10 ms·

I'm familiar with the theory, however I've never seen a good treatment of how this works with multiple countries. The income and capital gains taxes only apply

by swatow 12y ago

I'm familiar with the theory, however I've never seen a good treatment of how this works with multiple countries. The income and capital gains taxes only apply to shareholders residing in the US. Maybe some of the corporate tax could be considered a fair "rent" price for using the nations resources? But I'd have to see a real model to be sure. It's still unclear to me whether (a) nations have conflicting goals when it comes to taxation (they don't when it comes to free trade, so maybe they don't with tax either) and (b) what the optimal corporate tax rate is.

davidw 12y ago
It's clearly complicated, and something that might have different equilibria. If you had a corporate tax of 0, you'd be foregoing some taxes that would otherwise not end up in the local coffers because the money would flow out of the country and be taxed elsewhere. OTOH, that kind of arrangement would be very attractive for foreign investors, who would be more likely to send their money to your country, which would likely have many positive effects.
AnthonyMouse 12y ago
Multiple countries is the primary reason that corporate income tax doesn't work. International corporations just report profits in the countries with the lowest taxes. Corporate profit doesn't have any physical existence, it's just numbers in a spreadsheet, you can trivially move it to any country you like. The only way to tax an international entity is to tax them on the things that actually exist in your country: Customers, employees, property, etc. But that's not corporate income tax anymore, it's sales tax, personal income tax, property tax, etc. The closest thing you can get to corporate income tax that actually works is VAT.
philwelch 12y ago
The corporate strawman itself could also be resident in another country, as in the famous Double Irish with a Dutch Sandwich setup.

by swatow 12y ago

davidw 12y ago

It's clearly complicated, and something that might have different equilibria. If you had a corporate tax of 0, you'd be foregoing some taxes that would otherwise not end up in the local coffers because the money would flow out of the country and be taxed elsewhere. OTOH, that kind of arrangement would be very attractive for foreign investors, who would be more likely to send their money to your country, which would likely have many positive effects.

AnthonyMouse 12y ago

Multiple countries is the primary reason that corporate income tax doesn't work. International corporations just report profits in the countries with the lowest taxes. Corporate profit doesn't have any physical existence, it's just numbers in a spreadsheet, you can trivially move it to any country you like. The only way to tax an international entity is to tax them on the things that actually exist in your country: Customers, employees, property, etc. But that's not corporate income tax anymore, it's sales tax, personal income tax, property tax, etc. The closest thing you can get to corporate income tax that actually works is VAT.

philwelch 12y ago

The corporate strawman itself could also be resident in another country, as in the famous Double Irish with a Dutch Sandwich setup.