4 ms·

The actual rate is the least important part. What is important is jurisdictional issues, accounting standards, corporate law, deferral rules and the like. This

The actual rate is the least important part. What is important is jurisdictional issues, accounting standards, corporate law, deferral rules and the like. This is the problem with corporation tax generally. You can't really have a conversation about it in "normal" terms, that a journalist, politician or MOP can understand. It can only be understood via scenario plans and spreadsheets. It's a million little details. There is no "big picture."

Ericson2314 5y ago
And furthermore, I'd say however they harmonize the taxation shouldn't even matter, because the the G7 countries (or at least the euro ones acting zone wide) have no structural constraints preventing the money printer. The real important thing here is establishing the importance in preventing the race-to-the-bottom, so more important things like multinational carbon taxes, developing country capital controls, etc. are newly inside the Overton Window.
- dalbasal 5y ago
  IDK what you mean by "constraints preventing the money printer," but in the eurozone we have the opposite problem. Only the ECB can "print" money, or rather, only the ECB can create primary loans to national governments. National banks can't. In practice, expanding national debt requires eurozone-wide unanimity. Ask Greece.
  - a1369209993 5y ago
    > Only the ECB can "print" money > expanding national debt I feel the need to point out that currency debasement is a fundamentally different thing from taking out loans/issuing bonds/other debt. If anything, currency debasement reduces national debt in real terms, by devaluing the currency it's denominated in. I'm not especially clear on the situation, but I was under the impression that Greece's problem was that noone was willing to lend them money due to a expectation that they wouldn't be paying it back, not that they were prohibited from borrowing by EU law, but even that would be a different thing from being prohibited from printing money.
    - indigo945 5y ago
      But Greece is prohibited from printing money because it's currency is the Euro, and like all countries that have it, Greece had to sign the stability pact and, more importantly, also had to sign off the right to print more Euros. Only the European Central Bank can print money, and Greece can't tell it when to.
    - dalbasal 5y ago
      I feel like I need to point out that they are identical, inasmuch as debasement means anything in our current currency systems. Debasement of gold happens because gold isn't printed. You need to dilute it in order to make more coins. In a gold currency system, it's the gold that's the "real" currency. Gold value rises and falls, but that's not debasement. The coins are debase. It's theoretically possible for a gold coin to be debased, but also worth more because the value of gold has increased by more than the coin has been diluted. Euros and dollars aren't redeemable for anything, so debasement doesn't really mean anything. In the Eurozone, when a national government runs a deficit (all of us, currently) then the ECB issues a loan. That money is then available for the government to spend. This is where Euros come from. The ECB refused to loan/print money to the Greek government until they agreed to certain demands. Ireland, my country, did agree to the demands and the ECB made some euros for us to pay our banks with. It works in a similar way in the US. The Federal Reserve Bank gives their government dollars, and they US government give them bonds in exchange... a loan. The Fed can then sell those bonds to anyone who wants them, or hold them. The one unbreakable eurozone rule is no printing your own money. The "Greek Crisis" was a fear the Greece would try to issue its own bonds, which would trade at a different rate & effectively create their own separate euro... confusing everyone.
    - imtringued 5y ago
      Extremely short analysis. After 2008 Greece's GDP crashed by 50% over several years and stabilized 2016. It's pretty obvious that when you have a shrinking economy that your real debt burden is going up over time. 100% debt to GDP will turn into 200% and it's not because of irresponsible spending or low taxation. If anything you have to lend more money to Greece and only give the most productive companies/sections of the government access to loans, if Greece's GDP was 355 billion € in the past it can recover up to that old level.
  - Ericson2314 5y ago
    By "structural" I meant the material nature of the economy; the E.U.'s is certainly big and closed enough. Yes, there is the straight-jacketted neoliberal constitution that makes everything terrible, but that's separate. I really hope they can fix that.
usrusr 5y ago
So true. It's a fixing the algorithm vs tweaking some parameters situation. PS: if I were to design a state I would make it a part of the constitution that laws must either be written with placeholder variables for any concrete numbers you'd want to put into them or specify only concrete values for those placeholders and nothing else. And no single vote can contain both kinds at once.
- deleted 5y ago
  [deleted]
- bckr 5y ago
  Expand on this please? What would be excluded in the "nothing else"? And what good would it do to ban single votes on both parameters and constants?
  - a1369209993 5y ago
    Based on pattern-matching on my own political science knowledge, they're saying that a legislative act can either: establish a law, but all numbers must be unspecified placeholder parameters, or: specify the (new) values for the parameters of some existing law, but without changing the text of the law. A single vote cannot apply to both.
- layer8 5y ago
  Parameters vs. algorithms is really a spectrum though. Just ask the lispers. ;)
- clairity 5y ago
  rather than simple placeholder variables, we should employ placeholders for smoothly continuous functions over the relevant parameter space. for taxes, the parameter space might include revenue and profit, over which the tax is smoothly continuous. discontinuities just beg to be exploited.
  - specialist 5y ago
    I eagerly await the broad recognition that economies are non-linear complex adaptive systems.
adrianb 5y ago
Also it seems the agreement is that 7 countries agree that all countries in the world need to have that minimum rate? How would they convince the rest of 180+ countries? Especially, how do you convince the ones who would lose a lot of tax income by closing their tax heaven loopholes.
- pochamago 5y ago
  These seven countries have a lot of sway, but even if it's only these countries that implement it it will likely affect a number of corporations. There are benefits to being legally located in stable modern economies, so this at the very least minimizes shopping around for the lowest tax rate among them.
- dalbasal 5y ago
  Dunno. They haven't actually agreed to minimum rates yet. They just said they might in future. Broadly, you are not going to convince pure tax havens (eg Bermuda) to close tax loopholes. They don't even have corporate tax. You can do other things though. Part of the problem here is that reporting is mixing up issues. It's not clear how (if at all) the MSFT-Bermuda shenanigans relate. The minimum tax rate hasn't been done yet, and may not be. What they do seem to have agreed on is some sort of joint accounting standards. Accounting standards define what counts or doesn't count as an expense, investment, etc. Where that (may, we don't know yet) relate to the rest of 180+ countries is, for example: US accounting standards no longer recognize payments to (for eg) the Bermuda entity as an expense transaction. When you are uncoordinated, discrepancies in these standards allow companies to pick and choose.
- occamrazor 5y ago
  Basically, you do not consider payment to non-cooperating countries for tax purposes. For example ACME Inc. produces widgets with costs of 50 and revenue of 100 in the US. To avoid taxes, it also pays 50 in "licensing fees" to ACME Tax Heaven in the Cayman Islands, so that the profit in the US is 0. If the payment to the Cayman Islands is not counted, then the taxable profit in the US becomes 50.

Ericson2314 5y ago

And furthermore, I'd say however they harmonize the taxation shouldn't even matter, because the the G7 countries (or at least the euro ones acting zone wide) have no structural constraints preventing the money printer. The real important thing here is establishing the importance in preventing the race-to-the-bottom, so more important things like multinational carbon taxes, developing country capital controls, etc. are newly inside the Overton Window.

dalbasal 5y ago
IDK what you mean by "constraints preventing the money printer," but in the eurozone we have the opposite problem. Only the ECB can "print" money, or rather, only the ECB can create primary loans to national governments. National banks can't. In practice, expanding national debt requires eurozone-wide unanimity. Ask Greece.
- a1369209993 5y ago
  > Only the ECB can "print" money > expanding national debt I feel the need to point out that currency debasement is a fundamentally different thing from taking out loans/issuing bonds/other debt. If anything, currency debasement reduces national debt in real terms, by devaluing the currency it's denominated in. I'm not especially clear on the situation, but I was under the impression that Greece's problem was that noone was willing to lend them money due to a expectation that they wouldn't be paying it back, not that they were prohibited from borrowing by EU law, but even that would be a different thing from being prohibited from printing money.
  - indigo945 5y ago
    But Greece is prohibited from printing money because it's currency is the Euro, and like all countries that have it, Greece had to sign the stability pact and, more importantly, also had to sign off the right to print more Euros. Only the European Central Bank can print money, and Greece can't tell it when to.
  - dalbasal 5y ago
    I feel like I need to point out that they are identical, inasmuch as debasement means anything in our current currency systems. Debasement of gold happens because gold isn't printed. You need to dilute it in order to make more coins. In a gold currency system, it's the gold that's the "real" currency. Gold value rises and falls, but that's not debasement. The coins are debase. It's theoretically possible for a gold coin to be debased, but also worth more because the value of gold has increased by more than the coin has been diluted. Euros and dollars aren't redeemable for anything, so debasement doesn't really mean anything. In the Eurozone, when a national government runs a deficit (all of us, currently) then the ECB issues a loan. That money is then available for the government to spend. This is where Euros come from. The ECB refused to loan/print money to the Greek government until they agreed to certain demands. Ireland, my country, did agree to the demands and the ECB made some euros for us to pay our banks with. It works in a similar way in the US. The Federal Reserve Bank gives their government dollars, and they US government give them bonds in exchange... a loan. The Fed can then sell those bonds to anyone who wants them, or hold them. The one unbreakable eurozone rule is no printing your own money. The "Greek Crisis" was a fear the Greece would try to issue its own bonds, which would trade at a different rate & effectively create their own separate euro... confusing everyone.
  - imtringued 5y ago
    Extremely short analysis. After 2008 Greece's GDP crashed by 50% over several years and stabilized 2016. It's pretty obvious that when you have a shrinking economy that your real debt burden is going up over time. 100% debt to GDP will turn into 200% and it's not because of irresponsible spending or low taxation. If anything you have to lend more money to Greece and only give the most productive companies/sections of the government access to loans, if Greece's GDP was 355 billion € in the past it can recover up to that old level.
- Ericson2314 5y ago
  By "structural" I meant the material nature of the economy; the E.U.'s is certainly big and closed enough. Yes, there is the straight-jacketted neoliberal constitution that makes everything terrible, but that's separate. I really hope they can fix that.

usrusr 5y ago

So true. It's a fixing the algorithm vs tweaking some parameters situation. PS: if I were to design a state I would make it a part of the constitution that laws must either be written with placeholder variables for any concrete numbers you'd want to put into them or specify only concrete values for those placeholders and nothing else. And no single vote can contain both kinds at once.

deleted 5y ago
[deleted]
bckr 5y ago
Expand on this please? What would be excluded in the "nothing else"? And what good would it do to ban single votes on both parameters and constants?
- a1369209993 5y ago
  Based on pattern-matching on my own political science knowledge, they're saying that a legislative act can either: establish a law, but all numbers must be unspecified placeholder parameters, or: specify the (new) values for the parameters of some existing law, but without changing the text of the law. A single vote cannot apply to both.
layer8 5y ago
Parameters vs. algorithms is really a spectrum though. Just ask the lispers. ;)
clairity 5y ago
rather than simple placeholder variables, we should employ placeholders for smoothly continuous functions over the relevant parameter space. for taxes, the parameter space might include revenue and profit, over which the tax is smoothly continuous. discontinuities just beg to be exploited.
- specialist 5y ago
  I eagerly await the broad recognition that economies are non-linear complex adaptive systems.

adrianb 5y ago

Also it seems the agreement is that 7 countries agree that all countries in the world need to have that minimum rate? How would they convince the rest of 180+ countries? Especially, how do you convince the ones who would lose a lot of tax income by closing their tax heaven loopholes.

pochamago 5y ago
These seven countries have a lot of sway, but even if it's only these countries that implement it it will likely affect a number of corporations. There are benefits to being legally located in stable modern economies, so this at the very least minimizes shopping around for the lowest tax rate among them.
dalbasal 5y ago
Dunno. They haven't actually agreed to minimum rates yet. They just said they might in future. Broadly, you are not going to convince pure tax havens (eg Bermuda) to close tax loopholes. They don't even have corporate tax. You can do other things though. Part of the problem here is that reporting is mixing up issues. It's not clear how (if at all) the MSFT-Bermuda shenanigans relate. The minimum tax rate hasn't been done yet, and may not be. What they do seem to have agreed on is some sort of joint accounting standards. Accounting standards define what counts or doesn't count as an expense, investment, etc. Where that (may, we don't know yet) relate to the rest of 180+ countries is, for example: US accounting standards no longer recognize payments to (for eg) the Bermuda entity as an expense transaction. When you are uncoordinated, discrepancies in these standards allow companies to pick and choose.
occamrazor 5y ago
Basically, you do not consider payment to non-cooperating countries for tax purposes. For example ACME Inc. produces widgets with costs of 50 and revenue of 100 in the US. To avoid taxes, it also pays 50 in "licensing fees" to ACME Tax Heaven in the Cayman Islands, so that the profit in the US is 0. If the payment to the Cayman Islands is not counted, then the taxable profit in the US becomes 50.