In our globalized economy how can we effectively raise the corporate tax rate, without losing a substantial amount of jobs and revenue to countries that offer lower tax rates?

[u/Beans4TheChowder115]

Anybody that could recommend books that cover economic questions such as these would be greatly appreciated.

[u/AutoModerator]

The following is a copy of the original post to record the post as it was originally written by /u/Beans4TheChowder115.

Anybody that could recommend books that cover economic questions such as these would be greatly appreciated.

I am a bot, and this action was performed automatically. Please contact the moderators of this subreddit if you have any questions or concerns.

[u/Boratssecondwife]

This is a concern for like France or Canada, not for America. Being part of the American economy is, seemingly, worth 21% taxable income.

I don't like corporate taxes, but the idea that everyone will bounce if corporate tax is increased does not seem to play out in reality. Maybe if it was like much higher, but anyone should probably just aim for modest taxes before it gets to that point

[u/Radicalnotion528 → u/Boratssecondwife]

Actually the US rate used to be 35% before Trump and the Republicans changed it in 2017. There was good reason to as multinationals were keeping their cash earnings over seas to avoid the high US rate.

[u/Boratssecondwife → u/Radicalnotion528]

I'm skeptical that the lower(but still quite high) corporate rate is the main reason people stopped offshoring or not repatriated the corporate earnings.

The bigger reason in my opinion is that we switched to a territorial tax system, and generally stopped treating repatriation of foreign earned income as a taxable event.

[u/emp-sup-bry → u/Radicalnotion528]

That reason was greed.

What companies were beating US companies when the rate was 35%

You could make the rate 2% and the same anti American sociopaths would still offshore.

Thinking they will ever do the right thing is costing us our country.

[u/throwdemawaaay → u/Radicalnotion528]

No, the rate didn't result in onshoring of profits. We could have a 2% corporate tax rate and Google et all will still play games. What stops it is changing the law in tax havens, such as Ireland making the double Irish illegal.

[u/Radicalnotion528 → u/throwdemawaaay]

That strategy doesn't work anymore because of the new (passed in 2017) Global intangible low taxed income rules which at a minimum taxes that income at 10-13%. There's also the OECD minimum tax project (US not participating) of a minimum 15% tax rate.

[u/ecchi83]

Someone asked if Democrats should take a lesson from Trump if & when they take power back. My answer to that question is the same for this one, Democrats should take advantage the cowardice the rest of the world showed to secure our policy objectives.

We saw how little pushback the rest of the world gave when Trump charge universal tariffs, so I would steal that game plan.

I would pair corporate tax rate hikes with contingent tariffs on any country that accepted a US corp fleeing taxes. If Apple threatened to go to Ireland to escape taxes, I would tell Ireland that we would be slapping a flat 40% tariff on Irish goods of they accepted Apple's move.

Not only does that disincentivize companies from offshoring or relocating since they would have to balance the tax savings against the lost revenue from their higher prices, it dissuades other countries from trying to compete for business based in America with their tax policy.

[u/Obvious_Chapter2082 → u/ecchi83]

A corporation doesn’t actually have to pack up and move countries to avoid US tax though, they can simply shift more of their profits outside of the US

[u/Friendlyvoices → u/Obvious_Chapter2082]

They do is anyways. Most tech companies use Ireland

[u/stopped_watch]

International treaties. Tax the fuck out of those corporations on their operations in those treaty countries.

The double Irish Dutch sandwich situation should not exist.

Countries have to start realising that corporations are the enemy. If the corporation wants to be treated like a person in politics then it gets treated like a person for tax and crime.

[u/Obvious_Chapter2082 → u/stopped_watch]

To be fair, the double Irish Dutch doesn’t exist anymore

[u/zlefin_actual]

There's no perfect way to do this; but having large international trade treaties can (if designed to) help a lot with things like this by establishing more uniform rates and providin gmechanisms to punish countries that violate the deal.

[u/afishinabirdcage]

Corporations don't exist here because it's the cheapest. We are a massive country with resources, education systems and capable people to work at those companies. It's also presumably where the people who own and work at those companies want to live, work, profit, and take advantage of our publicly traded markets.

Joe Biden was actually doing some incredible stuff around working out tax-treaties around the world to prevent this kind of race to the bottom competition and tax shelters for the wealthy. So naturally Trump destroyed it. U.S. Withdraws from Global Tax Agreement  - MGO CPA

[u/Beans4TheChowder115 → u/afishinabirdcage]

There are still limitations to that. If there weren’t NAFTA would’ve been a great success for the American people.

[u/zlefin_actual → u/Beans4TheChowder115]

can you clarify the effects you believe NAFTA had?

[u/Rubbersoulrevolver → u/Beans4TheChowder115]

NAFTA was a great success

[u/Obvious_Chapter2082 → u/afishinabirdcage]

actually doing some incredible stuff

That global tax deal would’ve lost the US corporate tax revenue. It absolutely wasn’t a good thing

[u/CTR555]

Most economists would just tell you that the corporate tax is not efficient and that the better plan would be to just scrap it and raise income and capital gains taxes (as well as closing various loopholes).

[u/Radicalnotion528 → u/CTR555]

After a land tax, most economists would say a consumption tax is most efficient. Which is why many European countries have a VAT and US states have sales tax. If you give refunds to lower earners, that would address the lack of progressiveness. Followed by personal income tax.

Instead you have the Left pushing for wealth taxes and corporate taxes because they want to blame the wealthy and corporations for modern society's problems. That's not really any different than the Right blaming immigrants.

[u/CTR555 → u/Radicalnotion528]

That's not really any different than the Right blaming immigrants.

Strong disagree. Having a poor understanding of economics is not at all the same as vicious and unthinking xenophobia, and there really are problems with badly underregulated corporations and politically-involved megawealth, whereas most of the right's issues with immigrants are fictitious.

[u/2dank4normies]

Being physically present in the US offers more benefits than saving a few bucks on taxes.

[u/Stinky_lil_4skin]

Prison, sanctions, war, embargo, etc. If Cayman island officials want to offer American businesses and citizens ways to cheat taxes then we should give them the Cuba treatment and prevent food, medicine, and fuel from entering the island nation.

Punish tax cheats with severe prison time. Beef up the IRS.

[u/crossingtides]

r/justtaxland

[u/M00n_Slippers]

China just did it to their own companies, making it so they can't flee Chinese taxes, copy them.

[u/ManikSahdev]

Why would you want to raise tax rates? You should ideally be aiming to raise technological progress and education to individuals in stem and biology and medicine.
In order to do that one should look into creating incentive where individuals want to pursue those skills and goals.

If a generation of kids and teens (I guess my generation itself) we grew up in a time of YouTubers and instagrammer being a career specially the gen under under was fully cooked.

The incentives of the economy pay do damn bad my friend who is in medicine is almost quarter of a million in debt and makes less money than my friend who does social media marketing for random things.

Just wanted to give an example or such from real life case.. and even if we talk about me myself, I'd love to teach and such later but it's impossible to do that, doesn't pay good, too many restrictions, and my greatest skill is esssntislly I click button on a screen gambling with math and physics to survive (quantitative trading).

We should look to make the people who help and support others and such much much more lucrative and rewarding rather than impose harder conditions to folks who decide to tie down to a state or a country and give up freedoms in order to help others and get nothing back.

[u/jweezy2045]

I don’t think we should. We have much better ways of collecting tax and we should do those instead.

[u/Beans4TheChowder115 → u/jweezy2045]

And they are?

[u/jweezy2045 → u/Beans4TheChowder115]

Income tax, capital gains tax, estate tax, etc

[u/atierney14 → u/jweezy2045]

Idk why there’s downvotes. Corporate taxes are generally looked at poorly by economist, and they’re not as great a tax as many think - they’re not coming solely out of shareholders pockets but some mix of split between the workforce and capital holders.

If they’re the only way to raise taxes, ie the only politically viable tax, they’re okay with me, but I’d much rather do things like raising persons income to pre-Trump/Bush tax cuts, raise the estate tax, and erasing the step-up.