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Minimum 15% global corporate tax has too many loopholes

60 points by DocFeind 3y ago

neilwilson 3y ago
Of course. Wrong tax. Tax is there to free up people for the public purpose, so you tax firms on their use of manpower in your jurisdiction. That encourages the use of automation, which is what we want, and we can then turn competition up to 11 (ie anti-trust/competition legislation) which is what keeps corporate profits under control and prevents hoarding and gouging. Beardsley Ruml told us in the 1940s that taxing profits is the wrong target. http://home.hiwaay.net/~becraft/RUMLTAXES.html http://home.hiwaay.net/~becraft/RUMLTAXES.html
- notahacker 3y ago
  Of course, what everyone wants is for the tax system to encourage firms to lay off all their local employees! Because once the government has offshored all the nation's industry and private sector jobs, the public can go and build dams for the government for freshly printed dollars, and there are absolutely no downsides to this...
  - derelicta 3y ago
    If thats the only issue, may I suggest taking over the said companies then? Transform them into worker-cooperatives as the next step, so that people take pride in what they create, for now they own the full produce of their labour.
    - toomuchtodo 3y ago
      Companies exist because we collectively allow them to. There is nothing special about a company, like fiat and wealth in general they are a shared delusion. If the rules aren't working to encourage the desired collective outcome, the rules can change.
      - derelicta 3y ago
        Fully agree
      - RandomLensman 3y ago
        Pretty sure there will be no agreement on what the desired collective outcome should be. The better avenue might be to inquire if really innovation of the corporate form is done - there has be strikingly little progress over the last few hundred years (and perhaps longer if we don't look to closely).
        toomuchtodo 3y ago
        Enacted legislation is the agreement. Strongly agree with your second statement.
        RandomLensman 3y ago
        To enact legislation you need some sort of agreement (other than in autocracies) - I think that will be tough to get in quite a few places.
        toomuchtodo 3y ago
        Fully agree. Lifetimes of work ahead.
    - notahacker 3y ago
      If the government is taxing firms on manpower at levels intended on discouraging firms from actually using manpower, employees are going to have an even bigger problem funding the takeover of the firm than usual...
      - derelicta 3y ago
        Oh no, I meant nationalising companies instead of simply trying to rely on taxes to solve whatever issues you need to get solved. Gotta attack the root causes instead of the mere symptoms.
        RandomLensman 3y ago
        With very few examples, that route didn't work out well much, and in way the "successful" national or state sponsored enterprises where not necessarily nice. That isn't to say public utilities cannot be successful, but starting them by trying to modify something existing instead of devolved (where applicable) and bespoke entities that don't hold the power of the state as such might be a nicer way.
        derelicta 3y ago
        > With very few example that route didn't work out well much, and in way the "successful" national or state sponsored enterprises where not necessarily nice. Republics come and go, it doesnt mean democracy in itself is a failure. All I am advocating for is the extension of our democratic norms to the economic and production apparatus.
        RandomLensman 3y ago
        Not sure I understand your connection between nationalized corporations/SEEs and republics. We do have a fair amount of countries with more than just shareholder representations in boards, for example. That said, assuming that just extending democratic norms (TBD) into corporations will help - not sold, why would large and potentially uninformed decision making help?
    - cscurmudgeon 3y ago
      This has been tried and has always been 110% successful everywhere it has been tried /s. You do realize what you are proposing is 100% legal today but for some reason doesn't work out well.
      - derelicta 3y ago
        It would have been (and would be) certainly more successful if foreign powers didnt try to disrupt them. But it's only fair I guess. After all, absolute monarchies saught to disrupt newly born republics around them, as to prevent nasty ideas to spread to peasants.
        cscurmudgeon 3y ago
        > It would have been (and would be) certainly more successful if foreign powers didnt try to disrupt them Ah the same old excuses Why aren't they successful in the US today or USSR previously? Or North Korea or China today? You do realize even China's top companies are not cooperatives.
        derelicta 3y ago
        Ever heard of the alphabet agencies?
        boeingUH60 3y ago
        Wow, I guess the CIA is now disrupting co-ops after getting bored of toppling countries..
        Nasrudith 3y ago
        There is no getting around this. If a system of government cannot withstand foreign powers it is flat out a /bad system for a government/, no matter how well it works/could work at a smaller scale or different context. Corporations may work well economically but there is a reason that among all of the desperate reform attempts nobody decided to incorporate an entire nation and make it publicly traded.
    - psychlops 3y ago
      I think that would quickly degenerate into whomever could work the least and also maximize profits. Also, not everyone is creating something in which they can take pride. Most jobs are just jobs for money to pay for things that people really want...like more free time.
  - neilwilson 3y ago
    "Of course, what everyone wants is for the tax system to encourage firms to lay off all their local employees!" That's exactly what you want - otherwise there is nobody for government to hire - which is the point of taxes. They won't lay off all their local employees, just enough. And if they lay off too many, then you reduce taxes... Government will then hire them, and the wages paid goes to the firms in exchange for the produce they sell to government workers. Government needs people to do the tasks it has been elected to do. It has to stop the private sector hiring them instead. It does that by taxing. The tax incidence literature shows the most efficient way to reduce the number of job offers is to tax the employers on the wages paid to employees.
    - notahacker 3y ago
      Seriously, you can take economic contrarianism too far. Take a deep breath, forget all the rabbit holes you've been going down and go look at who governments actually hire, at what rates, and to do what. They're not recruiting civil servants or police or nurses or economists from the dole queue, or from people whose skillset is in imminent danger of being rendered obsolete by an algorithm. Just like the private sector, they have the remarkable ability to hire people that already have jobs or good job prospects by offering them more money (or more flexible work and better pensions, or a fancier title, or something that interests them more) Government has exactly the same ability to hire people as the private sector (more actually; it has a broader revenue base, can offer more unique privileges and actually has near monopsony hiring power in many areas... and no, people don't train to become NHS healthcare practitioners because the local supermarket is replacing people with kiosks!) and does not need to create unemployment to be able to man its offices. Quite the opposite actually, when unemployment shoots up governments in most developed countries have the obligation to pay lots of people unemployment benefits for , not working for them, and generally that's about the time it starts cutting the size of its own departments.
      - neilwilson 3y ago
        "Government has exactly the same ability to hire people as the private sector" Yes, by paying more. What you're saying is that government should just be another market player. Which causes inflation. That's a fallacy of composition. Government is too big to do that. There's nothing contrarian in what I'm saying. What I'm saying is look at it from the other point of view. If government increases the taxes on employers at a particular salary band then it will not be able to hire so many staff at that salary band. They will then take the government's shilling at the price on offer. Which is how you solve the staffing problem in the NHS. By taxing the private healthcare providers at the relevant salary band until the NHS becomes fully staffed. "more actually; it has a broader revenue base" Government doesn't have a revenue base at all. Governments spend by printing money and tax by shredding money. The little silver coins going into a big chest mental model isn't how it actually works. There are no little silver coins and there is no chest. It's just debits and credits. "when unemployment shoots up governments in most developed countries have the obligation to pay lots of people unemployment benefits for , not working" Well there's a simple solution to that. Pay them to work instead. Backwards to what you are suggesting. Which will then, remarkably, start acting as a spend-side auto stabiliser which means we can dispense with interest rate changes...
interactivecode 3y ago
How about we tax billion dollar corps an extra 10% because we expect them to use their considerable wealth to exploit loopholes. Like any healthy budget it should have a little bit of a safety net built in. That 10% could be a considered an economic incentive similar to giving any non billion dollar company a tax break. However this idea would add money to the countries budget instead of removing it.
- mdgrech23 3y ago
  10% should beats the current 0% most of them pay. The unfortunate truth is we have a system that allows you to legally bribe politicians called campaign donations. The corporations and the politicians are totally in bed w/ one another and typically they're the same people e.g. the revolving door of going back and fourth. It's fucked up.
- wongarsu 3y ago
  Cue every 10 billion dollar company splitting into 11 supposedly unrelated 0.9 billion dollar companies (with the same shareholders, CEO and board).
  - js8 3y ago
    That would be somewhat OK, IMHO. The power of big companies comes from the fact that they can throw money around. Breaking them up would limit it, and make these flows publicly visible.
  - ta1243 3y ago
    A $10b company is pocket change to the beomouths that run the world. Sure $10b seems like a lot to you and me, but to split Apple, Microsoft, Google to just $10b would require hundreds of different companies to form from their split. To go to $1b companies would make that thousands of companies. You could split apple into 3000 companies and still need to split further. The CEO would be able to spend less than 1 minute a week on each company.
  - interactivecode 3y ago
    If that really is a problem we can just still count it as a single company for the tax office. Or make it illegal for companies to own other companies. That would even encourage competition and break down monopolies! All things capitalism thinks are good things.
tomalaci 3y ago
The problem I find with these global taxes is not the arbitrary percentage set but the agreement and collaboration between countries that implement it. Some specialize in offering tax incentives in differing sectors (i.e. Ireland with their innovation tax). Some are very lax on enforcement or keeping a good eye on things (i.e. Switzerland). Are they really going to scrap that for this global tax if there is high likelihood that not everyone will play ball? If you only have a subset of countries on the same page, the accounting firms will definitely exploit that and move the wealth away from them, avoiding the tax. I just don't see this working at all any time soon, period - too many corrupt states in play at the moment.
tomComb 3y ago
It’s a start. Yes, it seems insufficient in so many ways, but it is a huge step in the right direction. Getting countries like Ireland, who are getting rich helping big tech legally avoid taxes, to sign on was very difficult. I think Yellen deserves a lot of credit for this.
- disgruntledphd2 3y ago
  Can you point me to where the US ratifies this minimum tax? Note that Ireland has already implemented this, and I'd estimate the chance of it being made into US law as less than 10%.
  - tyree731 3y ago
    IIRC it was part of the Inflation Reduction Act.
  - mikeyouse 3y ago
    It already is law in the US - CAMT; > The Inflation Reduction Act created the CAMT, which imposes a 15% minimum tax on the adjusted financial statement income (AFSI) of large corporations for taxable years beginning after Dec. 31, 2022. The CAMT generally applies to large corporations with average annual financial statement income exceeding $1 billion. https://www.irs.gov/newsroom/irs-clarifies-rules-for-new-corporate-alternative-minimum-tax# https://www.irs.gov/newsroom/irs-clarifies-rules-for-new-cor...
    - disgruntledphd2 3y ago
      Oh wow, I somehow missed that. I'm surprised, as generally these kinds of tax measures don't make it past the Senate. That's definitely good news.
- RyanAdamas 3y ago
  "Trickledown Taxation" is just as much a myth as Supply Side Economics.
okr 3y ago
The journey continues, on how to become creative, to get to other people's money and not earning it like everyone else. Governments, learn how to spend without being judged.
- rybosworld 3y ago
  Comments like this always miss the point. The root issue is "rules for thee but not for me". The wealthiest 0.01% have ways to avoid and evade taxes that others don't. It's a fairness problem.
  - hellojesus 3y ago
    > The journey continues, on how to become creative, to get to other people's money and not earning it like everyone else. I thought this was in reference to theiving governments.
  - okr 3y ago
    Maybe because they are unfair taxed? Maybe the entire system of taxation is unfair? Ever considered that?
petercooper 3y ago
Another matter is corporation taxes can be the first step in a chain of taxes. A corporation might be taxed on a profit and then invest it in various ways, but commonly it'll be paid out as dividends to shareholders who then pay further taxes. This makes it possible to be a "high corporation tax" country where shareholders still net more money than those in a "low" corporation tax country with high dividend taxes.
- notahacker 3y ago
  This is true, with the caveat that dividend taxes are trivially avoided (capital gains tax which includes taxes on share prices appreciation is a little harder for shareholders to avoid, but CGT paid only on gains realised through sales doesn't touch dynastic wealth that stays in the company)
  - codexb 3y ago
    Dividends aren’t capital gains, they’re taxed as income at the marginal rate. Unrealized wealth is exactly that, unrealized, which is why we don’t tax it. If you want to live a wealthy lifestyle and all you have is unrealized wealth, you will eventually have to realize some of it to pay for things, at which point you get taxed.
    - matwood 3y ago
      Qualified dividends are capped at 20%.
      - adolph 3y ago
        It seems like a reasonable system. https://en.wikipedia.org/wiki/Qualified_dividend https://en.wikipedia.org/wiki/Qualified_dividend
    - koolba 3y ago
      > If you want to live a wealthy lifestyle and all you have is unrealized wealth, you will eventually have to realize some of it to pay for things, at which point you get taxed. If you really want to, you could defer it till after you’re dead. Just borrow against the principal rather than realizing a capital gain. Zero annual income (as no gain) and spend as much of it as you want. You will have to realize it at some point. Or at least your estate will. But it doesn’t have to be while you’re sipping tax deferred champagne.
weberer 3y ago
>The poorest 10% of Americans pay more – 25.6%. Is that correct? I thought anyone below the poverty line paid 0% income tax, and would just have to pay sales tax. And property tax, gas tax, social security tax, and inflation, which is a secret hidden tax. But still, 25% sounds high.
- keltex 3y ago
  There's also Social Security, Medicare and SDI (State Disability Insurance)
- addicted 3y ago
  Inflation isn’t a secret hidden tax for any definition of tax outside of the general “it’s a burden of some sort” in which case time to fill forms, waiting at the bus stop for a bus to arrive, stuck in traffic, etc are all “secret hidden” taxes.
  - flenserboy 3y ago
    Inflation in general is not a tax; inflation due to the issuance of fiat money certainly is a tax.
  - weberer 3y ago
    By printing more money, the government gains money by reducing the value of money in everyone else's accounts. Its effectively a flat tax on holding cash.
- TimPC 3y ago
  This is a disingenous take. They are comparing the marginal rate on the poorest 10% of Americans without deductions applied to the rate after all deductions and tax avoidance of billionaires. Most of the bottom 10% pay very little in income tax.
- chaorace 3y ago
  Hard to say. It looks like this article has been republished in several different outlets but originally came from the AP[1]. At first glance they appear to cite the statistic as coming from the EU Tax Observatory, but it's worded in such a way that the provenance may only apply to a prior fact: > In the United States, [the EU Tax Observatory] says, billionaires pay an effective average tax rate of 23%, including all taxes at all levels of government. The poorest 10% of Americans pay more – 25.6%. I was unable to locate any such figure in the Tax Observatory's data atlas[2] -- I've included the relevant lines for their latest U.S. effective tax rate estimates below. As you can see, they're not broken down by income percentile and also lack the expected decimal precision: USA 2020 0.31 Total_tax_NDP USA 2020 0.11 Corporate_tax_rate USA 2020 0.27 Labor_tax_rate USA 2020 0.30 Capital_tax_rate It's possible that the statistic is instead buried in one of their publications[3], but I was not able to find relevant mentions of "25.6"/".256" in any of the recent reports. This particular NGO seems mostly focused on EU corporate taxation rather than American labor taxation... so I wouldn't be surprised if the fact source is actually some other uncited party. [1]: https://apnews.com/article/tax-corporations-global-havens-european-union-loopholes-5449a9ca89b86d108eb7300000c7d240 https://apnews.com/article/tax-corporations-global-havens-eu... [2]: "Effective tax rates on capital and labor": https://atlas-offshore.world/download-data/ https://atlas-offshore.world/download-data/ [3]: https://www.taxobservatory.eu/publications/ https://www.taxobservatory.eu/publications/
codexb 3y ago
Taxing corporate income is a flawed concept. Corporate headquarters are easily moved, and Corporate income is easily shifted between corporations and individuals in different tax jurisdictions all over the world. You have to tax the income at the source, at the point of sale. It’s why most of the EU shifted to VAT’s decades ago. The US should do the same. Corporate tax is already effectively eliminated for corporations in the US, as the income is just passed through to individual owners and shareholders who pay tax on their individual income. The only corporations who pay tax in the US are large corporations who need massive amounts of cash on hand for research and reinvestment for new products and ventures.
- thedaly 3y ago
  > The only corporations who pay tax in the US are large corporations who need massive amounts of cash on hand for research and reinvestment for new products and ventures. Apple would seemingly fit this description, but they still skirt taxes by offshoring their headquarters.
  - ProllyInfamous 3y ago
    The same lawyers who removed Ireland's infamous "Double Dutch" tax-avoidance scheme also wrote Apple's favorable replacement tax-avoidance scheme. Man with money, wins.
- Closi 3y ago
  Relying solely on VAT has big issues too - it is a regressive tax (VAT paid as a percentage of net household income tends to be higher for poorer households), B2B businesses would be fully untaxed, and it doesn't really tax the businesses (the tax is on the consumer price rather than the business profit). > You have to tax the income at the source, at the point of sale. It’s why most of the EU shifted to VAT’s decades ago. This is misleading - the EU put in place VAT as well as a minimum 15% corporation tax.
  - onlyrealcuzzo 3y ago
    > it is a regressive tax We already have a "progressive" tax system in which ~70% of Federal revenue (not including SS & Medicare which are separate line items funded separately) comes from individual income tax. Why can't we have a corporate tax that actually works and is evenly distributed instead of "progressive"?
FredPret 3y ago
There's a common talking point about corporations not paying their dues. - A megacorp that pays 0% in income taxes still pays a ton of sales tax on things it buys - Every employee pays income tax, sales taxes, income gains taxes on their investments, and eventually death taxes - The owners pay taxes on dividends received and capital gains in rising share prices, and all the same sales et al taxes as the employees on the remaining amount. - The economic activity generated by the 0% megacorp will create higher incomes for other corporations, all of whom are subject to the above taxes, and not all of whom manages to avoid all income taxes. The fact is that dodging tax is at best a temporary aberration. There are many financial tricks to delay and minimize taxes, but the government will always take its pound of flesh eventually. Also, at some point the owners of that money will spend it / gift it / die and then it gets taxed. Even in the USA, where these corporations are supposed to rule the roost, government spending as a % of the economy has been skyrocketing for the past century. Even if the government banned all income tax, they would stealth-tax us by issuing bonds and inflating the currency away. To boost their careers, top bureaucrats the world over need their headcount to keep growing, so they demand blank cheques from the productive with an air of moral sanctimony that's almost impressive. I fully support reasonable taxes to feed & educate the children of the poor and many other nice things, but the bureaucracy is a monster that never stops growing unless we make it. Something to keep in mind next time John Oliver goes on a rant.
- strangetortoise 3y ago
  >- A megacorp that pays 0% in income taxes still pays a ton of sales tax on things it buys Not familiar with the US, is this actually true? In europe, as a company, you're allowed to subtract VAT on products bought from VAT owed from sales. That would contradict most of what you're saying.
  - seanmcdirmid 3y ago
    It depends on the state I think. Sales tax is only implemented per state in the USA. I know Boeing gets an explicit sales tax exemption from Washington state on planes it sells. But things would be really weird otherwise.
NoboruWataya 3y ago
These don't sound like "loopholes", they sound like explicit limitations intentionally negotiated by signatory states because what government in its right mind would completely give away their tax sovereignty without any kind of reservations? In that context, these "loopholes" don't reduce the extra tax collected under the agreement, they increase it by ensuring that there actually is an agreement. > The EU Tax Observatory isn’t calling for an outright ban on green-technology subsidies. But it is urging governments to consider other policies to offset the financial gains to the wealthy from such tax breaks. "It's okay if you incentivise good behaviour, as long as you also punish it at the same time." Insane.
RecycledEle 3y ago
Obviously. Calculate how many incentive dollars the corporations have to influence the policy makers into creating loopholes for them, and you get the reason for the loopholes.
friend_and_foe 3y ago
I'll mention a concept I was exposed to recently that changed my thinking about all this: cartel arrangements are profitable to disrupt. That's what these global minimum tax and things are. Governments get together and decide that to squeeze a little harder there can be no escape. But all it takes is one government somewhere that decides not to do it and they get the economic benefit. Or, they can pretend to do it and give loopholes to some corporations, like Ireland does with their tax schemes. You're just not ever going to get the whole world to play ball the same way.

60 points by DocFeind 3y ago

Of course. Wrong tax. Tax is there to free up people for the public purpose, so you tax firms on their use of manpower in your jurisdiction. That encourages the use of automation, which is what we want, and we can then turn competition up to 11 (ie anti-trust/competition legislation) which is what keeps corporate profits under control and prevents hoarding and gouging. Beardsley Ruml told us in the 1940s that taxing profits is the wrong target. http://home.hiwaay.net/~becraft/RUMLTAXES.html http://home.hiwaay.net/~becraft/RUMLTAXES.html

notahacker 3y ago
Of course, what everyone wants is for the tax system to encourage firms to lay off all their local employees! Because once the government has offshored all the nation's industry and private sector jobs, the public can go and build dams for the government for freshly printed dollars, and there are absolutely no downsides to this...
- derelicta 3y ago
  If thats the only issue, may I suggest taking over the said companies then? Transform them into worker-cooperatives as the next step, so that people take pride in what they create, for now they own the full produce of their labour.
  - toomuchtodo 3y ago
    Companies exist because we collectively allow them to. There is nothing special about a company, like fiat and wealth in general they are a shared delusion. If the rules aren't working to encourage the desired collective outcome, the rules can change.
    - derelicta 3y ago
      Fully agree
    - RandomLensman 3y ago
      Pretty sure there will be no agreement on what the desired collective outcome should be. The better avenue might be to inquire if really innovation of the corporate form is done - there has be strikingly little progress over the last few hundred years (and perhaps longer if we don't look to closely).
      - toomuchtodo 3y ago
        Enacted legislation is the agreement. Strongly agree with your second statement.
        RandomLensman 3y ago
        To enact legislation you need some sort of agreement (other than in autocracies) - I think that will be tough to get in quite a few places.
        toomuchtodo 3y ago
        Fully agree. Lifetimes of work ahead.
  - notahacker 3y ago
    If the government is taxing firms on manpower at levels intended on discouraging firms from actually using manpower, employees are going to have an even bigger problem funding the takeover of the firm than usual...
    - derelicta 3y ago
      Oh no, I meant nationalising companies instead of simply trying to rely on taxes to solve whatever issues you need to get solved. Gotta attack the root causes instead of the mere symptoms.
      - RandomLensman 3y ago
        With very few examples, that route didn't work out well much, and in way the "successful" national or state sponsored enterprises where not necessarily nice. That isn't to say public utilities cannot be successful, but starting them by trying to modify something existing instead of devolved (where applicable) and bespoke entities that don't hold the power of the state as such might be a nicer way.
        derelicta 3y ago
        > With very few example that route didn't work out well much, and in way the "successful" national or state sponsored enterprises where not necessarily nice. Republics come and go, it doesnt mean democracy in itself is a failure. All I am advocating for is the extension of our democratic norms to the economic and production apparatus.
        RandomLensman 3y ago
        Not sure I understand your connection between nationalized corporations/SEEs and republics. We do have a fair amount of countries with more than just shareholder representations in boards, for example. That said, assuming that just extending democratic norms (TBD) into corporations will help - not sold, why would large and potentially uninformed decision making help?
  - cscurmudgeon 3y ago
    This has been tried and has always been 110% successful everywhere it has been tried /s. You do realize what you are proposing is 100% legal today but for some reason doesn't work out well.
    - derelicta 3y ago
      It would have been (and would be) certainly more successful if foreign powers didnt try to disrupt them. But it's only fair I guess. After all, absolute monarchies saught to disrupt newly born republics around them, as to prevent nasty ideas to spread to peasants.
      - cscurmudgeon 3y ago
        > It would have been (and would be) certainly more successful if foreign powers didnt try to disrupt them Ah the same old excuses Why aren't they successful in the US today or USSR previously? Or North Korea or China today? You do realize even China's top companies are not cooperatives.
        derelicta 3y ago
        Ever heard of the alphabet agencies?
        boeingUH60 3y ago
        Wow, I guess the CIA is now disrupting co-ops after getting bored of toppling countries..
      - Nasrudith 3y ago
        There is no getting around this. If a system of government cannot withstand foreign powers it is flat out a /bad system for a government/, no matter how well it works/could work at a smaller scale or different context. Corporations may work well economically but there is a reason that among all of the desperate reform attempts nobody decided to incorporate an entire nation and make it publicly traded.
  - psychlops 3y ago
    I think that would quickly degenerate into whomever could work the least and also maximize profits. Also, not everyone is creating something in which they can take pride. Most jobs are just jobs for money to pay for things that people really want...like more free time.
- neilwilson 3y ago
  "Of course, what everyone wants is for the tax system to encourage firms to lay off all their local employees!" That's exactly what you want - otherwise there is nobody for government to hire - which is the point of taxes. They won't lay off all their local employees, just enough. And if they lay off too many, then you reduce taxes... Government will then hire them, and the wages paid goes to the firms in exchange for the produce they sell to government workers. Government needs people to do the tasks it has been elected to do. It has to stop the private sector hiring them instead. It does that by taxing. The tax incidence literature shows the most efficient way to reduce the number of job offers is to tax the employers on the wages paid to employees.
  - notahacker 3y ago
    Seriously, you can take economic contrarianism too far. Take a deep breath, forget all the rabbit holes you've been going down and go look at who governments actually hire, at what rates, and to do what. They're not recruiting civil servants or police or nurses or economists from the dole queue, or from people whose skillset is in imminent danger of being rendered obsolete by an algorithm. Just like the private sector, they have the remarkable ability to hire people that already have jobs or good job prospects by offering them more money (or more flexible work and better pensions, or a fancier title, or something that interests them more) Government has exactly the same ability to hire people as the private sector (more actually; it has a broader revenue base, can offer more unique privileges and actually has near monopsony hiring power in many areas... and no, people don't train to become NHS healthcare practitioners because the local supermarket is replacing people with kiosks!) and does not need to create unemployment to be able to man its offices. Quite the opposite actually, when unemployment shoots up governments in most developed countries have the obligation to pay lots of people unemployment benefits for , not working for them, and generally that's about the time it starts cutting the size of its own departments.
    - neilwilson 3y ago
      "Government has exactly the same ability to hire people as the private sector" Yes, by paying more. What you're saying is that government should just be another market player. Which causes inflation. That's a fallacy of composition. Government is too big to do that. There's nothing contrarian in what I'm saying. What I'm saying is look at it from the other point of view. If government increases the taxes on employers at a particular salary band then it will not be able to hire so many staff at that salary band. They will then take the government's shilling at the price on offer. Which is how you solve the staffing problem in the NHS. By taxing the private healthcare providers at the relevant salary band until the NHS becomes fully staffed. "more actually; it has a broader revenue base" Government doesn't have a revenue base at all. Governments spend by printing money and tax by shredding money. The little silver coins going into a big chest mental model isn't how it actually works. There are no little silver coins and there is no chest. It's just debits and credits. "when unemployment shoots up governments in most developed countries have the obligation to pay lots of people unemployment benefits for , not working" Well there's a simple solution to that. Pay them to work instead. Backwards to what you are suggesting. Which will then, remarkably, start acting as a spend-side auto stabiliser which means we can dispense with interest rate changes...

interactivecode 3y ago

How about we tax billion dollar corps an extra 10% because we expect them to use their considerable wealth to exploit loopholes. Like any healthy budget it should have a little bit of a safety net built in. That 10% could be a considered an economic incentive similar to giving any non billion dollar company a tax break. However this idea would add money to the countries budget instead of removing it.

mdgrech23 3y ago
10% should beats the current 0% most of them pay. The unfortunate truth is we have a system that allows you to legally bribe politicians called campaign donations. The corporations and the politicians are totally in bed w/ one another and typically they're the same people e.g. the revolving door of going back and fourth. It's fucked up.
wongarsu 3y ago
Cue every 10 billion dollar company splitting into 11 supposedly unrelated 0.9 billion dollar companies (with the same shareholders, CEO and board).
- js8 3y ago
  That would be somewhat OK, IMHO. The power of big companies comes from the fact that they can throw money around. Breaking them up would limit it, and make these flows publicly visible.
- ta1243 3y ago
  A $10b company is pocket change to the beomouths that run the world. Sure $10b seems like a lot to you and me, but to split Apple, Microsoft, Google to just $10b would require hundreds of different companies to form from their split. To go to $1b companies would make that thousands of companies. You could split apple into 3000 companies and still need to split further. The CEO would be able to spend less than 1 minute a week on each company.
- interactivecode 3y ago
  If that really is a problem we can just still count it as a single company for the tax office. Or make it illegal for companies to own other companies. That would even encourage competition and break down monopolies! All things capitalism thinks are good things.

tomalaci 3y ago

The problem I find with these global taxes is not the arbitrary percentage set but the agreement and collaboration between countries that implement it. Some specialize in offering tax incentives in differing sectors (i.e. Ireland with their innovation tax). Some are very lax on enforcement or keeping a good eye on things (i.e. Switzerland). Are they really going to scrap that for this global tax if there is high likelihood that not everyone will play ball? If you only have a subset of countries on the same page, the accounting firms will definitely exploit that and move the wealth away from them, avoiding the tax. I just don't see this working at all any time soon, period - too many corrupt states in play at the moment.

tomComb 3y ago

It’s a start. Yes, it seems insufficient in so many ways, but it is a huge step in the right direction. Getting countries like Ireland, who are getting rich helping big tech legally avoid taxes, to sign on was very difficult. I think Yellen deserves a lot of credit for this.

disgruntledphd2 3y ago
Can you point me to where the US ratifies this minimum tax? Note that Ireland has already implemented this, and I'd estimate the chance of it being made into US law as less than 10%.
- tyree731 3y ago
  IIRC it was part of the Inflation Reduction Act.
- mikeyouse 3y ago
  It already is law in the US - CAMT; > The Inflation Reduction Act created the CAMT, which imposes a 15% minimum tax on the adjusted financial statement income (AFSI) of large corporations for taxable years beginning after Dec. 31, 2022. The CAMT generally applies to large corporations with average annual financial statement income exceeding $1 billion. https://www.irs.gov/newsroom/irs-clarifies-rules-for-new-corporate-alternative-minimum-tax# https://www.irs.gov/newsroom/irs-clarifies-rules-for-new-cor...
  - disgruntledphd2 3y ago
    Oh wow, I somehow missed that. I'm surprised, as generally these kinds of tax measures don't make it past the Senate. That's definitely good news.
RyanAdamas 3y ago
"Trickledown Taxation" is just as much a myth as Supply Side Economics.

okr 3y ago

The journey continues, on how to become creative, to get to other people's money and not earning it like everyone else. Governments, learn how to spend without being judged.

rybosworld 3y ago
Comments like this always miss the point. The root issue is "rules for thee but not for me". The wealthiest 0.01% have ways to avoid and evade taxes that others don't. It's a fairness problem.
- hellojesus 3y ago
  > The journey continues, on how to become creative, to get to other people's money and not earning it like everyone else. I thought this was in reference to theiving governments.
- okr 3y ago
  Maybe because they are unfair taxed? Maybe the entire system of taxation is unfair? Ever considered that?

petercooper 3y ago

Another matter is corporation taxes can be the first step in a chain of taxes. A corporation might be taxed on a profit and then invest it in various ways, but commonly it'll be paid out as dividends to shareholders who then pay further taxes. This makes it possible to be a "high corporation tax" country where shareholders still net more money than those in a "low" corporation tax country with high dividend taxes.

notahacker 3y ago
This is true, with the caveat that dividend taxes are trivially avoided (capital gains tax which includes taxes on share prices appreciation is a little harder for shareholders to avoid, but CGT paid only on gains realised through sales doesn't touch dynastic wealth that stays in the company)
- codexb 3y ago
  Dividends aren’t capital gains, they’re taxed as income at the marginal rate. Unrealized wealth is exactly that, unrealized, which is why we don’t tax it. If you want to live a wealthy lifestyle and all you have is unrealized wealth, you will eventually have to realize some of it to pay for things, at which point you get taxed.
  - matwood 3y ago
    Qualified dividends are capped at 20%.
    - adolph 3y ago
      It seems like a reasonable system. https://en.wikipedia.org/wiki/Qualified_dividend https://en.wikipedia.org/wiki/Qualified_dividend
  - koolba 3y ago
    > If you want to live a wealthy lifestyle and all you have is unrealized wealth, you will eventually have to realize some of it to pay for things, at which point you get taxed. If you really want to, you could defer it till after you’re dead. Just borrow against the principal rather than realizing a capital gain. Zero annual income (as no gain) and spend as much of it as you want. You will have to realize it at some point. Or at least your estate will. But it doesn’t have to be while you’re sipping tax deferred champagne.

weberer 3y ago

>The poorest 10% of Americans pay more – 25.6%. Is that correct? I thought anyone below the poverty line paid 0% income tax, and would just have to pay sales tax. And property tax, gas tax, social security tax, and inflation, which is a secret hidden tax. But still, 25% sounds high.

keltex 3y ago
There's also Social Security, Medicare and SDI (State Disability Insurance)
addicted 3y ago
Inflation isn’t a secret hidden tax for any definition of tax outside of the general “it’s a burden of some sort” in which case time to fill forms, waiting at the bus stop for a bus to arrive, stuck in traffic, etc are all “secret hidden” taxes.
- flenserboy 3y ago
  Inflation in general is not a tax; inflation due to the issuance of fiat money certainly is a tax.
- weberer 3y ago
  By printing more money, the government gains money by reducing the value of money in everyone else's accounts. Its effectively a flat tax on holding cash.
TimPC 3y ago
This is a disingenous take. They are comparing the marginal rate on the poorest 10% of Americans without deductions applied to the rate after all deductions and tax avoidance of billionaires. Most of the bottom 10% pay very little in income tax.
chaorace 3y ago
Hard to say. It looks like this article has been republished in several different outlets but originally came from the AP[1]. At first glance they appear to cite the statistic as coming from the EU Tax Observatory, but it's worded in such a way that the provenance may only apply to a prior fact: > In the United States, [the EU Tax Observatory] says, billionaires pay an effective average tax rate of 23%, including all taxes at all levels of government. The poorest 10% of Americans pay more – 25.6%. I was unable to locate any such figure in the Tax Observatory's data atlas[2] -- I've included the relevant lines for their latest U.S. effective tax rate estimates below. As you can see, they're not broken down by income percentile and also lack the expected decimal precision: USA 2020 0.31 Total_tax_NDP USA 2020 0.11 Corporate_tax_rate USA 2020 0.27 Labor_tax_rate USA 2020 0.30 Capital_tax_rate It's possible that the statistic is instead buried in one of their publications[3], but I was not able to find relevant mentions of "25.6"/".256" in any of the recent reports. This particular NGO seems mostly focused on EU corporate taxation rather than American labor taxation... so I wouldn't be surprised if the fact source is actually some other uncited party. [1]: https://apnews.com/article/tax-corporations-global-havens-european-union-loopholes-5449a9ca89b86d108eb7300000c7d240 https://apnews.com/article/tax-corporations-global-havens-eu... [2]: "Effective tax rates on capital and labor": https://atlas-offshore.world/download-data/ https://atlas-offshore.world/download-data/ [3]: https://www.taxobservatory.eu/publications/ https://www.taxobservatory.eu/publications/

codexb 3y ago

Taxing corporate income is a flawed concept. Corporate headquarters are easily moved, and Corporate income is easily shifted between corporations and individuals in different tax jurisdictions all over the world. You have to tax the income at the source, at the point of sale. It’s why most of the EU shifted to VAT’s decades ago. The US should do the same. Corporate tax is already effectively eliminated for corporations in the US, as the income is just passed through to individual owners and shareholders who pay tax on their individual income. The only corporations who pay tax in the US are large corporations who need massive amounts of cash on hand for research and reinvestment for new products and ventures.

thedaly 3y ago
> The only corporations who pay tax in the US are large corporations who need massive amounts of cash on hand for research and reinvestment for new products and ventures. Apple would seemingly fit this description, but they still skirt taxes by offshoring their headquarters.
- ProllyInfamous 3y ago
  The same lawyers who removed Ireland's infamous "Double Dutch" tax-avoidance scheme also wrote Apple's favorable replacement tax-avoidance scheme. Man with money, wins.
Closi 3y ago
Relying solely on VAT has big issues too - it is a regressive tax (VAT paid as a percentage of net household income tends to be higher for poorer households), B2B businesses would be fully untaxed, and it doesn't really tax the businesses (the tax is on the consumer price rather than the business profit). > You have to tax the income at the source, at the point of sale. It’s why most of the EU shifted to VAT’s decades ago. This is misleading - the EU put in place VAT as well as a minimum 15% corporation tax.
- onlyrealcuzzo 3y ago
  > it is a regressive tax We already have a "progressive" tax system in which ~70% of Federal revenue (not including SS & Medicare which are separate line items funded separately) comes from individual income tax. Why can't we have a corporate tax that actually works and is evenly distributed instead of "progressive"?

FredPret 3y ago

There's a common talking point about corporations not paying their dues. - A megacorp that pays 0% in income taxes still pays a ton of sales tax on things it buys - Every employee pays income tax, sales taxes, income gains taxes on their investments, and eventually death taxes - The owners pay taxes on dividends received and capital gains in rising share prices, and all the same sales et al taxes as the employees on the remaining amount. - The economic activity generated by the 0% megacorp will create higher incomes for other corporations, all of whom are subject to the above taxes, and not all of whom manages to avoid all income taxes. The fact is that dodging tax is at best a temporary aberration. There are many financial tricks to delay and minimize taxes, but the government will always take its pound of flesh eventually. Also, at some point the owners of that money will spend it / gift it / die and then it gets taxed. Even in the USA, where these corporations are supposed to rule the roost, government spending as a % of the economy has been skyrocketing for the past century. Even if the government banned all income tax, they would stealth-tax us by issuing bonds and inflating the currency away. To boost their careers, top bureaucrats the world over need their headcount to keep growing, so they demand blank cheques from the productive with an air of moral sanctimony that's almost impressive. I fully support reasonable taxes to feed & educate the children of the poor and many other nice things, but the bureaucracy is a monster that never stops growing unless we make it. Something to keep in mind next time John Oliver goes on a rant.

strangetortoise 3y ago
>- A megacorp that pays 0% in income taxes still pays a ton of sales tax on things it buys Not familiar with the US, is this actually true? In europe, as a company, you're allowed to subtract VAT on products bought from VAT owed from sales. That would contradict most of what you're saying.
- seanmcdirmid 3y ago
  It depends on the state I think. Sales tax is only implemented per state in the USA. I know Boeing gets an explicit sales tax exemption from Washington state on planes it sells. But things would be really weird otherwise.

NoboruWataya 3y ago

These don't sound like "loopholes", they sound like explicit limitations intentionally negotiated by signatory states because what government in its right mind would completely give away their tax sovereignty without any kind of reservations? In that context, these "loopholes" don't reduce the extra tax collected under the agreement, they increase it by ensuring that there actually is an agreement. > The EU Tax Observatory isn’t calling for an outright ban on green-technology subsidies. But it is urging governments to consider other policies to offset the financial gains to the wealthy from such tax breaks. "It's okay if you incentivise good behaviour, as long as you also punish it at the same time." Insane.

RecycledEle 3y ago

Obviously. Calculate how many incentive dollars the corporations have to influence the policy makers into creating loopholes for them, and you get the reason for the loopholes.

friend_and_foe 3y ago

I'll mention a concept I was exposed to recently that changed my thinking about all this: cartel arrangements are profitable to disrupt. That's what these global minimum tax and things are. Governments get together and decide that to squeeze a little harder there can be no escape. But all it takes is one government somewhere that decides not to do it and they get the economic benefit. Or, they can pretend to do it and give loopholes to some corporations, like Ireland does with their tax schemes. You're just not ever going to get the whole world to play ball the same way.