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Tugger
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Global Tax Agreement: 15% Minimum Corporate Rate

Fri Oct 08, 2021 5:44 pm

There is a lot more to go but an agreement is the start. 130+ countries have signed on to it but of course will take years to be enacted across all of the various governments. Still a big deal though.

https://www.cnbc.com/2021/10/08/oecd-re ... grees.html

Importantly it is structured to also put in place rules require businesses to pay tax based on the countries where the goods or services are sold/used, without requiring a physical presence there.

Should be interesting to see where this goes.

Tugg
 
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casinterest
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Re: Global Tax Agreement: 15% Minimum Corporate Rate

Fri Oct 08, 2021 5:50 pm

Looks like everyone is tired of seeing corporations with Tax Havens in Ireland. Wonder if they will do anything about Ships being registered in Panama ;) .
 
LCDFlight
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Re: Global Tax Agreement: 15% Minimum Corporate Rate

Fri Oct 08, 2021 5:56 pm

Probably nothing will change. Tax lawyers will get a bit richer. But, hoping to be surprised.
 
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readytotaxi
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Re: Global Tax Agreement: 15% Minimum Corporate Rate

Fri Oct 08, 2021 6:16 pm

casinterest wrote:
Looks like everyone is tired of seeing corporations with Tax Havens in Ireland. Wonder if they will do anything about Ships being registered in Panama ;) .

If they did you can bet some other nation would step in and offer an open registry.
 
737307
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Re: Global Tax Agreement: 15% Minimum Corporate Rate

Fri Oct 08, 2021 6:54 pm

Tax rates mean nothing if the tax code is riddled with loopholes.
 
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Tugger
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Re: Global Tax Agreement: 15% Minimum Corporate Rate

Fri Oct 08, 2021 7:36 pm

Dieuwer wrote:
Tax rates mean nothing if the tax code is riddled with loopholes.

That's why this is a minimum.

Tugg
 
737307
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Re: Global Tax Agreement: 15% Minimum Corporate Rate

Fri Oct 08, 2021 7:37 pm

Tugger wrote:
Dieuwer wrote:
Tax rates mean nothing if the tax code is riddled with loopholes.

That's why this is a minimum.

Tugg


Still, I would not be surprised if large corporations still pay nothing thanks to creative bookkeeping.
 
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Aesma
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Re: Global Tax Agreement: 15% Minimum Corporate Rate

Fri Oct 08, 2021 7:59 pm

I would have liked something closer to 20% but it's still a good thing. And should convince many companies that using loopholes isn't worth it. On top of mandating it I mean. Doing all kinds of shenanigans to go from 25-30% taxation to almost 0% is one thing, but doing it to go from 20-25% to 15% is another.

And as more and more multinationals stop doing it, there will be pressure on others to follow or risk being cancelled.
 
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Mortyman
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Re: Global Tax Agreement: 15% Minimum Corporate Rate

Fri Oct 08, 2021 8:26 pm

Anyone have a list of the countries that have signed ?
 
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Tugger
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Re: Global Tax Agreement: 15% Minimum Corporate Rate

Fri Oct 08, 2021 9:09 pm

This is an interesting read on the agreement:
https://www.irishtimes.com/opinion/if-o ... -1.4694296

Tugg
 
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Tugger
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Re: Global Tax Agreement: 15% Minimum Corporate Rate

Fri Oct 08, 2021 10:04 pm

 
GalaxyFlyer
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Re: Global Tax Agreement: 15% Minimum Corporate Rate

Fri Oct 08, 2021 10:12 pm

Yes, because collusion is good and competition is bad
 
Newark727
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Re: Global Tax Agreement: 15% Minimum Corporate Rate

Fri Oct 08, 2021 10:14 pm

GalaxyFlyer wrote:
Yes, because collusion is good and competition is bad


In this case? Yeah, I'll take that bet.
 
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Aesma
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Re: Global Tax Agreement: 15% Minimum Corporate Rate

Fri Oct 08, 2021 10:28 pm

Taxes are necessary to run our societies. If I buy a product and the company making it pays no tax, compared to a local competitor paying tax, is that good competition, does that benefit me or my country ?

This agreement is a way to prevent protectionist policies from becoming more and more appealing, and that 15% number is a very sweet deal for rich companies and their owners, they should be drinking champagne right now.
 
Dogman
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Re: Global Tax Agreement: 15% Minimum Corporate Rate

Fri Oct 08, 2021 10:41 pm

GalaxyFlyer wrote:
Yes, because collusion is good and competition is bad


Thinking in absolutes is usually very dangerous. Yes, competition can be bad, under certain circumstances. Especially in the race to the bottom.
 
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Tugger
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Re: Global Tax Agreement: 15% Minimum Corporate Rate

Fri Oct 08, 2021 11:30 pm

GalaxyFlyer wrote:
Yes, because collusion is good and competition is bad

OK, look at it in this way (and no it is not a perfect analogy but I think it makes the point):

Ask your body how good competition for its resources is. To my knowledge it works best as a cooperative system. Competition would have your as still just a bunch of microbes competing for resources.

The moral of the story is that competition is good but complex systems can succeed to higher levels when there is cooperative processes.

Tugg
 
AirWorthy99
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Re: Global Tax Agreement: 15% Minimum Corporate Rate

Fri Oct 08, 2021 11:41 pm

LCDFlight wrote:
Probably nothing will change. Tax lawyers will get a bit richer. But, hoping to be surprised.


Great post. You resumed it pretty nicely.
 
GalaxyFlyer
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Re: Global Tax Agreement: 15% Minimum Corporate Rate

Fri Oct 08, 2021 11:42 pm

Dogman wrote:
GalaxyFlyer wrote:
Yes, because collusion is good and competition is bad


Thinking in absolutes is usually very dangerous. Yes, competition can be bad, under certain circumstances. Especially in the race to the bottom.


Corporate taxes can fall on labor, consumers, or the shareholders, economists only agree it doesn’t fall on the corporation. Labor sees lower wages, consumers pay higher prices, shareholders (capital) see lower returns. Labor gets hit a second time when their retirement plan or pension gets lower returns. At best, it’s an even three-way split, at worst, labor gets the big hit thru lower investment in their productivity.

https://www.forbes.com/sites/adammillsa ... 54c0d6808e
 
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Aaron747
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Re: Global Tax Agreement: 15% Minimum Corporate Rate

Fri Oct 08, 2021 11:55 pm

GalaxyFlyer wrote:
Dogman wrote:
GalaxyFlyer wrote:
Yes, because collusion is good and competition is bad


Thinking in absolutes is usually very dangerous. Yes, competition can be bad, under certain circumstances. Especially in the race to the bottom.


Corporate taxes can fall on labor, consumers, or the shareholders, economists only agree it doesn’t fall on the corporation. Labor sees lower wages, consumers pay higher prices, shareholders (capital) see lower returns. Labor gets hit a second time when their retirement plan or pension gets lower returns. At best, it’s an even three-way split, at worst, labor gets the big hit thru lower investment in their productivity.

https://www.forbes.com/sites/adammillsa ... 54c0d6808e


A lot of truth there, nevertheless the bills on spending are always due now, now, now in some way or form.

Also, while you are correct and data shows there are no appreciable wage gains under high corporate tax rates, at least in the US experience, data *also* shows negligible wage gains when corporate taxes have been lowered, in spite of economic growth. That suggests the gains are mostly at the top end.

Image

Analysis here from Frank Lysy

https://aneconomicsense.org/2017/10/18/ ... eal-wages/
 
737307
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Re: Global Tax Agreement: 15% Minimum Corporate Rate

Sat Oct 09, 2021 12:53 am

That's what you get when you ditch sound money and abandon the Gold Standard. You will immediately get fiat currency inflation which acts as a transfer of wealth from the labor class to the capital class. Simply put, the endless money printing by the FED and the borrow-and-spend attitude of the government leads to inflation higher than any wage gains can match, all the while Wall Street get more and more inflated (richer).
Of course, offf-shoring labor also "helps" to keep a lid on domestic wages while enriching business owners (Wall Street).

Taxes can of course play a role in mediating the differences, as taxes are nothing more than a transfer mechanism of wealth ("rob Peter to pay Paul").
A possible solution to shrink the gap between wages and GDP would be to renounce all income taxes and instead levy corporate and capital gain taxes only.
 
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Aaron747
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Re: Global Tax Agreement: 15% Minimum Corporate Rate

Sat Oct 09, 2021 1:09 am

Dieuwer wrote:
A possible solution to shrink the gap between wages and GDP would be to renounce all income taxes and instead levy corporate and capital gain taxes only.


A fascinating proposal but it would naturally never succeed in the US system. Too few with too much to lose.
 
Newark727
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Re: Global Tax Agreement: 15% Minimum Corporate Rate

Sat Oct 09, 2021 1:10 am

Dieuwer wrote:
That's what you get when you ditch sound money and abandon the Gold Standard. You will immediately get fiat currency inflation which acts as a transfer of wealth from the labor class to the capital class.


History shows that the gold standard prevented neither inflation nor a transfer of wealth from labor to capital.
 
737307
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Re: Global Tax Agreement: 15% Minimum Corporate Rate

Sat Oct 09, 2021 1:19 am

Aaron747 wrote:
Dieuwer wrote:
A possible solution to shrink the gap between wages and GDP would be to renounce all income taxes and instead levy corporate and capital gain taxes only.


A fascinating proposal but it would naturally never succeed in the US system. Too few with too much to lose.


I think it could work very well. Take two extreme examples:

1) Income taxes at 50%, no corporate taxes.
Workers will feel less engaged with their work as they take home half of what the made in gros.
Incentive to generate as much profit as possible, nothing else matters.
If the business does well, employer makes out like a bandit.
Only owner wins.

2) No income taxes, 50% corporate taxes.
Works will feel engaged as all of their effort is expressed in wages. Business owner can pay him/her-self bigger salary and pay no taxes if so preferred.
Incentive to convert profits into wages. No incentive to have large profits on the books.
If this business does well, both employees and employer benefit as both receive higher and higher income.
Everyone wins.
 
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Aaron747
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Re: Global Tax Agreement: 15% Minimum Corporate Rate

Sat Oct 09, 2021 1:23 am

Dieuwer wrote:
Aaron747 wrote:
Dieuwer wrote:
A possible solution to shrink the gap between wages and GDP would be to renounce all income taxes and instead levy corporate and capital gain taxes only.


A fascinating proposal but it would naturally never succeed in the US system. Too few with too much to lose.


I think it could work very well. Take two extreme examples:

1) Income taxes at 50%, no corporate taxes.
Workers will feel less engaged with their work as they take home half of what the made in gros.
Incentive to generate as much profit as possible, nothing else matters.
If the business does well, employer makes out like a bandit.
Only owner wins.

2) No income taxes, 50% corporate taxes.
Works will feel engaged as all of their effort is expressed in wages. Business owner can pay him/her-self bigger salary and pay no taxes if so preferred.
Incentive to convert profits into wages. No incentive to have large profits on the books.
If this business does well, both employees and employer benefit as both receive higher and higher income.
Everyone wins.


I like the elevator pitch but you also have to convince these folks that how they’ve greased the pig can change in a way also advantageous to them.
 
737307
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Re: Global Tax Agreement: 15% Minimum Corporate Rate

Sat Oct 09, 2021 1:26 am

Of course, this is never is going to happen in the US as we don't live in a Democracy but an Oligarchy masquerading as a democracy.

https://www.bbc.com/news/blogs-echochambers-27074746


And that’s why most Americans are actually liberals who call themselves conservatives and who vote for conservative politicians that favor policies and values those voters actually oppose. Are most voters mental zombies who are actually manipulated by oligarchs? That seems to describe today’s American “democracy.”


https://www.counterpunch.org/2014/04/15 ... lectorate/

:white:
 
Dogman
Posts: 169
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Re: Global Tax Agreement: 15% Minimum Corporate Rate

Sat Oct 09, 2021 1:58 am

Tugger wrote:

Ask your body how good competition for its resources is. To my knowledge it works best as a cooperative system. Competition would have your as still just a bunch of microbes competing for resources.

The moral of the story is that competition is good but complex systems can succeed to higher levels when there is cooperative processes.

Tugg


There is no need for a hypothetical example. Just look how SEARS fared under the management of that Ain Rand aficionado, Edward Lampert.
 
Dogman
Posts: 169
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Re: Global Tax Agreement: 15% Minimum Corporate Rate

Sat Oct 09, 2021 2:26 am

GalaxyFlyer wrote:

Corporate taxes can fall on labor, consumers, or the shareholders, economists only agree it doesn’t fall on the corporation. Labor sees lower wages, consumers pay higher prices, shareholders (capital) see lower returns. Labor gets hit a second time when their retirement plan or pension gets lower returns. At best, it’s an even three-way split, at worst, labor gets the big hit thru lower investment in their productivity.

https://www.forbes.com/sites/adammillsa ... 54c0d6808e


Why did you separate the corporation and the shareholders? The American corporations are working in the shareholders interests, and if the shareholders see lower returns that means the corporation has less money too. Moreover, it's quite common for the shareholders to take out too much money out of the corporation, so the corporation may not even survive.
As for the workers and the consumers, it doesn't matter what are the corporate taxes, 35% or 15%. The corporation will try to charge for its product as much as possible and to pay its workers as little as possible, regardless of what the taxes are. I am surprised that the obvious things like that need to be pointed out.
 
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par13del
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Re: Global Tax Agreement: 15% Minimum Corporate Rate

Sat Oct 09, 2021 12:53 pm

Dogman wrote:
Why did you separate the corporation and the shareholders? The American corporations are working in the shareholders interests, and if the shareholders see lower returns that means the corporation has less money too. Moreover, it's quite common for the shareholders to take out too much money out of the corporation, so the corporation may not even survive.

A major point which is often overlooked when political experts go around talking about paying fair share of taxes. Just because the legal system gives corporations standing does not mean the shareholders have to keep the company going. Unlike governments where the people just change the drivers, shareholders can, do and will continue to pull the plug by taking their money out, and when they do, the tax base is diminished. A point does exist where taxes are a disincentive to those who have the assets to invest, the idea that the politicians have to get the whole world on the same tax system will ultimately fail, after all, look at what the EU has done to eliminate money laundering and tax havens outside of Europe and the USA.
 
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Aesma
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Re: Global Tax Agreement: 15% Minimum Corporate Rate

Sat Oct 09, 2021 1:54 pm

GalaxyFlyer wrote:
Dogman wrote:
GalaxyFlyer wrote:
Yes, because collusion is good and competition is bad


Thinking in absolutes is usually very dangerous. Yes, competition can be bad, under certain circumstances. Especially in the race to the bottom.


Corporate taxes can fall on labor, consumers, or the shareholders, economists only agree it doesn’t fall on the corporation. Labor sees lower wages, consumers pay higher prices, shareholders (capital) see lower returns. Labor gets hit a second time when their retirement plan or pension gets lower returns. At best, it’s an even three-way split, at worst, labor gets the big hit thru lower investment in their productivity.

https://www.forbes.com/sites/adammillsa ... 54c0d6808e


You can overhaul the US tax system (because it isn't like that everywhere) so that capital gains are taxed as income. Then people would pay in their usual bracket, and rich people would pay more. You can even imagine a deduction for the first X thousands earned on capital so that most people wouldn't see a change.
 
LCDFlight
Posts: 1349
Joined: Wed Jan 01, 2020 9:22 pm

Re: Global Tax Agreement: 15% Minimum Corporate Rate

Sat Oct 09, 2021 1:59 pm

Dieuwer wrote:
Aaron747 wrote:
Dieuwer wrote:
A possible solution to shrink the gap between wages and GDP would be to renounce all income taxes and instead levy corporate and capital gain taxes only.


A fascinating proposal but it would naturally never succeed in the US system. Too few with too much to lose.


I think it could work very well. Take two extreme examples:

1) Income taxes at 50%, no corporate taxes.
Workers will feel less engaged with their work as they take home half of what the made in gros.
Incentive to generate as much profit as possible, nothing else matters.
If the business does well, employer makes out like a bandit.
Only owner wins.

2) No income taxes, 50% corporate taxes.
Works will feel engaged as all of their effort is expressed in wages. Business owner can pay him/her-self bigger salary and pay no taxes if so preferred.
Incentive to convert profits into wages. No incentive to have large profits on the books.
If this business does well, both employees and employer benefit as both receive higher and higher income.
Everyone wins.


Corporate taxes are a rounding error today. The real choice here is 30% income and 0% corporate versus 80% corporate, no corporate activity, and the need for at least 30% income tax if not much more.

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