If they get personal benefit from the car, that's taxable income. If they get personal benefit from the home, that's taxable income.
    - nitwit005 9y ago
      Sure, but unless you have tax inspectors following the entire population around and security cameras in their home, you're never going to be able to enforce that, as demonstrated by people already doing this sort of scheme. It's easier to just disincentivize it in the first place.
- qubex 9y ago
  This is clearly a reductio ad absurdum, but mainline (indebted, null- or negative pro-capita economic growth) European countries will never slash the corporate tax rate down much further because they cannot afford it. Neoliberal rhetoric aside (keep in mind I'm a pretty orthodox and conservative macro-economist of the monetarist bent) trickle-down economics is clearly inaccurate and the fiscal multiplier is apparently greater than one. There's plenty of distortion in the tax systems of these states already (speaking of my native Italy, far too much bias on taxing income of firms and physical people as opposed to taxing consumption, because the latter is difficult to track because of the sizeable shadow economy, whereas the formers are supposedly easier to asses and monetise), the last thing they want is to suddenly end up relying on untested revenue streams. It's just too radical. Indeed there's a way of seeing this in terms of member states acting as a kind of fiscal cartel, and a couple of the states acting as the perennial defectors of Prisoner's Dilemma fame (cue Luxembourg and a couple others that shall go similarly unnamed). Really, the presence of these fiscal regimes within the EU community is a disgrace. On the other hand, keep in mind that Luxembourg is actually acting in an institutionally legitimate manner, presenting a case to the relevant EU authority instead of strutting its stuff unilaterally. They are going out there and testing the case, and there's a high probability that they will lose and set a strong precedent in their disfavour.
qubex 9y ago
Fun fact: Luxembourg's biggest physical export is dentures. Yup.

SamReidHughes 9y ago

The EU governments could just stop taxing corporate income entirely, and only tax personal income, sales, and property. There's no reason in principle why corporations must be income taxed.

nitwit005 9y ago
And then everyone stops being an employee to become a tax free one person contracting company, with car, home office, and anything else they can think of, considered business expenses.
- gsnedders 9y ago
  If they get personal benefit from the car, that's taxable income. If they get personal benefit from the home, that's taxable income.
  - nitwit005 9y ago
    Sure, but unless you have tax inspectors following the entire population around and security cameras in their home, you're never going to be able to enforce that, as demonstrated by people already doing this sort of scheme. It's easier to just disincentivize it in the first place.
qubex 9y ago
This is clearly a reductio ad absurdum, but mainline (indebted, null- or negative pro-capita economic growth) European countries will never slash the corporate tax rate down much further because they cannot afford it. Neoliberal rhetoric aside (keep in mind I'm a pretty orthodox and conservative macro-economist of the monetarist bent) trickle-down economics is clearly inaccurate and the fiscal multiplier is apparently greater than one. There's plenty of distortion in the tax systems of these states already (speaking of my native Italy, far too much bias on taxing income of firms and physical people as opposed to taxing consumption, because the latter is difficult to track because of the sizeable shadow economy, whereas the formers are supposedly easier to asses and monetise), the last thing they want is to suddenly end up relying on untested revenue streams. It's just too radical. Indeed there's a way of seeing this in terms of member states acting as a kind of fiscal cartel, and a couple of the states acting as the perennial defectors of Prisoner's Dilemma fame (cue Luxembourg and a couple others that shall go similarly unnamed). Really, the presence of these fiscal regimes within the EU community is a disgrace. On the other hand, keep in mind that Luxembourg is actually acting in an institutionally legitimate manner, presenting a case to the relevant EU authority instead of strutting its stuff unilaterally. They are going out there and testing the case, and there's a high probability that they will lose and set a strong precedent in their disfavour.

qubex 9y ago

Fun fact: Luxembourg's biggest physical export is dentures. Yup.