So lets assume €10M is the already inflated ammount to accommodate for Ireland/Sweden share. Then only (€3.12m, €5.25) was needed from (Sweden, Ireland) if taxes were zero. €3.12m + €5.25m = €8.37m. €163k (€10m - €8.37) went to Govts. Then consumption taxes would be (28.2%, 14.2%) for (Sweden, Ireland). Swedese are paying (.282-.142)/(1+.142) = 16.3% more than Irish for same product.
You can calculate all these from equation in my comment before. I write here again,
R'(1-T) = R
whereas T is tax rates. R' is inflated revenue. R is zerotax revenue.
In this example Swedish consumers would potentially see price increases - but on the other hand they could see tax reductions if the increased tax revenue from corporations gives some reform space for income or consumption tax cuts. Potential for jobs moving in from Ireland has the same positive effect on the bottom line.
The losers in the above scenario is the Irish because they'd see increased prices, lost jobs, and potentially raised taxes to offset lost corporate tax revenue.
Why ? The payroll will increase even if profit remains the same.
The losers in the above scenario is the Irish because they'd see increased prices, lost jobs, and potentially raised taxes to offset lost corporate tax revenue.
I doubt it. Consumption tax are never popular. Instead of businesses, the people at large might migrate to Ireland for significantly low cost of living.
Or a bad idea because of how it would increase corporate taxes, which would land on consumers?
I can't see how it would be a net negative for those countries that would get a nonzero corporate tax from megacorps that today contribute around zero. Even with price increases, the net effect seems like it would be positive
I can't see how it would be a net negative for those countries that would get a nonzero corporate tax from megacorps that today contribute around zero. Even with price increases, the net effect seems like it would be positive
Because countries are not getting new money. Old money is just cycling between govt and people.
You keep saying that, and I keep not understanding it. I realize higher prices (Companies shifting the tax to consumers) is a burden for consumers. But at the same time, if government tax revenue increases, then taxes could be cut (of all kinds: income, VAT, and corporate).
E.g. IKEA in Sweden ships 3% of their revenue as "royalties" to a dutch company, thereby reducing their swedish tax amount by over €100M/yr. If that money and money from similar companies was actually paid in Sweden, then Sweden could have a lower tax rate (e.g. 20%) and still have the same revenue. Or the VAT could be slightly lowered from 25%, to offset the fact that for a few products from multinational corporations, the products would be slightly more expensive.
Also: the argument that higher corporate tax rate = Higher CoL = bad, could be extended too. But how far? If the rest of the EU adopted Irelands low corporate tax rate, what would happen then?
Could be a few issues with it still, e.g. declaring that your in-house logistics operation requires €100 to transport your €200 widget to Sweden, rather than €10 to Ireland, no?
Say we have a hypothetical company that operates only in Sweden and Ireland, and has offices only in Ireland. It has a revenue of €10M and a profit of €1M.
This company had €4M (40%) of it's revenue in Sweden (tax rate 22%) and 60% of the revenue in Ireland (tax rate 12.5%). How should this corporation be taxed?
By proportion of revenue according to the normal tax rate in the country. So
In Sweden: Tax 40% (the proportion of revenue) of the profit
(€4M/10M) * €1M * 0.22 = €88k
In Ireland : Tax 60% of the profit
(€6M/10M) * €1M * 0.125 = €75k
So the total tax went from €125k to €163k, because the corporation was forced to pay taxes where it made business, rather than on Ireland alone.
Basically you just pretend that the corporation was in fact two corporations, where one €4M revenue corporation was in Sweden and the other was a €6M revenue corporation in Ireland. That's all.