> if I make billions via my genius SaaS company in the US, with 95% gross profit margin, get a nice apartment in Monaco and pay exactly 0% tax anywhere, ever on said billions, that's good?

I assume you have employees in the U.S.? Suppliers? Payroll and sales tax didn't go to zero.

If you don't, if you're supplying a product that has zero footprint in the U.S., and making a killing off it, I mean, sure. Fine. Keep your money. You aren't costing our system anything. And you're providing us with something of value.

More pointedly, if you have such a business, one which has zero assets or employees in the U.S., only income, it's trivial to zero out your taxable corporate income today. The only difference between that and this is the amount of accounting and legal paperwork required.

If you make billions, you pay individual taxes (including on stock granted to you, and again for any capital gains if you hold them over a year). If the company makes billions, it spends it on things like salary and growth investment (buying goods and services), or dividends or buying out shareholders (all of which is taxed along the way).

If you move to Monaco but stay a US citizen, you still owe US taxes on income. If you move and renounce your citizenship, you have to pay a significant sum of money based on your wealth (including stocks and ownership in companies).

Your scenario has nothing to do with the corporate tax rate.

Why are you assuming US citizenship? My SaaS, and sucking billions out of the US economy, doesn't require it.

I couldn't pull off 0% taxes without using corporate entities that are untaxed, all countries (at least try to) tax all income produced within their jurisdictions.

This point has been made above, but you think foreign corporations with no meaningful connection to the US are paying significant corporate taxes here?

Spotify is a great example.

>We have significant net operating loss carry-forwards in Sweden and the United States. As of December 31, 2020, we had net operating loss carry-forwards of €100 million in Luxembourg, €1,293 million in Sweden, €461 million in the United States relating to federal taxes, and €315 million in the United States relating to state taxes.

>We have initiated and are in negotiations of an APA between Sweden and the United States governments for tax years 2014 through 2020 covering various transfer pricing matters. These transfer pricing matters may be significant to our consolidated financial statements. In addition, we are subject to the continuous examination of our income tax returns by various tax authorities which could result in assessments against us.

Those two lines more or less tell me that Spotify will not pay meaningful US corporate taxes for the next decade.

Might as well lose that non-existent tax revenue if that's the 'carrot' that gets the public on board with a wealth tax.

Well, then we could just set a global minimum income tax.

However... there's a great problem with this proposal. We're decreasing individual agency and increasing corporate agency.

Corporations are massive evolutionary self-defending systems. As this kind of system, they don't fundamentally care (i.e. their survival and reward isn't directly connected) about the wellbeing of their employees or the general population; their success doesn't mean success of employees or our progress as a society. Think about how our bodies don't really regard the wellbeing of our cells (only that they do their jobs to sustain what we do care about) -- and of course that's fine because cells don't think (individually).

Since corporations are non-conscious as individual entities (as far as I can tell), they don't have a well-defined wellbeing we should care for, unlike their employees and the population at large.

In this sense, they can indeed be seen as AGI overlords fighting with us. If they could replace humans with non-questioning (and without consciousness or well-defined wellbeing) robots they wouldn't bat an eye, as entities.

I call this The Great Problem of Consciousness: there are a great many of (abstract) forces and incentives in the Universe, and almost none of them care about the only thing that really matters, the Collective Conscious experience. Profit, nationalism, bureaucracy, authoritarianism, entropy, natural selection, energy gradients, and so on. None of that really cares about our experience (well being), yet they are the major driving forces of the Universe. The great battle is to try to align those gargantuan monsters into our own service. We only have control now because of the precarious situation where:

  Power ~ Intelligence ~ Consciousness

Any variations in this condition will risk to topple humanity (in the sense of conscious individuals with good experience of life), unless we can systematically prevent it (before it prevents us). It's not quite it, but a similar concept is Scott Alexander's Moloch[1]. I'm studying ways to defeat this opponent (if anyone is interested, I hereby invite you to join in!).

[1]: https://slatestarcodex.com/2014/07/30/meditations-on-moloch/

Because you’re able to pass benefits and productivity presumably to US citizens.

Not just that, but fine, you win your arguments as they are perfect. So now, this founder/owners have pallets of US dollars. Where does one spend those funny looking pieces of paper?

Poof. There goes that argument of “sucking billions out” as those dollars are FORCED to come back to the US.

> sucking billions out of the US economy

Nah.

Every-hypothetical-body in the US paying you billions is getting more in value from your SaaS product than they're paying you for your SaaS product.

Otherwise they wouldn't buy it.

This has been the dream of people around the world for a good part of the last century. It’s a lot harder to achieve than to write hypotheticals about. In practice, the US economy is very good at taking its cut.

I think you would pay taxes in monaco [1], barring any crazy corporate structure shenanigans that would certainly smell of tax avoidance.

So, the government of Monaco would tax the corporate profit from Year 3 onward, assuming your genius SaaS is a startup, at a rate of at least 25%. You wouldn't evade taxes altogether.

For the corporate tax, you'd either convert to Euros to pay taxes (at which point, your USDs flow back into the international monetary system that eventually leads back to Uncle Sam), or you'd pay in USDs, and the government of monaco would do the same dance.

But, you'd get 75%ish tax-free USDs, to pay yourself an untaxed salary with! That's a good amount.

[1]: https://en.service-public-entreprises.gouv.mc/Tax/Other-taxe...

No because I have no corporate entity in Monaco, it's strictly a US company and I am sole shareholder. Monaco doesn't tax US companies unless they do business there.

If you lived in Monaco and operated your business from there presumably that would trigger a nexus requirement for "doing business there"?

No, the business has to be resident, which means it has an office there or sells locally. A resident shareholder or employee doesn't count. Monaco goes out of its way not to tax its residents, other than VAT on local purchases.

In that scenario you may create a permanent establishment in Monaco.

You may want to edit your original post with more context.

If "corporate income tax" only refers to tax on profits, then there is still a tax on dividends, which you pay regardless - US taxes dividends "at source" ("withholding tax"), precisely to prevent individuals to relocating to low-tax jurisdictions and escaping capital income taxes.

https://ibkr.info/article/938

The US happily imposes taxes on its citizens even if they are outside of its borders, and that apartment and all your other company perks would be considered taxable income.

You can renounce your citizenship, but you'll be subject to exit tax on the way out.

Yes, they've thought this through.

I was never a US citizen, I never even set foot in the country. I can do the same with every other country (except one small African country) because they tax according to residency. I'm only a resident of Monaco.

(I'm not a proponent of the 0% corporate tax, fwiw)

If you are running the SaaS from Monaco and only selling things in the US, isn't it right that you'd only pay sales tax?

It's the mismatch when work is done in one place (for some definition of work), but profits taxed elsewhere that's the issue, as I understand it.

0% corporate tax and higher individual income tax works as long as a company and its employees have to use the "full stack" of taxes, and can't mix and match across borders.

I don't pay sales tax, only my customers do, if they are in a state that charges sales tax.

No one pays income or capital gains taxes in Monaco, but my SaaS is genius remember, so I have only a small number of employees at any rate.

I don't think anything of what I'm proposing is right, I'm just thinking though the consequences of a 0% corporate tax.

In that situation you have nothing but deferred consumption (savings) accrued in your corporate bank account. You're just soaking currency out of the economy. It's fine if none of that money is taxed because it's not moving. As soon as you use it, it's taxed.

The usual way economists look at this is that proxy taxes aren't really effective.

So your company makes a ton of income and it's not taxed - but if every viable path of taking money out of the company is taxed, economists will argue it works better.

So in your scenario they are arguing for a system where your apartment in Monaco either came from direct payments to you (taxed) or is a taxable benefit for you, etc.

Does it actually work like that though? You own a US domiciled company, with US revenues. You’re effectively making US sourced income or capital gains in the US even if you don’t live there. Surely tax is due to the US IRS for that? If not, then easy - just make it so and your loophole is closed.

I see this stupid response in every thread about taxes. Do you have to personally benefit from something to advocate for it?

The point is people always complain about the tax implications of these made-up scenarios as if they matter. Yes there’s a loophole in the tax code if you make a 95% gross margin SaaS product and move to Monaco. Who cares? M