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possibly unpopular opinion... We need to be realistic about what the UN is, why it exists and what it can realistically do. Taxes are far outside the UN's scop

possibly unpopular opinion... We need to be realistic about what the UN is, why it exists and what it can realistically do. Taxes are far outside the UN's scope. It's even outside the EU's scope (currently), and the EU has a lot more authority over members and economic issues generally. In any case, it's not the rates that matter. It's corporation law, which determines what a company is for tax purposes. It's also corporation tax law, which is strategically byzantine. Individual countries (especially the US) can fix this, it's just hard. For example, corporation law acknowledges Google's claim that "Google Ireland" is not related to "Alphabet" and that arbitrary amounts (many billions)paid by Alphabet to Google Ireland (ostensibly IP royalty payments) are ordinary business expenses. If US corporation law considered them one entity, they would owe the corporate tax rate. Besides that... maybe corporate profit tax is just a bad solution. It has never really worked well. Historically such estate-like taxes have been a more solid approach. "Every grain flour owes its lord $n per year." In modern terms, you could say that Amazon owes x% (say 1%) of its market cap. In theory, this doesn't distinguish between profitable companies that can afford to pay from unprofitable ones that can't. In practice, (a)neither does the current system and (b)shares are money too. For analogy, consider gambling taxes. You can try to charge the gambler on wins. Because of the nature of gambling, this needs to be netted against losses somehow. Meanwhile, requiring gamblers to keep records is a lost cause. The opportunities for tax evasion, the complexity of needed rules... it makes the whole thing unworkable. Over time, various countries have moved to taxing casinos themselves with an excise-tax-like machine. Instead of gamblers paying on wins, casinos pay on wins. This is easy to manage, requires one paragraph of tax law and produces a predictable and steady stream of taxes. Structure is what matters, not rates, not moral rhetoric. This is why politicians have such a hard time dealing with it.

deleted 6y ago
[deleted]
fastball 6y ago
Right, my whole point is that tax havens / structuring like you have with Google Ireland would be less useful if there was a global minimum corporate tax rate. I hold no illusions about the capacity of the UN to wield real power. But if UN member countries agree to this global minimum and sanction anyone who doesn't, it achieves the goal, no? Tax havens are a classic example of Tragedy of the Commons. Since we don't actually have an institution with global powers that can effectively prevent such situations via global regulation, we need to do the next best thing – bully everyone into behaving better. Sure, sanctions hurt everyone in the short run, but in the long run it's worth it if we can stop spending a ludicrous amount of human capital on what is effectively dodging societal obligations at an unprecedented scale.
- dalbasal 6y ago
  >If UN member countries agree to this global minimum and sanction anyone who doesn't, it achieves the goal, no? ... Tragedy of the Commons. Not quite. At a very theoretical extreme, maybe... but it is (IMO) so theoretical that any efforts in that direction will yield nothing. IE, "going after tax havens" sounds good, but will do little. Multiple jurisdictions is not a solvable problem in practical terms. Even if it was solved, you would still need to deal with the main issues to get a good result. The main issue is the way corporate law works. In reality, Alphabet owns all of it subsidiaries. It shouldn't really matter that one is in Ireland, and if you read the "abstract" of relevant legislation it sounds like it doesn't. In corporate (and corporate tax) law, they are treated in different ways for different purposes. That's why we don't get a (Profit)X(Tax Rate) result. "Profit" is just as ethereal as "domicile." In my opinion... I would abandon corporate income taxes entirely. Investors that buy Facebook or Amazon aren't in it for profits. Amazon reported about $11bn net income last year. Its market cap has increased by about $500bn... and $700bn so far this year. In theory these gains are taxed under CGT. In practice, CGT also runs into the swamp of corporation law. This is like the problem with taxing gamblers. Stop trying to figure that out. Tax the casino instead. Tax either the market cap or the gains in market cap. Allow public companies to pay their taxes in shares. ..not saying any of this is simple... just saying that we can't win at whack-a-mole. In my particular suggestion, it runs against the grain of tax policies. Tax policies (since the 70s) try to be "efficient," for a somewhat technical economic definition of the term. "Neutral" would be more descriptive. Taxing market cap makes bad investments worse. Even though profits are low, they are still taxed and ownership is diluted. The reason that I think this is ok is because cash is what matters in reality, not profits. ...ultimately though... all this goes over the heads of 99% of politicians, and nearly anyone that doesn't have a vested interest.
marcosdumay 6y ago
> Taxes are far outside the UN's scope. They certainly aren't. The UN has already a few taxes agreement, including one on the line of setting international standards for corporate taxes. The thing is that it only applies when corporate profits change country, and enforcement is bilateral. (But why are we discussing the ship's property anyway?)
- dalbasal 6y ago
  >> But why are we discussing the ship's property anyway?) Fair response. It started from commenting on how corporate law shields and obscures ownership or interest from liability. In this case its liability for blowing up Beirut. The game is usually about tax liability, but it's a similar game. My point is that when lawlessness in relation to tax occurs... it's usually enabled by corporation law, and the obscurity inherent in it. Something similar seems to have happened here, at least if this article is accurate. the Russian man variously described as the owner or the operator of the Moldovan-flagged MV Rhosus, is said to have abandoned the vessel in Lebanon after declaring bankruptcy. The vessel’s deadly cargo had been purchased from the country of Georgia by a Mozambican firm that produces commercial explosives, via a British middleman trading firm linked to Ukraine. The ownership of the Rhosus, and the companies that ordered the nearly 3,000 tons of ammonium nitrate to be transported halfway around the world in a rickety ship, are obscured by layers of secrecy

deleted 6y ago

[deleted]

fastball 6y ago

Right, my whole point is that tax havens / structuring like you have with Google Ireland would be less useful if there was a global minimum corporate tax rate. I hold no illusions about the capacity of the UN to wield real power. But if UN member countries agree to this global minimum and sanction anyone who doesn't, it achieves the goal, no? Tax havens are a classic example of Tragedy of the Commons. Since we don't actually have an institution with global powers that can effectively prevent such situations via global regulation, we need to do the next best thing – bully everyone into behaving better. Sure, sanctions hurt everyone in the short run, but in the long run it's worth it if we can stop spending a ludicrous amount of human capital on what is effectively dodging societal obligations at an unprecedented scale.

dalbasal 6y ago
>If UN member countries agree to this global minimum and sanction anyone who doesn't, it achieves the goal, no? ... Tragedy of the Commons. Not quite. At a very theoretical extreme, maybe... but it is (IMO) so theoretical that any efforts in that direction will yield nothing. IE, "going after tax havens" sounds good, but will do little. Multiple jurisdictions is not a solvable problem in practical terms. Even if it was solved, you would still need to deal with the main issues to get a good result. The main issue is the way corporate law works. In reality, Alphabet owns all of it subsidiaries. It shouldn't really matter that one is in Ireland, and if you read the "abstract" of relevant legislation it sounds like it doesn't. In corporate (and corporate tax) law, they are treated in different ways for different purposes. That's why we don't get a (Profit)X(Tax Rate) result. "Profit" is just as ethereal as "domicile." In my opinion... I would abandon corporate income taxes entirely. Investors that buy Facebook or Amazon aren't in it for profits. Amazon reported about $11bn net income last year. Its market cap has increased by about $500bn... and $700bn so far this year. In theory these gains are taxed under CGT. In practice, CGT also runs into the swamp of corporation law. This is like the problem with taxing gamblers. Stop trying to figure that out. Tax the casino instead. Tax either the market cap or the gains in market cap. Allow public companies to pay their taxes in shares. ..not saying any of this is simple... just saying that we can't win at whack-a-mole. In my particular suggestion, it runs against the grain of tax policies. Tax policies (since the 70s) try to be "efficient," for a somewhat technical economic definition of the term. "Neutral" would be more descriptive. Taxing market cap makes bad investments worse. Even though profits are low, they are still taxed and ownership is diluted. The reason that I think this is ok is because cash is what matters in reality, not profits. ...ultimately though... all this goes over the heads of 99% of politicians, and nearly anyone that doesn't have a vested interest.

marcosdumay 6y ago

> Taxes are far outside the UN's scope. They certainly aren't. The UN has already a few taxes agreement, including one on the line of setting international standards for corporate taxes. The thing is that it only applies when corporate profits change country, and enforcement is bilateral. (But why are we discussing the ship's property anyway?)

dalbasal 6y ago
>> But why are we discussing the ship's property anyway?) Fair response. It started from commenting on how corporate law shields and obscures ownership or interest from liability. In this case its liability for blowing up Beirut. The game is usually about tax liability, but it's a similar game. My point is that when lawlessness in relation to tax occurs... it's usually enabled by corporation law, and the obscurity inherent in it. Something similar seems to have happened here, at least if this article is accurate. the Russian man variously described as the owner or the operator of the Moldovan-flagged MV Rhosus, is said to have abandoned the vessel in Lebanon after declaring bankruptcy. The vessel’s deadly cargo had been purchased from the country of Georgia by a Mozambican firm that produces commercial explosives, via a British middleman trading firm linked to Ukraine. The ownership of the Rhosus, and the companies that ordered the nearly 3,000 tons of ammonium nitrate to be transported halfway around the world in a rickety ship, are obscured by layers of secrecy