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Comment by Drakim | Hacker News Reader

The problem is the "race to the bottom" as countries have to offer better and better deals to outbid each other. It's a tragedy of the commons issue.

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Just throwing this out there with no idea of the reality of it, but maybe it is a good thing to have some downward pressure on tax rates from large multinationals because without that it could end up just being a 'race to the top' with countries continually ratcheting up rates unchecked.

What's more common is that the large multinationals get a targeted carve-out only usable by large multinationals, with the tax burden shifted to individuals and small businesses. A small business cannot practically take advantage of arrangements like "double Irish with a Dutch sandwich".

The corporate tax rate is not as important because taxes will still be paid on payroll and other uses of the money. The effective tax rate is not going to change much as the corporate tax rate changes because so much of the companies expenses are going to payroll and bonuses.

The goal of corporate taxes is to collect revenue from profits when a foreign entity own the company. Taxing people only works when the owners live in your country. Worse, high personal tax rates can encourage wealthy people to leave your country either on paper or directly.

PS: If your corporate tax rate is zero, then your country is often better off discouraging foreign investment.

In the UK at least, you can use umbrella trusts to legally dodge corporate tax as a small/medium business or self-employed if you're earning a decent amount.

That's tax avoidance, HMRC will come knocking and you'll end up having to pay 5 years tax in one chunk. Oh, plus penalties for not declaring you were avoiding tax!

Here is the HMRC specifically warning against this exact scheme and telling you they will tax all your money later and fine you:

https://www.gov.uk/government/publications/spotlight-26-cont...

So definitely not in the UK.

Unchecked? Even corporate tax rates can still be election issues for citizens.

Exactly! I don't know about you, but I think some competition among governments is a good thing. Why shouldn't the most efficient gov't reap all the rewards?

There is no reason to believe governments taking part in these races to the bottom are more efficient. (I would actually expect them to be more corrupt, on the average, as dictatorships are probably over-represented.)

The main problem with this sort of "competition" is these tax breaks for big companies creates a very unfair competition for small companies, which doesn't operate on the required scale to profit from them.

At least in the US, the federal gov't provides plenty of breaks for small companies. Are those unfair as well?

What rewards are they reaping? They're not necessarily getting more jobs, they're not getting more tax revenue, and as soon as the "efficient" government's tax break is over, the company will jump to the next country, and the original one will likely be worse off.

It's up to the governments to negotiate the best package they can. If they seemed to get screwed every time they try it, maybe they should stop?

Or maybe we just harshly punish every company who believes they're entitled to a better deal?

Why would we do that?

If I'm running a successful company and need to build a new plant, why shouldn't I seek out the best deal I can get?

Why do you feel entitled to a better deal than any one else?

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