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2022-04-09

Why Multinationals should be eager to pay normal taxes….

Current situation
As we all know (or could know) big multinationals use all kinds of efficient tax-routes which lead to an abnormal reduction of the taxes paid for the products and services they deliver. In the end this is a situation which can easily lead to toothless governments without executive power and migration on a massive scale of economic asylum-seekers which will lead to more unstable countries.

To describe the problem more clearly it helps to enlarge it:

- Multinationals are now able to decrease the percentage of taxes on profits from e.g. 25% to 0.25% by moving money around different countries
- Small, medium and large companies don’t have the capability to lower their tax-rates

This means there is no level playing field for companies.

Thus, money is piling up in the immense vaults of the multinationals. They use (some of it) for take-overs of possible dangerous rivals, to help prevent Aids, to connect the unconnected with the internet or to start a colony on Mars.

A destructive future scenario
What if:

- all companies should be able to compete on a level playing field and pay only 0.25%
- all companies can bring human labor input to zero by utilizing more robots and computers

Then:

- Governments will receive only 0.25% taxes on the profits companies made (instead of an average 20%)
- Governments will receive zero wage-taxes; because everybody is unemployed

As a result:

- Governments are no longer able to pay social welfare to the unemployed
- The unemployed are not able to buy any luxury goods from the companies
- The companies don’t have any consumers so they can stop producing their product and goods

This looks a lot like a vicious circle to me.

This could even lead to:

- Governments not being able to govern through lack of income and thus lack of authority
- Companies taking over government activities (which btw saves them current expenses for lobbyists)

A promising future scenario

The current situation and the previous described destructive scenario are not sustainable ones, so we should look for better options. One option could be that:

- all companies agree on creating a level playing field by paying the same reasonable tax-percentage e.g. 25% or a (much) higher percentage when labor is being minimized.
- Companies should pay the taxes in the country where they produce their products and/or sell their products or services. By doing this the economic situation in a lot of poor countries could drastically improve. A nice side-effect would be that massive migration of economic asylum-seekers could be prevented by empowering the local economy.
- Governments will receive less wage-taxes but more profit tax from the companies
- Governments can provide a sufficient social welfare income to the unemployed
- Unemployed can still buy (more luxury) products from the companies
- Companies can gain more profits by ongoing the selling of products and services

Governments should also be able to address, and help solve, important problems such as the massive pollution of the earth, climate change, feeding the hungry, preventing diseases such as Aids etc. This is a much more preferable situation compared to multinational companies which use a small part of their equity to mainly polish their image.

The Big Question:

Which multinational will be first to voluntarily raise their profit tax rates?

Which multinational company will set the new standard and will be the first to voluntarily pay the “normal” profit taxes in the country where the profit is made? Any suggestions?

Yeah, and:

- multinationals who voluntarily raise their taxes show their concern about the well-being of their customers
- If necessary, each country which provides companies with “efficient” tax-routes could be isolated until they adapt
….

I apologize for the fact that this blog was written using a Macbook, MS Office and a popular search engine…..

Admin - 23:39:29 @ Democratie, Politiek | Een opmerking toevoegen