9 ms·

Janet Yellen to call for global minimum corporate tax rate of 21%

Bostonian 5y ago
If the U.S. wants to make itself uncompetitive with high corporate tax rates, that is America's problem. "Ireland's headline 12.5% corporate tax rate — much lower than most industrialized nations — has been key to attracting many multinationals to the country."
- nabla9 5y ago
  Can you guess what the _global_ in the name means? I mean it's not called federal global minimum corporate tax rate.
- turbinerneiter 5y ago
  Congrats, they got more of the pie while reducing its total size. And getting my tax money on top of it via EU programs.
  - secfirstmd 5y ago
    Ireland has been a net contributor to the EU budget for many years. Plus it bailed out many EU bondholders when it didn't need to.
    - turbinerneiter 5y ago
      It was itself bailed out to the tune of 44b, so they still owe me a couple of bailouts, given that no one ever bailed me out. The whole EU is full of chery pickers and the fact that we have tax havens within it is disgusting.
      - andrepd 5y ago
        That's not how bailouts work. They were loaned money.
        secfirstmd 5y ago
        Yeh and it's made most of it back with interest
    - foepys 5y ago
      After financial markets collapsed in 2008, Ireland was in quite bad shape and requested a 67 billion Euro bailout from the EU. The EU granted it under the condition that Ireland gets their finances in order and imposes austerity measures on its citizens. https://en.m.wikipedia.org/wiki/Post-2008_Irish_banking_crisis https://en.m.wikipedia.org/wiki/Post-2008_Irish_banking_cris...
- chpmrc 5y ago
  No idea why you're getting downvoted. This makes perfect sense. Especially for up and coming economies, they almost need to resort to these schemes. Anything "global" that doesn't take into account details of specific realities is usually a bad idea.
- foobarbecue 5y ago
  Let this be a lesson to click the link before going on a screed
- knodi 5y ago
  this is a battle to the bottom. Whats to stop India from offering 6.25% corporate tax rate, what will Ireland do next go to 3% tax rate to? only losers with this kind of thinking is the individuals that end up paying more taxes than the multinationals.
  - missedthecue 5y ago
    Yes that's the entire point. Competition is good.
moistbar 5y ago
Isn't this basically global price fixing? It seems tremendously unfair to small businesses, at the very least.
- deleted 5y ago
  [deleted]
- sokoloff 5y ago
  Small businesses already don’t have the effective ability to structure their operations to take advantage of multiple domiciles’ different tax policies, because the fixed costs of such structures are high relative to their incomes and the consequential benefit they’d derive. Such a policy would generally help small businesses who seek to compete against large multi-nationals, even around the edges.
- turbinerneiter 5y ago
  Small business are the only ones who actually have to pay the taxes, while big corps avoid them. We are tax subsidizing starbucks while local independent shops die, altough the local independent ones are better and healthier for the local economy.
- rswail 5y ago
  Governments are not businesses and taxes are not prices. Small businesses generally are taxed more harshly than large multi nationals. Setting a global minimum is not going to necessarily restrict governments from offering lower rates to smaller businesses. This discussion is more about avoiding inefficient market distortions.
fortran77 5y ago
Why would another country, especially one that's doing just fine like Ireland, want to eliminate a competitive edge it has?
- coliveira 5y ago
  Because the US has atomic bombs.
  - secfirstmd 5y ago
    Yes because the US is really going to threaten Ireland with atomic bombs...
    - coliveira 5y ago
      Everything the US does has the implicit threat of atomic bombs. Or at least economic sanctions.
      - pietrovismara 5y ago
        I don't get the downvotes. Thats exactly how it goes, how the US in the past retained the "first global power" trophy it now lost.
        viraptor 5y ago
        Downvoted a tone-deaf comment which puts together an implicit threat of instantly vaporising thousands of unsuspecting people, and refusing to do business in one sentence - as if there wasn't a massive difference. When someone writes "threat of atomic bombs" they should consider if they mean it.
        lucian1900 5y ago
        There is a spectrum of violence the US can perpetrate, it starts with sanctions, continues with coups and invasions and ends with nukes. Sadly, we’ve seen the entirety of the spectrum already.
coliveira 5y ago
Another attempt from the US to control the global economy. Next step, if a country doesn't comply with their global tax rates, it will be labeled enemy and suffer economic sanctions.
- trentnix 5y ago
  Or war.
- sschueller 5y ago
  Another reason for the rest of the world to move a way from the US dollar as quick as possible.
- threatofrain 5y ago
  The US can only achieve its international monetary proposals by consensus. As the US corporate tax rate is effectively Less than major trading partners, it’s more like the US is shifting its position closer to international norms.
kjrose 5y ago
I would love to hear how they intend to enforce such a global minimum tax rate. As well how they would guarantee that no country offers a tax credit or otherwise to lower the numbers. And then, of course, there's the really common trick of keepin profits on the books near zero for a corporation to avoid taxes altogether. Would they suddenly be taxing income and not profit?
- ttt0 5y ago
  Yeah, especially considering the fact that Russia and China are ditching the dollar. No one cares what America has to say anymore.
  - refurb 5y ago
    You think the US throws it’s weigh around wait until you start using the RMB!
  - voisin 5y ago
    If recent experience with America’s unilateral application of FATCA on the rest of the world, (effectively imposing massive compliance costs on other countries’ banking systems to help them find non-compliant Americans and bring in revenue equal to maybe 1/100th of the worldwide compliance costs) and how literally no country put up resistance to this imposition, I’d say everyone still cares what America has to say!
- postingawayonhn 5y ago
  Sanctions on non-compliannt countries.
  - ed25519FUUU 5y ago
    This strikes me as incredibly imperialistic. Why should the USA get to decide what the tax rate is for the rest of the world?
    - andrepd 5y ago
pydry 5y ago
This would be a good way to arrest the global race to the bottom on corporate tax rates. It would allow income taxes to be commensurately reduced if multinational corporations get taxed more. If you own a ton of shares in multinationals this would not be good for you but it would be for everyone else.
MattGaiser 5y ago
No low population country should agree to this simply because you can make the money back on volume. Cayman Islands can live on the incorporation fees alone.
- markvdb 5y ago
  That will work as long as other countries accept it.
swader999 5y ago
Mars too?
mushufasa 5y ago
A unilateral global regime is the only complete solution to prevent capital from fleeing to lower-tax locales (e.g. Cayman Islands). That said, the same incentives for smaller countries to offer lower tax rates will make them unwilling to agree to a global regime. And a global taxation regime would require a degree of international cooperation that has never been seen. Janet is laying the groundwork for a potential policy which would take decades if not 100 years to come to fruition. She is extremely smart and intentional about her words, as a leader of the Fed.
- atemerev 5y ago
  “Buy bitcoin”
- nabla9 5y ago
  You start negotiations with global unilateral tax regime, then invite others with multilateral agreements.
- Shivetya 5y ago
  It won't be cooperation. Either it will requiring buying off those countries or using coercion which could include anything from tariffs, fees, and penalties, or to even locking them out from access to global banking and assistance. a global tax lets the countries with irresponsible spending to offload their costs to other countries. pure and simple. it will be packaged as something else entirely but it is no different that what happens internally in many countries between different levels of governments (states,cities, territories,etc)
- logifail 5y ago
  > capital from fleeing to lower-tax locales (e.g. Cayman Islands) I don't think the problem is the Cayman Islands, although it's the one people think of. Instead, take a look at the places that the big multinationals choose to put their overseas revenue through. This side of the Atlantic two high on the list would be Luxembourg and Ireland. Then look at the corporation tax rates in those jurisdictions[0]. [0] https://ec.europa.eu/jrc/sites/jrcsh/files/jrc104157.pdf https://ec.europa.eu/jrc/sites/jrcsh/files/jrc104157.pdf
- 5y ago
jfd98njkdgnh 5y ago
I have an issue with Yellen and it has nothing to do with her policies. It is with her use of online notifications via FinCEN. As annoying as Mnuchin was, he didn't send an update readout of the time he farted in a museum or read a treatise on funding random things. She seems to treat the entire ecosystem as her own personal PR team.
choward 5y ago
This will solve exactly 0 problems. I can't believe this is our treasury secretary. Completely clueless.
- HenryKissinger 5y ago
  A global minimum corporate tax rate would solve the problem of corporations moving assets and headquarters to jurisdictions with lower taxation.
  - jessaustin 5y ago
    An automatic rainbow unicorn pony supply would solve my rainbow unicorn pony shortfall, but that is also make-believe so never mind. This effort certainly will not accomplish the impossible thing they claim it will accomplish. Simultaneously it will cause a lot of problems for society that will make certain well-placed people even more money than they had before they installed the current government, which is the whole point of the show.
    - HenryKissinger 5y ago
      I do not understand this post.
      - legolas2412 5y ago
        They are suggesting that the treaty has a loophole that companies can make shell companies to outsource profit to non-signatory tax havens. Of course, that is stupid. That loophole is what happens now, and the point of such a treaty would be tariffs or sanctions against non signatories.
    - andrepd 5y ago
      You have said exactly 0 things of substance.
    - kube-system 5y ago
      International cooperation does happen, quite regularly.
acvny 5y ago
This is not necessary. They only have to tax the parent company at 21% and any of it's subsidiaries. If on the other hand a company buys services from its subsidiaries located abroad, then impose a customs tax of 21% for any imports / exports.
knodi 5y ago
I think this is good idea and thinking far into the future. With corporations constantly paying an lower tax rate than individuals and being able to move HQ to countries that offer a bigger tax break is leading to corporate taxes being deferred to the individuals. Prisoner's dilemma. This I hope will break that cycle and corporations can finally pay their fair share of the taxes.
- Guthur 5y ago
  And where does that money go then, corporations are not taking holidays in Caribbean or buying million dollar condos. Who are you actually redistributing the wealth from.
mensetmanusman 5y ago
I wonder what computer models they are using to reach 21%.
- alexbiet 5y ago
  Blackjack :D
lifeisstillgood 5y ago
Great! This is a necessary move for USA as it intends to raise tax rates to pay for the Big Spend, but also it's a long time coming to get the "global" community aligned on tackling multi-national corporations. Tax evasion and egregious avoidance has been too easy for multi-nationals for too long - and just a few simple measures between "western" countries will make a huge difference. Add onto this a win for the Trade Unions in Amazon and we might see Picketty get proven wrong and G > R
trentnix 5y ago
If this happens, I wonder if she'll also take the credit for the price increases on all the goods and services subject corporations provide. Corporations don't pay taxes. Their customers pay taxes. She knows that. So we can only assume this is an attempt to curb consumption.
henvic 5y ago
State just knows to increase taxes and do war. No, thanks. Let people flourish in peace. We need liberty to grow as individuals. Otherwise, we're going to end up having only crony corporations and statism.
- andrepd 5y ago
  That's a very silly way to look at it. Corporations extract value from society. Why shouldn't they pay back what they owe? And the state has democratic control and oversight (ideally at least, much to be improved). Corporations are completely unaccountable.
  - missedthecue 5y ago
    It is peculiar to me how people view what a company does (accepting mutually consensual payments in return for valuable life-improving products and services) as 'exploitative', while taxes, which are in economic terms what's called rent seeking, happen to be some universal good. It seems you've managed to get things completely reversed.
    - henvic 5y ago
      To me too. Unfortunately this brainwashed view of the world is more common than anything else.
  - aeternum 5y ago
    That's a strange worldview, corporations are typically seen as adding to the value of a society. They generally become profitable by providing people a better alternative than a competitor.
    - legolas2412 5y ago
      I as an individual add value to society. I generally become profitable by providing other people a better alternative labor/services than competing humans. Can I also get zero income tax rate? Can I also get the freedom of movement to move to tax havens and hide my existence and income in a web of different identities?
andrepd 5y ago
This is the only way to stop tax evasion and a race to the bottom, with devastating consequences to people to the tune of hundreds of billions of dollars lost per year. The question is how to do this. The only way I see is unilateral action by the biggest markets: the EU and the US (plus Japan, Australia, NZ, Canada), to say "you cannot access our market if you stash your profits in a tax haven".
- akmarinov 5y ago
  Yeah there’s 0 chance of that happening. The EU can’t even agree amongst themselves.
  - anm89 5y ago
    Yeah it's amazing how people look at the epic clusterfuck which is the EU and say "we just need to do the same thing at an even bigger scale". It get's harder as scale goes up. Not easier.
tryptophan 5y ago
Why don't we end all this corporate tax stupidity and remove the corporate income tax? It is a very inefficient and complicated tax to levy. >Most economists concluded long ago that it is among the least efficient and least defensible taxes. https://www.econlib.org/library/Enc/CorporateTaxation.html https://www.econlib.org/library/Enc/CorporateTaxation.html We can't have nice things because too many people see economics as a moral issue and not a math problem.
- andrepd 5y ago
  It is both. Corporations benefit from the existence of a well-functioning society that gives them invaluable tools to survive and thrive (they wouldn't exist without it). Why should they not contribute anything back?
  - HonestOp001 5y ago
    Because the tax is a stealth tax on the populace. The company needs a profit margin of x. If you place a tax of y on the company, that margin, simplistically, is now x+y. The company can increase the prices on its goods by y, which means everyone now pays y more (so, the government is now making the corporation collect the tax). Or it can absorb the cost of the tax, which would hurt it’s operating margin to survive, a small amount maybe could be done, but after a while they simply raise the price and pass y along to the populace. It is a stealth tax, pure and simple. If you want the more pernicious suggestion, the tax is a poor persons sales tax disguised as populace claptrap to make the electorate like they are sticking it to the big fat cats in corporations.
    - matheusaf 5y ago
      > The company needs a profit margin of x. If you place a tax of y on the company, that margin, simplistically, is now x+y. Not really, this only happens for perfectly inelastic goods. We can use the price elasticity of demand and price elasticity of supply to determine what amount of the tax burden will fall on buyers and sellers [1]. We can even show that for perfectly elastic goods, the tax burden will fall entirely on the sellers. [1] https://en.wikipedia.org/wiki/Tax_incidence https://en.wikipedia.org/wiki/Tax_incidence
ed25519FUUU 5y ago
Everyone here seems really in favor of this move. To me it sounds incredibly imperialistic. Why does the USA get to bully the rest of the world into their tax rates? We clearly have a problem with multinationals leaving the country and not paying taxes. There are plenty of ways to solve that domestically without calling for some globalist tax regime. What’s more likely: we end up with a more fair tax system, or a tax system written by the USA that looks like the USA?
Guthur 5y ago
One minute they're printing fiat currency like there is no tomorrow saying "we need to 'stimulate' the economy" and then the next minute they're all "we need to take the money back to pay for 'things'". Make up your fucking mind.
- laughingbovine 5y ago
  NO TAX ONLY STIMULUS
jessaustin 5y ago
I want to believe this is a good idea, but I can't shake the feeling that these people can't be trusted in any way. Yellen herself, for all her experience in economics and monetary policy, wasn't considered suitable for her current position until she had been thoroughly bought. https://www.forbes.com/sites/joewalsh/2021/01/01/yellen-earned-72-million-in-speaking-fees-over-last-two-years/ https://www.forbes.com/sites/joewalsh/2021/01/01/yellen-earn...
tyingq 5y ago
Are there details somewhere? It's hard to tell what "21%" means, given exemptions, deductions, and that the tax is on profits, not income.
FpUser 5y ago
Some countries are trying to attract foreign companies using low tax rate. In return they get many benefits (look how China had developed). What would be the reason for those countries to loose that advantage and go back to being nothing?
ObserverNeutral 5y ago
To people saying this will end the race to the bottom. It will never end, when every rate is equal then tax rate would magically stop being important and the important number will be: 1) Odds of tax audits 2) Countries with statutes of limitations 3) Lenght of the legal proceedings so you can get to the aforementioned statutes of limitation 4) Median fines imposed for non-compliance etc. 5) Countries with most bribable tax officials Human nature can't be solved, tragedy of the commons can't be solved either
- andrepd 5y ago
  That's a very cynical view. Many things cannot be 'solved', but they can be ammeliorated.
  - ObserverNeutral 5y ago
    how would this be an improvement, you just change the set of people who evade taxes. From people who pay tax experts millions to study really clever ways of doing transfer pricing and income shifting towards people who study the odds of audit and bribe tax officials
balozi 5y ago
> Janet Yellen to call for XYZ My perception is that there is a marked increase in the someone "will do X", or "will call for Y", or "will ask for Z" type reporting. How about just report when it happens? What is the strategy anyway? Is it to get the story first? Is it an attempt at preloading spin? Is it an attempt at taking the public's temperature? Or is it a means to manufacturing news content where none exists?
sigzero 5y ago
Good luck with that. Not.
boredumb 5y ago
end the fed.
throwawaysea 5y ago
No thanks. The next step will be for them to normalize global wealth taxes and exit taxes. I don’t want a web of overly bloated states to have that degree of control over citizens. Individuals liberties are waning and Marxist authoritarianism is building up in small imperceptible steps like this proposal.
triceratops 5y ago
At the very least, this levels the playing field somewhat between US persons and corporations that do business in the US. US persons (aka US tax residents) pay income tax on their worldwide income, regardless of source, even if they owned the income-producing asset before ever becoming a US person. It's always seemed unfair to me that corporations can essentially say "Hey, we actually earned this income someplace else" and not get taxed.
m101 5y ago
Corporate taxes are the most blindingly stupid idea ever. People forget that the only way to level the playing field between Amazon and local shops is to cut taxes to 0 rather than layering on increasingly complex tax rules. Amazon thrives in the presence of corporate taxes. Corporate taxes also create huge incentive to offshore jobs to tax havens. Not to mention no corporate tax rates would mean no need for all sorts of expenses on legal and accountants for tax optimisation. In the UK I think we acknowledge they are a bad idea by having a plan to step them down over time to some low level (and potentially even 0 eventually). Covid derailed that plan.
- cuchoi 5y ago
  > Corporate taxes also create huge incentive to offshore jobs to tax havens That's why Yellen is proposing a global minimum corporate tax.
  - emteycz 5y ago
    Why would the states profiting from low/none corporate taxes follow suit? Seems like their business just got a lot better.
  - m101 5y ago
    The problem here is that we are treating a symptom of legislation and not the cause, as usual. Instead of all trying to agree on a level of tax rates (unrealistic) we could unilaterally slash corporate tax rates and watch the others follow.
jkingsbery 5y ago
I'd be curious to know more details about the proposals. It seems hard to look at corporate taxes in isolation from other things corporations do and the other taxes that people pay. Some countries choose to provide fewer government services, or are able to provide government services for less money. It seems only fair that these countries would have lower corporate tax rates. Corporate tax rates also seem like they would be affected by what the capital gains tax is: the government can get money out of a group of people by either taxing the company they own or by taxing the capital gains they realize when their company does well. It also does matter what kind of other taxes a company will need to pay (payroll taxes), or what other taxes citizens pay (whether or not they pay VAT). It's hard to imagine a global minimum corporate tax rate not being exploited by special interests. Just because companies avoid taxes today by switching countries, won't mean that they won't find other loop holes tomorrow. It's easy to imagine countries saying "sure, our nominal corporate tax rate is 21%, but <special protected industry X> has to have a different rate because of <cultural and historical specific reasons to that country>.
tonfreed 5y ago
How about a big cold glass of shut the fuck up America

If the U.S. wants to make itself uncompetitive with high corporate tax rates, that is America's problem. "Ireland's headline 12.5% corporate tax rate — much lower than most industrialized nations — has been key to attracting many multinationals to the country."

nabla9 5y ago
Can you guess what the _global_ in the name means? I mean it's not called federal global minimum corporate tax rate.
turbinerneiter 5y ago
Congrats, they got more of the pie while reducing its total size. And getting my tax money on top of it via EU programs.
- secfirstmd 5y ago
  Ireland has been a net contributor to the EU budget for many years. Plus it bailed out many EU bondholders when it didn't need to.
  - turbinerneiter 5y ago
    It was itself bailed out to the tune of 44b, so they still owe me a couple of bailouts, given that no one ever bailed me out. The whole EU is full of chery pickers and the fact that we have tax havens within it is disgusting.
    - andrepd 5y ago
      That's not how bailouts work. They were loaned money.
      - secfirstmd 5y ago
        Yeh and it's made most of it back with interest
  - foepys 5y ago
    After financial markets collapsed in 2008, Ireland was in quite bad shape and requested a 67 billion Euro bailout from the EU. The EU granted it under the condition that Ireland gets their finances in order and imposes austerity measures on its citizens. https://en.m.wikipedia.org/wiki/Post-2008_Irish_banking_crisis https://en.m.wikipedia.org/wiki/Post-2008_Irish_banking_cris...
chpmrc 5y ago
No idea why you're getting downvoted. This makes perfect sense. Especially for up and coming economies, they almost need to resort to these schemes. Anything "global" that doesn't take into account details of specific realities is usually a bad idea.
foobarbecue 5y ago
Let this be a lesson to click the link before going on a screed
knodi 5y ago
this is a battle to the bottom. Whats to stop India from offering 6.25% corporate tax rate, what will Ireland do next go to 3% tax rate to? only losers with this kind of thinking is the individuals that end up paying more taxes than the multinationals.
- missedthecue 5y ago
  Yes that's the entire point. Competition is good.

moistbar 5y ago

Isn't this basically global price fixing? It seems tremendously unfair to small businesses, at the very least.

deleted 5y ago
[deleted]
sokoloff 5y ago
Small businesses already don’t have the effective ability to structure their operations to take advantage of multiple domiciles’ different tax policies, because the fixed costs of such structures are high relative to their incomes and the consequential benefit they’d derive. Such a policy would generally help small businesses who seek to compete against large multi-nationals, even around the edges.
turbinerneiter 5y ago
Small business are the only ones who actually have to pay the taxes, while big corps avoid them. We are tax subsidizing starbucks while local independent shops die, altough the local independent ones are better and healthier for the local economy.
rswail 5y ago
Governments are not businesses and taxes are not prices. Small businesses generally are taxed more harshly than large multi nationals. Setting a global minimum is not going to necessarily restrict governments from offering lower rates to smaller businesses. This discussion is more about avoiding inefficient market distortions.

fortran77 5y ago

Why would another country, especially one that's doing just fine like Ireland, want to eliminate a competitive edge it has?

coliveira 5y ago
Because the US has atomic bombs.
- secfirstmd 5y ago
  Yes because the US is really going to threaten Ireland with atomic bombs...
  - coliveira 5y ago
    Everything the US does has the implicit threat of atomic bombs. Or at least economic sanctions.
    - pietrovismara 5y ago
      I don't get the downvotes. Thats exactly how it goes, how the US in the past retained the "first global power" trophy it now lost.
      - viraptor 5y ago
        Downvoted a tone-deaf comment which puts together an implicit threat of instantly vaporising thousands of unsuspecting people, and refusing to do business in one sentence - as if there wasn't a massive difference. When someone writes "threat of atomic bombs" they should consider if they mean it.
        lucian1900 5y ago
        There is a spectrum of violence the US can perpetrate, it starts with sanctions, continues with coups and invasions and ends with nukes. Sadly, we’ve seen the entirety of the spectrum already.

coliveira 5y ago

Another attempt from the US to control the global economy. Next step, if a country doesn't comply with their global tax rates, it will be labeled enemy and suffer economic sanctions.

trentnix 5y ago
Or war.
sschueller 5y ago
Another reason for the rest of the world to move a way from the US dollar as quick as possible.
threatofrain 5y ago
The US can only achieve its international monetary proposals by consensus. As the US corporate tax rate is effectively Less than major trading partners, it’s more like the US is shifting its position closer to international norms.

kjrose 5y ago

I would love to hear how they intend to enforce such a global minimum tax rate. As well how they would guarantee that no country offers a tax credit or otherwise to lower the numbers. And then, of course, there's the really common trick of keepin profits on the books near zero for a corporation to avoid taxes altogether. Would they suddenly be taxing income and not profit?

ttt0 5y ago
Yeah, especially considering the fact that Russia and China are ditching the dollar. No one cares what America has to say anymore.
- refurb 5y ago
  You think the US throws it’s weigh around wait until you start using the RMB!
- voisin 5y ago
  If recent experience with America’s unilateral application of FATCA on the rest of the world, (effectively imposing massive compliance costs on other countries’ banking systems to help them find non-compliant Americans and bring in revenue equal to maybe 1/100th of the worldwide compliance costs) and how literally no country put up resistance to this imposition, I’d say everyone still cares what America has to say!
postingawayonhn 5y ago
Sanctions on non-compliannt countries.
- ed25519FUUU 5y ago
  This strikes me as incredibly imperialistic. Why should the USA get to decide what the tax rate is for the rest of the world?
  - andrepd 5y ago

pydry 5y ago

This would be a good way to arrest the global race to the bottom on corporate tax rates. It would allow income taxes to be commensurately reduced if multinational corporations get taxed more. If you own a ton of shares in multinationals this would not be good for you but it would be for everyone else.

MattGaiser 5y ago

No low population country should agree to this simply because you can make the money back on volume. Cayman Islands can live on the incorporation fees alone.

markvdb 5y ago
That will work as long as other countries accept it.

swader999 5y ago

Mars too?

mushufasa 5y ago

A unilateral global regime is the only complete solution to prevent capital from fleeing to lower-tax locales (e.g. Cayman Islands). That said, the same incentives for smaller countries to offer lower tax rates will make them unwilling to agree to a global regime. And a global taxation regime would require a degree of international cooperation that has never been seen. Janet is laying the groundwork for a potential policy which would take decades if not 100 years to come to fruition. She is extremely smart and intentional about her words, as a leader of the Fed.

atemerev 5y ago
“Buy bitcoin”
nabla9 5y ago
You start negotiations with global unilateral tax regime, then invite others with multilateral agreements.
Shivetya 5y ago
It won't be cooperation. Either it will requiring buying off those countries or using coercion which could include anything from tariffs, fees, and penalties, or to even locking them out from access to global banking and assistance. a global tax lets the countries with irresponsible spending to offload their costs to other countries. pure and simple. it will be packaged as something else entirely but it is no different that what happens internally in many countries between different levels of governments (states,cities, territories,etc)
logifail 5y ago
> capital from fleeing to lower-tax locales (e.g. Cayman Islands) I don't think the problem is the Cayman Islands, although it's the one people think of. Instead, take a look at the places that the big multinationals choose to put their overseas revenue through. This side of the Atlantic two high on the list would be Luxembourg and Ireland. Then look at the corporation tax rates in those jurisdictions[0]. [0] https://ec.europa.eu/jrc/sites/jrcsh/files/jrc104157.pdf https://ec.europa.eu/jrc/sites/jrcsh/files/jrc104157.pdf
5y ago

jfd98njkdgnh 5y ago

I have an issue with Yellen and it has nothing to do with her policies. It is with her use of online notifications via FinCEN. As annoying as Mnuchin was, he didn't send an update readout of the time he farted in a museum or read a treatise on funding random things. She seems to treat the entire ecosystem as her own personal PR team.

choward 5y ago

This will solve exactly 0 problems. I can't believe this is our treasury secretary. Completely clueless.

HenryKissinger 5y ago
A global minimum corporate tax rate would solve the problem of corporations moving assets and headquarters to jurisdictions with lower taxation.
- jessaustin 5y ago
  An automatic rainbow unicorn pony supply would solve my rainbow unicorn pony shortfall, but that is also make-believe so never mind. This effort certainly will not accomplish the impossible thing they claim it will accomplish. Simultaneously it will cause a lot of problems for society that will make certain well-placed people even more money than they had before they installed the current government, which is the whole point of the show.
  - HenryKissinger 5y ago
    I do not understand this post.
    - legolas2412 5y ago
      They are suggesting that the treaty has a loophole that companies can make shell companies to outsource profit to non-signatory tax havens. Of course, that is stupid. That loophole is what happens now, and the point of such a treaty would be tariffs or sanctions against non signatories.
  - andrepd 5y ago
    You have said exactly 0 things of substance.
  - kube-system 5y ago
    International cooperation does happen, quite regularly.

acvny 5y ago

This is not necessary. They only have to tax the parent company at 21% and any of it's subsidiaries. If on the other hand a company buys services from its subsidiaries located abroad, then impose a customs tax of 21% for any imports / exports.

knodi 5y ago

I think this is good idea and thinking far into the future. With corporations constantly paying an lower tax rate than individuals and being able to move HQ to countries that offer a bigger tax break is leading to corporate taxes being deferred to the individuals. Prisoner's dilemma. This I hope will break that cycle and corporations can finally pay their fair share of the taxes.

Guthur 5y ago
And where does that money go then, corporations are not taking holidays in Caribbean or buying million dollar condos. Who are you actually redistributing the wealth from.

mensetmanusman 5y ago

I wonder what computer models they are using to reach 21%.

alexbiet 5y ago
Blackjack :D

lifeisstillgood 5y ago

Great! This is a necessary move for USA as it intends to raise tax rates to pay for the Big Spend, but also it's a long time coming to get the "global" community aligned on tackling multi-national corporations. Tax evasion and egregious avoidance has been too easy for multi-nationals for too long - and just a few simple measures between "western" countries will make a huge difference. Add onto this a win for the Trade Unions in Amazon and we might see Picketty get proven wrong and G > R

trentnix 5y ago

If this happens, I wonder if she'll also take the credit for the price increases on all the goods and services subject corporations provide. Corporations don't pay taxes. Their customers pay taxes. She knows that. So we can only assume this is an attempt to curb consumption.

henvic 5y ago

State just knows to increase taxes and do war. No, thanks. Let people flourish in peace. We need liberty to grow as individuals. Otherwise, we're going to end up having only crony corporations and statism.

andrepd 5y ago
That's a very silly way to look at it. Corporations extract value from society. Why shouldn't they pay back what they owe? And the state has democratic control and oversight (ideally at least, much to be improved). Corporations are completely unaccountable.
- missedthecue 5y ago
  It is peculiar to me how people view what a company does (accepting mutually consensual payments in return for valuable life-improving products and services) as 'exploitative', while taxes, which are in economic terms what's called rent seeking, happen to be some universal good. It seems you've managed to get things completely reversed.
  - henvic 5y ago
    To me too. Unfortunately this brainwashed view of the world is more common than anything else.
- aeternum 5y ago
  That's a strange worldview, corporations are typically seen as adding to the value of a society. They generally become profitable by providing people a better alternative than a competitor.
  - legolas2412 5y ago
    I as an individual add value to society. I generally become profitable by providing other people a better alternative labor/services than competing humans. Can I also get zero income tax rate? Can I also get the freedom of movement to move to tax havens and hide my existence and income in a web of different identities?

andrepd 5y ago

This is the only way to stop tax evasion and a race to the bottom, with devastating consequences to people to the tune of hundreds of billions of dollars lost per year. The question is how to do this. The only way I see is unilateral action by the biggest markets: the EU and the US (plus Japan, Australia, NZ, Canada), to say "you cannot access our market if you stash your profits in a tax haven".

akmarinov 5y ago
Yeah there’s 0 chance of that happening. The EU can’t even agree amongst themselves.
- anm89 5y ago
  Yeah it's amazing how people look at the epic clusterfuck which is the EU and say "we just need to do the same thing at an even bigger scale". It get's harder as scale goes up. Not easier.

tryptophan 5y ago

Why don't we end all this corporate tax stupidity and remove the corporate income tax? It is a very inefficient and complicated tax to levy. >Most economists concluded long ago that it is among the least efficient and least defensible taxes. https://www.econlib.org/library/Enc/CorporateTaxation.html https://www.econlib.org/library/Enc/CorporateTaxation.html We can't have nice things because too many people see economics as a moral issue and not a math problem.

andrepd 5y ago
It is both. Corporations benefit from the existence of a well-functioning society that gives them invaluable tools to survive and thrive (they wouldn't exist without it). Why should they not contribute anything back?
- HonestOp001 5y ago
  Because the tax is a stealth tax on the populace. The company needs a profit margin of x. If you place a tax of y on the company, that margin, simplistically, is now x+y. The company can increase the prices on its goods by y, which means everyone now pays y more (so, the government is now making the corporation collect the tax). Or it can absorb the cost of the tax, which would hurt it’s operating margin to survive, a small amount maybe could be done, but after a while they simply raise the price and pass y along to the populace. It is a stealth tax, pure and simple. If you want the more pernicious suggestion, the tax is a poor persons sales tax disguised as populace claptrap to make the electorate like they are sticking it to the big fat cats in corporations.
  - matheusaf 5y ago
    > The company needs a profit margin of x. If you place a tax of y on the company, that margin, simplistically, is now x+y. Not really, this only happens for perfectly inelastic goods. We can use the price elasticity of demand and price elasticity of supply to determine what amount of the tax burden will fall on buyers and sellers [1]. We can even show that for perfectly elastic goods, the tax burden will fall entirely on the sellers. [1] https://en.wikipedia.org/wiki/Tax_incidence https://en.wikipedia.org/wiki/Tax_incidence

ed25519FUUU 5y ago

Everyone here seems really in favor of this move. To me it sounds incredibly imperialistic. Why does the USA get to bully the rest of the world into their tax rates? We clearly have a problem with multinationals leaving the country and not paying taxes. There are plenty of ways to solve that domestically without calling for some globalist tax regime. What’s more likely: we end up with a more fair tax system, or a tax system written by the USA that looks like the USA?

Guthur 5y ago

One minute they're printing fiat currency like there is no tomorrow saying "we need to 'stimulate' the economy" and then the next minute they're all "we need to take the money back to pay for 'things'". Make up your fucking mind.

laughingbovine 5y ago
NO TAX ONLY STIMULUS

jessaustin 5y ago

I want to believe this is a good idea, but I can't shake the feeling that these people can't be trusted in any way. Yellen herself, for all her experience in economics and monetary policy, wasn't considered suitable for her current position until she had been thoroughly bought. https://www.forbes.com/sites/joewalsh/2021/01/01/yellen-earned-72-million-in-speaking-fees-over-last-two-years/ https://www.forbes.com/sites/joewalsh/2021/01/01/yellen-earn...

tyingq 5y ago

Are there details somewhere? It's hard to tell what "21%" means, given exemptions, deductions, and that the tax is on profits, not income.

FpUser 5y ago

Some countries are trying to attract foreign companies using low tax rate. In return they get many benefits (look how China had developed). What would be the reason for those countries to loose that advantage and go back to being nothing?

ObserverNeutral 5y ago

To people saying this will end the race to the bottom. It will never end, when every rate is equal then tax rate would magically stop being important and the important number will be: 1) Odds of tax audits 2) Countries with statutes of limitations 3) Lenght of the legal proceedings so you can get to the aforementioned statutes of limitation 4) Median fines imposed for non-compliance etc. 5) Countries with most bribable tax officials Human nature can't be solved, tragedy of the commons can't be solved either

andrepd 5y ago
That's a very cynical view. Many things cannot be 'solved', but they can be ammeliorated.
- ObserverNeutral 5y ago
  how would this be an improvement, you just change the set of people who evade taxes. From people who pay tax experts millions to study really clever ways of doing transfer pricing and income shifting towards people who study the odds of audit and bribe tax officials

balozi 5y ago

> Janet Yellen to call for XYZ My perception is that there is a marked increase in the someone "will do X", or "will call for Y", or "will ask for Z" type reporting. How about just report when it happens? What is the strategy anyway? Is it to get the story first? Is it an attempt at preloading spin? Is it an attempt at taking the public's temperature? Or is it a means to manufacturing news content where none exists?

sigzero 5y ago

Good luck with that. Not.

boredumb 5y ago

end the fed.

throwawaysea 5y ago

No thanks. The next step will be for them to normalize global wealth taxes and exit taxes. I don’t want a web of overly bloated states to have that degree of control over citizens. Individuals liberties are waning and Marxist authoritarianism is building up in small imperceptible steps like this proposal.

triceratops 5y ago

At the very least, this levels the playing field somewhat between US persons and corporations that do business in the US. US persons (aka US tax residents) pay income tax on their worldwide income, regardless of source, even if they owned the income-producing asset before ever becoming a US person. It's always seemed unfair to me that corporations can essentially say "Hey, we actually earned this income someplace else" and not get taxed.

m101 5y ago

Corporate taxes are the most blindingly stupid idea ever. People forget that the only way to level the playing field between Amazon and local shops is to cut taxes to 0 rather than layering on increasingly complex tax rules. Amazon thrives in the presence of corporate taxes. Corporate taxes also create huge incentive to offshore jobs to tax havens. Not to mention no corporate tax rates would mean no need for all sorts of expenses on legal and accountants for tax optimisation. In the UK I think we acknowledge they are a bad idea by having a plan to step them down over time to some low level (and potentially even 0 eventually). Covid derailed that plan.

cuchoi 5y ago
> Corporate taxes also create huge incentive to offshore jobs to tax havens That's why Yellen is proposing a global minimum corporate tax.
- emteycz 5y ago
  Why would the states profiting from low/none corporate taxes follow suit? Seems like their business just got a lot better.
- m101 5y ago
  The problem here is that we are treating a symptom of legislation and not the cause, as usual. Instead of all trying to agree on a level of tax rates (unrealistic) we could unilaterally slash corporate tax rates and watch the others follow.

jkingsbery 5y ago

I'd be curious to know more details about the proposals. It seems hard to look at corporate taxes in isolation from other things corporations do and the other taxes that people pay. Some countries choose to provide fewer government services, or are able to provide government services for less money. It seems only fair that these countries would have lower corporate tax rates. Corporate tax rates also seem like they would be affected by what the capital gains tax is: the government can get money out of a group of people by either taxing the company they own or by taxing the capital gains they realize when their company does well. It also does matter what kind of other taxes a company will need to pay (payroll taxes), or what other taxes citizens pay (whether or not they pay VAT). It's hard to imagine a global minimum corporate tax rate not being exploited by special interests. Just because companies avoid taxes today by switching countries, won't mean that they won't find other loop holes tomorrow. It's easy to imagine countries saying "sure, our nominal corporate tax rate is 21%, but <special protected industry X> has to have a different rate because of <cultural and historical specific reasons to that country>.

tonfreed 5y ago

How about a big cold glass of shut the fuck up America