London's entire existence depends on letting large global corporations, oligarchs and criminals hide their money. If they stopped doing that the city and the country would spiral.
I'm no fan of London but saying its entire existence depends on that is a bit of a stretch. That's like saying Ireland's entire reason for existing hinges on its low (zero?) corporation tax. Both are important and I'm sure they'd both suffer if they lost their respective tax advantages, but a death spiral? Maybe not.
But ... it's entire existence? Like without the Oligarchs etc parking their money there it would wither away and cease to exist? I mean I am all for London having a diminished status within the UK, but that's taking a widely accepted fact (that a lot of laundered money goes through London) and blowing it way out of proportion.
No, it doesn't. The UK is the number one loser globally from corporate tax avoidance (the reason why we have a 15% rate is because the UK functionally stopped being able to collect corp tax because of the big EU tax havens agreeing deals with large companies). The reason why the UK doesn't like these proposals is because they are a fairly transparent attempt to get companies paying more US tax, regardless of the consequences for anyone else (and the proposals have been skilfully tailored to produce the most agreement from France and Germany whilst promising the least possible change).
As for "oligarchs and criminals"...those are two different things. The UK already applies extraterritoriality to money coming into the UK (i.e. if you bring money into the UK that is the proceeds of crime in another country that money will get taken, even if you haven't been charged in your own country). But most people view oligarchs as criminals, they are not. Running a business is not a crime, and we shouldn't make into a crime because that person happens to be the wrong nationality (btw, what most people don't understand is that the UK was a haven for oligarchs who were anti-Putin, not pro...the reason why they came here is because they had to leave Russia because of Putin).
>> The UK already applies extraterritoriality to money coming into the UK (i.e. if you bring money into the UK that is the proceeds of crime in another country that money will get taken, even if you haven't been charged in your own country).
Still... the UK is often cited as “the money laundering capital of the world,” with an estimated minimum £90bn laundered through the City of London every year (based on NCA figures alone).
London loves money laundering b/c there is money to be made.
>> The report said “the arrival of Russian money has resulted in a growth industry of enablers – [British] lawyers, accountants and estate agents have all played a role”.
>> “disturbing” prevalence of Russian money laundering in London, claiming up to half of all money laundered from the country is done through the UK.
£90bn in a financial system that moves trillions daily. The UK isn't the money laundering capital of the world...you have just quoted yourself...it is an extremely bad idea to launder money through the UK's financial system (unless you live somewhere that doesn't comply with CRS...in which case it doesn't matter).
And what is the accusation here...as I said previously, everyone equates Russia with money laundering because...you know, all Russians are evil but it is not easy to connect directly with crimes (and yes, UK police have this stereotype too, they are clueless).
Btw, if you read your link carefully, you would have realised that these companies don't use the UK's financial system to launder money (again, bad idea...even when Russia isn't going to comply with CRS notices). What happened is that some people use SLPs to transfer money through UK corporate structures (but not the UK's financial system) before going somewhere else. This has basically stopped because the structure of SLPs was changed (and btw, very few people made money from this, it cost £20 to set up an SLP).
>> £90bn in a financial system that moves trillions daily.
£90bn is based on NCA official figures that are always more "conservative" for obvious reasons. I think that amount is quite big anyway.
>> The UK isn't the money laundering capital of the world...you have just quoted yourself...
Nah...I quoted from the website linked. You can also google it. It's on all major websites including the financial ones(i.e ft.com).
>> Russians are evil but it is not easy to connect directly with crimes
Right...laundering money is a apparently a crime in itself to begin with but I guess that doesn't matter much to you.
Here is another quote for your enjoyment: "London is ‘the jurisdiction of choice’ for Russian crime gangs". Anyway let's not make this a "russian" thing. London is the money laundering capital of the world after all. It's not open for russians only.
>> it is an extremely bad idea to launder money through the UK's financial system (unless you live somewhere that doesn't comply with CRS...in which case it doesn't matter)...
Apparently that's just old good BS. The wise guys launder happily and are not bothered as long as they give back.
>> And what is the accusation here...
It shouldn't be that hard to figure it out, Walter! Hints: “the money laundering capital of the world”; "‘the jurisdiction of choice’ for Russian crime gangs"
Then why say it? If you are equating oligarchs to criminals then why does it matter that they bring money into the UK?
And yes, it does. That is why the UK was one of the first signatories to CRS, that is why the UK complied fully with FATCA, that is why the UK has some of the strongest AML processes anywhere, that is why the UK applies its law extraterritorially to pursue the proceeds of crime, that is why the UK brought in the tech tax...this is all totally inconsistent with what the UK has actually done.
London thrives because it's a world city with a massive talent pool. The standard of financial regulation is as high as anywhere else in the world, and the regulators hold a firm position against money-laundering.
> But London and Switzerland are already working to ensure they don't get badly hit by the minimum tax rate, as they fear it will make their financial districts less attractive
Well they're missing the point of this imposition, because it was designed expressly to avoid companies choosing 'favorable' locations to manage their tax affairs. Suck it up London and Switzerland.
Why should they? What incentive do they have to join an agreement against their wishes? Surely it's not the politicians jobs to lose jobs and income to other countries for nothing in return.
The G7 includes the UK and Switzerland-by-proxy of the EU, since Switzerland is in the European Market. They're not signing anything against their wishes. They're trying to water down the deal. The question at play here is whether or not they'll get away with it, and I sure hope they don't. Giving exemptions to the rule will create massive incentives to game those exemptions.
Again, a lot of disinformation is spread to create envy. The current average profit tax rate in Switzerland is 15.1%. Here is a recent article on this: https://www.organisator.ch/steuerreport-2020-vergleichsweise... There are a lot of places with lower or even zero taxes (even some within the USA).
Why should it not be relevant? You also know the minimum and maximum rate. A lot of big international companies are in Zurich where the rate is ~21% and among the highest in Switzerland. There are obviously criteria other than taxes, such as personnel trained at one of the world's top technical universities (ETH Zurich).
It's reasonable to expect 17 million relatively well off people to make some concessions when hundreds of millions of others have asked them to through the diplomacy of their elected officials.
They should do it because elected officials will sign it into law. It will be signed into law because people asked for it. People asked for it because they benefit from it. People benefit from it because they need stuff the government pays for.
There is no reason to sympathize with governments that depend on clever paperwork for their nation's success because that is not a tangible good. There is every reason to sympathize with governments that are trying to raise money to invest in their citizens because that is a tangible good.
Eliminating tax havens is no more objectionable than closing an account with a bank that has lost your trust. The bank will adapt and learn as it always does.
> It will be signed into law because people asked for it.
Again, did Swiss citizens ask for it? It seemed like US politicians asked for it. Why should I raise my prices because you said you are losing customers to me?
I'm not saying it's not a good thing, but representatives should be looking after their own people's interests and cooperation agreements need to be conditioned on that.
The people's interest is benefited by doing 'the right thing'. And if enough countries sign up to do 'the right thing' then they can release 'FATCA 2: Electric Bugaloo'
> Again, did Swiss citizens ask for it? It seemed like US politicians asked for it. Why should I raise my prices because you said you are losing customers to me?
Because if this agreement has any teeth, it will require some kind of sanctions against the defectors from the rest of the members of the deal.
It took a couple world wars to learn that only looking after your own interests leads to confrontation
Using your country's priviledged position to your advantage creates grievances and division
Just picture a world full of embargos as retaliation for tax dodging. Many countries could decide it's not worth keeping an open border (with flow of goods) with a country that tries to attract companies (that sell in your country) with low taxes. A trade agreemeny (EEC etc) rests on the good will of its signatories. But offering your country as a tax haven breaks this relationship. The only reason it has taken this long to get this type of agreement going is that the underpriviledged countries lacked democratic pressure. No healthy democracy would allow the flow of untaxed goods from third countries
The democratic will is slowly building up, and if it is denied it will lead to confrontation and overall waste of resources. It is in everyone's interest to agree to a global minimum tax rate (but it requires vision)
> Again, did Swiss citizens ask for it? It seemed like US politicians asked for it. Why should I raise my prices because you said you are losing customers to me?
Emphasis on US Politicians. I certainly didn’t ask for this.
First, I think the "incentive" would be "not getting kicked out of trading blocks and having punitive tariffs". Large countries can impose their will on smaller ones to an extent. In the extreme, larger and more powerful countries can invade smaller ones. The G7 countries won't be invading Switzerland, but they do have a lot of levers to make it very difficult for Swiss companies to do business. I don't think anything that rises to the level of a blockade is likely, but larger and more powerful countries have levers to use against smaller ones.
Again, I think the most likely result would be things like tariffs and restrictions on businesses, but there are so many options available to large, powerful countries to just make things annoying.
Heck, we've seen some of this with Brexit. British people are annoyed that they have to pay for a visa to enter the Schengen Area. That's a relatively small annoyance. Countries can ban foreigners from certain other countries. Countries control their airspace and Switzerland is land and air-locked by the EU.
Again, I don't think things will be extreme like that, but it's not hard to imagine all sorts of ways one can be incentivized to join an agreement at the point of a gun.
Second, I think the point is that it doesn't require those countries to join the agreement. Let's say that a company makes $10B in profit and it's accounted for as $1B in the US and $9B in a tax haven. They pay 25% on the $1B which is 2.5% of their global profits. The US then says, "under the law, you now owe an additional $1.25B since you didn't hit the 15% minimum."
The whole problem around tax havens is that companies are accounting for their profits in tax havens while their operations are actually in other countries. The company is actually doing their business and running their operations in the US, France, Japan, etc., but claiming that a company in a tax haven is the one actually making the profits. That also means that it's relatively easy to target them.
If you're a tech company whose employees are in the US and EU and whose sales are in the US and EU, but you're funneling the profits through a tax haven, it's still pretty easy for the US and EU to force you to give them money.
Company: "No, we didn't make any money in your jurisdiction! Better luck next year!"
US/EU: "Watch while we raid your offices, prevent your employees from working, shut down your data centers, prevent our financial institutions from being allowed to do business with you (which means you can't pay workers and can't collect money from advertisers/users/etc.), etc."
Company: "Well, when you put it that way..."
I mean, it'd still end up in court, but it's not as if the tax haven needs to join the agreement for the G7 countries to enforce a minimum tax on multinational companies. If the companies are actually doing business in G7 countries, their money/assets/etc. is in those countries to be confiscated. "Hey, you're pretending that you're earning that money in a tax haven and not here, but I'm willing to bet that cutting you off here will have a huge impact on those profits..."
Right now, companies are saying, "we didn't earn that money in your country so you can't do anything" and this agreement is kinda about, "it doesn't matter; if you haven't paid 15% of your global profits in tax, we're going to take that money from you even if you claim it was earned somewhere else."
> the "incentive" would be "not getting kicked out of trading blocks and having punitive tariffs"
I mean, you do realize that you're championing the American Imperialism you left wing nutjobs otherwise oppose so vehemently? It's just a different flavor now.
This isn't about countries with 15% corporate tax rates. This is about countries, like Ireland or Netherlands, with 0% corporate tax rates.
The UK loses a huge amount of corporate tax from EU tax havens, and the opposition has formed because the purpose of this deal is to allow the US to raise their corporate tax rate...rather than stop corporate tax avoidance (the US doesn't suffer hugely from this, all the profit in places like the UK that goes to Ireland ends up back in the US, and gets taxed).
> "selective treatment allowed Apple to pay an effective corporate tax rate of 1 percent on its European profits in 2003 down to 0.005 percent in 2014."
Tricks include transfer pricing; company A charges company B an arbitrary number to reduce company B's profit to zero (so it pays no tax) but this gets classed as exempt in company A.
That is the rate for Irish corporations, not foreign ones. Ireland, Netherlands, Luxembourg all negotiated bilateral deals with individual corporations so their effective tax rates are, at most, 3%.
The 2019 Dutch corporate tax rate is 19% of the taxable income up to and including €200,000, above which the rate is 25%. The lower rate will decrease to 16.5% in 2020. In 2021 the rate for the first bracket will again decrease to 15% with taxable income up to €245,000.
As said with the other comment, Netherlands has negotiated bilateral deals with individual corporations. So the rate you are quoting is for Dutch corporations but now what foreign corporations pay. That is why almost large corporation has a nameplate office there.
"Swiss cantons set their own additional rates on top of the federal portion of corporate tax. As a general rule, companies in Switzerland pay a total corporate tax rate of somewhere between 11.9% and 21.6%." (from https://www.expatica.com/ch/finance/taxes/corporate-tax-in-s...)
So locations that benefit from <15% tax rates want to avoid it. Hardly a surprise.
It might of been an interesting article if they had a rationale beyond "In the UK, Chancellor Rishi Sunak is worried that banks based in London, which he says pay adequate tax, will be wrongly dragged into the 15% rate."
The entire point of this tax minimum is 1) No countries are excepted so they dont attract investment/HQ purely on tax rates. or 2) Countries that dont agree face other punishment that outweighs point 1.
Personally I think its quite selfish if countries dont sign up to this. Its much needed and capitalism greatly benefits from "a level playing field" (also a core tenant) as it tends to focus innovation to areas that matter, over company X has a market advantage because they are headquartered in the Cayman Islands and can buy market share over domestic company paying 25% on profits.
Why shouldn’t a country be selfish? Isn’t that the point of a country: to promote the interests of the citizens of that country? It’s selfish that France doesn’t send me free Champagne. “Selfishness,” or in other words “self-interest” is what drives markets to efficiency. Minimum tax rate agreements are the same thing as a price floor — and have similar effects. It’s essentially a subsidy for high tax countries. How is it the fault of Ireland that France has a higher tax rate? Why should the Irish pay out of their pocket to bolster the treasury of France? What’s in it for Ireland?
Why shouldn't everyone be selfish? Because other people matter, and because if people work together and cooperate, which includes making some sacrifices, then everyone gets better results in the long run.
> Isn’t that the point of a country: to promote the interests of the citizens of that country?
That's one view (nationalism, if I'm using the term correctly), but certainly not the only one. There are higher purposes than one's personal interests.
We can say that people should not be selfish all the time. That will not change a simple fact: people ARE selfish.
Yes, generally people do want to help those in need - usually in exchange for some respect and karma improvement. The "give the money and fuck off with your advice" approach won't cause much compassion.
> We can say that people should not be selfish all the time. That will not change a simple fact: people ARE selfish.
People are selfish and generous, angry and compassionate, courageous and scared. None of those things are more fundamental than the other. We are biologically the same as the saints and sinners, as the people who burned witches at the stake and the ones who risked their lives to save others. You can choose the best or worst angels of your nature; we each can.
It's perverse to claim, against all evidence, that we are defined only by the worst in us. To take away our free will and choice. And for what? To provide an argument for a political movement?
As a broad term should should be self interested absolutely. In this regard it needs ot be recognised as selfish for little good reason and potentially very bad ones for the greater system. There clearly is a short term value in dropping tax rates for countries like Ireland, but medium/long term this means is other countries follow their rates down, so there is little long term advantage and your broking the system in chasing said advantage for a nation.
> Why should the Irish pay out of their pocket to bolster the treasury of France?
This is the core of the problem, Ireland is taking revenue from France. Im not sure if you aware of things like the 'Double Irish' (google if you dont as its core part of the problem) but profits being made in a country like France are artificially transferred to a low tax country so France doesn't get the tax they should on profits in their own country. This is in itself a ethical issue but if you like capitalism how long do you think there will be open international trade if this system continues and if corporate tax rates continue to drop? Countries will increasingly be unwilling to allow open global trade if they cant run their country to the rules they wish, this in itself should worry anyone that believe global trade is a good thing.
Capitalism is not about equalizing everything, otherwise there would be no competition on anything. Don't take "level playing field" with "equal everything".
At the same time having the most economically developed countries dictate conditions that make other countries very unattractive is bad. Without tax attractiveness some countries will remain just some shit holes nobody wants to go.
I would say a level playing field is a central concept of good capitalism. But what you replied to they act like this would make everything equal, its the opposite, it should bring out the best in the system.
For a simplified example, the rules of a game like chess make it a level playing field. It doesn't make all players equal, it makes the better player clearly that.
A source close to the G7 talks told The Guardian that several other European Union countries wanted financial services to be excluded from the minimum rate.
"The Europeans don't want to pull too many companies into this — they're mostly interested in US tech," the source said.
So basically I want to tax everyone else, that's not me.
Don't most of them wash their funds through Ireland? (Big tech firms). So in this instance they're not really US Tech, it's not like this will cost the US...
The moment one of those millionaires/big corp/lobbyist "accepts" a tax like that, we can be 100% sure they discovered a loophole or carved/paid a way to be exempt.
The global tax essentially functions as a cartel, and there is no reason to believe it will be stable in the long run. It's a classic prisoner's dilemma - the incentive to cut out is just too strong.
Furthermore, by setting such a low anchor price, if the cartel eventually fails, countries would be racing to the bottom from an even lower tax rate.
I'm not super optimistic about this tax, but have been pretty surprised by how quickly it seems to be getting adopted regardless.
I dunno. Majority control of international trade (exports or imports) is a heavy cudgel with which to wield against uncooperative or defecting parties.
It seems like with enough economic backing they could (and probably will) enforce the agreement.
The more unstable question is whether the respective democracies can get it through their lobbying systems intact.
OPEC is a cartel and has been running for 60 years, that would be a fairly good run for a global agreement.
But I think you misclassify this from a game theory point of view. Larger countries with higher tax rates can effectively punish companies that take advantage of the other ones if the cartel is broken.
This is the same reason the agreement was reached in the first place, it's "give up a little or we'll fight and you'll lose", much like it was for bank secrets in Switzerland.
Switzerland's bank secrecy lost not because of a tax cartel but because FATCA was signed to allow the United States to unconstitutionally give itself universal jurisdiction over bank accounts held by American customers. It was a "my way or high way" power play by the Obama administration coupled with a punishing increase of citizenship renunciation fees from 0 to the highest in the world at nearly $2.5k.
that is exactly what I wrote: Switzerland was bullied into doing it, and so will be small for low-tax countries. This is not a prisoner's dilemma, since the players have different strengths.
Government is a service, and services work harder when they have to compete.
Tax competition is a good thing. When raising taxes is hard, government has to work to justify its spend. If it doesn't, the business and talent goes elsewhere.
The proposed policy seems to be one thing pretending to be another. It is selling itself as a crackdown on big tech tax minimisation. Your description of it as a cartel arrangement is much more fitting.
> Tax competition is a good thing. When raising taxes is hard, government has to work to justify its spend. If it doesn't, the business and talent goes elsewhere.
Doesn't this mean that they're competing for the upper classes? The "value" in government is, in my opinion at least, ensuring rights (specifically equality irrespective of wealth) and services for all citizens, not only the very rich. Maybe you'd argue that the very rich care deeply about poorer citizens and would not leave a country that adequately provides for its poor, but I don't think history supports this generalization of the very rich. It seems like this is a recipe for exacerbating inequality--I'm not an ardent leftist, but I can't get down with "let the poor starve" nor can I bring myself to subscribe to the various economic trickle-down theories for caring for the poor. It seems to me that economic inequality must be limited and that the government is the only institution that has a chance at limiting it.
> Doesn't this mean that they're competing for the upper classes?
Well, they are. It's a matter of fact. Upper and middle classes, I would say.
The questions the government should solve are therefore (1) how do we attract more well-off people - whether it's through low crime rate, good health and education services or nice parks and clean air, (2) how do we use the limited resources we have to improve lives of not that-well-off and (3) how do we turn the poor ones into taxpayers.
> Well, they are. It's a matter of fact. Upper and middle classes, I would say.
Right, but the point of this proposal is to limit that competition so governments can focus on improving lives of lower classes. I can't tell if we're in "violent agreement" or not.
> how do we attract more well-off people - whether it's through low crime rate, good health and education services or nice parks and clean air,
Or tax breaks and the rich build their own enclaves with low crime and amenities. I'm not advocating for this, on the contrary; however, this is an option that governments use to court the rich to the detriment of the rest of their citizens.
> The questions the government should solve are therefore (1) how do we attract more well-off people - whether it's through low crime rate, good health and education services or nice parks and clean air, (2) how do we use the limited resources we have to improve lives of not that-well-off and (3) how do we turn the poor ones into taxpayers.
Isn't there an option in which we tax the super rich by closing loopholes? Or is that part of (2)?
> Isn't there an option in which we tax the super rich by closing loopholes?
Depends on your definition of "rich", but probably not.
First, top 1% already pays 40% of all taxes [1]. There are many talks about "paying fair share", but nobody is saying what is fair and how we determine it.
Second, I'm afraid even if we close loopholes and collect some more money, it won't help.
New York, for example, is in top 10 states by collected income tax. Yet it has shitty (and expensive!) roads, shitty subway, not-so-good state university - well, you name it. Before asking for more taxes, I'd like to see current funds used wisely.
My understanding is that we are talking about the top 0.1%, not the top 1%, at least with respect to loopholes.
> but nobody is saying what is fair and how we determine it.
Agreed. I’m less concerned about “what is fair” and more concerned with making sure everyone has access to essentials including healthcare and that corruption is minimized. As far as I can tell, this means we should tax the rich (and probably even upper middle classes including me, happily) and severely limit campaign donations, political advertising, lobbying etc so the very rich can’t buy our democracy.
After quick googling I could not find any definitive info about how much taxes top 0.1% pays, but from [3] and [1] above I can assume it's a bit more than 18% of total federal income tax.
> making sure everyone has access to essentials including healthcare
Even in USA with notoriously awful healthcare system pretty much everyone does have access to healthcare. It's expensive and stuff can be improved, but if anything that should reduce public expenses, not increase them.
> severely limit campaign donations, political advertising, lobbying etc
The other side of this coin is political populism. "We'll tax all fat cat businesses to death!" - say politicians. "Oh, Yeah!" - says the crowd. "Fuck you, we quit" - say businesses.
For context, in my country, to be in the 1%, you only have to earn ~5x the median salary (a bit less, actually). Whether you consider this "rich", it's a lot, but not enough to enable you to make much of a difference in the big scheme of taxes.
The value of government in the United States is in ensuring the protection of natural rights not the creation of positive ones at the expense of those natural rights. People have the right to vote with their feet or vote with their dollars regardless of their economic status. This treaty seeks to dissuade and upend that. If people are starving, that's because of bad economic policy. No person should be required to stay or invest in an area if it's not to his liking particularly if it is to his economic loss.
> Tax competition is a good thing. When raising taxes is hard, government has to work to justify its spend. If it doesn't, the business and talent goes elsewhere.
Is it?
I mean, if you believe that taxes are wasted money, it probably is, but if you equate taxes with hospitals, schools, roads, trains, police, research, ... then you probably feel that the underbidding tax war is really a bad thing that hurts communities.
The real question is what are the idiots running the rest of the countries involved doing?
Do elected persons from those other countries work for their electorate and try to attract business and jobs by competing against the incompetent and wasteful governments, or do they scheme against their electorate and work on behalf of globalists?
Interestingly the "City of London" is a specific thing that has surprising meaning [0], but used here I think it is a metonym for the financial / banking sector of the British economy.
Educated guess: 95% of UK's financial industry is in London, while in Schweiz it's more evenly spread out between the biggest cities.
And Switzerland has no capital either.
I think it's referring to "financial centres"[1]. According to The Global Financial Centres Index[2], it's equivalent to: London + Geneva + Zurich. But, yes, it's a bit clumsy.
And the reason it's Switzerland and not Zurich (or another city like Geneva, or a given Canton) is that AFAIK Switzerland's famously privacy-friendly finance regulation weren't just restricted to one area, so it would be incorrect to pick one place out of them all. I know there has been some movement in recent years that has curbed Switzerland's status as a tax haven, though I don't know to what extent. Maybe someone who's a bit more familiar can weigh in on this.
The UK currently has 20% corporation tax on profits, plus employers national insurance contribution, and various avenues to effectively reduce that a bit depending on how you spend what would otherwise be profit. The problem/complaint is with tech companies who use structures via Ireland, Netherlands, and occasionally other places to book billions in revenues and profits but pay a tax rate of zero on those profits.
https://en.wikipedia.org/wiki/Double_Irish_arrangementhttps://en.wikipedia.org/wiki/Dutch_Sandwich
These schemes have merely been replaced by variations on a theme. Without wanting to sound too dramatic, it’s just an arms race and having seen some this up-close myself, there is always another structure sitting on the shelf for when the current one is retired.
The City of London is a holdover from the feudal era, largely exempt from UK control. Really strange. Not at all the same as the city of London. The Guardian has covered it.
Not really. It's actually the opposite, the merchants of the city rebelled against the Monarchy basically for very similar reasons that the merchants of America rebelled later and as a result there is still a tradition where the queen has to ask permission from the Lord Mayor of London to cross into 'The City' which is a small borough about 1sqm in size in the centre of Greater London. Not that they are necessarily the good guys, the coat of arms of The City has a dagger on it which is symbolic of the dagger used to murder an early trade unionist.
I find it interesting how all of these articles keep mentioning Ireland specifically when there are countries in Europe with even lower tax rates.
I suspect that the reason is that Ireland is not only offering a very competitive tax rate, but also providing quality corporate services at the same time. And I think that that is the real issue - that you can get first class corporate services for much less than in other countries, making people ask - why should I pay more for the same - or in some cases, more for less?
Nope. These regions don't have a choice about whether to opt in because they are part of larger political units that have the power to make this choice for them (as long as they remain part of those political units.)
What they are doing is trying to subvert the agreement without leaving those larger political units that are signing on to the agreement. (For the London this is the UK and for Switzerland it is the European Market.)
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[ 2.8 ms ] story [ 248 ms ] threadTo be fair though, the old approach was only to pay tax on irish revenue, which was almost zero, given how small Ireland is.
https://www.imdb.com/title/tt3057428/
As for "oligarchs and criminals"...those are two different things. The UK already applies extraterritoriality to money coming into the UK (i.e. if you bring money into the UK that is the proceeds of crime in another country that money will get taken, even if you haven't been charged in your own country). But most people view oligarchs as criminals, they are not. Running a business is not a crime, and we shouldn't make into a crime because that person happens to be the wrong nationality (btw, what most people don't understand is that the UK was a haven for oligarchs who were anti-Putin, not pro...the reason why they came here is because they had to leave Russia because of Putin).
Still... the UK is often cited as “the money laundering capital of the world,” with an estimated minimum £90bn laundered through the City of London every year (based on NCA figures alone).
London loves money laundering b/c there is money to be made.
>> The report said “the arrival of Russian money has resulted in a growth industry of enablers – [British] lawyers, accountants and estate agents have all played a role”.
>> “disturbing” prevalence of Russian money laundering in London, claiming up to half of all money laundered from the country is done through the UK.
https://www.cityam.com/top-official-warns-of-disturbing-amou...
And what is the accusation here...as I said previously, everyone equates Russia with money laundering because...you know, all Russians are evil but it is not easy to connect directly with crimes (and yes, UK police have this stereotype too, they are clueless).
Btw, if you read your link carefully, you would have realised that these companies don't use the UK's financial system to launder money (again, bad idea...even when Russia isn't going to comply with CRS notices). What happened is that some people use SLPs to transfer money through UK corporate structures (but not the UK's financial system) before going somewhere else. This has basically stopped because the structure of SLPs was changed (and btw, very few people made money from this, it cost £20 to set up an SLP).
£90bn is based on NCA official figures that are always more "conservative" for obvious reasons. I think that amount is quite big anyway.
>> The UK isn't the money laundering capital of the world...you have just quoted yourself...
Nah...I quoted from the website linked. You can also google it. It's on all major websites including the financial ones(i.e ft.com).
>> Russians are evil but it is not easy to connect directly with crimes
Right...laundering money is a apparently a crime in itself to begin with but I guess that doesn't matter much to you. Here is another quote for your enjoyment: "London is ‘the jurisdiction of choice’ for Russian crime gangs". Anyway let's not make this a "russian" thing. London is the money laundering capital of the world after all. It's not open for russians only.
>> it is an extremely bad idea to launder money through the UK's financial system (unless you live somewhere that doesn't comply with CRS...in which case it doesn't matter)...
Apparently that's just old good BS. The wise guys launder happily and are not bothered as long as they give back.
>> And what is the accusation here...
It shouldn't be that hard to figure it out, Walter! Hints: “the money laundering capital of the world”; "‘the jurisdiction of choice’ for Russian crime gangs"
> The UK is the number one loser globally from corporate tax avoidance
Yes, it is. Which doesn't _at all_ negate anything I said.
And yes, it does. That is why the UK was one of the first signatories to CRS, that is why the UK complied fully with FATCA, that is why the UK has some of the strongest AML processes anywhere, that is why the UK applies its law extraterritorially to pursue the proceeds of crime, that is why the UK brought in the tech tax...this is all totally inconsistent with what the UK has actually done.
Well they're missing the point of this imposition, because it was designed expressly to avoid companies choosing 'favorable' locations to manage their tax affairs. Suck it up London and Switzerland.
And why would they go out of their way to avoid something they already do?
They should do it because elected officials will sign it into law. It will be signed into law because people asked for it. People asked for it because they benefit from it. People benefit from it because they need stuff the government pays for.
There is no reason to sympathize with governments that depend on clever paperwork for their nation's success because that is not a tangible good. There is every reason to sympathize with governments that are trying to raise money to invest in their citizens because that is a tangible good.
Eliminating tax havens is no more objectionable than closing an account with a bank that has lost your trust. The bank will adapt and learn as it always does.
Again, did Swiss citizens ask for it? It seemed like US politicians asked for it. Why should I raise my prices because you said you are losing customers to me?
I'm not saying it's not a good thing, but representatives should be looking after their own people's interests and cooperation agreements need to be conditioned on that.
Because if this agreement has any teeth, it will require some kind of sanctions against the defectors from the rest of the members of the deal.
Using your country's priviledged position to your advantage creates grievances and division
Just picture a world full of embargos as retaliation for tax dodging. Many countries could decide it's not worth keeping an open border (with flow of goods) with a country that tries to attract companies (that sell in your country) with low taxes. A trade agreemeny (EEC etc) rests on the good will of its signatories. But offering your country as a tax haven breaks this relationship. The only reason it has taken this long to get this type of agreement going is that the underpriviledged countries lacked democratic pressure. No healthy democracy would allow the flow of untaxed goods from third countries
The democratic will is slowly building up, and if it is denied it will lead to confrontation and overall waste of resources. It is in everyone's interest to agree to a global minimum tax rate (but it requires vision)
Emphasis on US Politicians. I certainly didn’t ask for this.
First, I think the "incentive" would be "not getting kicked out of trading blocks and having punitive tariffs". Large countries can impose their will on smaller ones to an extent. In the extreme, larger and more powerful countries can invade smaller ones. The G7 countries won't be invading Switzerland, but they do have a lot of levers to make it very difficult for Swiss companies to do business. I don't think anything that rises to the level of a blockade is likely, but larger and more powerful countries have levers to use against smaller ones.
Again, I think the most likely result would be things like tariffs and restrictions on businesses, but there are so many options available to large, powerful countries to just make things annoying.
Heck, we've seen some of this with Brexit. British people are annoyed that they have to pay for a visa to enter the Schengen Area. That's a relatively small annoyance. Countries can ban foreigners from certain other countries. Countries control their airspace and Switzerland is land and air-locked by the EU.
Again, I don't think things will be extreme like that, but it's not hard to imagine all sorts of ways one can be incentivized to join an agreement at the point of a gun.
Second, I think the point is that it doesn't require those countries to join the agreement. Let's say that a company makes $10B in profit and it's accounted for as $1B in the US and $9B in a tax haven. They pay 25% on the $1B which is 2.5% of their global profits. The US then says, "under the law, you now owe an additional $1.25B since you didn't hit the 15% minimum."
The whole problem around tax havens is that companies are accounting for their profits in tax havens while their operations are actually in other countries. The company is actually doing their business and running their operations in the US, France, Japan, etc., but claiming that a company in a tax haven is the one actually making the profits. That also means that it's relatively easy to target them.
If you're a tech company whose employees are in the US and EU and whose sales are in the US and EU, but you're funneling the profits through a tax haven, it's still pretty easy for the US and EU to force you to give them money.
Company: "No, we didn't make any money in your jurisdiction! Better luck next year!"
US/EU: "Watch while we raid your offices, prevent your employees from working, shut down your data centers, prevent our financial institutions from being allowed to do business with you (which means you can't pay workers and can't collect money from advertisers/users/etc.), etc."
Company: "Well, when you put it that way..."
I mean, it'd still end up in court, but it's not as if the tax haven needs to join the agreement for the G7 countries to enforce a minimum tax on multinational companies. If the companies are actually doing business in G7 countries, their money/assets/etc. is in those countries to be confiscated. "Hey, you're pretending that you're earning that money in a tax haven and not here, but I'm willing to bet that cutting you off here will have a huge impact on those profits..."
Right now, companies are saying, "we didn't earn that money in your country so you can't do anything" and this agreement is kinda about, "it doesn't matter; if you haven't paid 15% of your global profits in tax, we're going to take that money from you even if you claim it was earned somewhere else."
I mean, you do realize that you're championing the American Imperialism you left wing nutjobs otherwise oppose so vehemently? It's just a different flavor now.
The UK loses a huge amount of corporate tax from EU tax havens, and the opposition has formed because the purpose of this deal is to allow the US to raise their corporate tax rate...rather than stop corporate tax avoidance (the US doesn't suffer hugely from this, all the profit in places like the UK that goes to Ireland ends up back in the US, and gets taxed).
Ireland's corporate tax rate is 12.5%. It is one of the lowest in Europe but certainly not 0%.
> "selective treatment allowed Apple to pay an effective corporate tax rate of 1 percent on its European profits in 2003 down to 0.005 percent in 2014."
Tricks include transfer pricing; company A charges company B an arbitrary number to reduce company B's profit to zero (so it pays no tax) but this gets classed as exempt in company A.
Where do you get that 0% from.
And there are also communal taxes, so three levels of tax collectors, see https://www.ch.ch/en/tax-rates-switzerland/
But Black Dynamite, I sell drugs in the community!
It might of been an interesting article if they had a rationale beyond "In the UK, Chancellor Rishi Sunak is worried that banks based in London, which he says pay adequate tax, will be wrongly dragged into the 15% rate."
The entire point of this tax minimum is 1) No countries are excepted so they dont attract investment/HQ purely on tax rates. or 2) Countries that dont agree face other punishment that outweighs point 1.
Personally I think its quite selfish if countries dont sign up to this. Its much needed and capitalism greatly benefits from "a level playing field" (also a core tenant) as it tends to focus innovation to areas that matter, over company X has a market advantage because they are headquartered in the Cayman Islands and can buy market share over domestic company paying 25% on profits.
Why shouldn't everyone be selfish? Because other people matter, and because if people work together and cooperate, which includes making some sacrifices, then everyone gets better results in the long run.
> Isn’t that the point of a country: to promote the interests of the citizens of that country?
That's one view (nationalism, if I'm using the term correctly), but certainly not the only one. There are higher purposes than one's personal interests.
Yes, generally people do want to help those in need - usually in exchange for some respect and karma improvement. The "give the money and fuck off with your advice" approach won't cause much compassion.
People are selfish and generous, angry and compassionate, courageous and scared. None of those things are more fundamental than the other. We are biologically the same as the saints and sinners, as the people who burned witches at the stake and the ones who risked their lives to save others. You can choose the best or worst angels of your nature; we each can.
It's perverse to claim, against all evidence, that we are defined only by the worst in us. To take away our free will and choice. And for what? To provide an argument for a political movement?
Participation in the global economy.
An equivalent would be for high tax those countries to put very high tariffs on tax havens
As a broad term should should be self interested absolutely. In this regard it needs ot be recognised as selfish for little good reason and potentially very bad ones for the greater system. There clearly is a short term value in dropping tax rates for countries like Ireland, but medium/long term this means is other countries follow their rates down, so there is little long term advantage and your broking the system in chasing said advantage for a nation.
> Why should the Irish pay out of their pocket to bolster the treasury of France?
This is the core of the problem, Ireland is taking revenue from France. Im not sure if you aware of things like the 'Double Irish' (google if you dont as its core part of the problem) but profits being made in a country like France are artificially transferred to a low tax country so France doesn't get the tax they should on profits in their own country. This is in itself a ethical issue but if you like capitalism how long do you think there will be open international trade if this system continues and if corporate tax rates continue to drop? Countries will increasingly be unwilling to allow open global trade if they cant run their country to the rules they wish, this in itself should worry anyone that believe global trade is a good thing.
At the same time having the most economically developed countries dictate conditions that make other countries very unattractive is bad. Without tax attractiveness some countries will remain just some shit holes nobody wants to go.
Capitalism isn't about equalizing anything.
> Don't take "level playing field" with "equal everything".
That’s kind of irrelevant, because capitalism isn’t about a level playing field either.
For a simplified example, the rules of a game like chess make it a level playing field. It doesn't make all players equal, it makes the better player clearly that.
I mean, they are so blatantly honest here it's hard to even be mad.
The moment one of those millionaires/big corp/lobbyist "accepts" a tax like that, we can be 100% sure they discovered a loophole or carved/paid a way to be exempt.
Furthermore, by setting such a low anchor price, if the cartel eventually fails, countries would be racing to the bottom from an even lower tax rate.
I'm not super optimistic about this tax, but have been pretty surprised by how quickly it seems to be getting adopted regardless.
It seems like with enough economic backing they could (and probably will) enforce the agreement.
The more unstable question is whether the respective democracies can get it through their lobbying systems intact.
But I think you misclassify this from a game theory point of view. Larger countries with higher tax rates can effectively punish companies that take advantage of the other ones if the cartel is broken.
This is the same reason the agreement was reached in the first place, it's "give up a little or we'll fight and you'll lose", much like it was for bank secrets in Switzerland.
Plenty of international agreements are stable in the long run. What makes this one different?
Tax competition is a good thing. When raising taxes is hard, government has to work to justify its spend. If it doesn't, the business and talent goes elsewhere.
The proposed policy seems to be one thing pretending to be another. It is selling itself as a crackdown on big tech tax minimisation. Your description of it as a cartel arrangement is much more fitting.
Doesn't this mean that they're competing for the upper classes? The "value" in government is, in my opinion at least, ensuring rights (specifically equality irrespective of wealth) and services for all citizens, not only the very rich. Maybe you'd argue that the very rich care deeply about poorer citizens and would not leave a country that adequately provides for its poor, but I don't think history supports this generalization of the very rich. It seems like this is a recipe for exacerbating inequality--I'm not an ardent leftist, but I can't get down with "let the poor starve" nor can I bring myself to subscribe to the various economic trickle-down theories for caring for the poor. It seems to me that economic inequality must be limited and that the government is the only institution that has a chance at limiting it.
Well, they are. It's a matter of fact. Upper and middle classes, I would say.
The questions the government should solve are therefore (1) how do we attract more well-off people - whether it's through low crime rate, good health and education services or nice parks and clean air, (2) how do we use the limited resources we have to improve lives of not that-well-off and (3) how do we turn the poor ones into taxpayers.
Right, but the point of this proposal is to limit that competition so governments can focus on improving lives of lower classes. I can't tell if we're in "violent agreement" or not.
> how do we attract more well-off people - whether it's through low crime rate, good health and education services or nice parks and clean air,
Or tax breaks and the rich build their own enclaves with low crime and amenities. I'm not advocating for this, on the contrary; however, this is an option that governments use to court the rich to the detriment of the rest of their citizens.
> The questions the government should solve are therefore (1) how do we attract more well-off people - whether it's through low crime rate, good health and education services or nice parks and clean air, (2) how do we use the limited resources we have to improve lives of not that-well-off and (3) how do we turn the poor ones into taxpayers.
Isn't there an option in which we tax the super rich by closing loopholes? Or is that part of (2)?
Depends on your definition of "rich", but probably not.
First, top 1% already pays 40% of all taxes [1]. There are many talks about "paying fair share", but nobody is saying what is fair and how we determine it.
Second, I'm afraid even if we close loopholes and collect some more money, it won't help. New York, for example, is in top 10 states by collected income tax. Yet it has shitty (and expensive!) roads, shitty subway, not-so-good state university - well, you name it. Before asking for more taxes, I'd like to see current funds used wisely.
[1] https://taxfoundation.org/publications/latest-federal-income...
[2] https://www.taxadmin.org/2018-state-tax-revenue
My understanding is that we are talking about the top 0.1%, not the top 1%, at least with respect to loopholes.
> but nobody is saying what is fair and how we determine it.
Agreed. I’m less concerned about “what is fair” and more concerned with making sure everyone has access to essentials including healthcare and that corruption is minimized. As far as I can tell, this means we should tax the rich (and probably even upper middle classes including me, happily) and severely limit campaign donations, political advertising, lobbying etc so the very rich can’t buy our democracy.
> making sure everyone has access to essentials including healthcare
Even in USA with notoriously awful healthcare system pretty much everyone does have access to healthcare. It's expensive and stuff can be improved, but if anything that should reduce public expenses, not increase them.
> severely limit campaign donations, political advertising, lobbying etc
The other side of this coin is political populism. "We'll tax all fat cat businesses to death!" - say politicians. "Oh, Yeah!" - says the crowd. "Fuck you, we quit" - say businesses.
[3] https://fairtax.org/articles/income-taxes-on-the-top-0-1-per...
Is it?
I mean, if you believe that taxes are wasted money, it probably is, but if you equate taxes with hospitals, schools, roads, trains, police, research, ... then you probably feel that the underbidding tax war is really a bad thing that hurts communities.
Do elected persons from those other countries work for their electorate and try to attract business and jobs by competing against the incompetent and wasteful governments, or do they scheme against their electorate and work on behalf of globalists?
Thumbs up to the Swiss and the UK.
[0] https://en.wikipedia.org/wiki/City_of_London & https://www.youtube.com/watch?v=LrObZ_HZZUc
[1] https://en.wikipedia.org/wiki/Financial_centre
[2] https://www.longfinance.net/programmes/financial-centre-futu...
And the reason it's Switzerland and not Zurich (or another city like Geneva, or a given Canton) is that AFAIK Switzerland's famously privacy-friendly finance regulation weren't just restricted to one area, so it would be incorrect to pick one place out of them all. I know there has been some movement in recent years that has curbed Switzerland's status as a tax haven, though I don't know to what extent. Maybe someone who's a bit more familiar can weigh in on this.
https://www.bbc.com/news/uk-54226107
Money laundering is what enables organized crime, brutal dictatorships and many of the incarnations of evil in this world to exist.
The world would be a better place if one day all British banking institutions involved in money laundering closed and decided to do something else.
I suspect that the reason is that Ireland is not only offering a very competitive tax rate, but also providing quality corporate services at the same time. And I think that that is the real issue - that you can get first class corporate services for much less than in other countries, making people ask - why should I pay more for the same - or in some cases, more for less?
What they are doing is trying to subvert the agreement without leaving those larger political units that are signing on to the agreement. (For the London this is the UK and for Switzerland it is the European Market.)
https://en.m.wikipedia.org/wiki/European_Single_Market
Simplify accounting rules. Get rid of patent trolls. Ensure speedy trials by courts.