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> European leaders praised the decision, with Germany's Chancellor Olaf Scholz describing it as a "project close to my heart". French President Emmanuel Macron

> European leaders praised the decision, with Germany's Chancellor Olaf Scholz describing it as a "project close to my heart". French President Emmanuel Macron said the country had been pushing the idea for more than four years. Of course countries with high taxes are all for raising taxes in countries where they are lower! Now, unfortunately the article does not mention the interesting bit, which is that EU countries with lower corporation tax will therefore have to raise their rates. I'm thinking especially about Hungary and with the current tense relations I'm surprised that they agreed... What is the deal?

jacooper 4y ago
More money for the government, why would they refuse ?
- jiveturkey 4y ago
  It severely reduces their ability to attract future business, as well as the likelihood that companies will continue to remain headquartered there. If you go there for tax benefits and those tax benefits go away, how likely are you to continue to bother with such complex structures?
- anm89 4y ago
  This is empirically not always true. Higher taxes can lead to lower tax revenues if it reduces the size of the pie when business go to tax friendly jurisdictions. This can also work with income taxes. For example if you set income tax at 100%, you'd get 0 revenue probably because no one would work. This effect happens at values below 100%
  - skt5 4y ago
    This is what economists call the Laffer curve. See https://en.wikipedia.org/wiki/Laffer_curve https://en.wikipedia.org/wiki/Laffer_curve.
- mytailorisrich 4y ago
  Why do countries have lower tax rates to start with? For many small/remote countries, lower corporation tax is a way to attract companies that would never have come if the tax rate was higher.
  - manmal 4y ago
    Looking at you, Ireland.
    - secondcoming 4y ago
      Ireland did the right thing. The 1980’s and 1990’s were bleak times.
      - lechacker 4y ago
        And the 2020s and 2030s are going to be even bleaker, now.
- rnk 4y ago
  At a certain point, where you have such different views in countries like Hungary (Hungary wants to placate Russia or something similar leading to not helping Ukraine, wants to block Finland and Sweden from Nato, wants to disable/reduce/destroy democracy in Hungary, wants all that stimulus money from the EU to keep coming in), we just have to say we'll go our way, you go yours. Unity required for so many decisions means the extreme minority of 1 can extract too much. Similar thing for Turkey and Nato. Either that, or the groups (EU, NATO) will have to change their rules to allow a few no votes on things, or they'll just become broken orgs. I'm sure Russia would offer almost anything to the wanna-be dictators in Turkey and Hungary to get them to vote no on these things. These "complete agreement" democratic groups don't work when some leaders are dictators.
agilob 4y ago
Didn't know about Hungary. All I was thinking was how EU had to force Apple and Ireland to pay taxes in Ireland, because... Ireland didn't want some free billions https://www.theguardian.com/business/2016/aug/30/apple-pay-back-taxes-eu-ruling-ireland-state-aid https://www.theguardian.com/business/2016/aug/30/apple-pay-b...
- secondcoming 4y ago
  Ireland would prefer the jobs to the taxes. A country has to tune itself to keep people employed. Every country is different and small countries would be ruined by tax harmonisation. France et al give zero shits about Ireland, it wants the jobs Ireland has.
- NoboruWataya 4y ago
  That decision by the EU was found to be illegal by an EU court, by the way: https://www.euractiv.com/section/digital/news/commission-loses-out-in-apple-ireland-tax-battle-announces-tax-abuse-clampdown/ https://www.euractiv.com/section/digital/news/commission-los...
gumby 4y ago
They can use the EU as an excuse to raise taxes without taking the blame. Most people have no idea how the EU works and don't realize that that rule would not have been put in place unless their own government had supported it. That's what unanimity means. Also at the end of the day most EU laws are aquiescence rules: if you have a specification for cucumbers it must be like this. But if you don't have such a spec (and producers in other countries aren't prevented from doing business with you) then you don't need to put the rule into place. After all, every EU "law" is actually a description which has be be implemented in each country by its legislature.
sequence7 4y ago
Hungary desperately needs EU funds and it would have lost several billion euros is it had blocked this.
poisonborz 4y ago
Your wondering is justified, and (like almost every other EU issue nowadays) Hungary was a holdout opposer, and used the vote to blackmail in other areas. They struck a deal in a "package" that includes Ukrain aid as well, in return they got some of the EU funds that was held back because of corruption. What a great happy Union this is. https://www.politico.eu/article/eu-deal-hungary-drop-vetoe-recovery-plan-approved-funding-freeze-ukraine-aid/ https://www.politico.eu/article/eu-deal-hungary-drop-vetoe-r...
- mytailorisrich 4y ago
  Ah, thanks for those details and that link.
- TacticalCoder 4y ago
  > What a great happy Union this is. Also the EU repeatedly called out Hungary for corruption but now Hungary is having its moment pointing that several member of the european parliaments have been caught in a very serious corruption scandal (and these are only those who got caught). What a great happy honorable Union full of integrity we enjoy too.

jacooper 4y ago

More money for the government, why would they refuse ?

jiveturkey 4y ago
It severely reduces their ability to attract future business, as well as the likelihood that companies will continue to remain headquartered there. If you go there for tax benefits and those tax benefits go away, how likely are you to continue to bother with such complex structures?
anm89 4y ago
This is empirically not always true. Higher taxes can lead to lower tax revenues if it reduces the size of the pie when business go to tax friendly jurisdictions. This can also work with income taxes. For example if you set income tax at 100%, you'd get 0 revenue probably because no one would work. This effect happens at values below 100%
- skt5 4y ago
  This is what economists call the Laffer curve. See https://en.wikipedia.org/wiki/Laffer_curve https://en.wikipedia.org/wiki/Laffer_curve.
mytailorisrich 4y ago
Why do countries have lower tax rates to start with? For many small/remote countries, lower corporation tax is a way to attract companies that would never have come if the tax rate was higher.
- manmal 4y ago
  Looking at you, Ireland.
  - secondcoming 4y ago
    Ireland did the right thing. The 1980’s and 1990’s were bleak times.
    - lechacker 4y ago
      And the 2020s and 2030s are going to be even bleaker, now.
rnk 4y ago
At a certain point, where you have such different views in countries like Hungary (Hungary wants to placate Russia or something similar leading to not helping Ukraine, wants to block Finland and Sweden from Nato, wants to disable/reduce/destroy democracy in Hungary, wants all that stimulus money from the EU to keep coming in), we just have to say we'll go our way, you go yours. Unity required for so many decisions means the extreme minority of 1 can extract too much. Similar thing for Turkey and Nato. Either that, or the groups (EU, NATO) will have to change their rules to allow a few no votes on things, or they'll just become broken orgs. I'm sure Russia would offer almost anything to the wanna-be dictators in Turkey and Hungary to get them to vote no on these things. These "complete agreement" democratic groups don't work when some leaders are dictators.

agilob 4y ago

Didn't know about Hungary. All I was thinking was how EU had to force Apple and Ireland to pay taxes in Ireland, because... Ireland didn't want some free billions https://www.theguardian.com/business/2016/aug/30/apple-pay-back-taxes-eu-ruling-ireland-state-aid https://www.theguardian.com/business/2016/aug/30/apple-pay-b...

secondcoming 4y ago
Ireland would prefer the jobs to the taxes. A country has to tune itself to keep people employed. Every country is different and small countries would be ruined by tax harmonisation. France et al give zero shits about Ireland, it wants the jobs Ireland has.
NoboruWataya 4y ago
That decision by the EU was found to be illegal by an EU court, by the way: https://www.euractiv.com/section/digital/news/commission-loses-out-in-apple-ireland-tax-battle-announces-tax-abuse-clampdown/ https://www.euractiv.com/section/digital/news/commission-los...

gumby 4y ago

They can use the EU as an excuse to raise taxes without taking the blame. Most people have no idea how the EU works and don't realize that that rule would not have been put in place unless their own government had supported it. That's what unanimity means. Also at the end of the day most EU laws are aquiescence rules: if you have a specification for cucumbers it must be like this. But if you don't have such a spec (and producers in other countries aren't prevented from doing business with you) then you don't need to put the rule into place. After all, every EU "law" is actually a description which has be be implemented in each country by its legislature.

sequence7 4y ago

Hungary desperately needs EU funds and it would have lost several billion euros is it had blocked this.

poisonborz 4y ago

Your wondering is justified, and (like almost every other EU issue nowadays) Hungary was a holdout opposer, and used the vote to blackmail in other areas. They struck a deal in a "package" that includes Ukrain aid as well, in return they got some of the EU funds that was held back because of corruption. What a great happy Union this is. https://www.politico.eu/article/eu-deal-hungary-drop-vetoe-recovery-plan-approved-funding-freeze-ukraine-aid/ https://www.politico.eu/article/eu-deal-hungary-drop-vetoe-r...

mytailorisrich 4y ago
Ah, thanks for those details and that link.
TacticalCoder 4y ago
> What a great happy Union this is. Also the EU repeatedly called out Hungary for corruption but now Hungary is having its moment pointing that several member of the european parliaments have been caught in a very serious corruption scandal (and these are only those who got caught). What a great happy honorable Union full of integrity we enjoy too.