I don't understand this concern about a "race to the bottom". This "race to the bottom" is why you can buy a computer for $200 that would have cost $10,000 fives years ago. Manufacturers were in a race to provide the most value for the least money.
There should be pressure on gov'ts to keep tax rates low. I consider each country as it's own business where the price is what you pay in taxes and the product are the gov't services you recieve.
Do you really wants gov'ts banding together to collude and keep tax rates high? What do you think that will look like in the end? I assume massively inefficient gov'ts and crushingly high tax rates.
How many countries have you lived in? Why did you choose the place you live now? Presumably you have a spreadsheet somewhere with the tax to service ratio for all the countries you considered?
Well, maybe you do. Most people don't. Most people live in the country they were born in, or perhaps emigrate once to a country they perceive to have more opportunities (or family, or a more stable government). The only people who are shopping around for the cheapest tax regime are already exceptionally wealthy and looking to keep more of that wealth for themselves. They're not looking for any governmental services, just a way to stop paying for those that help other people.
Maybe that's OK for you if you're heartless sociopath. It's very easy to forget just how reliant we are on the hard work of other people, even those who earn far less than us.
If it takes me five or ten years to build out a successful company, I will have paid: - Some corporate tax - Income tax (your director salary, your employees salaries) - Dividend taxes - Capital gains tax (when I sell the company) - Various other smaller levies
And you will have created some jobs. When you sell the company, those jobs also usually won't seize to exist. In a way, you will have paid off your debt to society.
If at that point, should you decide to move to some low tax country and live off of investment gains, what's wrong with that? Given (for example) a massive amount of US taxpayers dollars is spent on military and defence spending, I find it hypocritical to call people who actually want to keep their earned wealth "heartless sociopaths".
Races to bottom only benefit the independently wealth in the long run.
If a 'player' wants to break out of the cooperation, he can (so this is not 'forced' stricto sensus), but there would presumably be costs from the defection--the other cooperating players might refrain from doing business with the former.
Panama and the HK only tax Panama and HK source income. They are far nicer places to live. This tax nature is unlikely to change any time soon.
Switzerland has no capital gains tax on share sales. The UK has a horrible tax law called non-domiciled resident that has created the housing affordability apocalypse of london. The wealthy can just pay a flat tax of 30k pounds per year after 7 years of the status. Those 7 years before they do not pay tax on their world wide foreign income.
All of the mentioned nations above are not small micro-states that can be easily bullied, and have too many power players in their country that benefit from the status quo to allow those changes to happen. The only reason why they will change is from higher power players who would benefit from their taxation.
Is it the state that give more life quality to all their citizens?
States are not households. The debt of a country is a very different animal that the debt of firm or an individual.
I don't get why this is a problem. You can tax income from dividends, and income from capital gains -- why do you need to tax the corporation's profits, too? Those taxes all hit the same person (the investor) so why not just eliminate corporate taxes and raise capital gains and dividend taxes?
However, if I want to go live in said castle, I usually have to pay some tax on the benefit received. Or pay market rate rent to the company. If I just want to hold the castle as an investment, then obviously I wouldn't have to pay personal tax on that.
If they do that (legally or not), it wouldn't count as profit for the business anyway, so a tax on profit doesn't help the situation.
I guess you're suggesting that it's a means to tax the special privilege of incorporation (and the protection it offers to investors). But that seems like a bad reason. Again, why not just tax the investors directly for the privilege?
The first is when the company makes profit, whether it is distributed to shareholders or not.
The second is when the shareholders receive their income.
If we did away with the first of these and raised the rate of the second, companies would no longer be paying any taxes on money they accumulate without disbursing. This would make them comparatively less likely to invest it in the short term in ways they can write off. I'm not going to make any particular case here as to whether that's good or bad (and for whom) but it's clearly a change.
Allowing companies to count disbursal of profits as an expense and raising the income tax on those receiving those funds would, I think, leave things more-or-less unchanged but that means there's also no particular reason to do it. It wouldn't simplify paperwork any - both corporations and individuals would still need to be accounting for their income and paying taxes.
This doesn't make sense.
Tax corporations for their income/profit and then zero dividend taxes (since this money paid tax in the form of corporate taxes).
Capital gains is another issue entirely, while it applies to buying/selling stock it also applies to a lot of other things, so most likely it can't/won't be eliminated.
Corporate profits usually become either investments or dividends.
It could be said that by removing corporate taxes you would increase corporate investments or more dividends payment (which would be taxed more, but probably would still be smaller than the tax you would have gotten with corporate taxation)
Also see dilthomas and charlesdm comments
Also: once there is a minimum tax level it will only go up. And there will be a lot of governments pushing for that.
What the world really need is a mechanism to prevent governments from overspending. Now there is none.
If corporate tax is 30-35%, people are going to try and optimise as much as humanly possible. If corporate tax is between 10 and 20%, it becomes a lot less of an issue.
Just to be clear, it is not that all EU profits are getting taxed at Ireland rates, it is that almost all EU profits are not being taxed at all.
If governments run a supply the private sector has to run a deficit. Mathematics don't lie.
Another other option is to get rid of company taxes and raise revenue purely at the personal level. Though this will only increase the cost of labor and skew the market in other negative ways.