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Old 07.06.2021, 12:04
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Re: G7 global tax deal - impact on job market

At least 15%, could be higher. This is bad news for Switzerland: our government works, our infrastructure is good, and we can afford it with low taxes. Just because this country is more efficient does not mean we should be penalised by forcing us to charge higher taxes. We don't have natural resources, our comparative advantage is this efficiency that allows us to have low taxes. Why should we be penalised for this?

However, if the Swiss federal and cantonal governments were smart, they'd just move various expenses into corporate tax and move on. For example the droit the timbre, the taxe professionnelle in Geneva, the contributions to the AVS... they could all be paid through the corporate tax and lead to a higher rate without increasing the expenditures.

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This should be good news for countries like Switzerland, as corporate execs and CEOs start googling where they can relocate to. IMO, people shouldn't be cheering this, this is how cartels operate, and will only result in higher prices for everyone. Increases in cooperation tax tend only ever passed on to the customer.
There's absolutely zero evidence of this. However, there is evidence that higher taxes on the wealthier segments of the population lead to higher economic growth as the rich have a higher propensity to save than the poor, which makes total sense: give $1000 to Bezos and he won't even notice it, give it to a poor family and they'll spend it on necessary stuff straight away.

https://www.economist.com/business/2...uge-cash-piles

Some of these large corporations are acting like wealthy individuals, they are hoarding cash at record levels, they don't even know what to do with it other than stock repurchases, whereas other smaller companies would carry out productive investments if they had the possibilities. So maybe having the government take more from tax dodging firms and investing the money in infrastructure will lead to smaller firms be able to carry out those investments.
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  #22  
Old 07.06.2021, 12:07
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Re: G7 global tax deal - impact on job market

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There's absolutely zero evidence of this. However, there is evidence that higher taxes on the wealthier segments of the population lead to higher economic growth as the rich have a higher propensity to save than the poor, which makes total sense: give $1000 to Bezos and he won't even notice it, give it to a poor family and they'll spend it on necessary stuff straight away.

Some of these large corporations are acting like wealthy individuals, they are hoarding cash at record levels, they don't even know what to do with it other than stock repurchases, whereas other smaller companies would carry out productive investments if they had the possibilities. So maybe having the government take more from tax dodging firms and investing the money in infrastructure will lead to smaller firms be able to carry out those investments.
No evidence, you're kidding right?! Check out how many companies have relocated to the Republic of Ireland to take advantage of the low corporation tax rates there and the effect it's had on Irish GDP in the last decade. Same goes for Luxembourg!
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  #23  
Old 07.06.2021, 12:16
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Re: G7 global tax deal - impact on job market

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No evidence, you're kidding right?! Check out how many companies have relocated to the Republic of Ireland to take advantage of the low corporation tax rates there and the effect it's had on Irish GDP in the last decade. Same goes for Luxembourg!
This just shows that the GDP as a measure of economic activity designed during the great depression has many flaws in today's world.

The Irish agree with this, by the way. Good reading on this in this wiki article

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Modified gross national income, Modified GNI or GNI* was created by the Central Bank of Ireland in February 2017 as a new way to measure the Irish economy, and Irish indebtedness, due to the increasing distortion that the base erosion and profit shifting ("BEPS") tools of US multinational tax schemes were having on Irish GNP and Irish GDP; the climax being the July 2016 leprechaun economics affair with Apple Inc.[1]

While "Inflated GDP-per-capita" due to BEPS tools is a feature of tax havens,[2][3] Ireland was the first to adjust its GDP metrics. Economists, including Eurostat,[4] noted Irish Modified GNI (GNI*) is still distorted by Irish BEPS tools and US multinational tax planning activities in Ireland (e.g. contract manufacturing); and that Irish BEPS tools distort aggregate EU–28 data,[5] and the EU–US trade deficit.[6]

In August 2018, the Central Statistics Office (Ireland) (CSO) restated table of Irish GDP versus Modified GNI (2009–2017) showed GDP was 162% of GNI* (EU–28 2017 GDP was 100% of GNI).[7] Ireland's public § 2018 Debt metrics differ dramatically depending on whether Debt-to-GDP, Debt-to-GNI* or Debt-per-Capita is used.[8]
Luxembourg's case is even more distorted. They have almost 200,000 workers crossing their border every day, so GDP per capita in that country means nothing.

On the other hand, in the 1950s corporate taxes were around 40 to 50%, and the economy was booming. It's not by cherry picking examples like these that economists work out correlations.
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  #24  
Old 07.06.2021, 12:20
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Re: G7 global tax deal - impact on job market

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This just shows that the GDP as a measure of economic activity designed during the great depression has many flaws in today's world.

The Irish agree with this, by the way. Good reading on this in this wiki article

Luxembourg's case is even more distorted. They have almost 200,000 workers crossing their border every day, so GDP per capita in that country means nothing.
No arguments from me there, this has distorted the Irish economy so that GDP figures paint a far better picture than the reality, however there's little denying the net positive effect of low corporation tax rates on the country, including job creation and money in the coffers.
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Old 07.06.2021, 13:41
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Re: G7 global tax deal - impact on job market

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At least 15%, could be higher. This is bad news for Switzerland: our government works, our infrastructure is good, and we can afford it with low taxes. Just because this country is more efficient does not mean we should be penalised by forcing us to charge higher taxes. We don't have natural resources, our comparative advantage is this efficiency that allows us to have low taxes. Why should we be penalised for this?
Higher taxes?
Probably very cantonal-dependent.
This source claims that CH corporate tax rate is 21.15% - but I assume that's the overall average or something.
Could only be a relatively big "deal" for the top 6 here.
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  #26  
Old 07.06.2021, 23:20
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Re: G7 global tax deal - impact on job market

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Higher taxes?
Probably very cantonal-dependent.
This source claims that CH corporate tax rate is 21.15% - but I assume that's the overall average or something.
Could only be a relatively big "deal" for the top 6 here.
that's just the cantonal tax. If you add municipal, federal and anything else that will get added to the surely complex calculation to avoid countries finding new loopholes, will it really be below 15%?
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  #27  
Old 08.06.2021, 00:00
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Re: G7 global tax deal - impact on job market

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old boys club still .. poor nations are no market for google et all ...its developed markets where you do not want to pay local-tax .and its not EU winning ..its US not losing as loophole is closed jan 2021 to my knowledge so they be up for more more often...
out of a true curiosity of someone (me) who is not well educated in global economics, what are you saying?
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  #28  
Old 08.06.2021, 00:06
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Re: G7 global tax deal - impact on job market

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No arguments from me there, this has distorted the Irish economy so that GDP figures paint a far better picture than the reality, however there's little denying the net positive effect of low corporation tax rates on the country, including job creation and money in the coffers.
Exactly. The Irish government estimates they will loose 2.2b in tax revenue as a result. And in a small country with a population of about 5m that is a lot of money.
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Old 08.06.2021, 10:14
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Re: G7 global tax deal - impact on job market

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At least 15%, could be higher. This is bad news for Switzerland: our government works, our infrastructure is good, and we can afford it with low taxes. Just because this country is more efficient does not mean we should be penalised by forcing us to charge higher taxes. We don't have natural resources, our comparative advantage is this efficiency that allows us to have low taxes. Why should we be penalised for this?
One should not ignore that Switzerland is collecting tax that should by fairness be distributed to other countries. Many companies have just HQs in Zug without any actual operations there.

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his?

However, if the Swiss federal and cantonal governments were smart, they'd just move various expenses into corporate tax and move on. For example the droit the timbre, the taxe professionnelle in Geneva, the contributions to the AVS... they could all be paid through the corporate tax and lead to a higher rate without increasing the expenditures.

Even though I don't know the detials (and even less about the corporate tax) I think there's some truth to this. There are many things that would be called tax elsewhere and are not in Switzerland (e.g. some of the pension contributions, basic health insurance, TV, etc.)
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  #30  
Old 08.06.2021, 10:36
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Re: G7 global tax deal - impact on job market

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Exactly. The Irish government estimates they will loose 2.2b in tax revenue as a result. And in a small country with a population of about 5m that is a lot of money.
Let's assume the government will instantaneously grab 500€ from the pocket of each inhabitant.



It looks like Apple will sell less iphones in Ireland (ok, there are just 250k Iphones in Ireland, I hope you got my point...). So Apple will sell globally less iphones. So money will suddenly disappear from the Universe. Because the irish government was putting the 2.2b in tax from Apple&co in good use, instead the money collected from the citizens are notoriously used to light up the woods in the winter villas of politicians.
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  #31  
Old 08.06.2021, 11:36
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Re: G7 global tax deal - impact on job market

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that's just the cantonal tax. If you add municipal, federal and anything else that will get added to the surely complex calculation to avoid countries finding new loopholes, will it really be below 15%?
Amazon is excluded as their margin on sales is too low, the devil is in the detail.
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Old 08.06.2021, 11:38
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Re: G7 global tax deal - impact on job market

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Unless you have money tied up in the stock market, we'll see tomorrow morning how it reacts.
S&P futures & Nasdaq futures are up, in line with UK, French & German markets this morning.

Who would have imagined that the stock market would be where it is today if you had predicted Lockdowns before they occurred.
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  #33  
Old 08.06.2021, 11:40
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Re: G7 global tax deal - impact on job market

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Unless you have money tied up in the stock market, we'll see tomorrow morning how it reacts.
With absolutely no interest at all it seems.
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  #34  
Old 08.06.2021, 13:09
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Re: G7 global tax deal - impact on job market

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Let's assume the government will instantaneously grab 500€ from the pocket of each inhabitant.
Let’s not because most of that free money was used to pay down the national debt. Between 2007 and the beginning of the pandemic Ireland reduced its national debt from 124% to 58% so it will not have as big an impact on daily government spending as might have been expected.
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  #35  
Old 10.07.2021, 18:07
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Re: G7 global tax deal (& impact on job market)

G20 is happy with the concept.

https://www.theguardian.com/world/20...-of-tax-havens
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