Tax competition is what keeps governments in check. Taxes are just fees for services in the territory of the state (e.g. security, market access, infrastructure, …). If these services don't warrant paying the fee anymore people and companies should of course leave for better-run places! Nothing else will make governments become more competitive than voting with one's feet. We should really become less sentimental about countries, they are just crude constructs to provide services that need coordination which markets can't as easily provide. Choosing the best service provider is something good as it increases overall efficiency as only sufficiently efficient systems survive in the long run.<p>Wanting a global minimum tax is like one mafia asking the others to increase their protection charges so their clients don't leave. Such collusion is frowned upon for good reasons in free markets as it leads to worse outcomes due to reduced competition.<p>I'm hopeful that this idea will not work due to the profitability of breaking the deal and the big number of countries that exist. The US also shouldn't overestimate its importance which seems high but ever-declining.
Corporate taxes are the most blindingly stupid idea ever.<p>People forget that the only way to level the playing field between Amazon and local shops is to cut taxes to 0 rather than layering on increasingly complex tax rules. Amazon thrives in the presence of corporate taxes.<p>Corporate taxes also create huge incentive to offshore jobs to tax havens.<p>Not to mention no corporate tax rates would mean no need for all sorts of expenses on legal and accountants for tax optimisation.<p>In the UK I think we acknowledge they are a bad idea by having a plan to step them down over time to some low level (and potentially even 0 eventually). Covid derailed that plan.
Why doesn't the US utilize the fact it has some of the richest, most sought-after customers in the world.<p>If a company wants to do business in the US, just stipulate that they have to be paying a corporate rate of X% somewhere. If that X is 21% and they are only paying 12.5% then in order to do business in America they would need to pay the US the difference.<p>Just like California can dictate emissions standards in vehicles across the rest of the states, the US has power to dictate standards across the world. No need to get everyone on board.<p>Note: I'm not commenting on whether corporate tax is good/bad. I'm just asking if the US wants something done why not.. do it.. and restrict those that don't from doing business here? We do that already for corruption (see the FIFA case[0]) Same could apply to carbon tax. If they don't pay a carbon tax for their GLOBAL business dealings, pay it to the US or your not welcome.<p>[0] <a href="https://en.wikipedia.org/wiki/2015_FIFA_corruption_case" rel="nofollow">https://en.wikipedia.org/wiki/2015_FIFA_corruption_case</a>
Here’s how this gets broken: The more countries faithfully adhere to the global corporate minimum, the stronger the incentive becomes for a “cheating” country to lower its rate.<p>The tax haven could even get around an “enforcer” or governing board. For instance, such a country might 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.”<p>And this happens a ton— see the WTO and “effective” but not nominal tariffs.<p>Whether or not we see such a harmonized tax rate emerge and even if we could find a way to have some governing body try to “enforce” it, you’ll 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).
If I am a smaller, poorer country (especially poor in natural resources), why would I agree to this? If giving tax breaks can attract foreign companies to my shore, why would I <i>not</i> do it?<p>Why should other countries make concessions for the American politicians (esp republicans) unwillingness to properly enforce the existing tax rules, make better tax code, increase funding for IRS etc?<p>I don't think I understand her logic, can someone ELI5?
I have a crazy and unpopular idea - America drops the corporate income tax to 0%, full stop, across the board, no loopholes, no exceptions.<p>(ducks from the rotten vegetables that are being thrown at me)<p>Here me out...<p>America offsets the revenue loss by increasing tax burden on (rich) <i>individuals</i>, not corporations [1]. Hopefully, that would bring offshore profits back and increase hiring, r&d spend, capex, etc etc positive feedback loop etc. More likely, corps use the profits to buy back stock and layoff people (which has happened in the past with tax holidays [2]), but hey, at least those profits don't just sit in a bank account in Ireland or the Cayman Islands.<p>Here is a really crazy idea that won't work - Janet Yellen trying to compel the world to adopt a global tax rate standard, thinking that tax haven countries would comply for America's benefit. Yeah, not happening... the baby boomer generation really don't have any capability of second order thinking.<p>[1] The irony is that republicans love to say corps are people. With that logic they should be taxed like people. Dumb. They are not people, they are institutions. Don't tax institutions, just tax people more.<p>[2] <a href="https://en.wikipedia.org/wiki/Repatriation_tax_holiday" rel="nofollow">https://en.wikipedia.org/wiki/Repatriation_tax_holiday</a>
Why don't we discuss corporate income taxes as effectively a fee for the legal and commercial advantages associated with being a corporate entity in the US?<p>For example a C corporation can tap into highly liquid and well developed capital markets, limit and separate the owners and lenders to a business from management and associated liability beyond their initial investment, and thanks to certain legal decisions like Citizens United, corporations still seem to enjoy what seem to me more like personal rights such as freedom of speech, ability to participate in politics anonymously , and likely more I don't know about.<p>With all the aforementioned advantages, is it any wonder that a huge proportion of firms above a certain size limit are C corporations despite the obvious downside to contend with of double taxation? [1]<p>It seems like the relevant question is the value of those advantages to the tax rate legislated by congress, net of costs related to the right accounting, legal, and lobbying teams.<p>[1]: <a href="https://fas.org/sgp/crs/misc/R44086.pdf" rel="nofollow">https://fas.org/sgp/crs/misc/R44086.pdf</a> (page 7 and 8)
Is there any treaty the entire globe has agreed on? Sure, overall corporate tax revenues would go up but not enough to make up for the money a small country stands to make by not signing and becoming a tax haven.<p>This is just an excuse to not pass strong controls preventing local companies from moving their money overseas. Start taxing companies based on where their employees and executives live, not which mailbox they stuff money into.
Coordination across nation states will be super important in order to stop runaway inequality that happens when you can easily shift capital around the world.<p>The only way we will be able to close all of the complex tax loopholes that large corporations take advantage of is to coordinate tax rates across nations.<p><a href="https://www.investopedia.com/terms/d/double-irish-with-a-dutch-sandwich.asp" rel="nofollow">https://www.investopedia.com/terms/d/double-irish-with-a-dut...</a><p>How often have these loopholes come up and people say "don't get mad at the corporations, we need to change the rules"<p>This is exactly the type of rule change we need to get this done.<p>(I know this particular loophole is closed now, but there are new ones I haven't taken the time to learn about yet.)
So we were the global tax haven that undercut the rest of the developed world for the past 50 to 100 years, and now that we're drowning in debt and the government needs revenue, we're asking very nicely that nobody plays spoiler.<p>Gotcha. Good luck with that.
We should move toward phasing out all income taxes, and shifting the burden to taxes on natural resource usage. The latter are:<p>* efficiently collected<p>* dissuade waste of scarce resources<p>* are impossible to evade<p>* don't necessitate global mass-surveillance<p>* don't violate private property rights<p>* and don't disincentivize productivity<p><a href="https://en.wikipedia.org/wiki/Land_value_tax" rel="nofollow">https://en.wikipedia.org/wiki/Land_value_tax</a>
Europe isn't going to be happy about getting targeted twice in a day by the us. First for charging a digital tax and now for having low corporate tax. I think this kind of thing will drive apart NATO if the level of hostility continues.
In light of this announcement I propose a new economic prediction where max_tax = min_tax + epsilon. I call this new relation the Obviously Economic Relation.
More options are always better than less. This is the reason why people hate the lack of choice in mobile OS, in App stores, etc.<p>It would be great to understand why lack of choice in tax regimen is different, particularly from people that are of the opinion that FAANGs are monopolies that should be broken up
The proof that media discussion regarding taxation is purely, ideologically ideologically driven is the fact that, as in this article, the Laffer curve is almost never mentioned. Any discussion about tax rates without considering where we currently sit on the Laffer curve is an exercise in futility (or propaganda).
> the Biden administration’s effort to help raise revenue in the United States<p>This coming after a $2T pork stimulus with another $2T on the way. Obviously this has nothing to do with prudent financial management. Punishing evil capitalists? Maybe. Trying to prevent a mass exodus of investment from the US? Probably.<p>I’m sure they tried to close loopholes regarding offshoring profits, but realized the corporations would just exit faster. This is desperation. It won’t work. Capital can’t be controlled and threatened the way that people can be. Capital will always go where it’s treated best.