Dutch Cabinet wants minimum 15% corporate tax to cut down tax avoidance | Hacker News Reader

Dutch Cabinet wants minimum 15% corporate tax to cut down tax avoidance

nltimes.nl

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> The proposal is part of an international agreement concluded in October 2021 by nearly 140 countries.

Which is this.[1][2]

It's been in effect in the US since last year. Unclear what the loopholes are. Comments?

[1] https://www.weforum.org/agenda/2021/11/global-minimum-tax-ra...

[2] https://en.wikipedia.org/wiki/Global_minimum_corporate_tax_r...

Are there popular tax avoidance schemes using the Netherlands?

Double Irish with a Dutch sandwich seems to be deprecated.

Great that the Dutch cabinet is stepping up their fight against tax avoidance.

> The proposal is part of an international agreement concluded in October 2021 by nearly 140 countries. The Netherlands is the first country in the European Union where legislation has been presented to parliament.

I am still scratching my head over how this is actually going to work. Representatives from 140 companies signing on via an OECD is a far cry from actual legislation.

A corporate income tax would not generate meaningful revenue for most countries. And such that it does, it only generates revenue by cannibalizing other taxes (income, sales, capital gains, etc) at the cost of a deadweight loss of investments.

But there is a huge game theory problem here. Even if you get collective sign-on, this would be an EXTREMELY unstable agreement - it's like the Prisoners' Dilemma in that there is no Nash Equilibrium. There would always be an incentive for a handful of countries to back out of the deal. And the more countries sign on, the more incentive there is to back out.

You say this

>A corporate income tax would not generate meaningful revenue for most countries.

Then you say this

> And such that it does, it only generates revenue by cannibalizing other taxes (income, sales, capital gains, etc) at the cost of a deadweight loss of investments.

If it's not meaningful revenue, how is it a meaningful loss of investments? This also seems to ignore if it's a minimum among a wide swath of nations, what investment loss would it incur?

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

There are a lot of theoretical tax schemes for which the amount of collected tax could be $0 and there would be a market reaction. If the government put a $100 tax on pencils, everyone would buy fewer pencils and the government would get a lot less than they calculate.

Keep in mind there are a lot of things investors could be doing with their money besides parking them in stocks. So if corporations lose 10% of their income off the top from a change in the tax code, investments like real estate or t-bills or securities are going to pick up the slack in comparison.

> There are a lot of theoretical tax schemes for which the amount of collected tax could be $0 and there would be a market reaction.

Well markets can be irrational, that doesn't mean we need to cater to the irrationality.

Taxes on corporations don’t make sense. They pass it on to consumers. Or they pocket the difference when repealed. Make a law that drops taxes and requires companies to reduce prices of goods and services.

"Make a law that drops taxes and requires companies to reduce prices of goods and services."

Gov't control of prices has worked so well in the past, so why not...?

Consumers don't have infinite money and prices are adjusted for the sweet spot for profitability.

This sweet spot may give a large gap for reducing the margins, while the consumer budget may not allow for raising the prices.

All in all, companies will work hard to find a way to stay profitable, and your tax will benefit from that.

If this reduces the marginal spend on tax avoidance schemes, then it is a net win for the greater society IMO

Well, they pass it on to consumers, or they pay their staff more, or, if those two are competitive enough, they pass it on to the pension funds etc that invested in them as dividends.

But as an elected representative it's better to take that money and spend it, and claim the credit for the results of spending their money. Having had at least a bit of a think, I can't figure out a way to have a decent political system that doesn't trend to infinite spending.

> as an elected representative it's better to take that money and spend it, and claim the credit for the results of spending their money.

How's that working out for San Francisco?

It's working out for the elected representative.

> Taxes on corporations don’t make sense. They pass it on to consumers.

Prices are marked up on costs. Goods and services are sold at what the market will bear. Low margin products would need to be priced higher, but typically they benefit from competition and low labor costs from overseas manufacturers (and anything that can be imported for cheap, already is, and won’t displace jobs from a country with a strong currency)

By this definition no taxes make sense, almost all of them make it more expensive for companies to do stuff for people. This is by design so people don't simply recompense the company but also society as a whole to ensure an infrastructure with money and companies exists.

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