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Yellen calls for global minimum corporate tax rate
- sadmann1 5y agoHow will we lobby ourselves out of this fellow 0.1% percenters
- Proven 5y ago1) Yellen is clueless about the economy. I think everyone who's watched her at the Fed knows that. 2) We need lower - not higher - taxes. I'd like to see 0% become the maximum tax rate. 3) If there isn't enough money to go around, the government should spend and tax less. They waste, consume and destroy multiple times of what enterprises invest. Given that, how can can living standards possibly improve? Does any of those economic illiterates understand basic math?
- UncleOxidant 5y agoGood luck with that.
- ArkanExplorer 5y agoPresumably the political logic to Tech Giants is: agree to higher taxes, unperson our political and ideological opponents, and we won't break you up?
- triceratops 5y agoOr this has nothing to do with "ideology". And it's meant to reduce the unfairness in tax rates between individuals (who pay taxes on worldwide income) and corporations (which do not).
- huy-nguyen 5y agoDuplicate of https://news.ycombinator.com/item?id=26698242 https://news.ycombinator.com/item?id=26698242?
- ghgdynb1 5y agoWhether or not we see such a harmonized tax rate emerge and even if we could find a way to have some governing body “enforce” it, you’d still see countries lowering their effective tax rates to lure firms or bolster growth. I bet there’s a maximum sustainable effective corporate tax rate, but I have no idea what it is (and for all I know it could be zero or negative).
- Ericson2314 5y agoIt's certainly positive because all the other countries could tariff the spoiler or whatever. It doesn't have to be race to the bottom.
- scsilver 5y agoCan these small countries who offer the low rates stand up the US sanctions and tarrifs apparatus. The US has alot of strings to pull to make these tax havens cooperate. Thats a nice export industry you have there, would be a shame if something were to happen to it wink nudge.
- ghgdynb1 5y agoThe point is that effective tax rates can be really subtle. For instance, you could have a country change what it considers to be “profit” so that you’re paying $2 on $100 of revenue, whereas in the neighboring country you’d be paying $6. Same nominal tax rate, different effective tax rates. There are even more ways to play this: “Sure, we tax you at the required 20%, but you can then direct how those funds are used to reduce costs you’d otherwise have to pay directly.” And this happens a ton— see the WTO and “effective” but not nominal tariffs.
- deleted 5y ago[deleted]
- scsilver 5y agoThanks for the insight, what would be the danger of the happy path solution where these effective vs nominal rates arent factored in. Some countries have a huge advantage in certain industries?
- woot482 5y agoMy theory is that inequality is simply the result of globalization and it's not necessarily a bad thing. If you had build the most successful retail business, in 1900 you would own the market in your town; in 1950 in your country; in 2020 you'd own the world (or a big part of it). The opportunity is just a lot bigger now than 50 years ago and that trickles down. Also technology enables goods and services to be produced from everywhere; that means countries compete globally. Many 0.1%ers had to overcome global competition to make the money they're making. In addition, more and more of them can do it from anywhere (def true for entrepreneurs starting fully remote startups, for instance). So there is both value and necessity in having to compete globally to attract the entrepreneurs and highest producers / best talent. Does it mean 0 tax? No. But it does mean you have to have reasonable taxes and offer a good product (security, laws, culture, talent, whatever it may be). It also means you don't offend your best 'customers' all the time. All this talk about how 0.1% people essentially unfairly stole their way to their success won't want to make anyone pay more or stick around to higher tax place (city/state/country). As a government you first want to be efficient with tax money; be reasonable with taxes, even if higher than average (but within the competitive ballpark); show appreciation for the people that end up paying most of your taxes; and stop talking about inequality as being exclusively a bad thing and a result of tax policy.
- macrael 5y agoYou might enjoy https://en.wikipedia.org/wiki/Capital_in_the_Twenty-First_Century https://en.wikipedia.org/wiki/Capital_in_the_Twenty-First_Ce...
- woot482 5y agoI know the book and it's an interesting theory. I guess most of the 'rich' people I know / know of are entrepreneurs and they didn't get rich from capital returns but by building a company that created an unthinkable amount of value and also many jobs and success for a lot of people. In my mind also, the best antidote to that is not taxes but anti-trust (make sure companies don't unfairly stay dominant) and low interest rates (which has been the case for a while) so that people without capital can borrow at reasonable cost. Taxing a company doesn't make it less dominant. it can be argued that it makes it more dominant because the cost to compete with the dominant company will be higher if corp taxes are higher.
- djvu9 5y agoAll talk. No action. Sounds good. Doesn't work. Never going to happen. (tm)
- TechBro8615 5y agoThat doesn't seem fair to the smaller (sovereign) countries who want to set their own tax laws to incentivize companies to do business there. In fact, it seems fundamentally outrageous that one country should be able to dictate anything about tax laws in another country. Wars have been fought over such abuses of power.
- mvzvm 5y agoThis is a wild misunderstanding of how the world actually works. Welcome to Realpolitik.
- vivekd 5y agoI don't think it's valid to say that the parent has misunderstood how the world works without saying what you believe that misunderstanding to be. It seems perfectly logical to think that a corporation would be attracted to places with lower corporate tax rates to use as a tax shelter.
- TechBro8615 5y agoSo Janet Yellen should have the right to tell Panama what its tax rate should be? Or China, or Russia? Good luck with that.
- rcMgD2BwE72F 5y agoYes, as long as Panama wants to continue doing business with the US. Guess what, most companies that are incorporated in a tax heaven do nothing there except tax and accounting, so they will pressure Panama to agree to the US' demands so they can keep enjoying their privileges.
- pessimizer 5y agoIt's not about rights, it's about ability. If Panama wants to trade with the US or it's vassals, it will do what the US says. China doesn't have to listen to the US, if Panama wants to defy Yellen, it can deal with China - although China may not see Panama as worth it, I don't think that tax breaks are an export that China is desperate for. edit: think of it like this - you have the "right" to eat meat. But if I refuse to be friends with people who eat meat and you need my friendship, you can't eat meat.
- jmpman 5y agoAdd in a global minimum estate tax, and we’re on our way to an interesting new world.
- nonameiguess 5y agoWe need a global maximum, of 0%. I don't want to sound like some kind of hardcore Austrian fundamentalist, because I'm not. Taxes are fine, but levying them on fictitious non-person entities is just a means of obscuring to voters where the tax burden ultimately lies. All taxes are paid by individuals, either directly, or by corporations raising or lowering the prices they charge and prices they pay, to suppliers, employees, owners, and customers. But this just means who bears the burden is now an opaque function of relative bargaining power and price elasticity of supply and demand. But that is not what we want from tax rates. We want them to be an open, transparent reflection of democratically passed laws. To that end, it is far better to levy taxes directly on suppliers, employees, owners, and customers of businesses, rather than on the businesses. This would also have the nice side effect of causing businesses to choose where they locate headquarters and factories based on something other than comparative tax rates, reducing an avenue of both dead weight loss and potential corruption.
- dnautics 5y agoI'm kind of the opposite. We should have 0% personal income tax and a minimum corporate income tax. A personal income tax incentivises the state to surveil the economic activity of individuals and play games with nudging people to do X or Y, and puts the burden of tax filing and the consequences of not reporting (which some people just can't do correctly). Contrariwise, a corporate income tax can be thought of as a "user fee" for the privilege of the corporate veil and limited liability. If you don't want your mom and pop shop to pay corporate income tax, simple: don't incorporate, and be responsible for your personally responsible for your employees' well being. And thus it becomes a driver of small business growth and a progressive taxation (the beneficiaries of bigcorp profits are going to be disproportionately wealthy). If you can't afford an accountant to keep track of what taxes you owe, don't incorporate. Etc.
- partiallypro 5y agoYour proposal would actually punish mom and pop stores in aggregate. Limited liability is incredibly important to business operation.
- jokoon 5y agoI believe that the pandemic will make world politics lean to the left. It's inevitable. Such a gigantic crisis will force society into mutual help, and will make it harder for values like independence and individualism to really thrive and endure. No man is an island. It's true that trade and entrepreneurship are a form of mutual help, but competition bring the worse, and it becomes the economy of the survival of the fittest. When governments inject money into private banks, it's impossible to deny that capitalism doesn't work without state intervention. Capitalism has been dying since 2008. In my view it started dying after the end of the cold war. An ideology without rival slowly becomes irrelevant because it's unchallenged.
- ping_pong 5y agoAnd yet, it didn't do that with the US. I'm frankly shocked that so many anti-maskers and covid-hoaxers are so adamant, because this was the perfect case for universal health care in the US. And yet, you hear NO ONE calling for it. It's like learned helplessness. There's almost half the population that actively rejects it, which is mindboggling to me.
- yourmom2 5y agolearned helplessness is exactly what it is. it also explains the unwillingness to change the us political system. "yes it's awful but there's nothing we can do about it."
- Mc_Big_G 5y agoIDK if you noticed, but half the population watches brainwashing "entertainment" disguised as "news", which actively pushes conspiracy theories and disinformation down their welcoming throats.
- jurassic 5y agoI don't see any reason why the Irelands of the world would be amenable to the idea of a minimum corporate tax rate. There are huge economic benefits to be had by luring US and UK companies with favorable tax treatment. Yellen's fantasy about getting every country to apply the same high tax rate against their interests is not helping the US's global competitiveness. In business, if you find yourself in a "race to the bottom" on price it typically means your product has become a commodity. The antidote to commodification is strong branding. Instead of trying to collude on tax rates like some kind of financial mafioso, somebody in Washington needs to figure out how to rescue the brand of the United States in order to reverse this trend.
- Hammershaft 5y agoIt isn't a fantasy if the US and other high tax rate countries apply pressure in the form of holding at stake economic access at stake. I'm not in favour of the corporate tax, I would rather have a high progressive consumption tax, a progressive inheritance tax, and a land value tax. (yes I recognize this will never happen...) That said, tax arbitrage across borders is the same kind of global coordination problem as climate policy across borders. Accepting a race to the bottom and resigning to a climate catastrophe are not solutions; we need countries who want to fix these problems to band together and create carrots and sticks to incentivize misbehaving countries to join in.
- partiallypro 5y agoThis will never happen.
- legitster 5y agoA corporate income tax is only slightly more progressive than a flat tax. A corporate tax rate of 0% but corporate income is passed through to shareholders as personal income seems better in every regard.
- kinghajj 5y agoIsn't that just called a dividend? Or are you suggesting that shareholders owe tax liability for all earned corporate profits, regardless whether any of that is paid to them as a dividend?
- legitster 5y agoNot only that, all income (but eliminate capital gains). While it may sound a bit revolutionary, this is essentially the tax structure Milton Friedman endorsed.
- dang 5y agohttps://news.ycombinator.com/item?id=26698242 https://news.ycombinator.com/item?id=26698242
- OliverJones 5y agoIn many countries, vendors from Apple to the guy selling apples on the street-corner collect Value-Added Tax (VAT) from their customers. It's a kind of sales tax that applies to all sales, not just retail sales to end users. It's harder for companies to play the international shell game with sales than it is with cash. VAT seems to be sufficiently fair, workable, and enforceable. People don't like it, but nobody likes taxes. The US feds can't do VAT though. It took the 16th amendment to allow the feds to collect income tax from people; it carves out an exception to the Article 1 requirement that all taxes be apportioned among the states by population. This corporate alternative minimum tax idea seems to be a way to stay within the bounds of the 16th amendment and still collect business taxes. None of it matters at all unless the tax-audit authorities get more teeth than they now have. Business-tax compliance in the US could easily go down Greece's path, where you're a chump unless you cheat.
- AzzieElbab 5y agois this something along the lines of multinational companies requiring multinational government/governance?