5 ms·

Sure, because a race to the bottom (the best tax rate from a companys perspective? 0%) is exactly what the world needs. I've never understood why companies shou

by sgift 12y ago

Sure, because a race to the bottom (the best tax rate from a companys perspective? 0%) is exactly what the world needs. I've never understood why companies should only be liable to taxes in the country they are incorporated in. You do business here? Then you pay tax here. Should be easy to fix. Somehow it isn't.

DSMan195276 12y ago
While I agree with you, on the flip side the alternative is that they don't sell their goods here, and people wouldn't be very happy about that. You have to draw a line somewhere to decide what's a reasonable price/tax/etc. for everybody, but it's not really an easy thing to do.
- roc 12y ago
  > "the flip side the alternative is that they don't sell their goods here" That's a silly concern. Businesses do not forgo profit simply because they'd prefer if there were more. They always prefer if there were more. And yet they still seek the profit that's available. So long as cost/benefit suggests the US is a profitable market, they will continue to sell their goods here. The only "risk" of corporations "taking their ball and going home", is if the United States pursued a transparently self-destructive tax rate on foreign-based corporations. Which there is absolutely no reason to expect would even enter rational conversation. Imagine a husband and wife are talking about what car they should buy next and they disagree on the budget. The analogous case to a tax rate so high corporations leave the US market, is the husband deciding to burn the house down so that there's no garage and no money at all. While that's certainly a possible alternative to negotiating their differences, discussing that alternative is, at best, silly. And attempting to ascribe serious weight to the possibility is downright intellectually dishonest.
  - DSMan195276 12y ago
    I have to disagree. They will go other places if those places aren't going to tax them as much and they expect a similar return. Obviously with Burger King, they're basically everywhere already so it doesn't matter as much, but if the profit margin in the US is smaller then other countries because of tax they'll consider putting stores somewhere else if it's more profitable. That said, IMO the concern with them selling their goods somewhere else isn't that we won't be able to eat their burgers, but that they employ tons of people at their stores. People are going to be pissed if Burger King decides they're going to close down their slower stores in the US and open some new stores elsewhere that doesn't have tax because they'll end-up making more. I agree in that we could put a tax in place without anything imploding, they aren't just going to run away obviously. The question is more can we implement a tax which would be worth the money we'd make off of it without it resulting in Burger King closing places around the country because they're not profitable anymore.
    - roc 12y ago
      Both the possibility that corporations may not come to the US market, or may only come to the US market after having expanded into other, more-profitable markets require an assumption that the US would (substantially) raise taxes above the current level. We're hypothetically setting out to close a loophole that results in two distinct effective rates, a lower rate A for foreign corporations and a higher rate B for US-based corporations. So, again, why should we spend any time worrying about what might happen if we were to introduce an even higher rate C? No-one's talking about that. It's not on the table. It's not remotely politically plausible. It's not even a thing anyone's seriously proposed. Talking about it is either entirely besides the point, or a motivated attempt to conflate closing the loophole with raising rates to C, to scare people away from trying to close the loophole.
  - true_religion 12y ago
    > The only "risk" of corporations "taking their ball and going home", is if the United States pursued a transparently self-destructive tax rate on foreign-based corporations. Which there is absolutely no reason to expect would even enter rational conversation. What's more likely is that corporations would split into the global corp, and the US corp. The US corp pays the high taxes and does work in the US. The global corp owns all the IP, and leases it to the US corp for some amount of money.
- nathanyz 12y ago
  It is actually pretty unlikely that they won't sell goods in the US. Burger King is not going to pull out as that is a major market for them. Not saying the US tax situation doesn't need fixed though.
  - DSMan195276 12y ago
    I agree it's unlikely, at least a full pull-out of the market is basically never going to happen. But if they were to get a somewhat high tax I'd expect their lower-profiting stores may end up getting closed down because they're not worth keeping open (IE. They're basically making nothing off of them after tax, but they could sell them off and then open a store somewhere else that may now be profitable since the US costs more to have stores).
deleted 12y ago
[deleted]
gadders 12y ago
Well, I'd rather have a race to the bottom on tax rates, rather than the race to the top that governments seem keen on. In reality, it the tax rate wouldn't need to go to zero - just low enough that the cost of paying it outweighs all the costs (PR, resource issues, relocation costs etc etc) of moving to a lower tax regime.
Alupis 12y ago
There are a lot of things that can be done without a so-called "race to the bottom". - Why does it require a team of lawyers and tax experts just to haphazardly understand the tax law well enough to submit a corporate filing? - Why does America have the highest corporate tax rate in the world? (besting the next highest country by 4%)[1] - Why do we double tax corporations that earn revenue off-shore? (they pay taxes in the country they earned the revenue in -- then we tax them again if they bring that money back into the country -- effectively encouraging corporate like Apple to keep billions of USD offshore) The list goes on ... [1] - http://www.kpmg.com/global/en/services/tax/tax-tools-and-resources/pages/corporate-tax-rates-table.aspx http://www.kpmg.com/global/en/services/tax/tax-tools-and-res...

by sgift 12y ago

DSMan195276 12y ago

While I agree with you, on the flip side the alternative is that they don't sell their goods here, and people wouldn't be very happy about that. You have to draw a line somewhere to decide what's a reasonable price/tax/etc. for everybody, but it's not really an easy thing to do.

roc 12y ago
> "the flip side the alternative is that they don't sell their goods here" That's a silly concern. Businesses do not forgo profit simply because they'd prefer if there were more. They always prefer if there were more. And yet they still seek the profit that's available. So long as cost/benefit suggests the US is a profitable market, they will continue to sell their goods here. The only "risk" of corporations "taking their ball and going home", is if the United States pursued a transparently self-destructive tax rate on foreign-based corporations. Which there is absolutely no reason to expect would even enter rational conversation. Imagine a husband and wife are talking about what car they should buy next and they disagree on the budget. The analogous case to a tax rate so high corporations leave the US market, is the husband deciding to burn the house down so that there's no garage and no money at all. While that's certainly a possible alternative to negotiating their differences, discussing that alternative is, at best, silly. And attempting to ascribe serious weight to the possibility is downright intellectually dishonest.
- DSMan195276 12y ago
  I have to disagree. They will go other places if those places aren't going to tax them as much and they expect a similar return. Obviously with Burger King, they're basically everywhere already so it doesn't matter as much, but if the profit margin in the US is smaller then other countries because of tax they'll consider putting stores somewhere else if it's more profitable. That said, IMO the concern with them selling their goods somewhere else isn't that we won't be able to eat their burgers, but that they employ tons of people at their stores. People are going to be pissed if Burger King decides they're going to close down their slower stores in the US and open some new stores elsewhere that doesn't have tax because they'll end-up making more. I agree in that we could put a tax in place without anything imploding, they aren't just going to run away obviously. The question is more can we implement a tax which would be worth the money we'd make off of it without it resulting in Burger King closing places around the country because they're not profitable anymore.
  - roc 12y ago
    Both the possibility that corporations may not come to the US market, or may only come to the US market after having expanded into other, more-profitable markets require an assumption that the US would (substantially) raise taxes above the current level. We're hypothetically setting out to close a loophole that results in two distinct effective rates, a lower rate A for foreign corporations and a higher rate B for US-based corporations. So, again, why should we spend any time worrying about what might happen if we were to introduce an even higher rate C? No-one's talking about that. It's not on the table. It's not remotely politically plausible. It's not even a thing anyone's seriously proposed. Talking about it is either entirely besides the point, or a motivated attempt to conflate closing the loophole with raising rates to C, to scare people away from trying to close the loophole.
- true_religion 12y ago
  > The only "risk" of corporations "taking their ball and going home", is if the United States pursued a transparently self-destructive tax rate on foreign-based corporations. Which there is absolutely no reason to expect would even enter rational conversation. What's more likely is that corporations would split into the global corp, and the US corp. The US corp pays the high taxes and does work in the US. The global corp owns all the IP, and leases it to the US corp for some amount of money.
nathanyz 12y ago
It is actually pretty unlikely that they won't sell goods in the US. Burger King is not going to pull out as that is a major market for them. Not saying the US tax situation doesn't need fixed though.
- DSMan195276 12y ago
  I agree it's unlikely, at least a full pull-out of the market is basically never going to happen. But if they were to get a somewhat high tax I'd expect their lower-profiting stores may end up getting closed down because they're not worth keeping open (IE. They're basically making nothing off of them after tax, but they could sell them off and then open a store somewhere else that may now be profitable since the US costs more to have stores).

deleted 12y ago

[deleted]

gadders 12y ago

Well, I'd rather have a race to the bottom on tax rates, rather than the race to the top that governments seem keen on. In reality, it the tax rate wouldn't need to go to zero - just low enough that the cost of paying it outweighs all the costs (PR, resource issues, relocation costs etc etc) of moving to a lower tax regime.

Alupis 12y ago

There are a lot of things that can be done without a so-called "race to the bottom". - Why does it require a team of lawyers and tax experts just to haphazardly understand the tax law well enough to submit a corporate filing? - Why does America have the highest corporate tax rate in the world? (besting the next highest country by 4%)[1] - Why do we double tax corporations that earn revenue off-shore? (they pay taxes in the country they earned the revenue in -- then we tax them again if they bring that money back into the country -- effectively encouraging corporate like Apple to keep billions of USD offshore) The list goes on ... [1] - http://www.kpmg.com/global/en/services/tax/tax-tools-and-resources/pages/corporate-tax-rates-table.aspx http://www.kpmg.com/global/en/services/tax/tax-tools-and-res...