12 ms·

The problem is real, many big tech paid less than 1% on non-USA income. This is likely one of the best agreements in decades. Will increase tax collection by d

The problem is real, many big tech paid less than 1% on non-USA income. This is likely one of the best agreements in decades. Will increase tax collection by decreasing incentive to avoid taxes. Little burrocracy, huge increase. Previous mesh of transfer prices and other meassures added huge amount of burrocracy on a lot of companies, yet still did not make much difference for the biggest avoiders.

oh_sigh 5y ago
> burrocracy I always felt like we were being ruled by donkeys...
- chosenbreed37 5y ago
  I see what you did there :-)
- jikbd 5y ago
  It’s a common word play in Spanish; I’m not sure that it was intended in this case, though.
Aerroon 5y ago
And why is it so important that businesses pay a high corporate tax rate? Isn't it enough to tax the money when it actually leaves the business? (Is paid out.) Some economists say that corporate taxes distort capital allocation.[0] A minimum global tax rate removes the ability for a country to decide for themselves whether they want this or not. Estonia, for example, is worried that their tax system has to change as a result, because they don't charge a corporate tax on money that's reinvested or retained. Edit: apparently Estonia is banking on an exemption for reinvestment. [0] https://ec.europa.eu/economy_finance/publications/economic_paper/2013/pdf/ecp503_en.pdf https://ec.europa.eu/economy_finance/publications/economic_p...
- Aa9C4xPz43Gg7k6 5y ago
  For socialists it's never enough, money has to be taxed 10 times. And I'm not using it in the slur way that Americans usually do. There's a kind of thinking that believes that money belongs to the person who earned it. There's another kind of thinking that treats everything as communal (but managed by elite class at the top of the system), taking anything away from the pile is evil then.
  - Volundr 5y ago
    I think you would find many take issue with the concept that those getting rich are by definition the ones who "earned" it, or produced the value. Almost by definition I produced more value than my salary. There's also the issue of resources. How is it that a corporation can own the oil under my land? Why should that common resource be controlled by some private entity rather than being used for the common good? There's a balance in all things and attempting to boil this down to "there are two kinds of people" is reductive and unhelpful.
- wolverine876 5y ago
  > why is it so important that businesses pay a high corporate tax rate? It's not a high rate; 15% is low - is there a lower income tax rate for any entity? It's important because societies need money to operate, including many things on which businesses depend such infrastructure; a good legal system; a healthy, educated, and prosperous population; security; stable, well-regulated markets; etc. If they don't pay their share, then others must or societies lose valuable things.
  - Aerroon 5y ago
    Are corporations people now? Do they have their own special set of rights and privileges like people do? Ultimately, corporations are groups of people. Why isn't it sufficient to tax the money when the owners of the corporation are trying to cash out through dividends or in some other way? Why does it have to be taxed every year like income? Why is it necessary to tax money that the corporation would otherwise invest in R&D?
    - wolverine876 5y ago
      > Are corporations people now? Do they have their own special set of rights and privileges like people do? Yes, that is why the legal structure exists: They've always been 'fictional persons'. That's what a corporation is: A separate entity where money can be pooled and personal liability (and taxes) limited, with it its own rights and privileges. It's fundamental to a corporation. > Ultimately, corporations are groups of people. Why isn't it sufficient to tax the money when the owners of the corporation are trying to cash out through dividends or in some other way? Why does it have to be taxed every year like income? Why is it necessary to tax money that the corporation would otherwise invest in R&D? That's called a partnership, and you are free to setup your business in that way. I'd talk to a lawyer first; there might be a reason that every major business is setup as a corporation - there must be something they like about it. Why must I personally pay taxes on money I'd use to invest in other things? All money in the economy is productive, yet we must tax something. Why does the corporation get off free while, requiring me to pay more?
      - 5y ago
- closeparen 5y ago
  A corporation successfully reinvesting its profits makes shareholders wealthier. People are concerned about how wealthy those shareholders are getting. Personal income tax is not a solution for wealth inequality. The problem as stated is not what rich people are selling, it's what they own.
- bin_bash 5y ago
  Because billionaires never take the money out. They just take out loans using their assets as collateral. If they need to make payments they just take out more loans.
  - mr_toad 5y ago
    This is the real answer, but it’s not just billionaires. It’s pretty easy for a small business owner or even a sole trader to get away with using business assets for personal use.
  - stjohnswarts 5y ago
    This is one tax I do agree on. A wealth tax for anything over 100 million seems fair. 1-2% would be a great start.
  - Aerroon 5y ago
    And this new minimum tax changes things how? We still tax the money that is paid out from the company. Every incentive to do this scheme still exists, because personal income taxes are way higher than this minimum corporate tax.
kapuasuite 5y ago
I don't see the point of the corporate tax at all unless people think the IRS would be incapable of auditing people that incorporate.
- SeanLuke 5y ago
  Are you fine with corporate personhood in other respects, but not this one?
dmw_ng 5y ago
This is a welcome step, but I'd expect the non-uniformity of accounting and taxation policies around the globe to still leave a huge amount of latitude for suitably sized companies.
jjtheblunt 5y ago
> many big tech paid less than 1% on non-USA income. paid to whom? I ask because I have read that (for example) a U.S. company may pay the U.S. taxes of less than 1% on foreign income, but that's because that income was generated by (example) a German subsidiary which fully paid taxes in Germany, where it was earned. Point is, taxes internationally are really a mess.
- wolverine876 5y ago
  Perhaps you are unaware, but companies often shift revenue to countries where taxes are lower. > these narratives sometimes look scandalous when they're actually following tax laws of foreign countries "correctly". It could be both; nobody said it was illegal. Following the law doesn't make something right - many horrible things are illegal; the law isn't designed as optimal behavior. And in many situations, they write the laws for themselves. Regardless, clearly they need to pay their share, and their share is more than 1%.
  - ethbr0 5y ago
    As parent said, in international terms, you can effectively shift profits wherever you want, assuming a sufficiently large and non-physical business. Which led to this entire recent mess. It was less of a problem when steel needed to be bought here, and goods needed to be sold here. Can't very well claim that here is actually there. But with intangible goods, you can! Who's to say what the fair price of using Google Nigeria using Google's brand is? Which led to a game of "Where to put the profits, without being too obvious about it?" Which led to a race to the bottom in tax rates to attract business. Effectively, this base rate is good for major developed countries (who typically didn't need to have the lowest rates), international businesses (who had to play convoluted shell games, without ever knowing the true rules, to stay competitive), and even smaller or developing countries (who now don't have to cut their own throats to attract businesses). Which is probably why an agreement happened. Nobody liked the old game, but it was a competitive necessity.
    - jjtheblunt 5y ago
stjohnswarts 5y ago
Why should US corps pay taxes for money they make overseas? That should go to the countries that they're in. Few countries are as greedy as the USA when it comes to taxes. Ask any America working overseas who not only has to fight the locals on taxes and make sure they get their fair part, the USA IRS is always looking over their shoulder and they aren't in the USA making money. Ultimately the consumer has to pay for it as well so essentially the "money" gets taxed multiple times, when it's made, when it's sold, sometimes even when it's used, the money paid to employees is taxed, (cars, boats etc with annual taxes). It's insane.
- triceratops 5y ago
  > Why should US corps pay taxes for money they make overseas? Because US persons do as well. > the USA IRS is always looking over their shoulder and they aren't in the USA making money No the IRS wants you to pay the difference between local taxes and US taxes, no matter where you live and work. And, btw, this applies to any US person, not just US citizens. A green card holder or temporary worker in the US inherits a rental property from a relative? Pay taxes on the rental income. Never mind that that property never had anything to do with the US. > the "money" gets taxed multiple times Yes, money does get taxed multiple times. I don't see how that matters.

oh_sigh 5y ago

> burrocracy I always felt like we were being ruled by donkeys...

chosenbreed37 5y ago
I see what you did there :-)
jikbd 5y ago
It’s a common word play in Spanish; I’m not sure that it was intended in this case, though.

Aerroon 5y ago

And why is it so important that businesses pay a high corporate tax rate? Isn't it enough to tax the money when it actually leaves the business? (Is paid out.) Some economists say that corporate taxes distort capital allocation.[0] A minimum global tax rate removes the ability for a country to decide for themselves whether they want this or not. Estonia, for example, is worried that their tax system has to change as a result, because they don't charge a corporate tax on money that's reinvested or retained. Edit: apparently Estonia is banking on an exemption for reinvestment. [0] https://ec.europa.eu/economy_finance/publications/economic_paper/2013/pdf/ecp503_en.pdf https://ec.europa.eu/economy_finance/publications/economic_p...

Aa9C4xPz43Gg7k6 5y ago
For socialists it's never enough, money has to be taxed 10 times. And I'm not using it in the slur way that Americans usually do. There's a kind of thinking that believes that money belongs to the person who earned it. There's another kind of thinking that treats everything as communal (but managed by elite class at the top of the system), taking anything away from the pile is evil then.
- Volundr 5y ago
  I think you would find many take issue with the concept that those getting rich are by definition the ones who "earned" it, or produced the value. Almost by definition I produced more value than my salary. There's also the issue of resources. How is it that a corporation can own the oil under my land? Why should that common resource be controlled by some private entity rather than being used for the common good? There's a balance in all things and attempting to boil this down to "there are two kinds of people" is reductive and unhelpful.
wolverine876 5y ago
> why is it so important that businesses pay a high corporate tax rate? It's not a high rate; 15% is low - is there a lower income tax rate for any entity? It's important because societies need money to operate, including many things on which businesses depend such infrastructure; a good legal system; a healthy, educated, and prosperous population; security; stable, well-regulated markets; etc. If they don't pay their share, then others must or societies lose valuable things.
- Aerroon 5y ago
  Are corporations people now? Do they have their own special set of rights and privileges like people do? Ultimately, corporations are groups of people. Why isn't it sufficient to tax the money when the owners of the corporation are trying to cash out through dividends or in some other way? Why does it have to be taxed every year like income? Why is it necessary to tax money that the corporation would otherwise invest in R&D?
  - wolverine876 5y ago
    > Are corporations people now? Do they have their own special set of rights and privileges like people do? Yes, that is why the legal structure exists: They've always been 'fictional persons'. That's what a corporation is: A separate entity where money can be pooled and personal liability (and taxes) limited, with it its own rights and privileges. It's fundamental to a corporation. > Ultimately, corporations are groups of people. Why isn't it sufficient to tax the money when the owners of the corporation are trying to cash out through dividends or in some other way? Why does it have to be taxed every year like income? Why is it necessary to tax money that the corporation would otherwise invest in R&D? That's called a partnership, and you are free to setup your business in that way. I'd talk to a lawyer first; there might be a reason that every major business is setup as a corporation - there must be something they like about it. Why must I personally pay taxes on money I'd use to invest in other things? All money in the economy is productive, yet we must tax something. Why does the corporation get off free while, requiring me to pay more?
    - 5y ago
closeparen 5y ago
A corporation successfully reinvesting its profits makes shareholders wealthier. People are concerned about how wealthy those shareholders are getting. Personal income tax is not a solution for wealth inequality. The problem as stated is not what rich people are selling, it's what they own.
bin_bash 5y ago
Because billionaires never take the money out. They just take out loans using their assets as collateral. If they need to make payments they just take out more loans.
- mr_toad 5y ago
  This is the real answer, but it’s not just billionaires. It’s pretty easy for a small business owner or even a sole trader to get away with using business assets for personal use.
- stjohnswarts 5y ago
  This is one tax I do agree on. A wealth tax for anything over 100 million seems fair. 1-2% would be a great start.
- Aerroon 5y ago
  And this new minimum tax changes things how? We still tax the money that is paid out from the company. Every incentive to do this scheme still exists, because personal income taxes are way higher than this minimum corporate tax.

kapuasuite 5y ago

I don't see the point of the corporate tax at all unless people think the IRS would be incapable of auditing people that incorporate.

SeanLuke 5y ago
Are you fine with corporate personhood in other respects, but not this one?

dmw_ng 5y ago

This is a welcome step, but I'd expect the non-uniformity of accounting and taxation policies around the globe to still leave a huge amount of latitude for suitably sized companies.

jjtheblunt 5y ago

> many big tech paid less than 1% on non-USA income. paid to whom? I ask because I have read that (for example) a U.S. company may pay the U.S. taxes of less than 1% on foreign income, but that's because that income was generated by (example) a German subsidiary which fully paid taxes in Germany, where it was earned. Point is, taxes internationally are really a mess.

wolverine876 5y ago
Perhaps you are unaware, but companies often shift revenue to countries where taxes are lower. > these narratives sometimes look scandalous when they're actually following tax laws of foreign countries "correctly". It could be both; nobody said it was illegal. Following the law doesn't make something right - many horrible things are illegal; the law isn't designed as optimal behavior. And in many situations, they write the laws for themselves. Regardless, clearly they need to pay their share, and their share is more than 1%.
- ethbr0 5y ago
  As parent said, in international terms, you can effectively shift profits wherever you want, assuming a sufficiently large and non-physical business. Which led to this entire recent mess. It was less of a problem when steel needed to be bought here, and goods needed to be sold here. Can't very well claim that here is actually there. But with intangible goods, you can! Who's to say what the fair price of using Google Nigeria using Google's brand is? Which led to a game of "Where to put the profits, without being too obvious about it?" Which led to a race to the bottom in tax rates to attract business. Effectively, this base rate is good for major developed countries (who typically didn't need to have the lowest rates), international businesses (who had to play convoluted shell games, without ever knowing the true rules, to stay competitive), and even smaller or developing countries (who now don't have to cut their own throats to attract businesses). Which is probably why an agreement happened. Nobody liked the old game, but it was a competitive necessity.
  - jjtheblunt 5y ago

stjohnswarts 5y ago

Why should US corps pay taxes for money they make overseas? That should go to the countries that they're in. Few countries are as greedy as the USA when it comes to taxes. Ask any America working overseas who not only has to fight the locals on taxes and make sure they get their fair part, the USA IRS is always looking over their shoulder and they aren't in the USA making money. Ultimately the consumer has to pay for it as well so essentially the "money" gets taxed multiple times, when it's made, when it's sold, sometimes even when it's used, the money paid to employees is taxed, (cars, boats etc with annual taxes). It's insane.

triceratops 5y ago
> Why should US corps pay taxes for money they make overseas? Because US persons do as well. > the USA IRS is always looking over their shoulder and they aren't in the USA making money No the IRS wants you to pay the difference between local taxes and US taxes, no matter where you live and work. And, btw, this applies to any US person, not just US citizens. A green card holder or temporary worker in the US inherits a rental property from a relative? Pay taxes on the rental income. Never mind that that property never had anything to do with the US. > the "money" gets taxed multiple times Yes, money does get taxed multiple times. I don't see how that matters.