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The global tax essentially functions as a cartel, and there is no reason to believe it will be stable in the long run. It's a classic prisoner's dilemma - the i

The global tax essentially functions as a cartel, and there is no reason to believe it will be stable in the long run. It's a classic prisoner's dilemma - the incentive to cut out is just too strong. Furthermore, by setting such a low anchor price, if the cartel eventually fails, countries would be racing to the bottom from an even lower tax rate. I'm not super optimistic about this tax, but have been pretty surprised by how quickly it seems to be getting adopted regardless.

WanderPanda 5y ago
If some country drops out I'm sure it can use some "democracy" spread by the cartel
ethbr0 5y ago
I dunno. Majority control of international trade (exports or imports) is a heavy cudgel with which to wield against uncooperative or defecting parties. It seems like with enough economic backing they could (and probably will) enforce the agreement. The more unstable question is whether the respective democracies can get it through their lobbying systems intact.
riffraff 5y ago
OPEC is a cartel and has been running for 60 years, that would be a fairly good run for a global agreement. But I think you misclassify this from a game theory point of view. Larger countries with higher tax rates can effectively punish companies that take advantage of the other ones if the cartel is broken. This is the same reason the agreement was reached in the first place, it's "give up a little or we'll fight and you'll lose", much like it was for bank secrets in Switzerland.
- AdrianB1 5y ago
  OPEC is a very good deal for the countries that are members; this deal is a very bad deal for most of the countries that are part of.
- Dracophoenix 5y ago
  Switzerland's bank secrecy lost not because of a tax cartel but because FATCA was signed to allow the United States to unconstitutionally give itself universal jurisdiction over bank accounts held by American customers. It was a "my way or high way" power play by the Obama administration coupled with a punishing increase of citizenship renunciation fees from 0 to the highest in the world at nearly $2.5k.
  - riffraff 5y ago
    that is exactly what I wrote: Switzerland was bullied into doing it, and so will be small for low-tax countries. This is not a prisoner's dilemma, since the players have different strengths.
wolverine876 5y ago
> The global tax essentially functions as a cartel, and there is no reason to believe it will be stable in the long run. Plenty of international agreements are stable in the long run. What makes this one different?
cturner 5y ago
Government is a service, and services work harder when they have to compete. Tax competition is a good thing. When raising taxes is hard, government has to work to justify its spend. If it doesn't, the business and talent goes elsewhere. The proposed policy seems to be one thing pretending to be another. It is selling itself as a crackdown on big tech tax minimisation. Your description of it as a cartel arrangement is much more fitting.
- throwaway894345 5y ago
  > Tax competition is a good thing. When raising taxes is hard, government has to work to justify its spend. If it doesn't, the business and talent goes elsewhere. Doesn't this mean that they're competing for the upper classes? The "value" in government is, in my opinion at least, ensuring rights (specifically equality irrespective of wealth) and services for all citizens, not only the very rich. Maybe you'd argue that the very rich care deeply about poorer citizens and would not leave a country that adequately provides for its poor, but I don't think history supports this generalization of the very rich. It seems like this is a recipe for exacerbating inequality--I'm not an ardent leftist, but I can't get down with "let the poor starve" nor can I bring myself to subscribe to the various economic trickle-down theories for caring for the poor. It seems to me that economic inequality must be limited and that the government is the only institution that has a chance at limiting it.
  - deleted 5y ago
    [deleted]
  - AlexTWithBeard 5y ago
    > Doesn't this mean that they're competing for the upper classes? Well, they are. It's a matter of fact. Upper and middle classes, I would say. The questions the government should solve are therefore (1) how do we attract more well-off people - whether it's through low crime rate, good health and education services or nice parks and clean air, (2) how do we use the limited resources we have to improve lives of not that-well-off and (3) how do we turn the poor ones into taxpayers.

WanderPanda 5y ago

If some country drops out I'm sure it can use some "democracy" spread by the cartel

ethbr0 5y ago

I dunno. Majority control of international trade (exports or imports) is a heavy cudgel with which to wield against uncooperative or defecting parties. It seems like with enough economic backing they could (and probably will) enforce the agreement. The more unstable question is whether the respective democracies can get it through their lobbying systems intact.

riffraff 5y ago

OPEC is a cartel and has been running for 60 years, that would be a fairly good run for a global agreement. But I think you misclassify this from a game theory point of view. Larger countries with higher tax rates can effectively punish companies that take advantage of the other ones if the cartel is broken. This is the same reason the agreement was reached in the first place, it's "give up a little or we'll fight and you'll lose", much like it was for bank secrets in Switzerland.

AdrianB1 5y ago
OPEC is a very good deal for the countries that are members; this deal is a very bad deal for most of the countries that are part of.
Dracophoenix 5y ago
Switzerland's bank secrecy lost not because of a tax cartel but because FATCA was signed to allow the United States to unconstitutionally give itself universal jurisdiction over bank accounts held by American customers. It was a "my way or high way" power play by the Obama administration coupled with a punishing increase of citizenship renunciation fees from 0 to the highest in the world at nearly $2.5k.
- riffraff 5y ago
  that is exactly what I wrote: Switzerland was bullied into doing it, and so will be small for low-tax countries. This is not a prisoner's dilemma, since the players have different strengths.

wolverine876 5y ago

> The global tax essentially functions as a cartel, and there is no reason to believe it will be stable in the long run. Plenty of international agreements are stable in the long run. What makes this one different?

cturner 5y ago

Government is a service, and services work harder when they have to compete. Tax competition is a good thing. When raising taxes is hard, government has to work to justify its spend. If it doesn't, the business and talent goes elsewhere. The proposed policy seems to be one thing pretending to be another. It is selling itself as a crackdown on big tech tax minimisation. Your description of it as a cartel arrangement is much more fitting.

throwaway894345 5y ago
> Tax competition is a good thing. When raising taxes is hard, government has to work to justify its spend. If it doesn't, the business and talent goes elsewhere. Doesn't this mean that they're competing for the upper classes? The "value" in government is, in my opinion at least, ensuring rights (specifically equality irrespective of wealth) and services for all citizens, not only the very rich. Maybe you'd argue that the very rich care deeply about poorer citizens and would not leave a country that adequately provides for its poor, but I don't think history supports this generalization of the very rich. It seems like this is a recipe for exacerbating inequality--I'm not an ardent leftist, but I can't get down with "let the poor starve" nor can I bring myself to subscribe to the various economic trickle-down theories for caring for the poor. It seems to me that economic inequality must be limited and that the government is the only institution that has a chance at limiting it.
- deleted 5y ago
  [deleted]
- AlexTWithBeard 5y ago
  > Doesn't this mean that they're competing for the upper classes? Well, they are. It's a matter of fact. Upper and middle classes, I would say. The questions the government should solve are therefore (1) how do we attract more well-off people - whether it's through low crime rate, good health and education services or nice parks and clean air, (2) how do we use the limited resources we have to improve lives of not that-well-off and (3) how do we turn the poor ones into taxpayers.