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Economics

Корпоративті салықтар бойынша жартылай өлшемдер жоқ

Oct 7, 2019 Joseph E. Stiglitz

НЬЮ-ЙОРК – Жаһандану соңғы жылдары ауыр соққы алды және оған негізді себептер бар. Бірақ кейбір сыншылар, мәселен АҚШ президенті Дональд Трамп, Еуропа, Қытай және дамушы мемлекеттер Американдықтардың қазіргі қасіретіне әкеліп соққан Американың сауда келіссөзшілерін жаман мәмілелерге итермелеген деп жалған сыңай танытып жала жауып отыр. Бұл жаласы өте орынсыз: бірінші кезекте жаһандану ережелерін жазған Америка немесе, дәлірек айтсақ, корпоративті Америка болды.

Дегенмен, жаһанданудың бір ерекше уытты аспектісіне лайықты назар аударылмаған, ол-корпоративтік салықтарды төлеуден жалтару. Трансұлттық корпорациялар өз штаб-пәтерін және өндірісін ең төменгі салықтар алатын кез келген юрисдикцияға тым оңай ауыстыра алады. Кейбір жағдайларда олар өздерінің іскерлік белсенділігін жылжытудың қажеті жоқ, өйткені олар жай ғана өз табысын қағазға қалай "рәсімдейтінін" өзгерте алады.

Мысалы Starbucks, ешқандай салықтарды төлемей, Біріккен корольдікте (Ұлы Британияда) кеңейтуін жалғастыра алады, өйткені ол пайдасын ең төменгі етіп көрсетеді. Бірақ егер бұл шындық болса, оның кеңеюі ешқандай қисынға келмейді. Егер ешқандай пайда жоқ болса ұлғаюдың не қажеті бар? Әлбетте, пайда бар, бірақ олар Ұлыбританиядан роялти, франшиза үшін алымдар және басқа да алымдар түрінде төмен салық юрисдикциясына жіберіледі.

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Joseph E. Stiglitz

Writing for PS since 2001
331 Commentaries

Joseph E. Stiglitz, a Nobel laureate in economics and University Professor at Columbia University, is a former chief economist of the World Bank (1997-2000), chair of the US President’s Council of Economic Advisers, and co-chair of the High-Level Commission on Carbon Prices. He is Co-Chair of the Independent Commission for the Reform of International Corporate Taxation and was lead author of the 1995 IPCC Climate Assessment.

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0 Comments on this paragraph, 22 Comments on this article

Thaomas H Oct 29, 2019

No changes in corporate income taxes are needed to address the externality of net CO2 emissions that cause the accumulation of CO2 in the atmosphere and its attendant costs.
The corporate income tax is a poor substitute for a sharply progressive tax on personal income and that is what should replace it. A progressive tax on income is, in turn, a poor substitute for a progressive tax on personal consumption. Only if experience with tax residence arbitrage of the consumption tax becomes a problem would international co-ordination be needed.
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Peter Schaeffer Oct 13, 2019

Stiglitz rightfully mentions Apple as a leading offender. That's true. It's also true, that Apple is a hardcore PC/Cultural Marxist company. As a consequence, the left is unlikely to crack down on Apple. The right is (and always has been) pro-corporate.

As long as corporations can buy 'indulgences' by supporting PC/Cultural Marxism they will. My guess is that trick will last for a long time.
- Peter Schaeffer Oct 15, 2019
  
  The bottom line here is simple. As long as Apple waives the Rainbow flag, the left will ignore Apples abuses. Stiglitz probably would not. But everyone else will. Of course, the right is so pro-corporate that no pressure for reform will come from that quarter.
  - Ray B Oct 21, 2019
    
    Basic Economics teaches us the corporations don’t pay taxes. The consumer pays the taxes. They pass along the cost of taxes to the product sold. The problem is that governments want the taxes from both sides of the equation to fund their limitless governments and spending to buy votes. I just signed my 2018 final US income taxes, which, when added all taxes (Federal, State, sales, and fee and income tax prep) together, has me paying around 48% of total income. Not fair taxes is it when 44.4% of people pay zero in federal income taxes. Our tax system is unfair beyond belief. It rewards those that can manipulate the system to get around the taxes while severely penalizing those that are trying to follow the rules with another 44% paying nothing. The federal government spends in excess of receipts no less than a $trillion every year putting that debt on future generations to the tune of $23T in debt.
    - Thaomas H Oct 29, 2019
      
      Basic economics teaches that the owners of shares pay the corporate tax although slightly less basic economics recognized the possibility of some incidence on consumers, workers, suppliers, etc. It will be interesting to see what analysis of the "Tax Cuts for the Rich and Deficits Act of 2017" says about how much of the cut was passed on to consumers, suppliers, workers, etc. My guess is that a null hypothesis of a zero pass through to any but share owners will not be rejected.
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- Bernhard Kopp Oct 14, 2019
  
  Apple appears indeed as one of the substantial offenders as consolidated financial statements confirm. Microsoft, Google, Amazon, and many others, are not materially better. The EU has made the mistake, since the 1980s, to permit preferential tax rates not just on profits from primary business activity in a country ( industrial development ) but also on profits generated from financial transactions (manipulations ) through shell companies. Here we have Cyprus, Malta, Portugal/Madeira and Cap-Verdes, Luxembourg, Netherlands, Belgium, Ireland, and a few more under specific circumstances, were multinational businesses, and some large private investors, can legally minimize the taxation on patents and licenses, artificially created immaterial assets, interest and other financial income. It is estimated that the annual tax savings through tax havens and tax avoidance schemes saves the corporate investors in access of € 100 billion per year, and every year. The taxes would rightfully belong into the coffers of the countries where the profits are originally generated, or where the beneficial owner is domiciled. This is all within the EU and has been in existence for at least 30 years.
  - Peter Schaeffer Oct 15, 2019
    
    Mr. Kopp, The situation is probably worse that you imagine. A few years ago, Ireland voted against the EU Constitution. To get a 'Yes' vote, the EU promised Ireland that it could retained its tax-shelter status. The EU has backed itself into a corner from which no easy exit is possible.
    - Bernhard Kopp Oct 16, 2019
      
      Well, the so-called EU-parliament cannot do anything legislatively ( thank God they can not ) but they could make a lot of noise and influence public opinion. Since I was close to several tax avoidance schemes in my business career in the 1980s I became an EU-sceptic when I saw in the 1990s that the party got bigger and bigger.
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Avraam Dectis Oct 13, 2019

Dr Stiglitz’s expose of the deficiencies of the international tax system highlights the poor performance of that system.

Perhaps, though, instead of focusing on questionable piecemeal fixes, we instead chose to focus on the robustness of the overarching design? Can we provide a better design?

A better design, would, I think, have two fundamental attributes.

First, no corporate income tax. Allow the companies to do whatever they like with their money.

Second, implement a device to control international cash flows, such that unbalanced flows out of the country would be penalised. This ensures that the Treasury, if necessary, benefits.

These two changes provide a simple elegant solution that addresses all concerns.

General imprecise nostrums without specifics are easy to assert and useless. Therefore, here is precision:

1a) Abolish all income tax, control inflation through consumption taxes.
1b) This change is supported by the Theorem of Proper Taxation, which states:

Theorem of Proper Taxation

The purpose of national taxation is to control inflation.
The only time money causes inflation is when it is spent.
Therefore, the only time nationwide taxes should affect is when money is spent.
Ergo - consumption taxes are far preferable to income taxes

2) Mechanism to control international cash flows would be Capital Transfer Securities.

This mechanism would keep capital flows balanced so that money earned in a country would either be spent there or else would suffer a cost to move it out of the country, if capital flows were not significantly positive.

Copied below verbatim is the lengthy description of that mechanism, and that is all I have to say here.

Capital Transfer Securities

The Problem

Supporting domestic industries and maintaining currency values are two perennial international economics problems that require better solutions.

Supporting domestic industries with tariffs and subsidies is banned and contentious.
  Maintaining currency values by raising interest rates, expending foreign exchange to purchase the domestic currency or employing crude capital controls can all be counterproductive and untenable.

The Solution
  Both of these problems can be addressed by Capital Transfer Securities (CTS).

CTS is implemented by a Balanced Capital Transfers Law.

Balanced Capital Transfers Law ( BCTL):

1) The act of transferring capital out of the country creates a Capital Export Security (CES) notating the amount exported. The CES, which is owned by the capital exporter, is taxed at a percentage of the value of the transfer. That percentage, X, will be set and adjusted as necessary, by the Central Bank.
  2) The act of transferring capital into the country creates a Capital Import Security (CIS), owned by the capital importer and which notates the amount imported

3) The tax paid on the CES can be refunded by holding an equivalent amount of CIS. The refund cancels the matched securities.

4) All CIS and CES will be recorded by a central entity to facilitate trading.

5) Anyone can buy and sell CTS. This facilitates a robust market.

Trivial Example and Rationale

For example: if X were a very high 50%,

1) if Capital Exporter A exported a trillion dollars in capital, they would be taxed 500 billion dollars and also accrue a 1 trillion dollar CES.

2) If Capital Importer B imported a trillion dollars in capital, they would accrue a 1 trillion CIS.

3) A would desire to have his tax refunded. If he could induce B to sell him his CIS he would be able to get a full refund.

4) If A could only get B to part with 800 billion in CIS, he could only claim back 400 billion.

Why does this work?

There would be a market in CTS.

If goods imports exceed goods exports, the supply of CIS will be exceeded by the supply of CES, which will cause the price of CIS to rise and therefore make goods exporting more profitable.

Conversely, if goods exports exceed goods imports, the supply of CIS will exceed the supply of CES, and the price of CIS will drop, providing little benefit to the goods exporter.
  Thus you have an explicit self regulating mechanism to keep capital flows balanced and an implicit self regulating mechanism to support exports. 
Affecting Currency Trading

The above assumes that goods exports cause capital to be imported and goods imports cause capital to be exported. This is not always the case and other forces can cause capital transfers, but capital flows are a good representative substitute for goods trading.

CTS would work for many countries but is not a universal solution. It has to work with that country’s larger role. It may work far better in a Bond Funded Government model ( MMT variation), where the lack of income taxes would not diminish the desire to repatriate profits.  
If the CTS implementation includes not just capital imports and exports but also conversions to another currency, that has the side effect of making currency trading much more risky. Such moves as currency traders breaking a central bank would be much more risky and, possibly, impossible. With currency traders sidelined, changes in currency values would reflect genuine economic activity.

Implementation

Not all transfers should be securitized. Sums small enough to fund a reasonable vacation might be excluded, to avoid negatively affecting the average vacationer. Everyone would get an annual exception for personal travel. 
The potency of CTS varies directly with the size of X. This attribute allows easy adjustments to achieve the desired effect. To acclimate the financial system to CTS, implementation could start with X set to a low .5% or 1%.

CTS is an elegant solution that can be efficiently implemented at financial institutions. It solves many problems that have been inadequately addressed.

Possible Scenarios:

The exact effect of CTS is difficult to predict because the effect depends on psychology as well as profit motive. These are some possibilities.

Goods exporters accrue significant CIS and of course want to maximize their value. If they think the central bank will raise X, thus increasing the value of CIS to owners of CES, they may decide to withhold the CIS from the market. Alternatively, if they need cash flow, they may seek the best immediate deal.

2) Goods importers accrue significant CES and want to maximize the refund. If they think the central bank might raise X, they are likely to sell for the best immediate price, since in the future they could be outbid for the available CIS. Conversely, they might wait if they expect X to decrease or if exports relative to imports are increasing.

3) Foreign entity wants to import capital for investments. They receive CIS. Essentially they receive a boost in the value of the transfer, if they immediately sell the CIS. Repatriating the money will cost them X, so the expected movement of X may affect their decision.

4) Goods importer pays foreign seller by depositing cash in a domestic account. No CTS issued.

5) Goods importer pays foreign seller with offshore funds. No CTS issued.

6) Disgruntled countries complain to WTO. WTO cannot do anything since BCTL is not necessarily affecting trade, as seen in example 3, 4 and 5. But, ultimately, any domestic funds a foreign entity wishes to receive will accrue CES.

6) Central Bank notices that imports far exceed exports and that even though the economy is generally good the exporters are struggling. They raise X and perform economic Jiu Jitsu, transferring some of the goods importing energy to the exporters. Export industries hire people and the economic benefits of the robust economy are more widespread.

7) Central Bank notices exporters doing fine, economy fine, everything fine, drops X to close to zero.

8) Central Bank notes the currency is under attack by currency traders and raises X significantly. This alone makes the attack more costly if the traders are borrowing the local currency and using it to buy foreign currency. Central Bank may even disallow refunds of CES to large scale currency traders. Raising X may cause a capital inflow as foreign capital seeks to accrue now more valuable CIS, thus raising the value of the currency, foiling the attack and inflicting losses on the traders. Raising X essentially recruits another group of foreign exchange traders to work against the attacking foreign exchange traders.

9) Currency is overvalued and the exporters are struggling but the government does not want to risk “world reserve currency” status by devaluing. Central Bank raises X to give a boost to exporters and domestic industries overwhelmed by competition from undervalued currency countries.

10) Goods importer accrues significant CES. Seeking to maximize the refund and having skills in international trade, realizes that instead of purchasing CIS, it would be more profitable to export products and accrue CIS that way, thus stimulating domestic industry. Alternatively, may just keep the capital in the country and invest it there, also stimulating the domestic economy.

11) Capital flight is causing severe liquidity issues in a country that is part of a shared currency zone. The Central Bank, which cannot print money, raises X significantly to slow down the capital flight and provide an inducement for capital repatriation.

CTS is an elegant, flexible, multipurpose, powerful, nimble, respect garnering policy lever that every Central Bank should implement and have available for immediate access.
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Robert Wolff Oct 7, 2019

In the wake of the failure of Trump’s tariff policies to encourage “Fair Trade” that would have rejuvenated the US economy, the only choice now is to try something else.

The next attempt, using liberal policies will swing way left of Trump’s policies, and US multinational corporations will wish they had honored Trump’s mandates to “Make America Solvent Again”.

The next attempt, given the failure of Trump’s policies, will be given to liberal Democrats and their economists and politicians (Stiglitz/Warren). Recent polls for the 2020 election show more independents and conservatives are now supporting the liberal agenda.

Wish it weren’t so, but apparently there is no other choice at this point in time.
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Bernhard Kopp Oct 7, 2019

On the European theater things are much worse. For the past 30 years tax avoidance schemes, tax havens, have been expanded even within the EU and within the Eurozone. If we are lucky, transnational businesses get charged with VAT in the country where they sell, but profits are very frequently not taxed where they are materially generated. It is said. It is vitriolic an it is destructive for any community.
- Peter Schaeffer Oct 13, 2019
  
  European VAT taxes are structured so that consumers, not corporations pay them.
  - Thaomas H Oct 30, 2019
    
    "Corporations" pay no tax of any kind, only their owners. Business taxes are just poor ways to tax personal income. We should eliminate eliminate business tax and impute the profits to the owners. There they can be taxes with a progressive income tax or better still a progressive consumption tax.
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Prashant Kotak Oct 7, 2019

The game of corporate tax avoidances
is both a symptom and a (logical) consequence of globalisation. "Half-Measures" appear so because you are catching globalisations' play-out in flight, so to speak. And the remedy proposed here is also a symptom - of the fact that we can't, if such remedies are about to become vogue in economics/politics circles, be far from entering the end-game of globalisations' play-out. A globally unified tax system implies several huge strides towards a unitary global governing authority - global government in effect. And tech, which magnifies the corporations' advantage in fleet-footed tax avoidance, will soon enough force the hand of national governments if they don't want to lose all control. The overt blurring of national demarcations is illustrated by the type of situation where someone like Mark Carney, who as a hired gun can operate in the highest echelons of the governance of a nation (which de-facto requires building advantage for that nation against competitor nations), before leaving to potentially govern his (nominal) home nation, and carry out actions designed to undo precisely the work done in his previous gig. It all begs the question: does even the idea of nation states have any meaning left at all in the face of globalisation?

And speaking for myself, I think it would be vanity to assume that a global government would retain many vestiges of western liberal democracy, although we can hope. I have to admit that the thought of a global government fills me with both horror and terror.
- Robert Wolff Oct 7, 2019
  
  Agree. Globalism as a means to serve the citizens of any particular State, the claim of international capitalists, is proven unworkable. It serves international capitalists at the expense of the stability of nations, societies and cultures. We have reached the brink.
  
  The problem of Globalism for the US is and always was an internal problem -- i.e. the lack of patriotism/fiduciary responsibility of US corporations to America and the American people. The reality gap between corporation owners and the American people has reached crisis proportions.
  
  Not sure Stiglitz has the answer, which relies on global cooperation among competing nations such as China and the US. The next attempt, after Trump's policies which have failed to repatriate American based organizations to the US national interest, may be by Elizabeth Warren.
  
  Warren has a plan to treat the decline of America (socially, economically, politically) as an internal US problem that can only be resolved by an internal US consensus. The concept of Trump that the fault lay with our foreign competitors has failed to bring about national policies that actually address and resolve the original problem (decline of America).
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stephan Edwards Oct 7, 2019

The author is urinating into an onrushing airmass. The people he expects to actually change the laws ?? Well in every developed country, in every political party enough of the lawmakers are beholden in one fashion or another to the interests he wants curbed. Can you say conflict interests? From experience I can honestly say given a choice between what's best for their country and what's best for them? Our politicians pick themselves every time!!! For those proclaiming that Sanders or Warren could change this, Please note NO matter what Sanders or Warren want it would still have to get through congress. Which is about has likely has Trump becoming a Trappist Monk! No it's not going to change!
- Kien Choong Oct 8, 2019
  
  Hi, your sentiment seems to be paralyzingly pessimistic, unless you're really trying to shame people into action! I'm more optimistic about the power of good reasoning and public discussion to change the world, but acknowledge that this can take time (even decades).
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