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> Probably the best solution is a minimum tax worldwide. I saw a similar comment earlier this week. I don't understand why first world people think developing

> Probably the best solution is a minimum tax worldwide. I saw a similar comment earlier this week. I don't understand why first world people think developing countries would agree to this minimum tax and not undercut them on day 1 to attract investments and jobs. There are no global tax authorities. Nobody is going to enforce these things. Even this G7 treaty is going to be a mess in practice because multilateral treaties are flawed like that.

ben_w 5y ago
It’s like fixing bugs in software: I don’t expect any given proposal to solve everything or to close every loophole and workaround, but it’s still important to put continuous effort into trying.
xxpor 5y ago
The US would sanction them, and then they'd be screwed.
- throwaway894345 5y ago
  Why don’t countries do this already? E.g., most European countries and presumably the US dislike that Ireland undercuts corp tax, so why don’t they penalize corporations who operate in their borders but are headquartered in a country that doesn’t have agreeable tax laws?
  - OJFord 5y ago
    Well they sometimes do (e.g. fine them) but at a scale where it matters these are companies that also have leverage - if Amazon responded 'Ehhh we might stop delivering to the UK then, Brexit is already an expense, with this too ...' and then the Government is the government that lost/banned/there-is-no-good-spin Amazon. Within the EU, (or EEA perhaps) I vaguely recall there's some restriction against penalising for things like this, as long as the other nation is also a member state. (Since viewed as a whole, 'one EU', it should be fine, I suppose.) Struggling for the right words ro search though.
  - chriscappuccio 5y ago
    without the cabal agreeing on taxes and penalties, the corporations would simply move to the lower tax rate districts
amelius 5y ago
G7 can say: no more trade on our soil if you don't pay the minimum tax.
JumpCrisscross 5y ago
> Nobody is going to enforce these things It doesn’t become effective until the G20, or at least G7, pass it. Part of the law would be automatic tariffs against non-participants. That leaves non-signatories with a choice between compliance and economic decimation.
Naga 5y ago
I agree that this is hard and that there are no global tax authorities, I wasn't trying to say that's something that can just be implemented. It's probably the most realistic solution to the transfer pricing problem though, which probably says something about the scale of this issue. I also disagree that the developing world is that much of a problem. Currently, in the developing world, money flows to places like the U.S. Virgin Islands, Bermuda, etc. While I'm sure they are not the only places that could act like as tax havens, there's probably a limit. Multinationals probably aren't going to want to relocate their headquarters to a developing country like Egypt for a variety of reasons like language, currency, corruption, weaker property laws, ease of moving cash, etc. Tax havens could also be disabled with tools like sanctions on a G7 or G20 basis. Bermuda doesn't want to play ball? Sure, then the G20 banks and governments will not allow their citizens to deal with Bermuda. As other people have said, the goal isn't to prevent this from happening, it's to make it too risky or expensive to justify as opposed to just paying corporate tax on profits without shifting them.

ben_w 5y ago

It’s like fixing bugs in software: I don’t expect any given proposal to solve everything or to close every loophole and workaround, but it’s still important to put continuous effort into trying.

xxpor 5y ago

The US would sanction them, and then they'd be screwed.

throwaway894345 5y ago
Why don’t countries do this already? E.g., most European countries and presumably the US dislike that Ireland undercuts corp tax, so why don’t they penalize corporations who operate in their borders but are headquartered in a country that doesn’t have agreeable tax laws?
- OJFord 5y ago
  Well they sometimes do (e.g. fine them) but at a scale where it matters these are companies that also have leverage - if Amazon responded 'Ehhh we might stop delivering to the UK then, Brexit is already an expense, with this too ...' and then the Government is the government that lost/banned/there-is-no-good-spin Amazon. Within the EU, (or EEA perhaps) I vaguely recall there's some restriction against penalising for things like this, as long as the other nation is also a member state. (Since viewed as a whole, 'one EU', it should be fine, I suppose.) Struggling for the right words ro search though.
- chriscappuccio 5y ago
  without the cabal agreeing on taxes and penalties, the corporations would simply move to the lower tax rate districts

amelius 5y ago

G7 can say: no more trade on our soil if you don't pay the minimum tax.

JumpCrisscross 5y ago

> Nobody is going to enforce these things It doesn’t become effective until the G20, or at least G7, pass it. Part of the law would be automatic tariffs against non-participants. That leaves non-signatories with a choice between compliance and economic decimation.

Naga 5y ago

I agree that this is hard and that there are no global tax authorities, I wasn't trying to say that's something that can just be implemented. It's probably the most realistic solution to the transfer pricing problem though, which probably says something about the scale of this issue. I also disagree that the developing world is that much of a problem. Currently, in the developing world, money flows to places like the U.S. Virgin Islands, Bermuda, etc. While I'm sure they are not the only places that could act like as tax havens, there's probably a limit. Multinationals probably aren't going to want to relocate their headquarters to a developing country like Egypt for a variety of reasons like language, currency, corruption, weaker property laws, ease of moving cash, etc. Tax havens could also be disabled with tools like sanctions on a G7 or G20 basis. Bermuda doesn't want to play ball? Sure, then the G20 banks and governments will not allow their citizens to deal with Bermuda. As other people have said, the goal isn't to prevent this from happening, it's to make it too risky or expensive to justify as opposed to just paying corporate tax on profits without shifting them.