U.S. Backs 15% Global Minimum Tax to Curb Profit Shifting Overseas (opens in new tab)

That's literally a reddit conspiracy theory propped up on r/Ireland. Everything seems to indicate the editor you mentioned is very well informed & doesn't have any COI a part from vague allegations.

Like what do people think, some guy working in the City spent tons of time making extremely well sourced and well constructed articles just to... Divert some sort of "heat" from the entire London financial sector... On Wikipedia? Imo that's absurd, and it's very similar to the type of accusations people (pointing at the original reddit post that popularized the city shill theory) make whenever they find an article that bruises their nationalist ego.

> London based corporate shill to take the heat off the City of London being a tax haven.

Nice catch. It could be a Russian bot or just Russian activity.

Will ‘Global Britain’ clamp down on money laundering?: Regulatory easing after Brexit risks attracting more dirty money to London

https://archive.is/PR0oX

> to take the heat off the City of London being a tax haven

What exactly makes the City of London a tax haven? If anything, it is not a tax haven itself but a facilitator to set up structures in some Crown Dependencies.

But that makes it a financial and corporate service capital, not a tax haven (i.e., "a country or independent area where taxes are levied at a low rate")

Well there are many types of capital. Fixed capital attached to land doesn't readily flow across borders unless owners spend money to disassemble and salvage it. Financial capital isn't really capital as banks can create money on security of fictitious capital without finding existing deposits for borrowers to purchase speculative assets which do not convey ownership of any fixed capital.

Allowing cross-border flows of floating capital such as machines and commodity inputs and outputs should not be problematic if all new legal tender is initially placed into circulation through public local loans issued on security of the replacement cost of industrial fixed capital physically attached to domestic soil.

Conveyance of state enforced privilege such as deeds, titles, patents can also only be recorded between domestic residents and domestically chartered corporations liable for corporate tax. While these privileges provide security for capital investment they are not really capital themselves.

Allowing foreign investors to purchase shares of domestic corporations does not seem overly problematic as long any deeds, titles, patents held by corporations are directly taxed and there are some distributive offsets and deductions for domestic residents.

This is a specific issue of US based companies hiding 'offshore' revenues that likely do not qualify as truly offshore. Also holding profits in foreign countries in an effort to outlast IRS rules to be able to 'repatriate' funds at a lower tax rate, or even somehow show a loss in the US.

The perfect is the enemy of the good enough, we cannot craft a perfect tax solution, but we can make it better.

Restricting the money flow in and out of a country is something we like to ding China for, and is a big reason why cryptocurrencies have become very popular there; maybe the unstable equilibrium is merely the mechanism we use to tax corporations.

VAT isn't paid by corporations which shelter vast amounts of wealth whilst doing very little real trading, and is the same whether the corporation selling the goods is very low or high margin.

VAT is a very regressive tax. All consumers would be taxed the same regardless of their income.

I don't have a good answer to this question, and am actually curious about it.

But note that in the EU we do have VAT, and the governments are still (pretending to be) looking for ways to curb "tax optimization".

simple, VAT is paid by the customer not by the corporation

When Apple Argentina sells phones to Apple USA, and Apple Argentina makes profits, while Apple USA always shows a loss, how does this work? Apple Global (which owns both other companies)of course, shows a profit and their stock still goes up.

because the proposals on the table are agreements that say access to the markets and banking systems of the countries in which you do business are predicated on a 15% minimum tax rate and without paying the taxes you do not get access to the markets or banking infra which are necessary to run and grow a mega cap company.

In a situation like that, the place if effectice management and/or the central management and control would probably be how the tax residency is decided.

From a corporation's point of view, it's fine if your competitors are treated the same as you are (in a competitive market).

But, even if so, CEOs/board members are often those high net worth individuals. So there's a potential conflict of interest that isn't resolvable.

This explains why corporations will lobby against a minimum tax, even if the institution doesn't ultimately care.

So instead of actually fixing the problem - we should just hope that our government arbitrarily applies Tariffs to the right companies in the right amounts?

Certainly that won't ever be abused to screw over one company and benefit another for political purposes, right?

And, seemingly, a tax authority (the IRS) would be better equipped to calculate these amounts anyway.

Sure, but both of those will have other, potentially unwanted consequences. Besides, this isn't just "US hegemony," most of the EU wants this as well (except Ireland), as they want to tax the local profits of multinational tech.

How does cryptocurrency fit into currency export control exactly?

This is a common misconception but actually Apple Inc. (the US corporation) is the sole owner of the legal rights to Apple's intellectual property. The economic rights are split between Apple Inc. (for sales occurring in the Americas) and Apple's Irish subsidiaries (for sales occurring outside the Americas) but the IP itself remains in the United States.

Source: Apple's Congressional hearing from a few years ago

> Just tell the US Apple Corporation (as an example) they can't proceed in their current court cases, as they are not the 'owner' of the IP, they are merely a licensee. Let them fight it in the court systems of the country where the IP is actually in.

That's just absurd. If you want something to happen in jurisdiction X, you sue in jurisdiction X, not some other place where you might be a citizen or legal entity. Apple can try to sue in Ireland or Netherlands or wherever, but if they are suing a US company for some breach or whatever that happens in US, the Irish or Dutch court will just dismiss the lawsuit for the lack of jurisdiction, as it could not possibly enforce its judgement in the US.

I might be tempted to take it a step further, and say that any interaction that would be taxed between businesses should be taxed if the same interaction happens internally. I really don’t like that the system seems to encourage acquisitions and mergers. If I buy a marketing firm so I don’t have to keep paying another firm for marketing, all those taxable events are now gone. I know my proposal starts to break down quickly and can lead to an accounting nightmare, but it seems like sort of a starting place to meditate on this topic.

> At the end of the day moving profits around isn't illegal and I dont see how banning it solves that problem. As long as it is taxed somewhere, which is what all country cares.

Well, that's the crux of the matter, isn't it?

Because they actually are taxed "somewhere", it's just that this usually tends to be a place with very low taxes. We're not talking tax evasion here, but actually legal ways of paying the least tax possible.

The issue with this approach is that some countries can attempt to undercut others with taxes. Of course, this could be seen as "capitalism at work", why should a country charge (tax) more if they can get by with less by being more effective?

The issue is that this doesn't happen in a vacuum. And if BigCorp makes a ton of profit in HiTaxCountry it's likely because the good conditions there are afforded by the taxes (which pay for education, infrastructure, etc). Whereas LoTaxCountry is usually some small island nation with next to no one actually living there, which means little cost for infrastructure, etc, so of course they can get by with next to no taxes. Even though "next to no taxes" on billions and billions of dollars can actually make up quite a hefty amount for a minuscule country.

But that's quite literally not what's happening. The problem is companies that do a significant portion of their business in one country using legal loopholes to claim that those operations actually occurred in other jurisdictions where they would have virtually zero tax liability.

Imagine you are a smaller country here. You probably don't want your tax law to be determined by third parties.

If anyone tried to enforce things like this on the US we'd be having a press conference with some general explaining that attacks on our sovereignty will have consequences.

Perhaps they're of the "tax is theft" branch of libertarianism

I think that's a pretty absurd argument. Like some sort of weird variation of fallacious slippery slope. So because someone is for international treaties on war crime he must be for global taxation rates? Would it be ridiculous to not just support a full on global government then since we already have bodies governing war crimes? That lazy line of thinking can be used for pretty much everything

I always find this kind of thought interesting. The government provides a ton of things. Do you use public roads or sidewalks? Do you live, work or shop in a structure that adheres to building codes? Do you have power? Do you have access to the internet? Do you enjoy food that doesn't kill you? So many of these things wouldn't be possible for the general population without government. It takes money to operate a government. I share the frustration that tax money isn't always (often) spent effectively, but then I ask...what have I done? what would I do differently? At the end of the day, I'm not that interested in doing these things. Sure, I like to complain to my inner circle about how I could do it better, but I've not actually gotten involved. The most I do is vote for people that (on the surface) aren't unhinged and trying to mostly do good, rather than buying into political ideology. So avoiding paying taxes or escaping would just be selfish for someone in my position. Paying these taxes doesn't measurably impact my overall well-being.

I'm surprised to hear this sentiment, but honestly I think there's a huge amount that the government does that is invisible to most citizens.

When I lived in China, I was shocked not by how controlled it was (which is what I expected given the western vision of China) but by how chaotic and uncontrolled it was compared to the US. Everything from food, health, and safety inspection, to the enforcement of traffic laws, the regulation of lenders and financial products, academic integrity, I could go on forever. I became aware of these things only when I lived in a place that lacked them.

The US is actually not that bad. One thing I think many ppl who have not spent time in developing countries overlook is how much stuff just works in the US. Compared to most EU countries US taxes are much lower. People like to point to Singapore as low tax example, but the difference in scale is such that the comparison is not meaningful.

There is some fraud and abuse, of course. And the huge numbers involved mean that even a small percentage of fraud is a huge number. But there never seems to be any statistics that back up the assertion that government (in general) or the US government (in particular) produces outrageous amount of fraud or abuse.

Where are you immigrating to that doesn't "mismanage" tax revenue?

It sounds like you should do some research and see what the govt actually provides for you!

Although there is mismanagement, fraud, and abuse sometimes the alternative, not having that service, is worse. There is a balance usually.

It isn't "countries around the world" that lose taxes and capital. It's a small number of very rich countries, mostly in the West, and primarily the US. This is simply a way for the US to retain economic power (and all the other powers that come from it) while cutting off competitive paths for other countries to compete and get rich. The reason this feels like a cartel is because the proposed policies amount to a joint collusive policy meant to reduce competition.

I tried to call out the other way is to push the income to individuals so corporate profits are always near zero.

So to apply energy on taxing individuals rather than corps. For corps income is so fluid, I think we get more revenue with tariffs, usage taxes, property tax, VAT, sales, etc.

Profit isn’t as important to corporations as it is to individuals.

There is an optimal Corp tax rate and you can have a data-driven discussion about it. It’s most likely higher than 20%. Def lower than 50%.

The rich are extremely mobile, already have wealth and assets that will keep appreciating.

The poor and middle class would need to disproportionately gain wealth if they were to rise to the same position in the power hierarchy, and they are not mobile. High taxes are like fixing positions in place, like a moat to make it difficult for others to rise, since it isn't going to retroactively take money.

Historical data further shows that taxes keep rising but so does inequality.

It's blatantly obvious that you cant control the laws of every country when the game theory makes it obvious that lower taxes makes you more competitive at attracting wealthy people.

Most economists think infinite growth in a finite world is a good idea. Companies reinvesting in themselves and growing bigger is not inherently a good thing.

Large corporations, in my opinion, are already causing the breakdown of local societies. Deals are done over large areas, less and less people are in control of their own fates. More and more externalities are caused as business leaders are more detached from the realities of their actions. Wages for workers are lower as more needs to be paid to management, and profits get used for stock-buybacks rather than bonuses and higher wages, to please shareholders rather than workers

Also the npr show has: “4. Eliminate all income and payroll taxes. All of them. For everyone. Instead, impose a consumption tax.”

That implies a GST/VAT/sales tax rate of ~35% in my country, changing from progressive to regressive tax. Enforcing it would require both the abolition of cash, and to somehow police the barter economy.

https://www.interest.co.nz/news/99949/budget-2019-summary-al...

Edit: 35%. Currently GST is 12.5% and 2019 GST budget was $21 billion, PAYE + other source deductions budget was $35 billion.

Worth adding that the liberal economists who favor eliminating the corporate tax in theory tie that policy change to radical increases in income taxes for high-earners; that is to say, it's not the case that all economists support eliminating the corporate tax as an independent intervention.

Taxing people's assets are complicated. But not because of houses. There are large portions of the U.S. where people are taxed based on their house value. Like in Houston where I pay ~3% of the value of my house every year in taxes.

The real tricky part is small businesses. If I run a small software consulting business or own a bar how much is that worth? Is that the value of the software consulting business with me or without me?

Housing evaluations are very straight forward -- the market is what decides the price. Unless your house is something exotic like a castle or something. Every year the city or region you live in has a process to evaluate this value, and then asks you to pay a tax based on this. Generally if you feel the taxation is unfair, you can just sell the house -- if it doubled in value from the year before, according to the market, you'll probably be happy to pocket that profit. Otherwise property taxes are just how it goes when you're a house owner. Also you normally have a year to pay the tax, so there is lots of time to make a decision.

We've had a solution for over 1400 years now. Look up Islam's Zakat laws. Much more affordable at only 2.5% on money above a certain amount that is sitting in the bank doing nothing. Things like produce and livestock have different measures depending on certain things. If you look up history, when everyone paid their Zakat in Iraq during the Ummayad empire, there were no more needy people left to accept it.

That's a lot of words to say competition. Competition is good.

The US can tax US corporations anyway it sees fit.

What do other countries have to do with it?

Read the subtitle:

>The Biden administration wants other countries to back a minimum tax as part of its plan to raise the U.S. corporate tax rate to 28 percent from 21 percent.

This makes no sense. Is the IRS a global institution now?

Ireland also made the deal available to other companies (on a case by case basis.) But it was definitely a too low a tax rate/tax avoidance issue, not an Apple specific issue.

No pretending. Sometimes binaries do matter.

How much could you possibly need to live a good life? Certainly not more than, say, $50 per day, right? Let’s simply cap ourselves there.

I say this to demonstrate that “ungodly” always means “more than me,” irrespective of all else. Justification through jealousy. A recipe for a lowest-common denominator society, at global scale.

I think the point is that to do this, tax agencies around the world would have to cooperate with American tax agencies, which just creates another level of overseeing that has never happened before. It is another instance of Americans trying to force their wishes on the rest of the world.

Why do other countries need to sign the agreement? They don't really seem like they have any part in this process.

what defines a US company? A company registered in the US, a company headquartered in US, a company with subsidiaries in the US, a company doing transactions into US jurisdiction?

Last I checked the US tax code does this already. If the US tax rate is higher you pay the difference!

So hip, so edgy

In ideal world that might work, but in reality, the countries that can afford to set low corp taxes do it, and the countries that can't don't. As usual, the rich get richer, and corporations get bigger

Wut???

They would benefit the most, from having a small government.

Precisely. But instead of solving this problem inside US they want to re-engineer the whole globe.

Most countries are mad about multinationals, most of them rich US multinationals. If the US would do a proper job of taxing their own corporations none of this would be necessary.

Interesting how this is just in time for the Dutch sandwich scheme to expire. Clearly something else was missing!

It is overly simplistic to think of a global company, such as Oracle, or Coca Cola, as a single monolithic US corporation. They have literally hundreds of subsidiary companies all over the world, manufacturing and selling into different markets.

Corporation tax.

They should just dump it and tax dividends and capitals gains like any other income.

It's easy to shift corporation tax but much harder to shift an individuals income.

The usurious underlying financial system.