G7 reaches historic global minimum tax

[Satchel 6908]

Good deal:

The G7 group of advanced economies has reached a "historic" deal to make multinational companies pay more tax. ... They also agreed in principle to a global minimum corporate tax rate of 15% to avoid countries undercutting each other. Tech giants Amazon and Facebook are among those likely to be affected.

 

G7: Rich nations back deal to tax multinationals - BBC News

 

[ChiTownDoc 21102]

About fucking time.  And this should only be the start.  

[JohnnyRage 1617]

I don't believe you

[Brew 3047]

Smoke and mirrors for most and mainly a kick to the nuts of Ireland.

Edit to add: It is a nice change for the US to be leading discussions rather than acting like a petulant child in the corner though.

Edited June 8, 2021 by Brew

[ChiTownDoc 21102]

8 hours ago, Brew said:

Smoke and mirrors for most and mainly a kick to the nuts of Ireland.

Edit to add: It is a nice change for the US to be leading discussions rather than acting like a petulant child in the corner though.

Agree - it’s rhetoric but that’s a start.  I don’t think this leads to much actual change in policy, yet.  

[Neonmoon 38127]

Have to start somewhere 

[SydneyCarton 47884]

Obviously this isn't exactly corporate tax rate, but this seems as good a spot as any:

https://www.propublica.org/article/the-secret-irs-files-trove-of-never-before-seen-records-reveal-how-the-wealthiest-avoid-income-tax?utm_medium=social&utm_source=twitter

[hornmpa96 2598]

1 hour ago, ChiTownDoc said:

Agree - it’s rhetoric but that’s a start.  I don’t think this leads to much actual change in policy, yet.  

I think the US will enact this policy and the rest of the world will not. 

[hornmpa96 2598]

5 minutes ago, SydneyCarton said:

Obviously this isn't exactly corporate tax rate, but this seems as good a spot as any:

https://www.propublica.org/article/the-secret-irs-files-trove-of-never-before-seen-records-reveal-how-the-wealthiest-avoid-income-tax?utm_medium=social&utm_source=twitter

That propublica report is arguing for a mark-to-market regime. I’m curious about what unforeseen impacts would occur when we subject to people to tax when they haven’t engaged in transactions providing the cash to pay the tax.

[TwiceHorn 31283]

6 minutes ago, SydneyCarton said:

Obviously this isn't exactly corporate tax rate, but this seems as good a spot as any:

https://www.propublica.org/article/the-secret-irs-files-trove-of-never-before-seen-records-reveal-how-the-wealthiest-avoid-income-tax?utm_medium=social&utm_source=twitter

That's kind of a stupid article in that it focuses on increases in wealth rather than income.

It's called income tax for a reason.

Which is not to say that it is utterly pointless.  But the "true tax rate" is kind of horseshit under current taxation norms, notwithstanding avoidance schemes.

[elfenix 34171]

it'll make a difference when they can get ireland and the other havens to actually do anything.  otherwise this is a group of 7 countries that already have corporate tax rates higher than 15% agreeing that corporate tax rates should be at least 15%

[TwiceHorn 31283]

9 minutes ago, hornmpa96 said:

That propublica report is arguing for a mark-to-market regime. I’m curious about what unforeseen impacts would occur when we subject to people to tax when they haven’t engaged in transactions providing the cash to pay the tax.

Yeah, that makes me uneasy.

Paper gains are paper and can be ephemeral.  But, without knowing details, I suspect the extremely wealthy have ways to "cash out" (via loans, etc.) of gains without incurring taxation that are utterly unavailable to me.

I'm well off, and I have pretty big gains (and periodically catastrophic losses), and it would hurt bad to be marked to market.

I am not generally opposed to paying higher or more taxes.  It's a necessity.  

Edited June 8, 2021 by TwiceHorn

[TwiceHorn 31283]

4 minutes ago, elfenix said:

it'll make a difference when they can get ireland and the other havens to actually do anything.  otherwise this is a group of 7 countries that already have corporate tax rates higher than 15% agreeing that corporate tax rates should be at least 15%

Well it is at the moment merely a declaration of intent, but it's more than just tax rate, at least according to the article:

Quote

Firstly the G7 will aim to make companies pay more tax in the countries where they are selling their products or services, rather than wherever they end up declaring their profits.

Secondly, they want a global minimum tax rate so as to avoid countries undercutting each other with low tax rates.

It seems the intention is for taxation in the jurisdiction of economic activity, without regard to corporate domicile or accounting fictions.

[SydneyCarton 47884]

2 minutes ago, TwiceHorn said:

Yeah, that makes me uneasy.

Paper gains are paper and can be ephemeral.  But, without knowing details, I suspect the extremely wealthy have ways to "cash out" (via loans, etc.) of gains without incurring taxation that are utterly unavailable to me.

I'm well off, and I have pretty big gains (and periodically catastrophic losses), and it would hurt bad to be marked to market.

The article didn't exactly make me happy. I mean, yeah, paying taxes when I have no money realized is absurd and dangerous. I don't have a better answer. But it does highlight the absurdity of the situation. Also, the article specifically mentions how the rich can have almost no traditional income but can take out loans against the market value of their stock options and do whatever the fuck they want to do with it. 

I'm not a financial guy, at all. But what about some rule indicating that people above a certain net worth must liquidate a certain amount of their stock on a regular basis, pay the taxes, and then can use that money to reinvest like normal people?

[hornmpa96 2598]

1 minute ago, SydneyCarton said:

I'm not a financial guy, at all. But what about some rule indicating that people above a certain net worth must liquidate a certain amount of their stock on a regular basis, pay the taxes, and then can use that money to reinvest like normal people?

That’s essentially Biden’s estate tax proposal. Everything above a certain amount is marked to market at death and the estate pays tax on the gain at that time.

[TwiceHorn 31283]

2 minutes ago, SydneyCarton said:

I'm not a financial guy, at all. But what about some rule indicating that people above a certain net worth must liquidate a certain amount of their stock on a regular basis, pay the taxes, and then can use that money to reinvest like normal people?

Like I said, there are some vehicles available that permit the ultra-wealthy to "cash out" of paper gains, apparently without the kind of risk that say, a "margin loan" would work for you and me.

It seems that they ought to be taxed not so much on pure paper gains, but on the amount of those gains that they are able to "monetize" for lack of a better term.

[elfenix 34171]

1 minute ago, SydneyCarton said:

But what about some rule indicating that people above a certain net worth must liquidate a certain amount of their stock on a regular basis, pay the taxes, and then can use that money to reinvest like normal people?

somethingseomthing cratering the market when everyone who is rich has to do this at the same time somethingsomething

 

 

 

(because we can't just use like, your birthday or something which would spread the activity around)

(also lots of rich fucks have holdings in non-public companies, so we'd have to figure that out.  probably has something to do with federal registration of businesses that warren was proposing)

[TwiceHorn 31283]

1 minute ago, hornmpa96 said:

That’s essentially Biden’s estate tax proposal. Everything above a certain amount is marked to market at death and the estate pays tax on the gain at that time.

Well, notwithstanding exemptions and avoidance strategies, that is basically the estate tax scheme today.

[RomaVicta 29793]

I've should have only read the first two posts. 

Banks, corporations, and the GOP are doing everything they can to turm me into a Dirty Red.

[SydneyCarton 47884]

1 minute ago, elfenix said:

somethingseomthing cratering the market when everyone who is rich has to do this at the same time somethingsomething

 

 

 

(because we can't just use like, your birthday or something which would spread the activity around)

(also lots of rich fucks have holdings in non-public companies, so we'd have to figure that out.  probably has something to do with federal registration of businesses that warren was proposing)

I wouldn't think non public companies would be a concern. Those companies are paying out dividends which would show up on taxes, not making money which means they don't owe shit, or other documentation that I would think would be indicative things on K-1s or whatever. I have small stakes in some private companies. Real small stakes. But I have to report K-1 data for some of them, or tax. 

This is more to do with regards big time CEO's who hoard their stock and get paid in stock. 

[hornmpa96 2598]

7 minutes ago, TwiceHorn said:

Well, notwithstanding exemptions and avoidance strategies, that is basically the estate tax scheme today.

Fair point - It’s probably more accurate to state that the proposal is really a change to the exemption amount although Treasury’s Green Book doesn’t present the proposal in that manner.

[elfenix 34171]

7 minutes ago, SydneyCarton said:

I wouldn't think non public companies would be a concern. Those companies are paying out dividends which would show up on taxes, not making money which means they don't owe shit, or other documentation that I would think would be indicative things on K-1s or whatever. I have small stakes in some private companies. Real small stakes. But I have to report K-1 data for some of them, or tax. 

This is more to do with regards big time CEO's who hoard their stock and get paid in stock. 

i'm thinking more like dell when it was private.  or UPS.  these are big fucking companies, not your little pass through. 

[hornmpa96 2598]

7 minutes ago, SydneyCarton said:

I wouldn't think non public companies would be a concern. Those companies are paying out dividends which would show up on taxes, not making money which means they don't owe shit, or other documentation that I would think would be indicative things on K-1s or whatever. I have small stakes in some private companies. Real small stakes. But I have to report K-1 data for some of them, or tax. 

This is more to do with regards big time CEO's who hoard their stock and get paid in stock. 

The CEOs who are being paid in stock are paying tax on those stock/option grants as compensation at ordinary income rates. If holding private company stock is taxed differently than public company stock, it will definitely create an incentive for companies to stay private for as long as possible.

[elfenix 34171]

12 minutes ago, TwiceHorn said:

Well, notwithstanding exemptions and avoidance strategies, that is basically the estate tax scheme today.

yes we already have a wealth tax on the type of wealth that makes up middle class wealth, but not on the type of wealth that makes up fuck you wealth.  and we've convinced all the people who are already getting most of their wealth taxed as wealth that if we tax the fuck you's wealth that it'll be the end of the republic.

[TwiceHorn 31283]

1 minute ago, hornmpa96 said:

Fair point - It’s probably more accurate to state that the proposal is really a change to the exemption amount although Treasury’s Green Book doesn’t present the proposal in that manner.

The thing that is irksome about the estate tax and that I think propels more avoidance than some notion of providing inheritance, is the confiscatory rate of 0.55 on the first non-exempt dollar.

Eliminate or reduce the exemption to a more reasonable amount, and cut the tax down, at least the lowest bracket, to something more reasonable.

[TwiceHorn 31283]

Just now, elfenix said:

yes we already have a wealth tax on the type of wealth that makes up middle class wealth, but not on the type of wealth that makes up fuck you wealth.  and we've convinced all the people who are already getting most of their wealth taxed as wealth that if we tax the fuck you's wealth that it'll be the end of the republic.

Well, no one pays estate tax.  That's the problem.

And the exemption is currently 11.7 million, which is getting toward fuck you money considering it is easily doubled by a marital trust.  In recent memory, it was as low as 600k.

[elfenix 34171]

@TwiceHornyou wrote estate and my brain inserted the word "real" before that.  so i'm off on a tangent.

[TwiceHorn 31283]

1 minute ago, elfenix said:

@TwiceHornyou wrote estate and my brain inserted the word "real" before that.  so i'm off on a tangent.

But you're not fundamentally off.  Property tax is a wealth tax, yes.  So too is estate tax.

I'm uncomfortable with the notion of eliminating inheritance entirely, either by confiscatory taxation or simply eliminating laws of descent.  That's the way it has been for most of human governmental existence.  Right or wrong, I tend to associate rights of descent/inheritance to the liberalization of British/western government and escape from feudalism.

But, for "wealth taxation" and "fairness" purposes it is really an ideal time to mark assets to market and tax them.  

[hornmpa96 2598]

7 minutes ago, TwiceHorn said:

The thing that is irksome about the estate tax and that I think propels more avoidance than some notion of providing inheritance, is the confiscatory rate of 0.55 on the first non-exempt dollar.

Eliminate or reduce the exemption to a more reasonable amount, and cut the tax down, at least the lowest bracket, to something more reasonable.

Going back to the Green Book, the proposal is similar to this approach which requires the deceased to recognize all appreciation on assets on the final income tax return subject to a $1 million exemption plus a $500,000 exemption for a primary residence. Additionally the proposal treats capital gains as ordinary income and so the appreciation is subject to tax at 43.4% assuming the highest marginal rates apply.

After considering the final income tax return, the estate would run through the estate tax process with the current 11.7 million exemption.

[TwiceHorn 31283]

2 minutes ago, hornmpa96 said:

Going back to the Green Book, the proposal is similar to this approach which requires the deceased to recognize all appreciation on assets on the final income tax return subject to a $1 million exemption plus a $500,000 exemption for a primary residence. Additionally the proposal treats capital gains as ordinary income and so the appreciation is subject to tax at 43.4% assuming the highest marginal rates apply.

After considering the final income tax return, the estate would run through the estate tax process with the current 11.7 million exemption.

That seems like an oddly complicated way to do it.  There's probably some scenario that it helps with that I'm not thinking of.

[hornmpa96 2598]

It’s really overly complicated similar to everything else in the US tax code.

[TwiceHorn 31283]

It just occurred to me that maybe a better way to tax wealth is to impute an income to it.  That is, take FMV of assets on 12/31, assume some statutory annual interest rate, calculate an income, and tax it according to current income tax rates.

Seems like that's a bit less likely to have weird effects that taxing paper or unrealized gains would have.

[wildcat09 29257]

18 minutes ago, TwiceHorn said:

But you're not fundamentally off.  Property tax is a wealth tax, yes.  So too is estate tax.

I'm uncomfortable with the notion of eliminating inheritance entirely, either by confiscatory taxation or simply eliminating laws of descent.  That's the way it has been for most of human governmental existence.  Right or wrong, I tend to associate rights of descent/inheritance to the liberalization of British/western government and escape from feudalism.

But, for "wealth taxation" and "fairness" purposes it is really an ideal time to mark assets to market and tax them.  

Even my commie ass doesn't love totally abolishing inheritance (or devising property), but there should be a limit on it. I don't really care exactly what that limit is set at, even a number that any of us would consider enough to retire in luxury on today would be fine, because that would still make the truly wealthy absolutely shit themselves. 

[burntorangebongos 10681]

The French  President got slapped on the way to the summit in Drome. It was kinda like a Rick James slap.

 

[elfenix 34171]

  estate tax is just  a big loophole for the income tax.  make inheritances subject to income tax and get rid of the estate tax.

[Dahobbs 17447]

1 hour ago, SydneyCarton said:

The article didn't exactly make me happy. I mean, yeah, paying taxes when I have no money realized is absurd and dangerous. I don't have a better answer. But it does highlight the absurdity of the situation. Also, the article specifically mentions how the rich can have almost no traditional income but can take out loans against the market value of their stock options and do whatever the fuck they want to do with it. 

I'm not a financial guy, at all. But what about some rule indicating that people above a certain net worth must liquidate a certain amount of their stock on a regular basis, pay the taxes, and then can use that money to reinvest like normal people?

If you own property in Texas, you already do. But I agree that wealth type taxes can be dangerous. 

1 hour ago, TwiceHorn said:

Like I said, there are some vehicles available that permit the ultra-wealthy to "cash out" of paper gains, apparently without the kind of risk that say, a "margin loan" would work for you and me.

It seems that they ought to be taxed not so much on pure paper gains, but on the amount of those gains that they are able to "monetize" for lack of a better term.

Yup. One simple example is that you can hold everything in an investment arm of a bank, and a get a nice line of credit at a very lower interest rate (think 2.5% or less). Effectively it lets you cash out without cashing out for a small fee, certainly less than the tax hit of actually realizing the income. 

[956 Worldwide 34444]

Back onto the main topic, yes, the solution is two pronged. First, to make companies pay tax on where they operate.  That is HUGE and the G7 is incredibly important because the digital giants (let’s be real, this is the Amazon/Facebook/Google tax) have their lifeblood in the developed world. Hell, FB is even banned in China and Russia prattles on about a sovereign internet.

Second, the big tax havens are places that are small and will be subject to enormous EU pressure to get on the train, like Ireland. And many other alternatives will become either easy to isolate like the Caribbean or too autocratic/unstable to be attractive as a corporate HQ. 

So this is a huge step but implementation will be tough and involve lots of mud flinging. 

[956 Worldwide 34444]

1 hour ago, SydneyCarton said:

The article didn't exactly make me happy. I mean, yeah, paying taxes when I have no money realized is absurd and dangerous. I don't have a better answer. But it does highlight the absurdity of the situation. Also, the article specifically mentions how the rich can have almost no traditional income but can take out loans against the market value of their stock options and do whatever the fuck they want to do with it. 

I'm not a financial guy, at all. But what about some rule indicating that people above a certain net worth must liquidate a certain amount of their stock on a regular basis, pay the taxes, and then can use that money to reinvest like normal people?

The way to be sure someone is truly wealthy is when they can provide years of tax returns showing they lose money every year. 

[ChiTownDoc 21102]

1 hour ago, elfenix said:

yes we already have a wealth tax on the type of wealth that makes up middle class wealth, but not on the type of wealth that makes up fuck you wealth.  and we've convinced all the people who are already getting most of their wealth taxed as wealth that if we tax the fuck you's wealth that it'll be the end of the republic.

Have you seen how much a G6 cost?  Have some heart, man.  

[elfenix 34171]

Have you seen how much a G6 cost?  Have some heart, man.  

Even used car prices being nuts right now can't save that one:





Edit: damn near 300,000 on one whoa:

[hornmpa96 2598]

Assuming the US enacts the current proposals regarding corporate international taxation, the US will be creating tax costs for US based multinationals over and above what the OECD is asking from its members primarily due to the following differences:

1. The US tax system applies it’s own set of accounting rules to determine taxable income. Accordingly this results in significant timing differences which create double taxation unless losses and/or tax credits can be carried forward/back. 

2. The OECD will allow companies to earn a normal return on substantive activities measured by tangible assets and payroll in a jurisdiction without an additional tax applying at the parent level while the current US proposals would remove the current 10% exemption.

3. The US has comprehensive expense allocation and foreign tax credit disallowance rules which effectively raise the tax rate on foreign earnings. 

Should we be subjecting US corporations to costs over and above their foreign counterparts?

I certainly see the reasons for making changes similar to the OECD recommendation, but should the US system be more costly to USS based multinationals?

[TwiceHorn 31283]

19 hours ago, elfenix said:

  estate tax is just  a big loophole for the income tax.  make inheritances subject to income tax and get rid of the estate tax.

Kind of a funny story, but it's illustrative.  When my parents first got serious about estate planning, around the time my Dad retired, the exemption was 600k.  They weren't big tax avoiders, never did anything but "standard" (as opposed to the standard) deductions.  Never griped about it.

But when the estate attorneys explained that the tax was 0.55 on the first dollar, everyone was like yikes, ya gotta avoid that.  Half Eddie!  Half!   And at that time, with the marital trust/deduction, my parents were well within the exemption.  But, were warned that there was a substantial chance that their estate would grow past it.  My Mom also explored "living trusts" and "second to die" insurance because that 0.55 was so noxious.

At one point my Dad said, "I don't know why we're screwing around with this so much, it's TwiceHorn's problem, not ours."  Gee, thanks, Dad.  But, really, the whole thing was motivated by avoiding that 0.55 tax.  It just seemed like very poor "business" or financial decision-making not to avoid that tax if you could.

Anyway, I think if you knocked down estate tax to something akin to property tax, or even the proposed wealth taxes (~2% of FMV at death), people generally would be less motivated to avoid it.  Rich still gonna rich and probably do all kindsa shit to avoid it.  But currently, hardly anyone pays estate tax, both because of the overly generous exemption and because the avoidance schemes are pretty easy.

[TwiceHorn 31283]

20 hours ago, TwiceHorn said:

It just occurred to me that maybe a better way to tax wealth is to impute an income to it.  That is, take FMV of assets on 12/31, assume some statutory annual interest rate, calculate an income, and tax it according to current income tax rates.

Seems like that's a bit less likely to have weird effects that taxing paper or unrealized gains would have.

Having slept on it, that's probably going to net out about the same, maybe a bit lower, than a wealth tax as currently conceived.

Say the statutory rate is 4% and the effective rate on the wealthy taxpayer is 30%, well that yields a tax rate on wealth of 1.2%.  Six of one, half a dozen of the other.

But from a "theoretical" basis it sounds a bit more palatable to me.  When push comes to shove, a single digit wealth tax is probably not really going to fuck anyone very hard.

[Judge Roybeanbag 11810]

20 hours ago, TwiceHorn said:

It just occurred to me that maybe a better way to tax wealth is to impute an income to it.  That is, take FMV of assets on 12/31, assume some statutory annual interest rate, calculate an income, and tax it according to current income tax rates.

Seems like that's a bit less likely to have weird effects that taxing paper or unrealized gains would have.

I like that approach, similar to a property tax.  Give an exemption to a retirement amount of say $2 million or whatever, and then the remainder gets taxed at a certain amount.

[27-25 2040]

4 hours ago, TwiceHorn said:

At one point my Dad said, "I don't know why we're screwing around with this so much, it's TwiceHorn's problem, not ours."

Haha!  You're Dad sounds awesome.

[GRHorn 105]

Since this is the new tax thread 

 

[TwiceHorn 31283]

39 minutes ago, GRHorn said:

Since this is the new tax thread 

 

What a load of horseshit.  Reason is usually a little more rational than that.

Every financial institution already reports income and gains to the IRS via 1099.  The year-end FMV of every IRA and 401k is reported via 5498.

Every transaction over $10k is or should be reported to the gubmint.

It would be different, but not dramatically so, for those same institutions to issue an annual tax-reporting document similar to a 5498, for every account.

Edited June 9, 2021 by TwiceHorn

[We’reTexas 1469]

On 6/8/2021 at 8:23 AM, hornmpa96 said:

The CEOs who are being paid in stock are paying tax on those stock/option grants as compensation at ordinary income rates. If holding private company stock is taxed differently than public company stock, it will definitely create an incentive for companies to stay private for as long as possible.

Would a wealth tax regime also pick up private equity funds in which individuals are LPs? I imagine the valuation exercise for that would be a total mess. 

[Biff Tannen 45496]

55 minutes ago, TwiceHorn said:

What a load of horseshit.  Reason is usually a little more rational than that.

Every financial institution already reports income and gains to the IRS via 1099.  The year-end FMV of every IRA and 401k is reported via 5498.

Every transaction over $10k is or should be reported to the gubmint.

It would be different, but not dramatically so, for those same institutions to issue an annual tax-reporting document similar to a 5498, for every account.

Perhaps Reason is dabbling in satire?

[TwiceHorn 31283]

23 minutes ago, We’reTexas said:

Would a wealth tax regime also pick up private equity funds in which individuals are LPs? I imagine the valuation exercise for that would be a total mess. 

I'm sure it would.  There are a lot of assets like this held by ultra-wealthy individuals that would present valuation obstacles.  But, they're going to be easy to undervalue, but hard to value at zero, so there would still be a gain in revenue.