The most shameless agreement in the world

Author: Snow 798

The Society for Humanistic Economics published an article entitled "Ireland's economy is growing at a staggering 12%, why?" (see Article 2 today), from the prestigious Foundation for Economic Education (FEE), written by Lawrence Reed.

The article said in a concise way that the Irish economy will grow at an astonishing rate of 12.2% in 2022 amid the mourning of the world economy. The reason for this is that Ireland is freer, and the country has the third largest degree of economic freedom in the world.

The main manifestation of economic freedom is that property rights and free contracts are effectively protected, and it is striking that Ireland's corporate income tax rate of 12% (sic, it seems wrong, should be 12.5%), which is one of the lowest tax rates in the world, except for the world's famous tax havens.

Lawrence Reid wittily wrote: "If you think there is no connection between freedom and prosperity in Ireland, contact your economics teacher and ask for a refund.

One

Reid was right. All prosperity must have a cause of freedom.

Without economic freedom, even gold mines everywhere, will not help. Afghans and North Koreans are "poor people sleeping in gold mines." Even in the most heavily regulated countries, even a small step towards reducing regulations can immediately burst into economic dynamism. The market is like a seed under a boulder, and the slightest sunshine and rain can break through the resistance and take root.

Ireland has been a beacon of freedom and prosperity in Europe and the world over the years, and its per capita GDP has reached a staggering $90,478 in 2021, ranking first among the United Kingdom, far ahead of countries such as the United Kingdom, the United States, Australia and New Zealand.

If we look at the reason for this visually, it is Ireland's low tax rate. This is Ireland's national policy, and since 2003, Ireland's corporate tax rate has remained low at 12.5%, and it also offers a variety of tax incentives for multinational companies. As a result, it attracted giants such as Apple, Google, and Facebook to have their European headquarters in Ireland, and its people enjoyed the highest standard of living in the world.

Lower than that, of course, are globally famous offshore financial centers and tax havens, such as the British Virgin Islands and the Cayman Islands. These small Caribbean islands were supposed to be places where birds did not, had neither resources nor population, there were only 19,000 people in the British Virgin Islands and 60,000 in the Cayman Islands. A very small population would not be enough to support an effective division of labor and build a strong economy. However, it is precisely because there is no income tax at all, attracting a large number of companies and individuals around the world to transfer funds there, so that the British Virgin Islands actually has a per capita GDP of $38,500, and the Cayman Islands, which has reached $85,000.

From this, we can conclude that if a country wants to develop its economy, the simplest and most direct way is to reduce taxes.

The truth is clear: even the most devout collectivists have to admit that taxes are a plundering of citizens' property rights. Without insured property rights, savings and investment will be reduced, and of course there will be no strong economy. And every reduction in tax is to make property rights more complete, which will inevitably stimulate people's momentum to create wealth.

Therefore, as long as a country is committed to economic progress and people's livelihood improvement, it will compete to lower tax rates to attract investment, forming a benign low-tax competition mechanism.

Two

However, this good practice was broken in 2021 by the US-led G7, the "world government". At the G7 Finance Ministers' Summit that year, U.S. Treasury Secretary Janet Yellen mobilized the European Union and countries around the world to sign a global corporate minimum tax rate agreement, setting the minimum corporate income tax at 15%. At present, more than 140 countries have agreed to the agreement.

The purpose is to prevent multinational enterprises from transferring profits and underpaying taxes, and to ensure that the substantive tax rate cannot be lower than 15%. Countries – which in the eyes of the United States are local governments – adopt some "homegrown policy" to keep the substantial tax burden below this standard, on the one hand, they will be sanctioned, and on the other hand, the difference will be made up.

For example, Google Europe is headquartered in Ireland, if the Irish tax rate of 12.5% is implemented, then the difference of 2.5%, the IRS agent, can make up this difference.

Well, you can't escape, and the profit transfer is in vain.

As for global tax havens, as well as regions with substantially low tax rates, such as Singapore and Hong Kong (although the nominal tax rate is higher than 15%, but there are many exemptions, making the real tax rate lower), it will be more severely affected, and multinational companies may re-choose their investment destinations, reducing the competitiveness of the places.

Speaking after the initial signing of the agreement, Yellen said: "Today, this agreement by 130 countries representing more than 90% of global GDP is a clear signal: the "race to the bottom" is one step closer to the end. "I think what you're seeing is a renaissance of multilateralism — a willingness of the major countries in the G7 and G20 to work together to address the toughest challenges facing the global economy."

There is no more corrupt language corruption in the world's black-and-white "Oceanic Country".

Let me "translate" the main meaning of this agreement.

This means that my corporate income tax rate in the United States is 21%, how can you be too low? You are all "vicious competition" and "competition at the bottom", investment has run to you, how can it? I'm not able to do it financially, how can I be the boss? So you have to raise so that American businesses won't help even if they run.

I am 21%, you 12.5% are not, which means: any country that is a little better to the people and a little less plundering is a sin.

Then at the call of the United States, most countries in the world actually agreed. This means: a gang of robbers held a meeting and said, you can't rob too little, it seems that I am too greedy, I must rob at least 15%.

Never seen such a brazen person!

Three

Taxes increase the burden on taxpayers, inevitably reduce capital accumulation, reduce the speed of economic progress, and what is taxed is what is hit, and the final result is not good for everyone. The process of spending taxes will further distort the allocation of resources, attract scarce factors to government projects, and use tax money to cater for specific groups. The size of a country's taxes and expenditures directly represents its power and degree of control.

What determines a country's economic development level and national living standard is the amount of capital per capita. The greater the amount of capital, the higher the labor productivity and the higher the standard of living of the people. Therefore, taxing any one person will reduce the amount of capital occupied per capita, and its essence is to tax everyone and reduce the standard of living of all people. Conversely, a tax cut for anyone would raise the amount of capital per capita and raise the standard of living for all.

So no matter when and where, tax cuts are always the right thing. The economy has progressed, and if you want to reduce taxes, it will make the economy progress faster; If the recession occurs, tax cuts are needed, and it will allow the economy to recover.

You can't pursue "plugging loopholes". What makes a country's high taxes barely tolerable is that it has certain loopholes. You cannot advocate higher taxes on others, which will not do you any good, but will reduce the amount of capital and ultimately harm yourself, because money left in his hands must be converted into savings and investments, which will benefit everyone.

Nor can we pursue the so-called "fairness" of taxation. There is nothing unfair about Auschwitz fleeing a Jew, you can't demand that he be brought back and achieve "justice" that everyone is in captivity, and certainly not that iron gates be welded and pulled onto the grid to "plug the loopholes." What we should expect is for everyone to flee.

In the same way, we should seek lower taxes for all, rather than requiring all to be "equally" collected.

When countries around the world impose competitive tax rates, which increase the right to vote with their feet, capital can flow to low-tax regions, maximizing utility for the benefit of people around the world, including that country. Competitive tax rates force countries to reduce taxes as much as possible to attract population and capital, and those countries that levy too much will lose population and capital and lose competitiveness. Thus, the realization of a benign mechanism of competing to reduce conquest is a move towards freedom and prosperity in the world.

Such mechanisms should also be implemented within a country and within a province, and prosperity can be expected.

The mainland has been cutting taxes and fees over the years, and this is undoubtedly correct. For example, the nominal tax rate of corporate income tax is 25%, but many incentives and credits have been implemented for small and micro enterprises, and the real tax rate for enterprises with an annual taxable income of less than 1 million yuan has been reduced to 2.5% (2022), and the part of 1 million to 3 million yuan is 5%.

It is hoped that the steps can be taken a little bigger, and that all localities can introduce more "land policies" to reduce the substantive tax burden of all taxes, so that the economy can develop better and have the strength to deal with the suppression of the United States. After all, economic development always comes first.

As for that agreement, we should first reduce the tax rate to 15%, the rest don't need to worry about it, it should be reduced, they can't take us how, the business will vote with their feet. In the face of the improvement of the well-being of the population, such an agreement is a fart!

Public number: haze