[netcan]

Since this became such a public debate issue in Europe, I've actually more or less landed on the idea that maybe corporate taxes (taxing profits) are a lost battle. The only way to really combat it is for different countries to collude and perhaps sanction tax havens. Even then, I doubt they will be able to raise much tax.

Modern tax systems are diverse by design: sales tax/VAT. Excise/sin taxes, income taxes, CGT, employer taxes, etc. The mix is designed to reduce volatility. It's also designed to max out tax revenue while avoid damaging the economy by discouraging things like labour, savings, or other important activities too much. The effective maximum revenue for a country to collect in taxes appears to be somewhere in the 35%-45% of GDP range. After that diminishing returns on taxes kick in. Most euro countries are taxing (or rather spending) near that max. So, they can't afford to let corporate taxes.

Problem is that corporate tax is unavoidably problematic. Large multinationals can arrange their activities (not just their paperwork) depending on taxes. I doubt an single country want to create a tax the ensures large companies avoid setting up local subsidiaries within their borders. The end result is a different set of rules for the large and/or sophisticated that is more lenient than the rules on small companies.

Personally, I would rather see corporate tax abolished than see it applied in such a way that it discriminates against small companies.

[peteretep]

    > The only way to really combat it is for different
    > countries to collude and perhaps sanction tax havens.
    > Even then, I doubt they will be able to raise much tax.

I wonder if the US (and probably only the US has the clout, but perhaps US + EU) that any company doing business there has to show they had paid corporate tax on all profit worldwide of up to 20%. Doesn't matter who they paid it to, but if they paid any less than that, they owe the remainder to the IRS, as a cost of doing business in the US. Could that work?

[ihsw]

> The only way to really combat it is for different countries to collude and perhaps sanction tax havens.

Sounds like textbook prisoner's dilemma -- if they betray each-other then they both lose, but there's still a chance that they could betray their opponent without being betrayed themselves.

It seems to me that international law is riddled with subtleties where the general rule is "cheat effectively" rather than "don't cheat."

[vinceguidry]

Except if you don't tax profits, you're forced to tax consumption instead, forcing consumers to bear a larger than fair share of the tax burden.

It's really hard to properly tax corporations because they have the resources and the motivation to really fight back. But we shouldn't stop trying.

[netcan]

Sure, but this is more rhetoric than practicality. Whether you tax profits, salaries or consumption, you are taking it away from people. Often the same people.

[pointernil]

Well, maybe it is time to admit that "the market" and its players are not a homogenous mass and as Colin Crouch (of Post-Democracy fame) puts it (paraphrasing):

there is the market and acting outside of it and mostly by different rules there are the multinational big enterprises/corporations.

Why should NOT different tax rules apply them?

Is this an idea easily translated into laws? Probably not. Doable for sure.

Btw, please do not "combine" those Mega-Corps with small companies... they are not the same and will not be in the future; it only helps to drive certain unrealistic fears benefiting those lobbying and looking FOR the loop holes around the world.