136 Countries agree to minimum corporate tax rate

https://www.cnn.com/2021/10/08/business/ireland-global-tax-deal-oecd/index.html

by nathanyz • 5 years ago

102 63 5 years ago

I think the tech companies will keep their headquarters in Ireland even after this - Ireland is still not going to raise it's corporate tax rate above 15%, there's inertia, and Ireland is now the only native English-speaking country in the EU (except maybe for Malta).

crishoj• 5 years ago

The greater impact of the agreement as I understand it will come from the requirement for companies to pay taxes in the countries where they do business, and not just in the country of registration.

ensignavenger2• 5 years ago

Whenever some one visits Hacker News, where is Ycombinator "doing business" from? The country where the visitor is located? The country where the Hacker News moderators/programmers are located? The country where Ycombinator is headquartered? The location of the Hacker News servers? The location of the advertisers on HackerNews? If each country makes up their own tax rules to determine where Ycombinator is doing business, then a company may have to pay 200% of their total revenue in taxes to cover all the different locations that could claim business was being conducted there.

asdff• 5 years ago

Is the language barrier really an issue when you have nations like Germany where half the population speaks english? When you consider knowledge worker germans I wouldn't be surprised if this jumps up to U.S. proportions where 78% of the population speaks english.

tommiegannert• 5 years ago

I think the tech companies will keep their headquarters in Ireland even after this

I agree they probably won't leave. Ireland is cheap for labour as well. (It has/had one of Google's lowest salary levels, for instance.)

However, it will make new companies question moving there. I was in Ireland when Brexit was becoming a reality. My guess was that Fintechs would flee London into Dublin, but it looked like many went to Amsterdam. English is fairly widespread in continental Europe now.

Even Switzerland (which already has four national/federation languages, depending on region) is slowly moving towards English as second language.

dantheman2• 5 years ago

I think this type of harmonization is incredibly harmful and reduces experimentation among states. I personally think the concept of corporate taxes doesn't make sense and encourages reckless behavior - there are a lot of unintended consequences do this.

We should be encouraging experimentation in governance.

It's the same how inflation doesn't just devalue the currency, it encourages riskier behavior because investors must seek higher returns.

thaumasiotes• 5 years ago

https://www.overcomingbias.com/2020/09/the-world-forager-eli...

RNCTX2• 5 years ago

I think you're in need of some further reading.

1) UN resolutions don't have any enforcement weight, which is why they're so popular with politicians who run on the statement "nothing will fundamentally change."

2) Taxes should be paid by whoever retains earnings, and in that case corporate taxes make a lot of sense. And yes, buying back your own shares to drive share values higher for current shareholders is "retaining earnings" and should be taxed at not just capital gains, but individual income levels since individual income is what such activity creates.

tertius5• 5 years ago

On #2: Buying back shares does not create individual income. It only creates temporary unrealized gains. Only if those individual shareholders sell, do they realize the gains and, in some cases, will they be taxed on it at income tax rates.

vegetablepotpie• 5 years ago

Without collective agreements between governing bodies on what bare minimum standards should be on taxation what we see is rent seeking behavior from corporations (ah la Foxconn and Mount Pleasant, Amazon HQ 2).

Without minimum taxation, we see a race to the bottom for taxation, where elites benefit and everyone else looses.

dcgudeman• 5 years ago

By "elites" do you mean the people living in the countries or states that attract capital? Ireland's standard of living has increased dramatically because they adopted low taxation regime. It's ridiculous to pretend that forcing countries that don't have much in the way of resources or infrastructure to adopt higher taxes somehow helps them. This might help the U.S. or Germany keep companies "in house" but it certainly does not help Ireland or similar countries.

Glyptodon• 5 years ago

The thing is non-harmonization doesn't really promote experimentation, it promotes competitive-market-leading behavior. Obviously there are limits to how much it matters - lots more startups in CA compared to South Dakota. But I don't think there's a lot of evidence that non-harmonization provides an incentive to experiment, so much as it makes countries have economic incentives to treat things like a zero sum game.

lowbloodsugar• 5 years ago

Sure. Let's try an experiment where all countries agree to a minimum tax rate, and see what that does.

We've tried race-to-the-bottom. We've tried penalize-till-we-get-hitler. We've tried tickle-down. We've tried fascism-masquerading-as-communism. Let's try globally coordinated minimum tax!

booleanbetrayal• 5 years ago

This is experimentation in governance. What better way to encourage that than to provide an illustration as these 136 countries are doing?

entropyneur• 5 years ago

Sounds like a cartel.

ceejayoz• 5 years ago

Cartels are entirely legal on the international stage. See OPEC as a clear example.

fulafel• 5 years ago

Sounds good, a tax race to the bottom hurts many more counries than it helps, it's a negative sum game.

What's the previous % been so far in major western counries, anyone got a link?

sharkjacobs• 5 years ago

US: 21%

China: 15%/25%

Japan: 29.74%

Germany: 29.65%

UK: 19%

France: 26.5%

India: 15%/22%

Italy: 27.9%

Countries with two values listed have different rates for different types of companies e.g. China has a lower rate for “high-tech” companies

https://en.wikipedia.org/wiki/List_of_countries_by_tax_rates

glogla• 5 years ago

That makes this sound more like a corporate win - 15 % is already the lowest one, and this agreement can be used as a way to wiggle out from something more useful, like revenue tax or VAT.

fallingfrog2• 5 years ago

On one level, this is a good thing as there has been a race to the bottom going on in terms of taxes for some time.

But on another level, this is very bad because national tax policy is now being set by unelected diplomats instead of congress. It's an ominous admission that western democracy is now unable to operate as it's meant to and set policy in a way that reflects the desires and interests of the citizens.

I know that worrying about national sovereignty is usually a right wing thing, but there is some truth to it- when the economy is international the bodies with the most power are the international economic agencies and banks. For example it's well known that Greek government policy after the financial crisis was dictated to them by the European Central Bank and the IMF. Likewise the World Bank and the IMF set policy for a large swath of the global south. And none of those people are elected.

tweedledee3• 5 years ago

It could be worse; they could have taken over via conquest (war).

lovich4• 5 years ago

It's an ominous admission that western democracy is now unable to operate as it's meant to and set policy in a way that reflects the desires and interests of the citizens.

That comes off as a little hyperbolic to me. Those governments are supposedly already taking choices they feel reflect the desires and interests of their citizens which means entering into this tax agreement is such a reflection.

There’s no world government enforcing that states remain a member of this agreement so they can always leave them later if their citizens feel that way as well.

It’s not like this was done entirely out of altruism from states looking out for their fellow man. Nation states are pretty nakedly self interested hence the phrase “nations have no friends only interests”. They all must feel they are getting something from the deal

nescioquid• 5 years ago

tax policy is now being set by unelected diplomats instead of congress.

Each nation will have to ratify the agreement.

It is nominally true that congress sets tax policy, though that overlooks the golden horde of lobbyists that descend upon Congress with ready-made bills. It is also true that a representative or senator ought to make decisions based on the best interests of their constituents, rather than donors and their lobbyist pals (who might land them a lucrative gig after office).

someguydave• 5 years ago

“ I know that worrying about national sovereignty is usually a right wing thing”

is that an apology for considering a right wing idea seriously?

fallingfrog2• 5 years ago

Well, the nation as an organizing principle and identity arose in revolutionary France as a way to fill the hole left by the collapse of god and the king as the feudal system was abolished. But the nation, too, as a concept has its limits. In some cases I think it will be replaced with more local identifications and political structures; in other cases more global ones. But in every case those structures need to be democratic.

zw123456• 5 years ago

Step 1) global harmonization of trade

Step 2) common monetary system

Step 3) global harmonization of tax structure

Step 3) one global government (similar to EU)

Is that a good thing or a bad thing ?

Yes.

ed_elliott_asc• 5 years ago

as long as Americans don’t go mad and get another crazy elected

Ekaros• 5 years ago

I think that is kinda forgone now... How many of them do they now have in row? Going back to at least Clinton, maybe further...

nine_k• 5 years ago

Not really "global", but mostly "western", I'd say.

What are the upsides of homogenization? Efficiency and predictability when all goes well.

What are the downsides of homogenization? Lack of innovation and fragility when everything stops going all that well.

lovich4• 5 years ago

Did something happen to cause mutual cooperation between most of the planet to be viewed as a bad thing? All these countries have come to an agreement by negotiation instead of economic or martial war.

Why is there such pessimism/paranoia about this deal in this thread?

burnafter182• 5 years ago

Globalism is inherently fragile. This is part of a continued trend which has enough inertia to carry us to an inflection point where it could conceivably destroy everything human, either in real terms or something less tractable. We made a wrong turn a very long time ago, and since we've been extraordinarily misdirected but inextricably committed to the mistake we've made. We're totally in the dark, and truth becomes ever more indefinite as we travel down this timeline and the path we [never] elected.

You see, the way that we made exchange was translated from a moral domain to a material domain, which was finally transposed to a symbolic one. Dollar valuations of a lifetimes is an intrinsically abhorrent concept. A life can never be repaid, thus it can never be valued in real terms - yet it is, billions of times over. Globalism is just a long-range result of this. Exploitation and undervaluing of billions of lives in order to create increasingly competitive products to grow dollar values of a investments in the hands of an increasingly small proportion of the population. This itself founded on false pretense.

Every move towards globalism is increasingly dangerous, this is no exception.

feoren• 5 years ago

This is a lot of doomsaying, with no evidence and very little details or logic. It's like you expect your reader to already agree with you and nod along to "mistake" and "misdirected" and all the other negative language you use without any explanation of what you're actually talking about.

We made a wrong turn a very long time ago

What, inventing agriculture? Certainly some think that. Otherwise: what are you talking about?

translated from a moral domain to a material domain, which was finally transposed to a symbolic one.

What? Can you explain what this is supposed to mean?

bloodyplonker22• 5 years ago

What you just wrote is a lot of verbal diarrhea without any examples or backing at all.

lovich4• 5 years ago

Globalism is inherently fragile Every move towards globalism is increasingly dangerous, this is no exception.

I don’t really agree in the slightest unless you’re making the claim that all political systems above the family level are inherently fragile in which case it’s a moot point. The previous international standard was war when there were major disagreements. Globalism has helped make the entire planet relatively(relative is doing a lot of heavy lifting here but still counts) peaceful compared to the past

brodouevencode2• 5 years ago

Operating under the assumption that most replies are from US citizens: the people of the US have a love/hate relationship with taxes. Most of the time theyre fine with taxing others so that they could reap the benefits, they just dont want to be taxed themselves.

sushid• 5 years ago

Isn't that like... everyone?

I_am_tiberius2• 5 years ago

Corporate tax in general is the wrong type of taxation.

Corporate tax can be controlled by the company itself. If you run your business economically, you pay more corporate tax. This is just wrong.

brodouevencode2• 5 years ago

You, the consumer, pay the corporate tax.

tertius5• 5 years ago

Yes, but increased profits (by running profitably) also increases returns for the shareholders... A good thing.

TechBro8615• 5 years ago

Personally, I'm a strong believer that decentralized systems are more robust than any centralized or distributed alternative. I see no reason why geopolitics would differ from software in this case. In fact, the most effective use case for decentralized software occurs when centralized (geo)political governance creates friction or reduces optionality. For examples, see Napster, Bitcoin, Tor, etc. – their decentralization provides robustness against failure modes created by centralized governance and regulatory capture.

So if the principles of software and politics are already so closely aligned, isn't it reasonable to assume that 136 independent governing bodies would be more robust than one?

tomohawk• 5 years ago

there's what's written, and then there's what's done.

amai• 5 years ago

I still think it would be better to not have any corporate taxes at all. If corporations have to pay taxes they also want to have a say in politics. But that leads to all these corporate friendly but human unfriendly decisions. Instead if you agree a state should do what is good for it’s people only people should be allowed to pay taxes.

136 Countries agree to minimum corporate tax rate

Related Stories