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> they might start drinking overseas where the atmosphere is somewhat friendlier. That's the limiting factor indeed. However, even if taxation is much lower in

by fab13n 16y ago

> they might start drinking overseas where the atmosphere is somewhat friendlier. That's the limiting factor indeed. However, even if taxation is much lower in Bolivia or Burma or Afghanistan, I doubt they'd be happier there even with 0% taxation. Happiness and disposable income are positively correlated, but not proportional, especially for higher incomes. Moreover, many fortunes built in America are dependent on USA. Intel or Microsoft couldn't have been built in Albania. This co-dependence between the country and its businesses allows the former to command financial support from the later. This is where the bar metaphor falls into pieces: the drinkers spend money together, but don't make this money co-dependently. If they were, the rich guy wouldn't leave because it would remove his source of income. Intel couldn't relocate to Zimbabwe, hire local engineers and keep making money. It could maybe entertain the fiction that its money is made in Caiman Island or some other fiscal paradise, but that would be a gross lie; for US state representatives to tolerate such an absurd claim, some form of corruption would most likely be necessary.

lzw 16y ago
Intel makes chips in many such countries, like costa rica and Malaysia. There are many countries around the world with good standards of living and lower taxes and lower overall regulatory burden. Plus with Internet businesses and the easy ability to have virtual office with employees living remotely, you can locate your business in a jurisdiction that is more favorable. Intel or Microsoft can't move, but starting a new business off shore can make a lot of sense.
- cies 16y ago
  > > Bolivia or Burma or Afghanistan > Intel makes chips in many such countries, like costa rica and Malaysia. many "such" countries... there is a _HUGE_ difference in freedom, social economic development and stability between these two sets of countries. i dont reckon the infrastructure in the first set of countries would be sufficient for intel to consider it.
  - borism 16y ago
    And infrastructure in the second set of countries might not be sufficient for these companies forever without them paying something for it's support: It is ironic, of course, that the very tax exemptions granted to Intel and other TNCs under the rules of the Zona Franca, means that these companies do not directly contribute to an increase in the tax revenue needed for significant improvements in infrastructure and education that they benefit from. It is unfortunate that these companies do not appreciate the need to contribute to the generation of the country specific assets they are looking for. But it is even more unfortunate that the government does not recognize the need for such a contribution either. The tax reform attempts that have been sent to the congress only timidly open up the possibility of taxes on TNCs, and with the fear that perhaps these firms will decide to leave the country, in search for more favorable treatment in other developing countries. Of course, these fears are well grounded as firms (like the comments by Intel above) have made it very clear that they do not want to be taxed. http://ase.tufts.edu/gdae/Pubs/rp/DP13Paus_CorderoApr08.pdf http://ase.tufts.edu/gdae/Pubs/rp/DP13Paus_CorderoApr08.pdf as the article continues: Stopping the tax rate race to the bottom among developing countries ultimately requires the imposition of tax floors at a global level, a formidable challenge.
brc 16y ago
While I'm not here to defend the article there are plenty of low taxation countries with a very high standard of living. There's a reason why a lot of sports stars move to places like Monaco. And that's not the only example - there are plenty of places accommodating to rich individuals.
- fab13n 16y ago
  Monaco is a nice place to spend your wealth, but it's a poor place to produce wealth. No real estate (not at a realistic price anyway), no skilled workforce except in fiscal optimization (although they might call themselves bankers), no natural resources. Wealth-producing countries tolerate Monaco because it's too tiny for its parasitism to produce big effects. De Gaulle threatened to close Monaco off with a blocus, unless it stopped welcoming French taxpayers. Needless to say, the prince complied immediately.

by fab13n 16y ago

lzw 16y ago

Intel makes chips in many such countries, like costa rica and Malaysia. There are many countries around the world with good standards of living and lower taxes and lower overall regulatory burden. Plus with Internet businesses and the easy ability to have virtual office with employees living remotely, you can locate your business in a jurisdiction that is more favorable. Intel or Microsoft can't move, but starting a new business off shore can make a lot of sense.

cies 16y ago
> > Bolivia or Burma or Afghanistan > Intel makes chips in many such countries, like costa rica and Malaysia. many "such" countries... there is a _HUGE_ difference in freedom, social economic development and stability between these two sets of countries. i dont reckon the infrastructure in the first set of countries would be sufficient for intel to consider it.
- borism 16y ago
  And infrastructure in the second set of countries might not be sufficient for these companies forever without them paying something for it's support: It is ironic, of course, that the very tax exemptions granted to Intel and other TNCs under the rules of the Zona Franca, means that these companies do not directly contribute to an increase in the tax revenue needed for significant improvements in infrastructure and education that they benefit from. It is unfortunate that these companies do not appreciate the need to contribute to the generation of the country specific assets they are looking for. But it is even more unfortunate that the government does not recognize the need for such a contribution either. The tax reform attempts that have been sent to the congress only timidly open up the possibility of taxes on TNCs, and with the fear that perhaps these firms will decide to leave the country, in search for more favorable treatment in other developing countries. Of course, these fears are well grounded as firms (like the comments by Intel above) have made it very clear that they do not want to be taxed. http://ase.tufts.edu/gdae/Pubs/rp/DP13Paus_CorderoApr08.pdf http://ase.tufts.edu/gdae/Pubs/rp/DP13Paus_CorderoApr08.pdf as the article continues: Stopping the tax rate race to the bottom among developing countries ultimately requires the imposition of tax floors at a global level, a formidable challenge.

brc 16y ago

While I'm not here to defend the article there are plenty of low taxation countries with a very high standard of living. There's a reason why a lot of sports stars move to places like Monaco. And that's not the only example - there are plenty of places accommodating to rich individuals.

fab13n 16y ago
Monaco is a nice place to spend your wealth, but it's a poor place to produce wealth. No real estate (not at a realistic price anyway), no skilled workforce except in fiscal optimization (although they might call themselves bankers), no natural resources. Wealth-producing countries tolerate Monaco because it's too tiny for its parasitism to produce big effects. De Gaulle threatened to close Monaco off with a blocus, unless it stopped welcoming French taxpayers. Needless to say, the prince complied immediately.