Uber used 50 Dutch shell companies to dodge taxes on $6B in revenue(businessinsider.com.au)
businessinsider.com.au
Uber used 50 Dutch shell companies to dodge taxes on $6B in revenue
https://www.businessinsider.com.au/uber-tax-avoidance-50-dutch-shell-companies-5-billion-revenue-2021-5
428 comments
It's also worth noting that the top 1% pay about 40% of all income taxes at the federal level, and they earn about 20% of annual income from all sources (http://hdr.undp.org/en/indicators/186106). So classifying 88% of federal revenue as paid by regular workers might be a bit misleading
99% of the top 1% are "normal workers" like me - engineers at Google - or my cousin - a radiologist - or one of my best friends - an investment banker - or lawyers, or owners of successful small businesses, etc...
These "normal workers" pay a lot of that 40% of the tax bill.
There aren't that many CEOs of Fortune 500 companies and board members, A+ list celebrities, and aristocrats. You're getting into the .01% - that's still 32,000 people!
Chicago Booth put together an article with graphs to really show how much the top 0.01% has diverged [1].
The top 0.01% still pays A LOT of the income taxes - about 5% - but that means, mostly hardworking normal people in the top 1% are paying the other 35% of that 40% share of the tax bill.
It's not like Bill & Melinda Gates are paying 40% of the tax bill by themselves...
[1] https://review.chicagobooth.edu/economics/2017/article/never...
These "normal workers" pay a lot of that 40% of the tax bill.
There aren't that many CEOs of Fortune 500 companies and board members, A+ list celebrities, and aristocrats. You're getting into the .01% - that's still 32,000 people!
Chicago Booth put together an article with graphs to really show how much the top 0.01% has diverged [1].
The top 0.01% still pays A LOT of the income taxes - about 5% - but that means, mostly hardworking normal people in the top 1% are paying the other 35% of that 40% share of the tax bill.
It's not like Bill & Melinda Gates are paying 40% of the tax bill by themselves...
[1] https://review.chicagobooth.edu/economics/2017/article/never...
First, I assume when you write "normal workers" that you mean non-executives and non-passive income earners. (Executives can get a lot of equity or dividends that accrue taxes at lower rates; passive income earners use asset depreciation to lessen tax burden.)
The top 1% in the US is ~400K USD.
Real question for OP (and others): What do you think is a reasonable effective income tax rate? (Please do not confuse effective and nominal tax rates!) In my view: "All in" should be about 50-55%. When I say "all in" I mean absolutely everything -- federal, state, local, national pension, national health (if applicable), yada yada yada. That would mean top 1% still have net income (after taxes) of more than 200K USD.
If you look at highly developed economies, it seems hard to provide a healthy social safety net without 50% effective income tax rate on top 1%.
In Hongkong, the top effective tax rate is about 15%. The social safety net is appalling. The number of poor, working, elderly people (collecting cardboard in the street to sell by the kilo to recyclers) is heartbreaking. You would not use the public health system, nor the public school system; nor depend upon the national pension, nor unemployment benefits. One bright spot: The public housing system has served well the working class and below. (I joke that 15% only gets you a good metro system and airport.) Hongkong feels like a semi-feudalistic society.
The top 1% in the US is ~400K USD.
Real question for OP (and others): What do you think is a reasonable effective income tax rate? (Please do not confuse effective and nominal tax rates!) In my view: "All in" should be about 50-55%. When I say "all in" I mean absolutely everything -- federal, state, local, national pension, national health (if applicable), yada yada yada. That would mean top 1% still have net income (after taxes) of more than 200K USD.
If you look at highly developed economies, it seems hard to provide a healthy social safety net without 50% effective income tax rate on top 1%.
In Hongkong, the top effective tax rate is about 15%. The social safety net is appalling. The number of poor, working, elderly people (collecting cardboard in the street to sell by the kilo to recyclers) is heartbreaking. You would not use the public health system, nor the public school system; nor depend upon the national pension, nor unemployment benefits. One bright spot: The public housing system has served well the working class and below. (I joke that 15% only gets you a good metro system and airport.) Hongkong feels like a semi-feudalistic society.
> Real question for OP (and others): What do you think is a reasonable effective income tax rate? (Please do not confuse effective and nominal tax rates!) In my view: "All in" should be about 50-55%. When I say "all in" I mean absolutely everything -- federal, state, local, national pension, national health (if applicable), yada yada yada. That would mean top 1% still have net income (after taxes) of more than 200K USD.
In my view one of the big problems is that capital gains are taxed less than income from working and they are a proportional tax. The result of that is that once you get to the 0.1 % taxation becomes regressive because a bigger chunk of your income comes from capital gains.
In my view one of the big problems is that capital gains are taxed less than income from working and they are a proportional tax. The result of that is that once you get to the 0.1 % taxation becomes regressive because a bigger chunk of your income comes from capital gains.
+9000 votes! I agree 110%. I didn't say it, but the 50-55% "all-in" should also include capital gains receiving no special treatment for high-income people.
Which special treatment is this ?
Might be more sensible to give smallish tax breaks for CGT to ordinary workers and reform the taxation of worker share options no more crippling tax bills for worthless options.
Id also encourage listed companies to offer UK style share saves to all workers to allow those lower down the food chain to actually get some equity.
Might be more sensible to give smallish tax breaks for CGT to ordinary workers and reform the taxation of worker share options no more crippling tax bills for worthless options.
Id also encourage listed companies to offer UK style share saves to all workers to allow those lower down the food chain to actually get some equity.
You wrote: <<Which special treatment is this ?>>
Good question. For the United States, I reference: https://www.investopedia.com/articles/personal-finance/10151...
If you hold one year or more:
Filing Status: Single
0% rate: Up to $40,000
15% rate: $40,000 to to $441,450
20% rate: Over $441,450
In the above, personally, I would like to remove the brackets for 15% and 20%. My point: For anyone beyond middle class, tax capital gains as regular income.
Good question. For the United States, I reference: https://www.investopedia.com/articles/personal-finance/10151...
If you hold one year or more:
Filing Status: Single
0% rate: Up to $40,000
15% rate: $40,000 to to $441,450
20% rate: Over $441,450
In the above, personally, I would like to remove the brackets for 15% and 20%. My point: For anyone beyond middle class, tax capital gains as regular income.
Not sure what your point is those with more gains pay more here - is residential property included in this?
Taxing cgt as income has some negative aspects.
And almost 1/2 mill a year income is not what id call "middle class"
Taxing cgt as income has some negative aspects.
And almost 1/2 mill a year income is not what id call "middle class"
I pay more than 55% in effective tax rate, and my income is about 60k USD a year.
I live in Uruguay, South America - my taxes include healthcare and retirement.
It's definitely not ideal and it's crippling my chance of ever owning a home, but it does pay for a lot of social services way beyond what the U.S. provides - key differences being state provided healthcare and education up to and including the university level.
I live in Uruguay, South America - my taxes include healthcare and retirement.
It's definitely not ideal and it's crippling my chance of ever owning a home, but it does pay for a lot of social services way beyond what the U.S. provides - key differences being state provided healthcare and education up to and including the university level.
This sounds like a terrible deal.
In the US - your effective income tax rate could be as low as ~24% on $60k. There is nowhere it would be higher than ~33%.
So your tax rate is AT LEAST 22% higher - and all you're getting is "free" education and healthcare.
=FV(0.075, 40, -13200, 0).
That's $3M by the time you would retire if you invested the difference in taxes in a total market index fund and got average returns. Adjusted for inflation - that's $822k. You could reliably drawdown the equivalent of ~$3.5k per month forever. That's 50% more than you make after taxes now...
And in the US - you would already be getting $3k+ from social security... Plus you'd have free healthcare via Medicare...
Individually, you are unquestionably better off with the lower tax rate in the US. Unless you went to Princeton to study underwater basketweaving without a scholarship. Even if you had ridiculously expensive chronic conditions - there's plans you can get cheaper than $13k per year.
And as a whole you are also worse off.
The cost of "free" education is estimated at $47Bn in the US. That would increase taxes by about 1.1%.
The cost of "free" healthcare is estimated at an additional $1.6Tn. If evenly distributed - that would increase everyone's taxes by about 43%.
That means your tax rate would be as low as ~31% or as high as ~41% -- depending on which state you lived in.
In the US - your effective income tax rate could be as low as ~24% on $60k. There is nowhere it would be higher than ~33%.
So your tax rate is AT LEAST 22% higher - and all you're getting is "free" education and healthcare.
=FV(0.075, 40, -13200, 0).
That's $3M by the time you would retire if you invested the difference in taxes in a total market index fund and got average returns. Adjusted for inflation - that's $822k. You could reliably drawdown the equivalent of ~$3.5k per month forever. That's 50% more than you make after taxes now...
And in the US - you would already be getting $3k+ from social security... Plus you'd have free healthcare via Medicare...
Individually, you are unquestionably better off with the lower tax rate in the US. Unless you went to Princeton to study underwater basketweaving without a scholarship. Even if you had ridiculously expensive chronic conditions - there's plans you can get cheaper than $13k per year.
And as a whole you are also worse off.
The cost of "free" education is estimated at $47Bn in the US. That would increase taxes by about 1.1%.
The cost of "free" healthcare is estimated at an additional $1.6Tn. If evenly distributed - that would increase everyone's taxes by about 43%.
That means your tax rate would be as low as ~31% or as high as ~41% -- depending on which state you lived in.
With a USD60K salary, I assume that the Uruguayan you are responding to is in the 1%. So he's not just paying for his own health care and education, he's probably covering health care and education for ~10 people.
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Wow. This is a great reply. Thank you for your honesty. I hope more people will leave valuable, personal stories like you.
Do you feel the healthcare and national pension are high quality ("good value")?
Do you feel the healthcare and national pension are high quality ("good value")?
The important question is: How good is the "free" health care ? And is it fully free or is one charged beyond a point ?
Hongkong is not free, so I am not sure if this is a valid comparison. People of Hong Kong do not have the same opportunities as people of the US.
The problem is how much of the tax payer money is being wasted.
I think the absolute maximum tax should be no more than 30% and the goal should be to reduce it to 15% by reducing waste in public sector.
I currently pay over 50% and this is demotivating. I am at the point when I consider moving to another country or finding less stressing job, that pays much less. It would be a different matter if I saw that 50% actually benefits me in any way, but I feel like this money goes down the toilet each month.
Interesting, I always thought Hong Kong was pretty good.
>What do you think is a reasonable effective income tax rate? (Please do not confuse effective and nominal tax rates!) In my view: "All in" should be about 50-55%. When I say "all in" I mean absolutely everything -- federal, state, local, national pension, national health (if applicable), yada yada yada.
Who is this for? The “rich” or for everyone else?
An effective rate of 50-55% is obscene. I would relocate for anything approaching 40%.
Who is this for? The “rich” or for everyone else?
An effective rate of 50-55% is obscene. I would relocate for anything approaching 40%.
Where do you live?
In California - if you don't have a ton of mortgage interest deductions and you count state income tax - you're above 39.5% on $400k. If you count both sides of payroll tax, you're in the mid 40s. And even if you own a home, if you count property tax, you could be close to or above 50%.
The median state income tax is about half of California's at $400k - and property taxes here are somewhat low. Most places - you're gonna be above 40%.
In California - if you don't have a ton of mortgage interest deductions and you count state income tax - you're above 39.5% on $400k. If you count both sides of payroll tax, you're in the mid 40s. And even if you own a home, if you count property tax, you could be close to or above 50%.
The median state income tax is about half of California's at $400k - and property taxes here are somewhat low. Most places - you're gonna be above 40%.
If unclear, the "reasonable effective income tax rate" was for the top 1%.
1) Where do you live?
2) Are you in the top 1%?
3) In your location, what is the effective income tax rate for top 1%?
1) Where do you live?
2) Are you in the top 1%?
3) In your location, what is the effective income tax rate for top 1%?
Texas.
That would depend on how you classify 1%.
The effective tax rate for an individual earning $400k would be around 31%.
Like I said, even approaching 40% is obscene. 50-55% is absolute thievery. I would relocate from Texas if my effective tax was even close to 40%.
That would depend on how you classify 1%.
The effective tax rate for an individual earning $400k would be around 31%.
Like I said, even approaching 40% is obscene. 50-55% is absolute thievery. I would relocate from Texas if my effective tax was even close to 40%.
Is this satire?
I mean, you’re pointing your finger at the <1% above you, claiming you’re just “an normal worker” who is shouldered with the burden of paying taxes, yet you’re ignoring the fact you make more money than 99% of people. 99%!
And I love the call out about your everyday working schmuck cousin, you know, the radiologist, who is in one of the highest paid professions and if he’s in the US is likely making close to $500,000 per year. Almost 10x the median US salary.
https://www.salary.com/research/salary/alternate/radiologist...
I mean, you’re pointing your finger at the <1% above you, claiming you’re just “an normal worker” who is shouldered with the burden of paying taxes, yet you’re ignoring the fact you make more money than 99% of people. 99%!
And I love the call out about your everyday working schmuck cousin, you know, the radiologist, who is in one of the highest paid professions and if he’s in the US is likely making close to $500,000 per year. Almost 10x the median US salary.
https://www.salary.com/research/salary/alternate/radiologist...
They make more money because they are more productive and their services are highly valued. Those people already bear disproportional burden when it comes to taxes.
I mean, what do you really want? Everyone works according to abilities and everyone is provided for according to their needs?
I mean, what do you really want? Everyone works according to abilities and everyone is provided for according to their needs?
"Disproportionate" in raw numbers sure. Disproportionate in quality of life and lifestyle? lol 50% for the 1% is like "damn the government!" 50% for people under median salary is putting them into poverty and likely government assistance to get by.
I’m not arguing the rich need to pay more, I’m arguing that the OP is wrong to argue he’s just a “normal worker” and shouldn’t be paying a large tax burden when he makes more than 99% of the population.
Basically when the OP says “the rich should pay more” I’m saying “ok, but that includes you”
Basically when the OP says “the rich should pay more” I’m saying “ok, but that includes you”
You're misdefining rich I think in the sense it may be being used in this case as a proxy for "companies and taxpayers doing things to obfuscate their actual flow of monetary value".
Even if one makes say 1000000 in income, no equities, and takes the standard deduction, they are not the Rich being lamented here. They would not be doing end runs around tax obligations.
Yes, you blow the minimum wage folks out of the water salary-wise, but it doesn't mean they are in any different a boat than any other tax payer trying to do it right.
Which can actually be surprisingly difficult if you do anything other than basically "money comes in, money goes out". I'm actually somewhat afraid of doing any of the more advanced reading in the tax code, because it'll probably end up with me makimg a few appointments with the IRS to get someone to explain things to me. Their writing style is terrible, and I tend to lose track in the forests of ambiguous antecedents.
I say this as someone who isn't a stranger to reading legal docs or standards for fun.
Even if one makes say 1000000 in income, no equities, and takes the standard deduction, they are not the Rich being lamented here. They would not be doing end runs around tax obligations.
Yes, you blow the minimum wage folks out of the water salary-wise, but it doesn't mean they are in any different a boat than any other tax payer trying to do it right.
Which can actually be surprisingly difficult if you do anything other than basically "money comes in, money goes out". I'm actually somewhat afraid of doing any of the more advanced reading in the tax code, because it'll probably end up with me makimg a few appointments with the IRS to get someone to explain things to me. Their writing style is terrible, and I tend to lose track in the forests of ambiguous antecedents.
I say this as someone who isn't a stranger to reading legal docs or standards for fun.
So using your numbers, the top percent of the top percent pay 1/8 of the taxes that the top percent pay, and the remaining 99% of the top percent pay 7/8 of those taxes.
That is still quite disproportionately more.
I pay a big chunk of my income in taxes too. Everyone needs to contribute. There's not enough money otherwise, and demanding that Bill Gates pay more, as much as I dislike him, isn't going to do it (and doesn't seem fair as he's already paying his fair share).
That is still quite disproportionately more.
I pay a big chunk of my income in taxes too. Everyone needs to contribute. There's not enough money otherwise, and demanding that Bill Gates pay more, as much as I dislike him, isn't going to do it (and doesn't seem fair as he's already paying his fair share).
The top 1% - minus the top 0.01% - are paying 35% of all income taxes. The top 0.01% themselves are paying another 5%. The bottom 99% are paying the remaining 60%.
That article is saying top 1% income in the US is numbers higher than $400k! The median was something like $50k or $80k last time I checked. Those aren't normal workers, those are exactly there sort of people who are seen as not contributing their fair share. They physically can't be working harder than a median worker but they're getting multiples of the salary.
If someone is going to be supporting society, they are the people with the means.
If someone is going to be supporting society, they are the people with the means.
> Those aren't normal workers
What's your definition of a normal worker? Lawyers, doctors, dentists, pilots, architects and programmers sound like normal workers to me.
This is still millions of people, and I imagine they would think they're normal workers, too. But Fortune 500 CEOs? Well, there's only... 500. Even the combined payroll of the MLB, NBA, NHL, NFL, and MLS is less than 10,000 professional athletes where median pay is $860k, $1.15M, and $8.3M for the NFL, MLB, and NBA respectively.
What's your definition of a normal worker? Lawyers, doctors, dentists, pilots, architects and programmers sound like normal workers to me.
This is still millions of people, and I imagine they would think they're normal workers, too. But Fortune 500 CEOs? Well, there's only... 500. Even the combined payroll of the MLB, NBA, NHL, NFL, and MLS is less than 10,000 professional athletes where median pay is $860k, $1.15M, and $8.3M for the NFL, MLB, and NBA respectively.
> What's your definition of a normal worker? Lawyers, doctors, dentists, pilots, architects and programmers sound like normal workers to me.
Please stop acting like these professions average at the 1% threshold. EPI put the top 1% at $737,697 in 2019 and the top 5% at $309,348 [1].
Average Income of those normal workers [2]:
* Lawyer: $148,910
* Dentists (across all specialities): $186,300
* Physicians (across all specialties): $218,850
* Architects: $89,470
* Software engineers (across all specialties): $109,950
* All computer and math specialties: $96,770
* Pilots (All specialties): $163,480 [3]
So these “Normal people” are not even apart of the discussion stop making it seem like all these professions seem like they are in the top 1%. It’s paint a really false picture that skews the conversation at large.
1. https://www.epi.org/blog/top-1-0-of-earners-see-wages-up-157...
2. https://www.bls.gov/oes/current/oes_nat.htm#23-0000
3. I think that number might miss out on all the burn out low level contract airline pilots that make peanuts.
Average Income of those normal workers [2]:
* Lawyer: $148,910
* Dentists (across all specialities): $186,300
* Physicians (across all specialties): $218,850
* Architects: $89,470
* Software engineers (across all specialties): $109,950
* All computer and math specialties: $96,770
* Pilots (All specialties): $163,480 [3]
So these “Normal people” are not even apart of the discussion stop making it seem like all these professions seem like they are in the top 1%. It’s paint a really false picture that skews the conversation at large.
1. https://www.epi.org/blog/top-1-0-of-earners-see-wages-up-157...
2. https://www.bls.gov/oes/current/oes_nat.htm#23-0000
3. I think that number might miss out on all the burn out low level contract airline pilots that make peanuts.
>What's your definition of a normal worker? Lawyers, doctors, dentists, pilots, architects and programmers sound like normal workers to me.
We're not. Lawyer income is not on a normal distribution.
People making >400k a year are owners/partners in a successful firm. Most of these people work hard, yes, but they make their big dollars off leverage; the amount of margin they can accrue from billing out the work of lower ranked lawyers on files they've brought in. Some don't even do legal work. It's very tough to lump these guys in with 'normal workers'.
For the people doing low-cost-jurisdiction bulk lawyer work, they make closer to 25-35$/hr as contractors. Which is almost an order of magnitude less. These are normal workers.
We're not. Lawyer income is not on a normal distribution.
People making >400k a year are owners/partners in a successful firm. Most of these people work hard, yes, but they make their big dollars off leverage; the amount of margin they can accrue from billing out the work of lower ranked lawyers on files they've brought in. Some don't even do legal work. It's very tough to lump these guys in with 'normal workers'.
For the people doing low-cost-jurisdiction bulk lawyer work, they make closer to 25-35$/hr as contractors. Which is almost an order of magnitude less. These are normal workers.
I'm going to point at the median worker, they're pretty normal.
All the people you're listing aren't necessarily normal workers - observe that some of them are part of the much-vaunted 1%.
I don't really understand the mindset that people are grumpy about the 1% and then interpret that as "oh really they're on the side of the 1% they mean the 0.1%". If anything, it might be the other way around and they mean the 10%.
The argument is there need to be more transfer payments. A mindset that CEOs need to pay but not fabulously wealthy doctors/dentists/programmers is a mystery to me. What even is the argument?
These are people who either need to work for 2 years (pre-tax) to live comfortably for a decade or they're squandering their earnings. They are outrageously wealthy.
All the people you're listing aren't necessarily normal workers - observe that some of them are part of the much-vaunted 1%.
I don't really understand the mindset that people are grumpy about the 1% and then interpret that as "oh really they're on the side of the 1% they mean the 0.1%". If anything, it might be the other way around and they mean the 10%.
The argument is there need to be more transfer payments. A mindset that CEOs need to pay but not fabulously wealthy doctors/dentists/programmers is a mystery to me. What even is the argument?
These are people who either need to work for 2 years (pre-tax) to live comfortably for a decade or they're squandering their earnings. They are outrageously wealthy.
400K is not real rich territory. Wealth follows a power law.
If you look at the net worth of people who make ~400K/year in their jobs, it has a huge variation.
This is because some of them launched themselves into a high-earning job and others were born into significant generational wealth. Most people who are born into serious wealth aren't going to stay long (if ever at all) in a sub-100K salary grind regardless of talent and skills.
Incidentally, I happen to know that a good number of the people that get busted for insider trading are highly compensated finance folks that make ~400K. They see their peers with dynastic wealth and the accompanying toys, get envious, and try taking "short cuts".
This is because some of them launched themselves into a high-earning job and others were born into significant generational wealth. Most people who are born into serious wealth aren't going to stay long (if ever at all) in a sub-100K salary grind regardless of talent and skills.
Incidentally, I happen to know that a good number of the people that get busted for insider trading are highly compensated finance folks that make ~400K. They see their peers with dynastic wealth and the accompanying toys, get envious, and try taking "short cuts".
The people who have the means have the means because society supports them.
EPI put the top 1% at $737,697 in 2019 and the top 5% at $309,348 [1].
Average Income of those normal workers [2]:
* Lawyer: $148,910
* Dentists (across all specialities): $186,300
* Physicians (across all specialties): $218,850
* Architects: $89,470
* Software engineers (across all specialties): $109,950
* All computer and math specialties: $96,770
* Pilots (All specialties): $163,480 [3]
So these “Normal people” are not even apart of the discussion stop making it seem like all these professions seem like they are in the top 1%. It’s paint a really false picture that skews the conversation at large.
1. https://www.epi.org/blog/top-1-0-of-earners-see-wages-up-157...
2. https://www.bls.gov/oes/current/oes_nat.htm#23-0000
3. I think that number might miss out on all the burn out low level contract airline pilots that make peanuts.
Average Income of those normal workers [2]:
* Lawyer: $148,910
* Dentists (across all specialities): $186,300
* Physicians (across all specialties): $218,850
* Architects: $89,470
* Software engineers (across all specialties): $109,950
* All computer and math specialties: $96,770
* Pilots (All specialties): $163,480 [3]
So these “Normal people” are not even apart of the discussion stop making it seem like all these professions seem like they are in the top 1%. It’s paint a really false picture that skews the conversation at large.
1. https://www.epi.org/blog/top-1-0-of-earners-see-wages-up-157...
2. https://www.bls.gov/oes/current/oes_nat.htm#23-0000
3. I think that number might miss out on all the burn out low level contract airline pilots that make peanuts.
You can use data from the IRS [1].
The cutoff for the 1% for households is around $550k. For individuals it's around $400k.
The median salary for radiologists is $422k [2].
The median salary for a Google Sr Engineer is >$350k [3] (not including Google stock appreciation - which pushes this well into the $500k range).
[1] https://taxfoundation.org/publications/latest-federal-income...
[2] https://www.salary.com/research/salary/alternate/radiologist...
[3] https://www.levels.fyi/company/Google/salaries/Software-Engi...
The cutoff for the 1% for households is around $550k. For individuals it's around $400k.
The median salary for radiologists is $422k [2].
The median salary for a Google Sr Engineer is >$350k [3] (not including Google stock appreciation - which pushes this well into the $500k range).
[1] https://taxfoundation.org/publications/latest-federal-income...
[2] https://www.salary.com/research/salary/alternate/radiologist...
[3] https://www.levels.fyi/company/Google/salaries/Software-Engi...
Reading the other comments, I looked closer at your choice of professions.
1) Engineers at Google earning 400K+ USD per year are receiving a large chunk in stock grants. I guess 1/3 to 1/2. (And the last 10 years have been very, very good for equity prices in tech majors.) I assume those receive capital gains tax treatment when sold. If held for at least one year, you receive generous tax savings. Is that fair?
2) Radiologist is probably paid 100% cash or part in deferred (cash) comp. I doubt their receive equity in their public/listed hospital group. Dear Reader Doctors: Please correct me if I am wrong! Also: Are you aware of incomes for highly-skilled specialists in other high-developed countries with good national healthcare systems? I guess about 50% less. Look at Germany, Netherlands, France, Japan, etc. The US is a global outlier on healthcare costs and incomes.
3) Investment banker is a loose term, because you can be a very senior quant on Wall Street can earn 500K USD. Or you can be a M&A i-banker or trader or portfolio manager and easily earn more than 500K USD in good years, but a good chunk will be equity. I guess 1/4 to 1/3. If you make crazy money (millions), surely 50% equity. That said, equity in an investment bank isn't a very good investment. Look at the last ten years compared to big tech. Big tech is killing ibanks on equity returns. Still... that equity grant will get beneficial tax treatment. In this narrow scenario, what benefit does this serve for the wider economy? I see little.
4) Lawyers: Probably paid all cash, possibly deferred comp (cash). Most white shoe law firms that can pay 400K+ USD are not public/listed, so equity isn't the same, even if there is /some/ measure of profit-sharing. Please correct me if I am wrong about public/listed law firms. Just before I hit reply, I thought of another type of special case: corporate counsel. If you work an in-house counsel in New York City, you can easily make 400K+ USD as a senior lawyer. And your company probably pays you some equity. (We can all this i-bank/legal hybrid job.)
5) Small business owners: These are essentially small-time executives who can structure all kinds of non-income payments to themselves and reduce their tax burden. Important: I would also separate intellectual property-heavy businesses (high-value services) vs traditional mom-n-pop shops, like chain of gift shops or pizza restaurants. The return-on-equity is hugely different. That said, in most developed economies, small-to-medium enterprises generate the lion's share of new jobs. (Huzzah to that.) Still, the same tax benefits the owner can structure for themselves will not also be arranged for the "normal workers". Again: Is this fair?
1) Engineers at Google earning 400K+ USD per year are receiving a large chunk in stock grants. I guess 1/3 to 1/2. (And the last 10 years have been very, very good for equity prices in tech majors.) I assume those receive capital gains tax treatment when sold. If held for at least one year, you receive generous tax savings. Is that fair?
2) Radiologist is probably paid 100% cash or part in deferred (cash) comp. I doubt their receive equity in their public/listed hospital group. Dear Reader Doctors: Please correct me if I am wrong! Also: Are you aware of incomes for highly-skilled specialists in other high-developed countries with good national healthcare systems? I guess about 50% less. Look at Germany, Netherlands, France, Japan, etc. The US is a global outlier on healthcare costs and incomes.
3) Investment banker is a loose term, because you can be a very senior quant on Wall Street can earn 500K USD. Or you can be a M&A i-banker or trader or portfolio manager and easily earn more than 500K USD in good years, but a good chunk will be equity. I guess 1/4 to 1/3. If you make crazy money (millions), surely 50% equity. That said, equity in an investment bank isn't a very good investment. Look at the last ten years compared to big tech. Big tech is killing ibanks on equity returns. Still... that equity grant will get beneficial tax treatment. In this narrow scenario, what benefit does this serve for the wider economy? I see little.
4) Lawyers: Probably paid all cash, possibly deferred comp (cash). Most white shoe law firms that can pay 400K+ USD are not public/listed, so equity isn't the same, even if there is /some/ measure of profit-sharing. Please correct me if I am wrong about public/listed law firms. Just before I hit reply, I thought of another type of special case: corporate counsel. If you work an in-house counsel in New York City, you can easily make 400K+ USD as a senior lawyer. And your company probably pays you some equity. (We can all this i-bank/legal hybrid job.)
5) Small business owners: These are essentially small-time executives who can structure all kinds of non-income payments to themselves and reduce their tax burden. Important: I would also separate intellectual property-heavy businesses (high-value services) vs traditional mom-n-pop shops, like chain of gift shops or pizza restaurants. The return-on-equity is hugely different. That said, in most developed economies, small-to-medium enterprises generate the lion's share of new jobs. (Huzzah to that.) Still, the same tax benefits the owner can structure for themselves will not also be arranged for the "normal workers". Again: Is this fair?
1 - RSUs are taxed as earned income from the time they vest.
That means - if I was granted $75k worth of Google stock to be paid this year - but it has quadrupled in value... Upon vesting - I'll receive $300k worth of Google stock this year...
I pay "earned" income tax on all $300k of that - meaning, after taxes, I get about ~$185k of that.
If I should hold that for a year - and it goes up 20% in value - I would pay capital gains tax on that 20% / ~$37k just like anyone else who bought and held Google stock for a year.
That means - if I was granted $75k worth of Google stock to be paid this year - but it has quadrupled in value... Upon vesting - I'll receive $300k worth of Google stock this year...
I pay "earned" income tax on all $300k of that - meaning, after taxes, I get about ~$185k of that.
If I should hold that for a year - and it goes up 20% in value - I would pay capital gains tax on that 20% / ~$37k just like anyone else who bought and held Google stock for a year.
Thank you for valuable information about RSUs. You are right, the tax advantages are lower than I proposed!
RSUs and such don’t have capital gains treatment like you might be imagining. If you sell the day you vest, you get income taxed. If you sell a year later, you get income taxed. You will only get capital gains on that which you earned above what you got when you vested. (No different than just selling the stock and buying it again immediately - you will owe income tax even if you still hold the stock btw) Only ISOs and other private equity will get that preferred treatment. (Which is far more risky and the stock is not tradable after all and typically bordering on worthless anyway)
Interesting. Does your company not withhold shares for taxes when they vest for you? I thought this was required.
Meaning - your second option isn't really an option.
Your company withholds some shares when they vest (usually less than you actually pay in taxes). Then, regardless of whether you sell or hold - at the end of the year - the IRS comes after the rest of the "earned income" taxes you owe.
IFF you do hold the shares - for say another 2 years - you pay only capital gains on your stock appreciation for those 2 years (if there is any). You already paid "earned income" tax on the shares the year you received them from your company.
Meaning - your second option isn't really an option.
Your company withholds some shares when they vest (usually less than you actually pay in taxes). Then, regardless of whether you sell or hold - at the end of the year - the IRS comes after the rest of the "earned income" taxes you owe.
IFF you do hold the shares - for say another 2 years - you pay only capital gains on your stock appreciation for those 2 years (if there is any). You already paid "earned income" tax on the shares the year you received them from your company.
Thank you for valuable information about RSUs. You are right, the tax advantages are lower than I proposed!
Did 100% of the wealth generated by the 1% come from their income taxed at that rate, or did they have a significant portion of their generated wealth come from capital gains?
Classifying the 1%'s wealth by talking about their income as if its 100% of their wealth might be a bit misleading.
Classifying the 1%'s wealth by talking about their income as if its 100% of their wealth might be a bit misleading.
> might be a bit misleading
Does wealth matter when you're talking about taxes? I was under the impression "1%" was in reference to share of adjusted gross income, not total wealth.
Does wealth matter when you're talking about taxes? I was under the impression "1%" was in reference to share of adjusted gross income, not total wealth.
In the same spirit it might be worth noting that 'earn about 20% of annual income" could also be considered a bit misleading 'receive about 20% of annual income" would be a less controversial term.
One must be careful about focusing on income taxes - they leave out about 1/3 of federal revenue paid by social security taxes, which are overwhelmingly paid by the bottom 99%. And focusing on federal taxes leaves out state and local taxes, which are also borne by the majority of the populace.
Actually the EU would have to act here. The EU should ensure that revenues made in the EU are taxed in the EU. However that would require all member states to agree and for countries like Ireland or Netherlands it is better to earn 1% of all EU profits of those companies than "proper" tax rates on only parts of the revenue, thus they won't agree ...
To be fair to Ireland it also would require other countries drop the hidden advantages to business that countries grant to gain unfair advantage.
Germany blocking regulation of car emissions and it's control/manipulation of the Euro to ensure its advantage, France's support to state industries and use of its intelligence services to gain competitive business contracts, the US subsidising research through military investment, Delaware Corps, Swiss banks being Swiss banks, Scandinavian companies using bribes, various favoured semi-state companies in Eastern Europe with suspiciously tight political connections, Israel using state resources and insider access for trusted businesses, Korean State lead industry, Chinas intellectual property theft, Italy and Greece's lack of tax collection, Dutch taxes, Malta's money laundering, the UK using Trusts, the Island of Man and BVI to allow companies manipulate tax but keeping it at an arm's length, UKs revolving door between intelligence/gov/banking, the UK letting dodgy money wash through London.
Ireland is one of the worse on the corporate tax but in many ways we are just a rocky previously poor outcrop that has found a way to be competitive openly. Many others do unfair things in more hidden ways and everything needs to be on the table.
Germany blocking regulation of car emissions and it's control/manipulation of the Euro to ensure its advantage, France's support to state industries and use of its intelligence services to gain competitive business contracts, the US subsidising research through military investment, Delaware Corps, Swiss banks being Swiss banks, Scandinavian companies using bribes, various favoured semi-state companies in Eastern Europe with suspiciously tight political connections, Israel using state resources and insider access for trusted businesses, Korean State lead industry, Chinas intellectual property theft, Italy and Greece's lack of tax collection, Dutch taxes, Malta's money laundering, the UK using Trusts, the Island of Man and BVI to allow companies manipulate tax but keeping it at an arm's length, UKs revolving door between intelligence/gov/banking, the UK letting dodgy money wash through London.
Ireland is one of the worse on the corporate tax but in many ways we are just a rocky previously poor outcrop that has found a way to be competitive openly. Many others do unfair things in more hidden ways and everything needs to be on the table.
Ireland, is far from a rocky poor outcrop. A look at the cost of living indexes will convince anyone. And what is frequently missed on it is that this -surreal COL- is yet another form of indirect taxation on the salaries of people.
So, it's a bit more sinister than letting the companies tax evade. Ireland is moving the tax burden down to its workers, out to the rest of EU and off the big companies and the landlords lobby.
Also "others are not playing well either" is not a convincing argument. Ireland is on par with Cayman islands and similar tax havens on a whole another level - unlike any of the countries that you're pointing at.
Also "others are not playing well either" is not a convincing argument. Ireland is on par with Cayman islands and similar tax havens on a whole another level - unlike any of the countries that you're pointing at.
Poster said "rocky _previously_ poor outcrop". If you take a look at any of the economic indicators before the early 90s, you'll see a very different picture.
There is absolutely no doubt that the policy of encouraging foreign-direct-investment has transformed Ireland into a modern and wealthy nation. The question is whether we sold our souls to the devil to achieve that. My personal take is no, but I respect the opposing opinion.
The issue today is indeed CoL, but that is a function of the government's failure to build. We were poor before the celtic tiger, we got addicted to property, the financial crisis hit us incredibly hard, and we are not building housing nearly quick enough today, especially with the (welcome!) influx of continental europeans to Ireland as multilingual workers servicing the european market for these US companies. There's a fresh batch of emigration happening now for this very reason.
There is absolutely no doubt that the policy of encouraging foreign-direct-investment has transformed Ireland into a modern and wealthy nation. The question is whether we sold our souls to the devil to achieve that. My personal take is no, but I respect the opposing opinion.
The issue today is indeed CoL, but that is a function of the government's failure to build. We were poor before the celtic tiger, we got addicted to property, the financial crisis hit us incredibly hard, and we are not building housing nearly quick enough today, especially with the (welcome!) influx of continental europeans to Ireland as multilingual workers servicing the european market for these US companies. There's a fresh batch of emigration happening now for this very reason.
Yes agreed. The COL is stupid for what you get in return. It's shifting the burden from big business to the employees.
> Germany blocking regulation of car emissions and it's control/manipulation of the Euro to ensure its advantage,
I grant the first one, but how exactly does Germany control/manipulate the Euro?
I grant the first one, but how exactly does Germany control/manipulate the Euro?
Easily.
When the Euro started the German economy was in a terrible stagnation.
The Euro needed to be higher for countries like Ireland that economically were doing very well at the time. By keeping it low to make German exports more competitive it meant countries like Ireland overheated, instead of having a natural breaking mechanism though higher interest rates. Irish interest rates were way too low at the time. (Of course that doesn't remove our responsibility for not taking the loans or for regulating things better)
Tons of money in Germany that was making little return then flooded into countries running hot. When this stupid money should have been written off as bad loans the Germans strong armed Ireland and elsewhere to pay it all back in full. Many of these debts should have been properly haircut.
It's the same thing with the Euro post 2008. Germany's tight control of its policy means it gets the strongest say on what actions the ECB takes and generally how the wider EU approaches finances etc.
When the Euro started the German economy was in a terrible stagnation.
The Euro needed to be higher for countries like Ireland that economically were doing very well at the time. By keeping it low to make German exports more competitive it meant countries like Ireland overheated, instead of having a natural breaking mechanism though higher interest rates. Irish interest rates were way too low at the time. (Of course that doesn't remove our responsibility for not taking the loans or for regulating things better)
Tons of money in Germany that was making little return then flooded into countries running hot. When this stupid money should have been written off as bad loans the Germans strong armed Ireland and elsewhere to pay it all back in full. Many of these debts should have been properly haircut.
It's the same thing with the Euro post 2008. Germany's tight control of its policy means it gets the strongest say on what actions the ECB takes and generally how the wider EU approaches finances etc.
> and for countries like Ireland or Netherlands it is better
Don't know about Ireland, but saw a TV highlight about 2yrs ago, that analysed benefits for the country and found there hardly aren't any. For regular citizens and the economy in general, at least. That a lot of the revenues flow to those upholding this lax tax system, while the huge money streams flow through NL to end up in even more lax tax havens.
Don't know about Ireland, but saw a TV highlight about 2yrs ago, that analysed benefits for the country and found there hardly aren't any. For regular citizens and the economy in general, at least. That a lot of the revenues flow to those upholding this lax tax system, while the huge money streams flow through NL to end up in even more lax tax havens.
Having large multinational corporations is hugely beneficial to the Irish economy, through direct employment. Sure any company that is just a brass plaque and funneling money through Ireland is of no benefit, but most of the big ones have significant high quality high tech jobs here. Apple, Facebook, Google, Intel, you name it, they all have huge operations here.
Yes and no. Ireland may seem materially better off than they were before, but they've effectively been recolonized. Putting aside matters of tax evasion, these corporations aren't sticking to just employing labor. They're also politically influential. The rapid shift in Irish cultural norms in recent years is jaw-dropping.
I think the shift in culture is directly correlated to being better off for the average person. Dublin is very different from rural places, that have changed more slowly. Its modernisation, for better or worse. Politics is as crooked as ever. Some serious sennanigans were had well before the multinationals were big
Tax evasion should be prosecuted, but I believe most of the time I read about these companies and taxes, it's about tax avoidance, such as the source article for this thread.
It's probably legal, even though it's not as intended. If you need 50 shell companies you are clearly abusing some loopholes, which I morally/ethically consider wrong. But that's something society has to fix ...
Finding loopholes seems like it's perfectly aligned with the hacker ethos. We cheer when we read about the guy who figured out how to always win at Press Your Luck, the guy who gamed the lotto system to greatly increase his odds, the guy who bought large quantities of pudding and got enough free air miles to last the rest of his life. I wouldn't be surprised if the first lawyers who figured out these loopholes got the same hacker high from finding the cracks in the system. Of course, for the first 3 examples, the loopholes were closed after those people exploited it. Now if the governments don't close these well-known loopholes, isn't it equivalent to implicitly condoning them?
Hacker Ethos is mot to find the bug in the bank's system and transfer a billion dollar, but to find the issue and report it and get it fixed. The hacker Ethos is to improve things.
Maybe it’s just me, but I’d say the hacker ethos would be to, yes, exploit that loophole but also publicize the dickens out of it so it gets fixed and refactored into a more rational system that obviates that whole class of errors.
Some math is needed here, but intuition tells me 20% of X companies is more than 1% of X + Y companies, Y being those who decide to evade taxes by being incorporated in Ireland.
My interpretation of the grandparents comment is the $6B in revenue (probably from outside Ireland) would not be subject to the 20% tax, while they are subject to 1% tax. So by raising taxes to 20%, you lose all foreign companies like Uber paying 1%, which may very well add up to much more than purely revenue originating within Ireland.
I could be completely wrong, I’m not a tax lawyer
I could be completely wrong, I’m not a tax lawyer
Mind that currently they take 1% of all EU revenues of international corporations.
For a "fair" scheme they would tax on their share of revenue.
Irish GDP is about 2.5% of EU GDP. 20% of 2.5% is 0.5%
So with the current scheme they make double.
And yes, that calculation is wrong in many ways. On the one side the current GDP is increased due to the tax business (they are 1% of population) on the other hand there are still many company's not doing the Irish game. And yes, I ignored the Dutch for this calculation ...
For a "fair" scheme they would tax on their share of revenue.
Irish GDP is about 2.5% of EU GDP. 20% of 2.5% is 0.5%
So with the current scheme they make double.
And yes, that calculation is wrong in many ways. On the one side the current GDP is increased due to the tax business (they are 1% of population) on the other hand there are still many company's not doing the Irish game. And yes, I ignored the Dutch for this calculation ...
One: this seems to be about uber activities outside the US
Two: the US is actively working on what it is calling a global minimum corporate tax
Three: anonymous shell companies were made illegal in the US in January
It seems your comment is rather uninformed. There is of course much to do but it is hard to look at what is happening and come to the conclusion that it is all nothing
Two: the US is actively working on what it is calling a global minimum corporate tax
Three: anonymous shell companies were made illegal in the US in January
It seems your comment is rather uninformed. There is of course much to do but it is hard to look at what is happening and come to the conclusion that it is all nothing
jb775(5)
Honest question:
When you have an agenda that wants to spend an additional $6tillion do you really care that much about tax revenues? (On top of the $5 trillion from the past year) At that point does it really matter how much you collect? You’ve clearly given up all semblance of trying to balance a budget.
At this point we’re pretty deep in the new-age progressive economic policy ideology, where taxes aren’t about building up gov coffers but rather taking money out of the economy, so does it really matter how the money is taken out? Why are you so concerned with taxing corporations when it’s much easier to tax people?
When you have an agenda that wants to spend an additional $6tillion do you really care that much about tax revenues? (On top of the $5 trillion from the past year) At that point does it really matter how much you collect? You’ve clearly given up all semblance of trying to balance a budget.
At this point we’re pretty deep in the new-age progressive economic policy ideology, where taxes aren’t about building up gov coffers but rather taking money out of the economy, so does it really matter how the money is taken out? Why are you so concerned with taxing corporations when it’s much easier to tax people?
[deleted]
By that logic, isn't taxing lower-income people taking even more money out of the economy, since poorer people spend a much higher percentage of their earnings?
100% of $10 is still less than 20% of $100 but taxing corporations doesn’t do the same thing as taxing ppl and the purpose is to remove money from the economy not ensure everyone fairly contributes to the national coffers. We should be working on the most effective way to remove money from the economy not worrying about who’s paying what.
Is it unusual that 88% of the US federal revenue is from individual income taxes?
IIRC US corporate income tax rates are fairly high compared to the rest of the world (although maybe there's more deductions and other shenanigans)
IIRC US corporate income tax rates are fairly high compared to the rest of the world (although maybe there's more deductions and other shenanigans)
The economist has a nice chart on this. The US has a lower share of taxes paid by corporations relative to other sources than our peers.
https://archive.is/ND3cQ
https://archive.is/ND3cQ
At 24.6%, the US had an effective average corporate tax rate somewhat in the middle of the pack in 2019. In 2017, at 37.5%, it was the second highest in the world, so which year you look at is very important.
It's also important to realize that a large portion (~10%) of individual income taxes are actually from pass-through business income.
https://stats.oecd.org/Index.aspx?DataSetCode=CTS_ETR
It's also important to realize that a large portion (~10%) of individual income taxes are actually from pass-through business income.
https://stats.oecd.org/Index.aspx?DataSetCode=CTS_ETR
Fairly high? I don't think so. Compare the tax rates to european countries.
It looks like most countries in Europe have lower corporate tax rates than the US (https://en.wikipedia.org/wiki/Tax_rates_in_Europe)
Many in congress literally use shell companies to obtain payments discretely so yeah, shell company laws aren't getting passed anytime soon.
Why do people always bitch about Congress? They are playing governments all over the world for this, not just the US government.
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Capital gains taxes fall under income taxes.
Spending money on lobbyists is not corruption. Is the ACLU corrupting Congress through its lobbying?
Spending money on lobbyists is not corruption. Is the ACLU corrupting Congress through its lobbying?
>Is the ACLU corrupting Congress through its lobbying?
Yes. Just because what something has as a goal may seem like a net positive doesn't mean the means it uses to get to that goal are.
The ACLU, like any lobbying, is using financial resources to influence democratic government policy disproportionately based on the financial resources it can acquire. The ACLU shouldn't need to exist but it's an interesting example to bring up.
Lobbying (part of the process of transferring wealth into power by influencing or creating policy that creates more or solidifies that wealth) shouldn't be permitted to exist. However in competitive environments, ultimately, ethics go out the window.
If you're constrained by ethics and your opponent isn't, you're working at a disadvantage in most environments. Rules have to exist to enforce those ethics in such environment and prevent such necessary compromises from being on the table. If we didn't have groups lobbying against individual rights and liberties we shouldn't need groups lobbying to protect individuals rights and liberty.
Both, IMHO, are signs of an unhealthy democracy. Let's eliminate lobbying.
Yes. Just because what something has as a goal may seem like a net positive doesn't mean the means it uses to get to that goal are.
The ACLU, like any lobbying, is using financial resources to influence democratic government policy disproportionately based on the financial resources it can acquire. The ACLU shouldn't need to exist but it's an interesting example to bring up.
Lobbying (part of the process of transferring wealth into power by influencing or creating policy that creates more or solidifies that wealth) shouldn't be permitted to exist. However in competitive environments, ultimately, ethics go out the window.
If you're constrained by ethics and your opponent isn't, you're working at a disadvantage in most environments. Rules have to exist to enforce those ethics in such environment and prevent such necessary compromises from being on the table. If we didn't have groups lobbying against individual rights and liberties we shouldn't need groups lobbying to protect individuals rights and liberty.
Both, IMHO, are signs of an unhealthy democracy. Let's eliminate lobbying.
Huh? You’re saying that voters or organizations that represent voters shouldn’t petition their politicians in issues they think are important? Because that’s what lobbying is.
I didn't say voters shouldn't petition their representatives, I said organizations funded by a biased subset of voters shouldn't petition politicians for voters.
That defeats the entire purpose of the current reprentative system if you have a mechanism to skew and pressure representation based on your financial resources as opposed to voters.
I already question the current representation system. It doesn't help when I know I can pump tens of millions or more into professional lobbyists to get unequal representation in government.
That defeats the entire purpose of the current reprentative system if you have a mechanism to skew and pressure representation based on your financial resources as opposed to voters.
I already question the current representation system. It doesn't help when I know I can pump tens of millions or more into professional lobbyists to get unequal representation in government.
Actually, the US gets to benefit from this. This money will be taxed in the US, at best; or repatriated as a deal at worst {https://www.bloomberg.com/news/articles/2019-12-19/u-s-compa...}.
> 88% of the cost of the US Fed gov is paid for by taxes by workers (income taxes). Less than 12% comes from all corp/business taxes combined with capital gains (taxing the rich 1%). Business shifting tax burden to workers is a massive scale problem. $3.5 Trillion = US Tax Revenues (2019) and 88% came from workers.
This is meaningless. You need to look at something called "fiscal pressure". If you remove employees taxes and increase corporate taxes, what you'll probably get is lower salaries. {https://en.wikipedia.org/wiki/List_of_countries_by_tax_reven...}
tl;dr: Taxes are a political topic when they should be a scientific one.
> 88% of the cost of the US Fed gov is paid for by taxes by workers (income taxes). Less than 12% comes from all corp/business taxes combined with capital gains (taxing the rich 1%). Business shifting tax burden to workers is a massive scale problem. $3.5 Trillion = US Tax Revenues (2019) and 88% came from workers.
This is meaningless. You need to look at something called "fiscal pressure". If you remove employees taxes and increase corporate taxes, what you'll probably get is lower salaries. {https://en.wikipedia.org/wiki/List_of_countries_by_tax_reven...}
tl;dr: Taxes are a political topic when they should be a scientific one.
Do you have a source for these stats?
Yes. They come straight from US Congressional Budget Office.
These are government published numbers:
US Federal Tax Revenues (2019): $3.5 Trillion
SOURCE: https://www.google.com/search?q=us+tax+revenues+2019&oq=us+t...
US Capital Gains (2018): $170 Billion (4.8%)
SOURCE: https://taxfoundation.org/federal-capital-gains-tax-collecti...
US Corporate Taxes: 3.9% of US Tax Revenues
https://taxfoundation.org/us-tax-revenue-2021/#:~:text=Corpo....
US Federal Tax Revenues (2019): $3.5 Trillion
SOURCE: https://www.google.com/search?q=us+tax+revenues+2019&oq=us+t...
US Capital Gains (2018): $170 Billion (4.8%)
SOURCE: https://taxfoundation.org/federal-capital-gains-tax-collecti...
US Corporate Taxes: 3.9% of US Tax Revenues
https://taxfoundation.org/us-tax-revenue-2021/#:~:text=Corpo....
> US Federal Tax Revenues (2019)
> US Capital Gains (2018)
Is that a typo or are you comparing revenues from two different years?
> US Capital Gains (2018)
Is that a typo or are you comparing revenues from two different years?
in the 1950s and later, the highest tax bracket was somewhere in the 90%s
Yes, but unfortunately no rich person actually paid those rates: "despite these high marginal rates, the top 1 percent of taxpayers in the 1950s only paid about 42 percent of their income in taxes. As a result, the tax burden on high-income households today is only slightly lower than what these households faced in the 1950s."
https://taxfoundation.org/taxes-on-the-rich-1950s-not-high/
https://taxfoundation.org/taxes-on-the-rich-1950s-not-high/
Your 42% is overall, right? The 90% was a marginal rate, the first bullet point at your URL.
That implies that significantly less than half of their income fell into the highest bracket. This is true of the top 0.01% as well (the top 1% of the top 1%), they paid about 50% overall.
So, the top 1% of the top 1% of high-income earners, found a way for their income that would fall into the top tax bracket, to not be income. They turned it into capital gains or something else. To not do so would be crazy, so literally no one let a significant amount of their income fall into the top tax bracket, in the 1950s.
So, the top 1% of the top 1% of high-income earners, found a way for their income that would fall into the top tax bracket, to not be income. They turned it into capital gains or something else. To not do so would be crazy, so literally no one let a significant amount of their income fall into the top tax bracket, in the 1950s.
The difference between 42% (1954) and 36% (2016) is massive, and we lowered their taxes even more since then!
Do you have sources for those incredibly attractive statistics?
IMO the state should give incentives and ways for billionaires and mega corps to invest into new technologies as well as new programs that will invigorate the economy, technology and other perspectives of the society. Sadly it seems it is doing the opposite.
R&D tax credits exist in some places, but as far as I can tell one company I worked at claimed it just for writing software they used in-house which seems against the spirit of the idea.
It's really hard to evade personal income tax, so why shouldn't the government just give up and tax corporations at 0%, while having high progressive personal income taxes?
Or, better yet, proper sliding consumption taxes. If you want a yacht or private jet, pay 150% in taxes.
Norway already taxes luxury cars at over 100% of their value.
Or, better yet, proper sliding consumption taxes. If you want a yacht or private jet, pay 150% in taxes.
Norway already taxes luxury cars at over 100% of their value.
This is right. Corporate taxes just create a tax evasion industry. If there were no corporate tax then shareholder profits would be higher. It's be simpler to tax the shareholders and an individual is unlikely to have an army of lawyers doing their taxes
When corporate tax is zero and corporations don't hire tax specialists because nobody audits them, individuals don't need an army of specialists to hide most of their income and expenditure in a corporation, and basically anyone that isn't an entry-level employee can do it...
How do I hide most of my income?
"Expenses". They get audited at the moment though, because the companies paying them owe tax...
That hinders technological progress. Typically newer technology in most consumer fields is bought and “tried out” by the wealthy. If it’s popular enough, economy of scales comes in and makes it more affordable.
Adding that heavy of a tax will disincentivize some wealthy from buying the product, leading to slower, if any, feedback loop to give that tech to the lower income classes.
You may ask, well the tech is already made. And a private jet won’t become affordable to normal folks anytime soon. True, but then the issue is, who determines exactly which items are taxed, and how much?
Most likely a domino effect that was not intended or predicted will occur, causing worse outcomes than the pseudo planned-economy hoped for.
Adding that heavy of a tax will disincentivize some wealthy from buying the product, leading to slower, if any, feedback loop to give that tech to the lower income classes.
You may ask, well the tech is already made. And a private jet won’t become affordable to normal folks anytime soon. True, but then the issue is, who determines exactly which items are taxed, and how much?
Most likely a domino effect that was not intended or predicted will occur, causing worse outcomes than the pseudo planned-economy hoped for.
Hot take: Stop thinking of lobbying as a corporate only tool and understand the system was devised as a way for specialized interested (technocratic) to influence congress in an efficient and informed way. The lobbyist system is open to all by purpose. The real problem: the general public doesn't actually give a shit about wiping its own ass when it comes to dealing with their own government. Whose fault is it when you don't play the game with the rules provided? Stubbing your toe and blaming an -ism doesn't produce results. Many non-corporate, non-corrupt groups in US history used the system to make true good changes.
Okay then go to K Street and hire yourself a lobbyist. Unless you know someone or have a lot of money under your control you won’t even be able to get a meeting. Your suggestion is as ridiculous as telling the average person to “just ask the Fed for money” when they can’t make rent. If you truly believe the system is equally “open to all” then you have bought the bullshit lobbyists have been selling the public hook, line, and sinker.
Reminds me of this story from The Onion:
American People Hire High-Powered Lobbyist To Push Interests In Congress
"WASHINGTON—Citing a desire to gain influence in Washington, the American people confirmed Friday that they have hired high-powered D.C. lobbyist Jack Weldon of the firm Patton Boggs to help advance their agenda in Congress.
Known among Beltway insiders for his ability to sway public policy on behalf of massive corporations such as Johnson & Johnson, Monsanto, and AT&T, Weldon, 53, is expected to use his vast network of political connections to give his new client a voice in the legislative process."
https://politics.theonion.com/american-people-hire-high-powe...
American People Hire High-Powered Lobbyist To Push Interests In Congress
"WASHINGTON—Citing a desire to gain influence in Washington, the American people confirmed Friday that they have hired high-powered D.C. lobbyist Jack Weldon of the firm Patton Boggs to help advance their agenda in Congress.
Known among Beltway insiders for his ability to sway public policy on behalf of massive corporations such as Johnson & Johnson, Monsanto, and AT&T, Weldon, 53, is expected to use his vast network of political connections to give his new client a voice in the legislative process."
https://politics.theonion.com/american-people-hire-high-powe...
I mean, if you donate to the ACLU your money goes to lobbying. The comment isn’t wrong.
Nothing stops citizens from organizing a non-profit to lobby the government. I’ve worked with a few groups that lobby for better healthcare coverage. They go to Washington once to year. They are surprisingly effective in getting changes passed.
Actually being more “grassroots” makes the lobbying easier. It’s harder for a Congressperson to reject a meeting from their constituents.
Nothing stops citizens from organizing a non-profit to lobby the government. I’ve worked with a few groups that lobby for better healthcare coverage. They go to Washington once to year. They are surprisingly effective in getting changes passed.
Actually being more “grassroots” makes the lobbying easier. It’s harder for a Congressperson to reject a meeting from their constituents.
This reminds me of a saying I once heard:
"In it's grand equality the law forbids both the rich and the poor alike from sleeping under bridges"
I mean, sure the lobbying system is "open" to all, but not everyone can actually participate in it or utilize it, even if they're technically allowed to.
"In it's grand equality the law forbids both the rich and the poor alike from sleeping under bridges"
I mean, sure the lobbying system is "open" to all, but not everyone can actually participate in it or utilize it, even if they're technically allowed to.
Of course you can. It happens all the time. There is nothing stopping you from calling your Congresspersons office and asking for a meeting. Obviously the more people you represent, the better, but you’d be surprised how effective even a small group can be in terms of pushing issues.
Here is an example of a state bleeding disorders non-profit that meet with Senators in DC every year.
https://cthemophilia.org/events/washington-days-2020/
I also worked with an entrepreneurship group at a college. The head told a story where he went to DC and his senator had their staff type up the law with him there. Brought it to the floor that day. It didn’t pass but I was amazed at what got done through one person’s advocacy.
Here is an example of a state bleeding disorders non-profit that meet with Senators in DC every year.
https://cthemophilia.org/events/washington-days-2020/
I also worked with an entrepreneurship group at a college. The head told a story where he went to DC and his senator had their staff type up the law with him there. Brought it to the floor that day. It didn’t pass but I was amazed at what got done through one person’s advocacy.
We can't afford lobbyists because we are paying those 88% of taxes and ever increasing costs for products from those companies and organizations paying 12%.
[deleted]
>Congress is corrupt (via lobbyists)
The most a single company spent on lobbying last year was Facebook at $19.7 million, which is a whopping .17% of their marketing expenses. At the same time, they shelled out $130 million, forming a irrevocable trust to fund a supreme court of moderation decisions. If lobbying were really effective, Facebook would have given money to any Congressperson willing to make any decisions at all, regardless of whether they are pro or anti-censorship. Either way, it's a win for Facebook because they can deflect all blame to the new regulations. The less Zuck has to think about moderation, the more he can focus on making money. The problem is that no representative was ever willing to do so. During the hearings about Section 230, Congress loved to grill Facebook on why they shouldn't have censored this and should censor this other thing. However, none of them attempted meaningful questioning that would aid them in writing a bill to achieve their supposed goals.
The real reason Congress is so ineffective is much more mundane: they have no incentive to do otherwise. Voters love hearing spicy soundbytes, so that's where all Congresspeople's effort goes into. People just want a simple problem that they can point their fingers at and knock down, but the real world doesn't work that way. When you blamed "lobbying", did you bother to look up the myriad existing regulations and their shortcomings? The result of all this is that an increasing number of real decisions are being made by unelected officials, from the SCOTUS effectively legislating Google v. Oracle or the Federal Reserve's increasingly aggressive monetary policy.
The most a single company spent on lobbying last year was Facebook at $19.7 million, which is a whopping .17% of their marketing expenses. At the same time, they shelled out $130 million, forming a irrevocable trust to fund a supreme court of moderation decisions. If lobbying were really effective, Facebook would have given money to any Congressperson willing to make any decisions at all, regardless of whether they are pro or anti-censorship. Either way, it's a win for Facebook because they can deflect all blame to the new regulations. The less Zuck has to think about moderation, the more he can focus on making money. The problem is that no representative was ever willing to do so. During the hearings about Section 230, Congress loved to grill Facebook on why they shouldn't have censored this and should censor this other thing. However, none of them attempted meaningful questioning that would aid them in writing a bill to achieve their supposed goals.
The real reason Congress is so ineffective is much more mundane: they have no incentive to do otherwise. Voters love hearing spicy soundbytes, so that's where all Congresspeople's effort goes into. People just want a simple problem that they can point their fingers at and knock down, but the real world doesn't work that way. When you blamed "lobbying", did you bother to look up the myriad existing regulations and their shortcomings? The result of all this is that an increasing number of real decisions are being made by unelected officials, from the SCOTUS effectively legislating Google v. Oracle or the Federal Reserve's increasingly aggressive monetary policy.
Almost 10 billion dollars was donated in the 2020 election cycle. The money overwhelmingly comes from a very small and well off portion of the population. This is why the positions taken by congress so consistently serve the interests of the few over the many.
https://www.opensecrets.org/elections-overview/donor-demogra...
https://www.opensecrets.org/elections-overview/donor-demogra...
Campaign finance is certainly broken, but it's not the same as lobbying. Also, most evidence points towards money having little if any impact on elections. Most recently, Bloomberg spent $570 million on primaries and only received 31 delegates.
https://fivethirtyeight.com/features/money-and-elections-a-c...
https://www.vox.com/2016/2/9/10941690/campaign-finance-left
https://www.cbsnews.com/news/bloomberg-delegate-18-million/
https://fivethirtyeight.com/features/money-and-elections-a-c...
https://www.vox.com/2016/2/9/10941690/campaign-finance-left
https://www.cbsnews.com/news/bloomberg-delegate-18-million/
The most a single company spent on lobbying last year was Facebook at $19.7 million, which is a whopping .17% of their marketing expenses.
In a thread about how a company used 50 shell companies to avoid millions in taxes it seems a little naive to suggest companies don't use similar tactics to fund lobbyists as well.
In a thread about how a company used 50 shell companies to avoid millions in taxes it seems a little naive to suggest companies don't use similar tactics to fund lobbyists as well.
The shell companies are public information. How do you think researchers found them? Also, that implies that anyone bothers to look up lobbying spend in the first place, which clearly very few people do.
> Uber transfered its intellectual property through a $16 billion “loan” from one of its subsidiaries in Singapore that in turn owns one of Uber’s Dutch shell companies, a manuever that grants the company a $1 billion tax break every year for the next 20 years, the researchers found.
Shit like this makes my head hurt and infuriates me at the same time.
Shit like this makes my head hurt and infuriates me at the same time.
I've taken to calling it anti-American (or anti-whatever country in which they're minimizing their taxes). How better to tell the world that you don't care about the societies that made your success possible than to refuse to help fund them?
Then again, what does the US government do with said revenue? Its citizens are certainly not helped when it comes to medical issues, for instance.
https://ourworldindata.org/grapher/life-expectancy-vs-health...
https://ourworldindata.org/grapher/life-expectancy-vs-health...
It goes into the pockets of other companies who lobbied for it, that's one reason why our military spending is so high.
Avoiding taxes is as American as baseball and apple pie.
Well it's not only a matter of helping countries, but funding the civilisation infrastructure that allows businesses to operate and turn a profit in the first place.
In the case of Uber, there wouldn't be much business without roads
You write laws and tell companies to follow strictly the letter of the law or else.
And that's precisely what they do.
The problem doesn't sit at the companies.
And that's precisely what they do.
The problem doesn't sit at the companies.
Tax laws are what's written in acts and statutes, but also how the courts interpret those laws.
When a company plans their tax they can either use the laws as they're intended (tax planning), they can deceive the tax authorities in order to illegally reduce their tax burden (tax evasion) or they can use the laws in ways which aren't necessarily intended, but which aren't yet outright illegal because we haven't had a court ruling yet (tax avoidance).
It's really easy to say "just change the law", but there are problems with that.
Prosecuting complex tax cases is fantastically expensive, and so tax authorities tend to only go to court when i) the case is obvious and ii) everything else has failed. (This includes for the small guy too -- if I chose not to pay my tax there are escalating steps of intervention before I get prosecuted). This means we simply don't know if a particular tax avoidance scheme is illegal or not, and we're unlikely to find out unless the tax authorities move to a more punitive regime.
And we don't necessarily want to give more power to the state. We want to limit the power of the state to some extent, which is why a lot of pretty unpleasant behaviours are perfectly legal, and it's why we impose that "beyond all reasonable doubt" requirement on criminal conviction.
Corporate values aren't (at least they shouldn't be) nonsense. A company could say "we do this because it's legally mandated and we don't have a choice", but that's the worst reason for doing something. Companies that make use of education, transport infrastructure, policing, healthcare, (all the things that are paid for by taxation) should pay their fair amount of tax, rather than using the law in weird unexpected ways to reduce their tax burden by an unreasonable amount.
There is a cultural thing going on here. No-one in the UK is saying that companies should go out of their way to pay more tax than they need to. And reducing their tax burden a bit is probably seen as okay. But we do have the concept of "taking the piss", and a lot of these companies are taking the piss. They need to realise that public tolerance for this is low and reducing, and that if they don't change their behaviours they're going to see increased tax regulation.
When a company plans their tax they can either use the laws as they're intended (tax planning), they can deceive the tax authorities in order to illegally reduce their tax burden (tax evasion) or they can use the laws in ways which aren't necessarily intended, but which aren't yet outright illegal because we haven't had a court ruling yet (tax avoidance).
It's really easy to say "just change the law", but there are problems with that.
Prosecuting complex tax cases is fantastically expensive, and so tax authorities tend to only go to court when i) the case is obvious and ii) everything else has failed. (This includes for the small guy too -- if I chose not to pay my tax there are escalating steps of intervention before I get prosecuted). This means we simply don't know if a particular tax avoidance scheme is illegal or not, and we're unlikely to find out unless the tax authorities move to a more punitive regime.
And we don't necessarily want to give more power to the state. We want to limit the power of the state to some extent, which is why a lot of pretty unpleasant behaviours are perfectly legal, and it's why we impose that "beyond all reasonable doubt" requirement on criminal conviction.
Corporate values aren't (at least they shouldn't be) nonsense. A company could say "we do this because it's legally mandated and we don't have a choice", but that's the worst reason for doing something. Companies that make use of education, transport infrastructure, policing, healthcare, (all the things that are paid for by taxation) should pay their fair amount of tax, rather than using the law in weird unexpected ways to reduce their tax burden by an unreasonable amount.
There is a cultural thing going on here. No-one in the UK is saying that companies should go out of their way to pay more tax than they need to. And reducing their tax burden a bit is probably seen as okay. But we do have the concept of "taking the piss", and a lot of these companies are taking the piss. They need to realise that public tolerance for this is low and reducing, and that if they don't change their behaviours they're going to see increased tax regulation.
Laws get written with a lot of help and influence from lobbyists who do sit at the companies.
Let's get couple of things straight:
1. Politicians are responsible for the laws.
2. Companies are responsible for following the laws.
If you have a beef with any of the above, address the right parties. How they interact and depend on each other is a fact, but also it's not relevant to the above two points. Everyone has a clear responsibility.
Furthermore the phrase "dodged taxes" means "they structured their revenue so they paid less taxes than if they would structure it otherwise". Who the hell says you gotta structure your revenue in order to MAXIMIZE your taxes?
Do you do that? If not, you also "dodge taxes" as far as the media is concerned.
1. Politicians are responsible for the laws.
2. Companies are responsible for following the laws.
If you have a beef with any of the above, address the right parties. How they interact and depend on each other is a fact, but also it's not relevant to the above two points. Everyone has a clear responsibility.
Furthermore the phrase "dodged taxes" means "they structured their revenue so they paid less taxes than if they would structure it otherwise". Who the hell says you gotta structure your revenue in order to MAXIMIZE your taxes?
Do you do that? If not, you also "dodge taxes" as far as the media is concerned.
This is a theoretical framework you are presenting but it does not reflect reality. The text of many bills is written by people working for corporations. A politician needs to get funding in order to be re-elected and have any meaningful ability to make a difference.
In theory all the power for determining laws is supposed to lie in the hands of the politicians, but in practice a significant fraction of the power lies in the hands of corporations. So it doesn’t make sense to only look at part of the power structure that has set the system up this way.
In theory all the power for determining laws is supposed to lie in the hands of the politicians, but in practice a significant fraction of the power lies in the hands of corporations. So it doesn’t make sense to only look at part of the power structure that has set the system up this way.
ALEC literally writes "model bills" written by industry and are submitted word-for-word by politicians.
What about explicitly bringing up and fighting that mechanism in the first place?
This seems to presuppose that it is an inherently good thing to maximize tax revenue.
Its an inherently good thing if the parties with most of the money aren't ABLE to also opt out of substantially more of the needed burden than the average person but we live in an imperfect world.
When deciding if your tax minimization strategy is a good thing simply ask yourself what would happen if everyone found a way to pay virtually nothing. The obvious thing in that scenario is that society collapses. This is obviously not a good thing.
Clearly everyone should try to pay a reasonable share. When your strategy is clearly a contrived misuse of an overly complicated tax code that goes against the spirit if not the letter of the law you should be able to figure out what side of the moral line you are on.
When deciding if your tax minimization strategy is a good thing simply ask yourself what would happen if everyone found a way to pay virtually nothing. The obvious thing in that scenario is that society collapses. This is obviously not a good thing.
Clearly everyone should try to pay a reasonable share. When your strategy is clearly a contrived misuse of an overly complicated tax code that goes against the spirit if not the letter of the law you should be able to figure out what side of the moral line you are on.
> Clearly everyone should try to pay a reasonable share.
That isn't clear to me, because using the government to collect revenue hasn't been demonstrated to be a benefit. This still presupposes that government revenue is inherently beneficial.
I think if everyone found a way to pay virtually nothing, the government would collapse. That's not the same thing as society collapsing, society and the government are not coterminous.
Tax revenues don't go to "society", they go to the government. It is a logical leap to assume a collapse of society when the government loses funding.
That isn't clear to me, because using the government to collect revenue hasn't been demonstrated to be a benefit. This still presupposes that government revenue is inherently beneficial.
I think if everyone found a way to pay virtually nothing, the government would collapse. That's not the same thing as society collapsing, society and the government are not coterminous.
Tax revenues don't go to "society", they go to the government. It is a logical leap to assume a collapse of society when the government loses funding.
Do you really see a situation where the US government collapses and US society does not?
Every scenario where the US government ends/collapses is such, outside of the Dr Strangelove ending.
A huge portion of the population is directly receiving benefits that enable them to pay for life critical medical care/meds, food, and shelter including a majority of people receiving social security and every military member and other government employee.
The entirety of the population is doing business in dollars that would end up worth nothing which means everything grinds to a halt while people figure out how to reorganize this brave new world. Right now you own what you own courtesy of the government providing armed men to keep others from taking it and courts to settle differences.
This reorganization would inevitably mean that different groups compete to be the new powers that be. The obvious inheritors would be the existing state power structures which controls lots of armed men and women but nothing is stopping people from setting up their own feifdoms and disagreements about who controls what could trivially have to be settled by shooting each other.
It's not like we don't have plenty of examples of failed states collapsing. Look at Yugoslavia for example. Can you provide me with some counterexamples?
The entirety of the population is doing business in dollars that would end up worth nothing which means everything grinds to a halt while people figure out how to reorganize this brave new world. Right now you own what you own courtesy of the government providing armed men to keep others from taking it and courts to settle differences.
This reorganization would inevitably mean that different groups compete to be the new powers that be. The obvious inheritors would be the existing state power structures which controls lots of armed men and women but nothing is stopping people from setting up their own feifdoms and disagreements about who controls what could trivially have to be settled by shooting each other.
It's not like we don't have plenty of examples of failed states collapsing. Look at Yugoslavia for example. Can you provide me with some counterexamples?
That's the very essence of libertarian fantasy.
Tax revenues trickle down to society very quickly. The amount of money trickling down is ridiculous that one might even call it corruption. As long as it is fairly distributed and there isn't a fixed amount of players getting most of the money, it's fine.
For any given tax rate, yes. This because it means the tax rate won't need to be as high to pay for the same things as it otherwise would have to, for everyone else.
not avoiding taxes = communism
> Shit like this makes my head hurt
If you are feeling masochistic then I highly recommend these two books. 1. Moneyland [1] 2. Treasure Islands [2]
One can set up corporate structures in a way that will make those looking for the real owner stuck in an infinite loop spread across the globe.
[1] https://www.theguardian.com/books/2018/sep/07/moneyland-oliv...
[2] https://www.goodreads.com/book/show/10197857-treasure-island...
If you are feeling masochistic then I highly recommend these two books. 1. Moneyland [1] 2. Treasure Islands [2]
One can set up corporate structures in a way that will make those looking for the real owner stuck in an infinite loop spread across the globe.
[1] https://www.theguardian.com/books/2018/sep/07/moneyland-oliv...
[2] https://www.goodreads.com/book/show/10197857-treasure-island...
Be mad at politicians for writing tax codes that work like this rather than companies for taking advantage of them.
Why not both? Dissatisfaction drives change. Yes, companies are expected to take advantage of legal means of increasing value, but there is a spectrum of behavior between "shrewd" and "immoral" that still falls entirely within "legal", and the individual human beings in the affected society reasonably have opinions about where the line is. When the numbers are too disgusting, it's OK for people to express dissatisfaction with both lawmakers and the company in question, market forces be damned.
And let's not forget that the companies frequently play an outsize role in influencing the written laws. The line between "playing the game" and "cheating" is very fuzzy in real world systems.
And let's not forget that the companies frequently play an outsize role in influencing the written laws. The line between "playing the game" and "cheating" is very fuzzy in real world systems.
> Why not both?
It's hard to be mad at someone once you realize you'd do the same thing if you were in their shoes.
Loopholes like this should be illegal, but their existence ~obligates executives to take advantage of them (fiduciary duty). You'd just be bad at business if you didn't.
As someone who wants to be good at business, I can't get mad at the players here – just the game.
It's hard to be mad at someone once you realize you'd do the same thing if you were in their shoes.
Loopholes like this should be illegal, but their existence ~obligates executives to take advantage of them (fiduciary duty). You'd just be bad at business if you didn't.
As someone who wants to be good at business, I can't get mad at the players here – just the game.
>It's hard to be mad at someone once you realize you'd do the same thing if you were in their shoes.
this is projecting.
your comment goes on a bit more like this but i'm not going to quote all of it
there has been a cultural failure of some sort that rewards people that think like this, and encourages this kind of behavior.
maybe we should expect people, especially people in positions of responsibility, to not loot our lives out from under us
this is projecting.
your comment goes on a bit more like this but i'm not going to quote all of it
there has been a cultural failure of some sort that rewards people that think like this, and encourages this kind of behavior.
maybe we should expect people, especially people in positions of responsibility, to not loot our lives out from under us
> to not loot our lives out from under us
Then reflect that in the law! Don’t setup a bunch of loopholes and then get mad when corporate tax accountants find them and use them.
In the business world there are mountains and mountains of tax incentives for employing this type of person, that type of person, building here, building there, etc. What you see in front of you is what the law is encouraging and asking companies to ignore “obviously wrong” tax setups is naive.
The line is super blurry, all the way down to a 1 person business expensing anything and everything “related” to their business.
Then reflect that in the law! Don’t setup a bunch of loopholes and then get mad when corporate tax accountants find them and use them.
In the business world there are mountains and mountains of tax incentives for employing this type of person, that type of person, building here, building there, etc. What you see in front of you is what the law is encouraging and asking companies to ignore “obviously wrong” tax setups is naive.
The line is super blurry, all the way down to a 1 person business expensing anything and everything “related” to their business.
I expect (well, I don't expect, but I WANT) my government to stop it from happening.
It's foolish to expect people who are in a position of responsibility _to their shareholders_ to act like they're responsible _to you_. They're not.
Close the loopholes, raise the taxes (wealth, cap gains, high-earner income, corporate, etc) and stop vilifying people for making money.
It's foolish to expect people who are in a position of responsibility _to their shareholders_ to act like they're responsible _to you_. They're not.
Close the loopholes, raise the taxes (wealth, cap gains, high-earner income, corporate, etc) and stop vilifying people for making money.
Becoming a CEO does not magically make your responsibility to society disappear. Shareholders are an additional thing you need to worry about, not the only thing.
> stop vilifying people for making money
Why? They're doing it in a vile way.
> stop vilifying people for making money
Why? They're doing it in a vile way.
I'll put it a different way. Most people don't see issues with that, they see issues with shit legislation. You want an effective method? Provide a negative incentive to correct that. Its far more effective to do that.
Talking about how we should get them to change their morality may give us the feel goods, but that's about all it'll do.
Talking about how we should get them to change their morality may give us the feel goods, but that's about all it'll do.
But why would you want the law to change if you don't have a problem with what they're doing? Honestly I don't think you're right about what "most people" think. I can't remember ever seeing a protest about the tax code, but there was a global social movement about vilifying immoral corporations.
And frankly I think it's more effective. If you try to argue about tax policy, it's easy for a well-educated opponent to kind of dazzle you with cherry-picked stats and economic models and say "well actually this lower corporate rate is better for the economy, just look at these graphs". Anyone can find a credentialed economist to back up their position. It's much harder to look at someone straight-faced and say "actually greed is good" and "we would go bankrupt immediately if we had to pay a single extra cent in taxes". I mean they try, and it works on some people, but not as many. And whatever issue can get the most widespread agreement is the one most likely to spark some change.
And frankly I think it's more effective. If you try to argue about tax policy, it's easy for a well-educated opponent to kind of dazzle you with cherry-picked stats and economic models and say "well actually this lower corporate rate is better for the economy, just look at these graphs". Anyone can find a credentialed economist to back up their position. It's much harder to look at someone straight-faced and say "actually greed is good" and "we would go bankrupt immediately if we had to pay a single extra cent in taxes". I mean they try, and it works on some people, but not as many. And whatever issue can get the most widespread agreement is the one most likely to spark some change.
Because fundamentally, most people don't have issues with people playing by the rules of the game. People don't like shit laws, but they hate kneecapping themselves more.
And more effective? Has the railing about this since the 90s changed anything there?
And more effective? Has the railing about this since the 90s changed anything there?
I hear what you're saying, I just don't agree that most people think this way.
Again - there is no reason not to do both. Dissatisfaction is not a limited resource. I haven't heard a convincing reason to refrain from criticizing the business practices in question that doesn't simply ignore the practical points I've been making. Re-read my post near the top of this thread.
> Dissatisfaction is not a limited resource
It is, though. When outrage is misdirected, it lets the true bad guys get off scot–free.
Sure, there are some people who can be angry about everything all day long, but everyone else grows tired to listening to them, and they lose credibility for when it counts.
It is, though. When outrage is misdirected, it lets the true bad guys get off scot–free.
Sure, there are some people who can be angry about everything all day long, but everyone else grows tired to listening to them, and they lose credibility for when it counts.
Their responsibility to "the taxpayer" is a few orders of magnitude less acute than their responsibility to the owners of the company they've been hired to manage.
I completely disagree, but I don't really know how to debate such a fundamental thing. It's such a weird philosophy to put your job over your society. I understand it's common, but it's weird. You can find a new job, but you can't find a new planet.
I just don't want to leave climate change up to the whims of strangers.
If you're in business, you compete with people who put their jobs before society, so you don't really have much choice. Call that a race to the bottom if you want, but it's a race – and races need rules.
If you're in business, you compete with people who put their jobs before society, so you don't really have much choice. Call that a race to the bottom if you want, but it's a race – and races need rules.
They are part of the same minority of society that donates almost all the billions of dollars that ultimately goes to politicians who make the same rules. They are buying the rules and then exploiting them. There is no way to deal with the matter without dealing with them.
I totally agree the legalized corruption in the US is causing huge problems, and preventing the fixes I mentioned above (higher taxes for the rich and for companies, closing loopholes, etc).
If you live in the US, I'd encourage supporting Represent.US, an anti-corruption / good-governance group. There is a critical anti-corruption, pro-democracy bill that they support nearing the floor of the senate now, and they need more people to make calls to voters.
If you live in the US, I'd encourage supporting Represent.US, an anti-corruption / good-governance group. There is a critical anti-corruption, pro-democracy bill that they support nearing the floor of the senate now, and they need more people to make calls to voters.
> there has been a cultural failure of some sort that rewards people that think like this, and encourages this kind of behavior.
That “cultural failure” is the consumers’ purchasing at the cheapest price available. How does a manufacturer compete with one that uses sweatshop labor if people choose to buy the sweatshop labor products? How does Lyft compete with Uber if Uber minimizes tax expenses and can price lower than Lyft?
Going after specific companies for legal maneuvers is a waste of time and energy. At the end of the day, the voting populace will punish whoever can be blamed for limiting their consumption, and the voting populace is to blame. Educating and convincing them to support politicians who support better laws is the only solution.
That “cultural failure” is the consumers’ purchasing at the cheapest price available. How does a manufacturer compete with one that uses sweatshop labor if people choose to buy the sweatshop labor products? How does Lyft compete with Uber if Uber minimizes tax expenses and can price lower than Lyft?
Going after specific companies for legal maneuvers is a waste of time and energy. At the end of the day, the voting populace will punish whoever can be blamed for limiting their consumption, and the voting populace is to blame. Educating and convincing them to support politicians who support better laws is the only solution.
I wouldn't do the same in their shoes and this statement
>obligates executives to take advantage of them (fiduciary duty)
Is a piece of wisdom that exists entirely on the internet unconnected with objective reality. You are obligated to in the general case to serve the shareholders interests but you are absolutely legally entirely able to take a broader and deeper view than this quarters profits and use your own judgement.
Take this situation. Do you really believe that had they NOT done this someone could have gone to court to legally compel the CEO to set up shell corps and tax havens? That isn't have fiduciary duty works. Fiduciary duty means you don't screw the shareholders to help yourself it doesn't mean you are obliged to substitute their judgement for yours or toss out vital but nebulous goals like long term profitability, reputation, and ethics. If they have enough control they have the privilege of firing you not substituting their judgement for yours.
>obligates executives to take advantage of them (fiduciary duty)
Is a piece of wisdom that exists entirely on the internet unconnected with objective reality. You are obligated to in the general case to serve the shareholders interests but you are absolutely legally entirely able to take a broader and deeper view than this quarters profits and use your own judgement.
Take this situation. Do you really believe that had they NOT done this someone could have gone to court to legally compel the CEO to set up shell corps and tax havens? That isn't have fiduciary duty works. Fiduciary duty means you don't screw the shareholders to help yourself it doesn't mean you are obliged to substitute their judgement for yours or toss out vital but nebulous goals like long term profitability, reputation, and ethics. If they have enough control they have the privilege of firing you not substituting their judgement for yours.
There is also an argument that doing this gives a company certain competitive advantage.
E.g. if (completely made-up example) Lyft were practicing this kind of tax avoidance and Uber did not, the former would have potentially more budget left over to undercut the latter on prices and/or salaries.
So proper laws are still needed for an even playing field. Not that I condone Uber's practice anyway.
E.g. if (completely made-up example) Lyft were practicing this kind of tax avoidance and Uber did not, the former would have potentially more budget left over to undercut the latter on prices and/or salaries.
So proper laws are still needed for an even playing field. Not that I condone Uber's practice anyway.
> It's hard to be mad at someone once you realize you'd do the same thing if you were in their shoes.
Speak for yourself, bud.
Speak for yourself, bud.
I wouldn't do the same thing in their shoes? And mind you I am not trying to claim sainthood here. If it was a few million for following a legal method of tax evasion I'd be highly likely to do so.
After I secured enough money to comfortably retire though, every dollar I got through unethical means would feel less like "securing my future economic safety" and more like "unabashed greed"
After I secured enough money to comfortably retire though, every dollar I got through unethical means would feel less like "securing my future economic safety" and more like "unabashed greed"
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Whether you take advantage of those codes in these ways is a question of ethics. Nobody's forcing them to do this, "do it all for the shareholders" isn't a law and shareholder suits for fiduciary mismanagement against executives are basically nonexistent in the US. It's a choice, and it's the choice of assholes.
I just ask one question:
Who do you think politicians have their dinner with? Is it a middle class tax paying person or some rich businessmen friends?
Who will get his sympathy? Extrapolate from there.
Who do you think politicians have their dinner with? Is it a middle class tax paying person or some rich businessmen friends?
Who will get his sympathy? Extrapolate from there.
You don’t need to choose one or the other.
That makes it sound like the companies are innocently stumbling upon these opportunities when in fact they're actively lobbying/buying these changes.
Nah let’s do both. If a company wants to spin a pro-social image - Uber is currently asking consumers to donate vaccine rides - then they sure as hell can take the heat for avoiding pro-social taxes.
At a minimum, they should pay that tax savings towards vaccine rides. I won’t hold my breath.
At a minimum, they should pay that tax savings towards vaccine rides. I won’t hold my breath.
This is if you are a startup founder, it makes sense to accept investment, this brings the tax dodging practises which those people already know about and now it's available to you too
Why?
If IP and shell companies infuriate you. I invite you to investigate why all billionaires have foundations or its cousin structures and "give" their wealth to it... Clue: tax and inheritance (tax) avoidance. Bill, Buffett, etc. are hypocrites.
But it is not new, even in the Bible they spoke about it (Matthew 6:2): "So when you give to the needy, do not announce it with trumpets, as the hypocrites do in the synagogues and on the streets, to be honored by men."
But it is not new, even in the Bible they spoke about it (Matthew 6:2): "So when you give to the needy, do not announce it with trumpets, as the hypocrites do in the synagogues and on the streets, to be honored by men."
You could reframe it as:
The tax benefits are there to incentivize philanthropic giving. Society benefits from their giving and they receive a tax benefit and PR boost in return. It's not like they're saving more money total by giving it away. And sure, it'd be nice if philanthropists were super humble and anonymous, but the money helps either way, and I don't think those who are helped by the giving care if the givers have a statue of themselves up somewhere.
The tax benefits are there to incentivize philanthropic giving. Society benefits from their giving and they receive a tax benefit and PR boost in return. It's not like they're saving more money total by giving it away. And sure, it'd be nice if philanthropists were super humble and anonymous, but the money helps either way, and I don't think those who are helped by the giving care if the givers have a statue of themselves up somewhere.
The core claim above is that ultimately the foundation is a lip service activity to preserve wealth. If a hundred billionaire pays out 1 billion dollars in philanthropy via the foundation, but earns 10 billion tax free then they are doing quite well.
It's a trivial matter to write the terms of the foundation such that yourself/successors can draw permanent income via "board" positions, advisory roles, or other means.
It's a trivial matter to write the terms of the foundation such that yourself/successors can draw permanent income via "board" positions, advisory roles, or other means.
How would that work exactly? Genuine question, I've never understood how donating saves on taxes, you have to pay at some point to access the money, no?
In theory, you could donate to a charitable org you control, live on its properties, travel for "business" reasons, so on and so forth tax free.
There's also the unfortunately more common interpretation I see on reddit where somehow people believe that tax deductions are generally greater than the donated amount
There's also the unfortunately more common interpretation I see on reddit where somehow people believe that tax deductions are generally greater than the donated amount
I think the idea is that you "pay" the charity instead of the tax man.
This in turn allows you to take income from the charity (as an advisor/board member/fake title) so you're getting some back (with 40% taxed as income) via charity "employment".
Then as a cherry on top, you get to push headlines that you are altruistic and have buildings named after you.
Also, your friends can be advisors/board members for your charity and donate you gifts.
This in turn allows you to take income from the charity (as an advisor/board member/fake title) so you're getting some back (with 40% taxed as income) via charity "employment".
Then as a cherry on top, you get to push headlines that you are altruistic and have buildings named after you.
Also, your friends can be advisors/board members for your charity and donate you gifts.
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This is how - https://techstartups.com/2021/04/30/bill-gates-turned-55-mil...
First you buy stock in your selected list of companies. Next you pledge suitable sums of money to charity programmes. Then you use your power and influence in ensuring said companies get all the big contracts. Your foundation is funding these programmes of course, so you can influence whom they partner with. The stocks of those companies shoot up and you profit. The funding is effectively more of a strategic investment than a donation. The tax savings are just a bonus.
Think about why Gates, who is in the philanthropy business, fought so hard to ensure Oxford don't put out their vaccine in the public domain? Oxford wanted to do so but Gates stepped in "suggesting" they partner with a well known entity like AstraZeneca instead. Of course, when you are a benefactor to an orgranisation, your suggestions tend to do more than just suggestions. AstraZeneca's terms were that they get exclusive IP and licensing rights and you know the rest.
First you buy stock in your selected list of companies. Next you pledge suitable sums of money to charity programmes. Then you use your power and influence in ensuring said companies get all the big contracts. Your foundation is funding these programmes of course, so you can influence whom they partner with. The stocks of those companies shoot up and you profit. The funding is effectively more of a strategic investment than a donation. The tax savings are just a bonus.
Think about why Gates, who is in the philanthropy business, fought so hard to ensure Oxford don't put out their vaccine in the public domain? Oxford wanted to do so but Gates stepped in "suggesting" they partner with a well known entity like AstraZeneca instead. Of course, when you are a benefactor to an orgranisation, your suggestions tend to do more than just suggestions. AstraZeneca's terms were that they get exclusive IP and licensing rights and you know the rest.
In some aspects it is controlling how your TAXES are spent by cutting out the middle man.
I don't see how this is generally desirable though.
Replacing the government middleman with a rich-person & associated bureacracy middleman. At least the government is meant to be accountable to the people.
Replacing the government middleman with a rich-person & associated bureacracy middleman. At least the government is meant to be accountable to the people.
This exactly, and because of the absurd magnitude of wealth some people have they are setting policy with their foundations. Basically governing without ever being elected.
The whole philanthropy argument is irrelevant PR.
This wealth wasn't created in a vacuum.
The whole philanthropy argument is irrelevant PR.
This wealth wasn't created in a vacuum.
I’ll start paying heed to this line of reasoning when a significant portion of tax revenue is spent bombing innocents. There’s very shaky moral grounds for many of our actions overseas, and I don’t blame any rich person for wanting to control policy for significant philanthropic efforts.
Does Oil & Gas fall under offshore efforts?
Gold & uranium?
There's always something some where worth taking, smoke and mirrors of democracy pave the way.
One country's terrorist is another country's freedom fighter.
Gold & uranium?
There's always something some where worth taking, smoke and mirrors of democracy pave the way.
One country's terrorist is another country's freedom fighter.
We can in theory vote for people that wont bomb innocents we can't vote out the rich people in any meaningful way.
The laws that allow this philanthropy are controlled by us. We most certainly can vote them out of existence
We can't vote their wealth out of existence easily when they own the legislators.
It is a tool, you are right. But not the solution so it should not be so heavily encourage.
What should be encourage: a better distribution of the profits in the value production chain. At amazon, Wallmart, all the employees should be obscenely well paid (relatively to their job), the enormous profits should not be concentrated at the top.
What should be encourage: a better distribution of the profits in the value production chain. At amazon, Wallmart, all the employees should be obscenely well paid (relatively to their job), the enormous profits should not be concentrated at the top.
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How would someone at that level of wealth give in a more empathetic way? What should Bill and Buffett be doing instead?
Buffett always complains that he did not pay enough tax. He could simply wire 50% of his fortune to the IRS. His secretary had no choice. (End of sarcasm)
They should donate to a foundation. They should not have link with it (direct or indirect). Their family (direct or indirect) should not have link with it (direct or indirect).
The problem with these structures is that they allow someone to control and directly benefit from assets without fiscally owning them. Usually these foundations have complex structures and use generous fiscal code of some countries.
For many, the main goal is to lower the fiscal pressure during transmission to the children.
They should donate to a foundation. They should not have link with it (direct or indirect). Their family (direct or indirect) should not have link with it (direct or indirect).
The problem with these structures is that they allow someone to control and directly benefit from assets without fiscally owning them. Usually these foundations have complex structures and use generous fiscal code of some countries.
For many, the main goal is to lower the fiscal pressure during transmission to the children.
This argument gets played frequently but it misses the a point. Buffet is not complaining that he has not been able to send enough money to the government he is complaining that the system has no way to take the money from people like him. It’s is meaningless to send more money as the complaint is about the system and how it deals with the overall group he is a part of.
The consistent criticism is that Buffet has not put in enough lobbying to change the system. He could afford building of lobbyists and not farms and burned out influencers manipulating public consensus. Now that’s a a decent criticism. But no one should ever have to pay more than they must, just to have an opinion on their own government.
The consistent criticism is that Buffet has not put in enough lobbying to change the system. He could afford building of lobbyists and not farms and burned out influencers manipulating public consensus. Now that’s a a decent criticism. But no one should ever have to pay more than they must, just to have an opinion on their own government.
I think by the very nature of saying that he should be taxed more is sufficient enough. Why would anyone pay money to lobbyists to then have to pay more taxes. He provided political cover and conversation around it. Sufficient enough IMO. Ridiculous to think he would spend money to increase his own tax burden - if people can't get it done themselves than that's on them.
I’m sorry what?
Buffet shouldn’t have just cut the IRS a check for $2B because it’s “meaningless to just send the money”?
So unless all the pieces are in place there is no value in paying the amount in taxes you publicly claim you should pay?
That’s like saying alcohol should be illegal, but drinking all the time. “Well, there is no point in me not drinking, the point is to change the law”.
That makes zero sense.
Buffet shouldn’t have just cut the IRS a check for $2B because it’s “meaningless to just send the money”?
So unless all the pieces are in place there is no value in paying the amount in taxes you publicly claim you should pay?
That’s like saying alcohol should be illegal, but drinking all the time. “Well, there is no point in me not drinking, the point is to change the law”.
That makes zero sense.
Disagree. Why would you arbitrarily pay the IRS money if you didn't owe them anything. It would put himself in a weaker competitive position against his competitors and for what benefit?
I completely disagree with you. The move should be to change the system.
I completely disagree with you. The move should be to change the system.
You pay them because your argument is “i should be paying more”.
It’s hard to take someone seriously when they say they should pay more tax, have every opportunity to pay more tax, yet choose not to pay more tax.
It’s hard to take someone seriously when they say they should pay more tax, have every opportunity to pay more tax, yet choose not to pay more tax.
He's arguing that the system should charge him more and his class of citizens more. Why would he arbitrarily pay more if noone else in his cohort is paying more? Doesn't make any sense.
What you are saying is he should make a donation to the US government.
What you are saying is he should make a donation to the US government.
No, those are just weasel words. It’s setting an example by doing what you’re saying others should be doing.
It’s why we have the phrase “put your money where you mouth is”.
And it’s not a donation. It’s intentionally paying more taxes because that what you think you should be doing. If the law changed he’d be paying the extra money anyways.
It’s why we have the phrase “put your money where you mouth is”.
And it’s not a donation. It’s intentionally paying more taxes because that what you think you should be doing. If the law changed he’d be paying the extra money anyways.
Well maybe you could consider it 'paying more taxes' internally but in reality it would be classified as a donation otherwise the US government would give him a refund for overpaying his taxes. And to my prior point I don't see how that gets anyone else on board.
The law won't change retroactively so I don't see "If the law changed he’d be paying the extra money anyways." makes any sense.
The law won't change retroactively so I don't see "If the law changed he’d be paying the extra money anyways." makes any sense.
Your argument is illogical because it implies that people should be able to alter the tax law by intentionally overpaying taxes.
Buffer should've done same but opposite what Koch brothers do: fund powerful think-tanks, but left of center, to promote progressive tax and eliminating loopholes and limitation of business taxes and capital gains taxes, I guess also promoting estate taxes for a good measure.
The argument is usually that you personally making the change isn't significant. Even $2B from Buffet isn't significant on a "US government" level. So making that change would "hurt" Buffet a lot for not much gain.
Changing the law, on the other hand, is significant, because it impacts every millionaire/billionaire.
Changing the law, on the other hand, is significant, because it impacts every millionaire/billionaire.
No, this is bullshit. “Hurt” Buffet? Hurt him how? Wouldn’t the higher tax rate “hurt” home too.
This is just a bullshit billionaire who won’t do what he’s asking others to do.
This is just a bullshit billionaire who won’t do what he’s asking others to do.
>Buffett always complains that he did not pay enough tax. He could simply wire 50% of his fortune to the IRS. His secretary had no choice. (End of sarcasm)
Wealth is competitive. Over time, having a higher rate of return than someone else results in substantial differences in overall wealth. Everyone in his position being on the same playing field and chipping in equally is not the same as him martyring himself and letting more selfish peers acquire more resources and sway.
Wealth is competitive. Over time, having a higher rate of return than someone else results in substantial differences in overall wealth. Everyone in his position being on the same playing field and chipping in equally is not the same as him martyring himself and letting more selfish peers acquire more resources and sway.
Said better than I in fewer words
millions of Americans struggle with basic expenses. Such expenses are recurring. even if he gave half, it would not last long enough to fix those problems.
Agree - which is why he says it's a systemic problem that needs fixing.
All of these, frankly, stupid arguments that he should just give the IRS money for no reason because they don't tax him high enough is ridiculous. Literally a drop in the bucket. Full year budget - $4.89 Trillion in 2019.
All of these, frankly, stupid arguments that he should just give the IRS money for no reason because they don't tax him high enough is ridiculous. Literally a drop in the bucket. Full year budget - $4.89 Trillion in 2019.
I think the real thing is that Buffet knows that wiring your fortune to the IRS is a perilously stupid way to do good with your money; just statistically such a huge chunk of that will go to, say, bombing children halfway around the world, bureaucracies that spend money better than actually provide healthcare, and anti-poverty programs that are better at lining the pockets of 'social entrepreneurs' that are better at writing grants than providing services to the poor.
If you do actually believe that the federal government is the most efficient way to redistribute wealth, at least earmark it to killing the debt, which is an unethical institution (you cannot go back in time and vote against spending that your generation is forced to pay off; it's taxation without representation)
https://www.treasurydirect.gov/govt/reports/pd/gift/gift.htm
If you do actually believe that the federal government is the most efficient way to redistribute wealth, at least earmark it to killing the debt, which is an unethical institution (you cannot go back in time and vote against spending that your generation is forced to pay off; it's taxation without representation)
https://www.treasurydirect.gov/govt/reports/pd/gift/gift.htm
It’s fine if he thinks it’s stupid, but then he shouldn’t complain that he doesn’t pay enough either as if only he could pay more then he would do so. BS!
I don’t have a problem with the guy or with his wealth, but the whole “oh but if they’d only tax me” thing is infuriating.
Hell, he could just endow any number of non-Ivy League schools and pay for kids to go to college.
I don’t have a problem with the guy or with his wealth, but the whole “oh but if they’d only tax me” thing is infuriating.
Hell, he could just endow any number of non-Ivy League schools and pay for kids to go to college.
I have a genuine question do you know what Buffets philanthropies do or his plans with his wealth? Or are you just reacting to talking points?
I'm reacting to his talking points - I'm not sure what his philanthropies will do with his wealth, but I assume not give it to the IRS so I think the point still stands.
Anybody who wants to pay more taxes can write the IRS a check. It's very easy to do.
Anybody who wants to pay more taxes can write the IRS a check. It's very easy to do.
Exactly this. I don't even make nearly as much as warren Buffett and I'm actively contributing to an unrelated kid's (single mom, service worker, spotty job reliability) college fund.
You just have to step up and do it one day, or, if you're warren buffet, tell your personal assistant to set it up.
You just have to step up and do it one day, or, if you're warren buffet, tell your personal assistant to set it up.
Frankly if I was a billionaire and had the means to setup my own charity that I had complete visibility into so I knew exactly where every penny was spent I would do that over giving it to another foundation.
Agree. Unfortunately today a Foundation is mainly a optimisation structure. Most of the countries have usually other structures (in their fiscal code) to encourage people to help.
Sticking your nose in "where every penny was spent" is not great and I imagine for most people it would lead quickly to micromanagement. What do you know about charities, about running charities? Anything? Give anonymously. To people who already know what they're doing. You're a billionaire, you can afford list price for benefit events.
Paying as much taxes as they can. And why not more? IIRC the 1040A has a field where you can give the government as much extra money as you want.
Oh but it doesn't get spent with your name associated, so that's obviously not a good option for egomaniacs.
Oh but it doesn't get spent with your name associated, so that's obviously not a good option for egomaniacs.
$0.15 of every dollar given would also go toward defense spending, which some find objectionable...
If SpaceX can reduce launch costs, we need one of these uber billionaires to launch rockets with some kind of exploding black powder to create a dot-matrix picture of themselves on the moon.
Yes and no, in the case of charities, our tax system encourages this behavior intentionally. Obviously there are those who take advantage more than others, but often you would find that it's not easy to do so without actually breaking the law.
Can someone create a Dutch-shell-companies-as-as-service (DSCaaS), generate and submit all legal documents automatically, and help normal citizens dodge the same amount of taxes?
I was actually offered this as a service by a company doing formations in the Seychelles (they were spamming people) - quite literally had a spammer tell me "no, don't buy my product, it isn't worth it"
They basically said the cost of company formation (doesn't really matter where, but anywhere that matters, like Panama or Seychelles or BVI or Macau or etc), mail handling monthly payments, virtual office payments, legal and accountant time, etc exceeds more than 99% of peoples' actual tax payment. That includes people making 500k. And that there is virtually no point in doing so. Doubly more if you are US based due to reporting requirements and massive additional costs for that.
IANAL, but based on what I've been told you are not able to easily do this if you are employed by a normal company - it requires that you hold a company in the first place to have intellectual property, branding to be able to licence cross-shell [easiest compared to trying to shuffle physical items of value around], etc, and that the company gets the payment, so people making 500k FAANG salaries are out as they are FTE employed.
And that your cost of finding the 'correct' accountant that has experience in this will far exceed your previous accountant cost.
They basically said the cost of company formation (doesn't really matter where, but anywhere that matters, like Panama or Seychelles or BVI or Macau or etc), mail handling monthly payments, virtual office payments, legal and accountant time, etc exceeds more than 99% of peoples' actual tax payment. That includes people making 500k. And that there is virtually no point in doing so. Doubly more if you are US based due to reporting requirements and massive additional costs for that.
IANAL, but based on what I've been told you are not able to easily do this if you are employed by a normal company - it requires that you hold a company in the first place to have intellectual property, branding to be able to licence cross-shell [easiest compared to trying to shuffle physical items of value around], etc, and that the company gets the payment, so people making 500k FAANG salaries are out as they are FTE employed.
And that your cost of finding the 'correct' accountant that has experience in this will far exceed your previous accountant cost.
I suspect there's a large fixed cost to arrange this so it doesn't make sense for most people. Though maybe there's way to make it cheaper!
Also with inheritance tax in the US, your estate isn't taxed unless it's worth more than $11.18 million [0]. So doesn't matter for most people. It's estimated only %0.2 of estates pay the tax.
[0] https://en.wikipedia.org/wiki/Estate_tax_in_the_United_State...
Also with inheritance tax in the US, your estate isn't taxed unless it's worth more than $11.18 million [0]. So doesn't matter for most people. It's estimated only %0.2 of estates pay the tax.
[0] https://en.wikipedia.org/wiki/Estate_tax_in_the_United_State...
I suppose a lot of the fixed costs are lawyers charging $1000/hour to fill in some blanks on some Word templates?
Maybe an entrepreneur just needs to make that a web form. Fill in details and generate the same form for $10 instead of $1000.
And then some robots to print, seal up, and mail the envelopes and we're done.
I should be able to spin up a Dutch shell company like an EC2 instance. Maybe have "AWS" regions for Cayman and other places too and a Python API to spin up shell companies in arbitrary locales.
Maybe an entrepreneur just needs to make that a web form. Fill in details and generate the same form for $10 instead of $1000.
And then some robots to print, seal up, and mail the envelopes and we're done.
I should be able to spin up a Dutch shell company like an EC2 instance. Maybe have "AWS" regions for Cayman and other places too and a Python API to spin up shell companies in arbitrary locales.
Each pod in a Kubernetes cluster should register itself as a separate LLC and declare bankruptcy on shutdown. Free cloud deployments!
Could there be one Dutch Shell Company Company and individuals could enter into a contract with it to pass their wealth through to avoid taxes?
Forget it. Tax offices are chasing the big fishes so they have all the tools to catch and bother the small inexperienced ones. Also running these structure is actually very expensive and complex.
Normal citizen have only 2 possibilities: cash economy or move to place fiscally more adapted to their needs (each country favor a type of fiscal profil).
Anyone with any money should setup a trust. Especially if they want to marry. Done right it’s an amazing way to protect your wealth. Better protection than a prenup can provide.
>Anyone with any money should setup a trust
Anyone in the US with any money should setup a trust
Anyone in the US with any money should setup a trust
[deleted]
Where can I read more?
UI_at_80x24(1)
IMO most of the “exceptional” people in a country “by of and for the people” are hypocrites for waiting on billionaires to fix things
How is political capitulation by the masses exceptional?
Covid offered a perfect opportunity for info workers to show solidarity with on-site workers by not opening those laptops at home.
But really it’s the leopards fault they keep eating our faces because we refuse to build a cage (higher taxation, breaking up monopoly).
The solution is not new either as we just went through it in recent memory with ATT.
I’m rather tired of the general public pointing fingers at everyone but themselves.
Stop going to the jobs they offer. It’s our agency not theirs. Demand they respect it.
How is political capitulation by the masses exceptional?
Covid offered a perfect opportunity for info workers to show solidarity with on-site workers by not opening those laptops at home.
But really it’s the leopards fault they keep eating our faces because we refuse to build a cage (higher taxation, breaking up monopoly).
The solution is not new either as we just went through it in recent memory with ATT.
I’m rather tired of the general public pointing fingers at everyone but themselves.
Stop going to the jobs they offer. It’s our agency not theirs. Demand they respect it.
>Stop going to the jobs they offer. It’s our agency not theirs. Demand they respect it.
A general strike? You're asking for people to cooperate in a mass prisoner dilemma on a societal scale. Never going to happen with the complete lack of labor organization in the US.
A general strike? You're asking for people to cooperate in a mass prisoner dilemma on a societal scale. Never going to happen with the complete lack of labor organization in the US.
General strikes occur are strange occurences. The few examples such as France in 1968, or the Soviet Union in 1991, or the Praque Spring in 1968 occurred for reasons more akin to "mass social unrest/dissatisfaction" than organized labor activity.
> In 2019, Uber claimed $4.5 billion in global operating losses (excluding the US and China) for tax purposes – in reality, it brought in $5.8 billion in operating revenue
This sentence makes me feel like the article author does not understand the difference between profit and revenue. The wording makes it seem like there is something nefarious about being a loss making company.
Uber's global 2020 revenue was 11 billion, with a net income of -7 billion.
> a manuever that grants the company a $1 billion tax break every year for the next 20 years, the researchers found
I just have no idea how any researcher would be able to compute this. Corporate taxes are based on profits. In order to pay taxes, a corporation must actually make money. Did the researchers forecast a 20 year P&L and compute lost tax revenue based on their hypothetical financials?
This sentence makes me feel like the article author does not understand the difference between profit and revenue. The wording makes it seem like there is something nefarious about being a loss making company.
Uber's global 2020 revenue was 11 billion, with a net income of -7 billion.
> a manuever that grants the company a $1 billion tax break every year for the next 20 years, the researchers found
I just have no idea how any researcher would be able to compute this. Corporate taxes are based on profits. In order to pay taxes, a corporation must actually make money. Did the researchers forecast a 20 year P&L and compute lost tax revenue based on their hypothetical financials?
Sure, but tax breaks themselves are often fixed.
Buying stock options is a great example of where you might end up with a fixed tax break.
Buy 1000 options at your strike price ex: $1, pay tax on their current estimated value (say the value is estimated at $100, you pay tax on (100 - 1) * 1000 = $99,000 of "value" that you gained, probably about 20k).
2 years later: Boom, company goes out of business. That stock valued at 99k was actually worth 0k, but you paid taxes on 99k.
So now you can write off approximately $3,500 (for this case) in taxes every year until you've written off that 20k you paid in taxes - about 6 years in this case.
Has absolutely zilch to do with how much your P&L are. Those will still influence your final tax bill, of course, but they don't touch the break.
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Now - this case is not "avoidance" since you've paid the tax and are getting it back, but there are a lot of similar breaks related to loans, and the interest you're paying on loans - especially if the thing you're using that loan for is also taxed.
So it's VERY possible that Uber has generated a $1 billion tax break every year through loan shenanigans. That doesn't mean that they won't pay taxes, it just means the yearly bill will be 1 billion lower than it probably ought to have been.
Buying stock options is a great example of where you might end up with a fixed tax break.
Buy 1000 options at your strike price ex: $1, pay tax on their current estimated value (say the value is estimated at $100, you pay tax on (100 - 1) * 1000 = $99,000 of "value" that you gained, probably about 20k).
2 years later: Boom, company goes out of business. That stock valued at 99k was actually worth 0k, but you paid taxes on 99k.
So now you can write off approximately $3,500 (for this case) in taxes every year until you've written off that 20k you paid in taxes - about 6 years in this case.
Has absolutely zilch to do with how much your P&L are. Those will still influence your final tax bill, of course, but they don't touch the break.
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Now - this case is not "avoidance" since you've paid the tax and are getting it back, but there are a lot of similar breaks related to loans, and the interest you're paying on loans - especially if the thing you're using that loan for is also taxed.
So it's VERY possible that Uber has generated a $1 billion tax break every year through loan shenanigans. That doesn't mean that they won't pay taxes, it just means the yearly bill will be 1 billion lower than it probably ought to have been.
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I've heard this suggested before: abolish all corporate tax and increase capital gains tax to equal income tax.
This will level the playing field between large and small businesses, since the former has the means to dodge byzantine corporate tax laws.
It will also give an incentive for companies to stay onshore.
Any downsides?
This will level the playing field between large and small businesses, since the former has the means to dodge byzantine corporate tax laws.
It will also give an incentive for companies to stay onshore.
Any downsides?
Probably the biggest downside is that the government would lose a major policy tool. If there are no corporate taxes then there's no way to incentivize companies via tax breaks.
It would also become more important to enforce taxation on corporate benefits. If a company provides a car, jet, mansion etc for an executive's personal use, then they need to put a monetary value on that usage and tax it as income. It's not that it's impossible to do that, but it's an additional hurdle for enforcement. Not only do you have to confirm that the company provided the employee X benefit, but you also have to confirm that they valued it appropriately.
Finally, it's just not good politics. It's really hard to sell a plan like this to voters. Even if it doesn't raise the taxes of the average voter, it sounds like you're moving the burden of taxation from rich companies onto the average citizen.
I think there's a lot of economists who love the idea because it really does simplify things. Besides the framing, there's not really a big difference between subsidies or tax breaks. But that third point is probably what kills it.
It would also become more important to enforce taxation on corporate benefits. If a company provides a car, jet, mansion etc for an executive's personal use, then they need to put a monetary value on that usage and tax it as income. It's not that it's impossible to do that, but it's an additional hurdle for enforcement. Not only do you have to confirm that the company provided the employee X benefit, but you also have to confirm that they valued it appropriately.
Finally, it's just not good politics. It's really hard to sell a plan like this to voters. Even if it doesn't raise the taxes of the average voter, it sounds like you're moving the burden of taxation from rich companies onto the average citizen.
I think there's a lot of economists who love the idea because it really does simplify things. Besides the framing, there's not really a big difference between subsidies or tax breaks. But that third point is probably what kills it.
Your third point is a good one. It would take a very clever reframing so the public understands the rationale, although it's doubtful that could ever happen.
Regarding your second point, how does this become more of a concern when corporate tax rates are low? If a company buys an employee a car using pretax income, that will be tax free regardless of the capital gains or corporate tax rates.
Regarding your second point, how does this become more of a concern when corporate tax rates are low? If a company buys an employee a car using pretax income, that will be tax free regardless of the capital gains or corporate tax rates.
Corporate tax does not make sense because "income" and "profit" for a company are very loosely defined. Instead, a simple GST on products and services should be enough. Unambiguous and easy to reason about, with very less maneuverability to avoid.
In fact, I would rather income tax for individuals also be done away with. Just tax every transaction in the market. That is much fairer and presents less avenues to avoid tax.
In fact, I would rather income tax for individuals also be done away with. Just tax every transaction in the market. That is much fairer and presents less avenues to avoid tax.
> Corporate tax does not make sense because "income" and "profit" for a company are very loosely defined.
Yes, the verbiage used by the IRS is awful; they use the term "income tax" to describe both the "personal revenue tax" and the "corporate profit tax".
Unfortunately they're stuck with it because the 16th amendment uses (but does not define) the term "income".
So if they call the thing that they're taxing anything other than "income", they have to deal with a bunch of clowns arguing that they aren't allowed to tax that.
Yes, the verbiage used by the IRS is awful; they use the term "income tax" to describe both the "personal revenue tax" and the "corporate profit tax".
Unfortunately they're stuck with it because the 16th amendment uses (but does not define) the term "income".
So if they call the thing that they're taxing anything other than "income", they have to deal with a bunch of clowns arguing that they aren't allowed to tax that.
A simple tax like that on its own is also socially regressive. Implemented on its own, people would go hungry, causing social unrest.
What would you suggest as a simple social stabiliser on top? A negative personal income tax up to a certain rate?
What would you suggest as a simple social stabiliser on top? A negative personal income tax up to a certain rate?
> Implemented on its own, people would go hungry, causing social unrest.
Why would that happen?
Why would that happen?
Because the poor and working class spend all their money on necessities and in doing so incur higher effective transaction taxes relative to their income.
Does differential tax rates on necessities Vs luxuries help here?
For example, in the UK, sales tax is discounted or not applied on many types of food, children's clothes, etc. - yes, you end up with strange arguments at the edges (a famous one being the lawsuit to decide whether Jaffa Cakes are legally cakes or biscuits) but I think it _could_ work.
For example, in the UK, sales tax is discounted or not applied on many types of food, children's clothes, etc. - yes, you end up with strange arguments at the edges (a famous one being the lawsuit to decide whether Jaffa Cakes are legally cakes or biscuits) but I think it _could_ work.
> lawsuit to decide whether Jaffa Cakes are legally cakes or biscuits
We had a lawsuit to determine if KitKat is a chocolate or a biscuit for similar reasons:
https://www.businessinsider.in/KitKat-is-a-biscuit-and-Parac...
> In the case of Nestle India Ltd Vs Commissioner of Central Excise, Mumbai of 1999, it was ruled that KitKat is a biscuit and not a chocolate that is taxed high.
We had a lawsuit to determine if KitKat is a chocolate or a biscuit for similar reasons:
https://www.businessinsider.in/KitKat-is-a-biscuit-and-Parac...
> In the case of Nestle India Ltd Vs Commissioner of Central Excise, Mumbai of 1999, it was ruled that KitKat is a biscuit and not a chocolate that is taxed high.
First time I've heard of it, but one thing that comes to mind: if a company is very successful in the Netherlands, in part due to being able to make use of its excellent infrastructure, but its owners are in the US, then they will not be contributing to the maintenance of that infrastructure. You'd then lose the positive feedback loop of the infra paying for itself, enabling more successful businesses.
Estonia has done just this.
Yes.
> increase capital gains tax to equal income tax
Is far easier said than done. For example, would you include the $250K capital gains deduction for selling a home in that? Additionally, you're probably referring to raising long-term capital gains tax, but that has the side effect of disincentivizing long-term investment in favor of more short-term speculation.
> increase capital gains tax to equal income tax
Is far easier said than done. For example, would you include the $250K capital gains deduction for selling a home in that? Additionally, you're probably referring to raising long-term capital gains tax, but that has the side effect of disincentivizing long-term investment in favor of more short-term speculation.
Not at all. Many countries already do this. For example, in Australia, capital gains is considered as income. It contributes to your progressive tax bracket the same way income does. For property, you do not pay capital gains tax when you sell your primary residence (that you live in) but you do on investment properties.
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How would it disincentivize long term investment?
In the US dividends are taxed at capital gains. I believe if a company makes $X and gives it out as a dividend it makes no difference to the investor whether the split between capital gains and corporate tax is 25/25 versus 43.75/0?
In the US dividends are taxed at capital gains. I believe if a company makes $X and gives it out as a dividend it makes no difference to the investor whether the split between capital gains and corporate tax is 25/25 versus 43.75/0?
What's to stop me from hiding my capital gains in a series of shell companies?
You need to follow laws to funnel money through your shell companies. In turn, global agreement could require a tax small tax for any capital gains transfers made by each of those shell companies. The end result is that companies can still dodge taxes, but the more law-abiding ones aren't quite as efficient at doing so. That said, I haven't investigated the details of how this might work, and I'm sure like anything humans invent, there will be exceptions. Perhaps it would apply to large companies only, and suddenly lots of companies break up to become smaller affiliated investors that just happen to invest in the same companies in various jurisdictions, perhaps through an unaffiliated managed ETF. If there's benefit -- read: profit -- to working around a law, I'm sure folks will find a way, unfortunately.
Good luck exfiltrating it back to your bank account.
The difference is you only need to transfer enough money to your personal bank account to cover your annual expenses. So if you make $500k/year but only spend $100k/year, then the other $400k will continue to grow tax free.
That's a pretty big difference. Makes the idea of a sales tax only kind of attractive since it doesn't disadvantage income over capital gains.
If the money is in your company then it's in one of your accounts somewhere.
What are you going to tell the IRS when they ask you about the offshore wire transfers coming in? It's a "consulting fee"? You're going to be paying taxes on that at your marginal rate.
Sure, but if you pay yourself a very nice income and realize very many nice incomes in capital gains, then you're still coming out way ahead.
In my opinion, this is example of poor/incomplete regulation. Using sports as an analogy, it's like if a game was designed poorly, we have the expectation that players would act in good faith to not take advantage of rules. But players have the incentive to win, not act in good faith.
I don't think there any actual expectation by policy makers that there will be good faith. These rules are designed this way intentionally.
IMHO the consultants and lobbyists benefit from such convulted loopholes .
These setups are only possible for large consultants to deliver for large consultants and policy makers have plausible deniability when there is no obvious loopholes and benefit from lobbying perks , revoking doors, election donations if not outright corruption.
IMHO the consultants and lobbyists benefit from such convulted loopholes .
These setups are only possible for large consultants to deliver for large consultants and policy makers have plausible deniability when there is no obvious loopholes and benefit from lobbying perks , revoking doors, election donations if not outright corruption.
Yes, for me this is flopping in soccer and basketball. There's a pro for the athlete (chance of foul called) while the con is little to none. Hence both sports have floppers. The regulatory system must adapt to those who take advantage of the spirit of the policy but adhere to the letter of it. Obviously this is a constant issue, but what won't work is trying to "shame" the bad actors through hearings, media, etc. Policy must constantly evolve, esp. in areas like taxation.
Also for those who are better versed with law, is it possible that companies can legally defend actions like this by arguing they are maximizing shareholder legally and thus, they are obligated to do so?
Also for those who are better versed with law, is it possible that companies can legally defend actions like this by arguing they are maximizing shareholder legally and thus, they are obligated to do so?
> Using sports as an analogy
An example I'm quite familiar with; the Ferrari Formula 1 team used an engine in (at least) 2019, and possibly earlier too, that had momentary higher fuel flow than allowed by the regulations. The regulations were very clear that at no time the flow was to be larger than 100 kg per hour.
The hurdle: enforcing the fuel flow into an engine, running at 12,000 RPM, is hard when you're not the one building it. So the FIA, the governing body, commissioned a fuel flow device that would sit in the fuel line between the tank and the engine, and measure the throughput. The flow was/is measured almost 5,000 times per second.
Ferrari found out how it worked, and simply produced higher throughput when the fuel flow monitor wasn't reading the flow. Entirely genius but highly illegal. Between 2019 and 2020 they were found out, and for the 2020 season they were considerably slower because their engine was designed to use the fuel flow workaround.
TL;DR: even perfectly designed regulations can have problems when it comes to figuring out if something is being broken. In this example, Ferrari got off without a penalty because they in turn helped the governing body figure out a way to catch anyone doing the same thing. This rule break was suspected by competitors and fans alike for the best part of the 2019 series. It wasn't an out-of-the-blue shock. Figuring out what exactly is being done illegally is just not that easy in large, opaque systems.
An example I'm quite familiar with; the Ferrari Formula 1 team used an engine in (at least) 2019, and possibly earlier too, that had momentary higher fuel flow than allowed by the regulations. The regulations were very clear that at no time the flow was to be larger than 100 kg per hour.
The hurdle: enforcing the fuel flow into an engine, running at 12,000 RPM, is hard when you're not the one building it. So the FIA, the governing body, commissioned a fuel flow device that would sit in the fuel line between the tank and the engine, and measure the throughput. The flow was/is measured almost 5,000 times per second.
Ferrari found out how it worked, and simply produced higher throughput when the fuel flow monitor wasn't reading the flow. Entirely genius but highly illegal. Between 2019 and 2020 they were found out, and for the 2020 season they were considerably slower because their engine was designed to use the fuel flow workaround.
TL;DR: even perfectly designed regulations can have problems when it comes to figuring out if something is being broken. In this example, Ferrari got off without a penalty because they in turn helped the governing body figure out a way to catch anyone doing the same thing. This rule break was suspected by competitors and fans alike for the best part of the 2019 series. It wasn't an out-of-the-blue shock. Figuring out what exactly is being done illegally is just not that easy in large, opaque systems.
I wouldn't be surprised if there other big companies doing the same. So we need to fix the regulations to close this loophole.
Loophole makes it seem like it was accidental. This happens over and over again, it's on purpose.
The regulation is likely working as intended. The bug is the disclosure here.
> Uber’s sophisticated efforts to achieve little or no tax burden on multibillion-dollar global revenues highlights a long-standing challenge governments face in enforcing tax compliance among wealthy corporations and individuals across borders.
But... It's legal... None of it is illegal... They are compliant with the law... It's the law and the government's that need to change... Or am I missing something here?
But... It's legal... None of it is illegal... They are compliant with the law... It's the law and the government's that need to change... Or am I missing something here?
Yes, this seems correct. This behaviour is "compliant" in the sense of "complying with the law", so calling it a "challenge... in enforcing tax compliance" seems straightforwardly wrong.
The tax laws allow this. Preventing it requires changing the law. If a government complains about this problem but doesn't try to change the law, then it's reasonable to ask if the government is truly serious about doing anything.
However, it's also true that this a difficult problem for governments to solve. Consider a company that has a head office in the US and factories in Indonesia, selling to customers in Europe and the US. Where should the corporate profits be taxed? Without the customers, there is no profit. Without the factories, there is no profit. Without the head office directing the whole thing, there is no profit. Which governments are entitled to a share of that? If the Indonesian subsidiary is "selling" the goods to the European and US branches and turning a profit, and the head office is "selling" its management services to both and turning a profit, and the retail arms are making profits on sales to end customers, then there might be taxes to pay in each jurisdiciton.
Now move the head office to a tax haven, and have the subsidiary units pay hefty IP licensing fees to the parent company - it seems that there are no taxable profits anywhere!
This seems obviously bad, but the amount of work involved in crafting a set of rules which prevent this is hard. Either there is a global corporate tax rate such that this kind of profit-shifting no longer makes sense, or there is some system for distinguishing between illegitimate profit-shifting (to a tax haven) and legitimate profit-shifting (profits accumulating with the parent company in the US rather than in the subsidiaries). Of course, perhaps the latter isn't legitimate either! European governments worried about FANG companies would be no happier if FANG paid heavy corporate taxes in the US if they continued to pay very little corporate tax in Europe, for instance.
So, I think government complaints about this are of the "this is too difficult for us to figure out and get international consensus on", so they resort to a kind of moral shaming, rather like the local priest shaming the town's wealthiest individuals for refusing to pay for repairs to the church roof.
The tax laws allow this. Preventing it requires changing the law. If a government complains about this problem but doesn't try to change the law, then it's reasonable to ask if the government is truly serious about doing anything.
However, it's also true that this a difficult problem for governments to solve. Consider a company that has a head office in the US and factories in Indonesia, selling to customers in Europe and the US. Where should the corporate profits be taxed? Without the customers, there is no profit. Without the factories, there is no profit. Without the head office directing the whole thing, there is no profit. Which governments are entitled to a share of that? If the Indonesian subsidiary is "selling" the goods to the European and US branches and turning a profit, and the head office is "selling" its management services to both and turning a profit, and the retail arms are making profits on sales to end customers, then there might be taxes to pay in each jurisdiciton.
Now move the head office to a tax haven, and have the subsidiary units pay hefty IP licensing fees to the parent company - it seems that there are no taxable profits anywhere!
This seems obviously bad, but the amount of work involved in crafting a set of rules which prevent this is hard. Either there is a global corporate tax rate such that this kind of profit-shifting no longer makes sense, or there is some system for distinguishing between illegitimate profit-shifting (to a tax haven) and legitimate profit-shifting (profits accumulating with the parent company in the US rather than in the subsidiaries). Of course, perhaps the latter isn't legitimate either! European governments worried about FANG companies would be no happier if FANG paid heavy corporate taxes in the US if they continued to pay very little corporate tax in Europe, for instance.
So, I think government complaints about this are of the "this is too difficult for us to figure out and get international consensus on", so they resort to a kind of moral shaming, rather like the local priest shaming the town's wealthiest individuals for refusing to pay for repairs to the church roof.
If this is only hiding the potato in layers and layers of companies in different countries, then they have still paid less taxes than what they owe, which clearly is against the law and will generally require them to pay the missing taxes. If it is done through negligent reporting to tax authorities, then more laws may have been broken.
You are absolutely correct. The Netherlands is a tax avoidance haven since many years. There seems to be a global consensus to keep it this way.
It’s crazy that we’re at the point of such massive globalization that sophisticated companies can literally play different business/tax laws of countries off of each other
I don't fully understand the part about Dutch shell companies, but it seems perfectly believable that Uber would have $6B in revenue and still operate at a loss (and owe no income taxes). Isn't that the big criticism of Uber's business model -- that they can't turn a profit at rates people are willing to pay while also compensating drivers?
This begs the question of what purpose the shell companies serve.
Shell companies are just companies without offices. You can use corporate entities to organize assets, create trusts, hold certain obligations, create joint ventures, provide equity to align interests, etc.
All of these things are beneficial.
If you treat this like a game and try to win it, though, the 'building block' of legal personhood can be broken. The mechanics aren't perfect.
You can book profits to one entity, then losses to another by creating 'fake' intercompany transactions, despite the fact that your organization as a whole is net even. We have rules that attempt to deal with these problems in arms-length transactions - regulators get to check if the contract payment amounts make sense.
If you do this with IP, which is hard to value, tax offices have significant issues disputing the value of the inter-company contracts. You use this issue to toss losses between various national corporations to take advantage of problems with individual tax regimes. The double irish/dutch sandwich technique is a great example.
But eventually the chickens need to come home to roost, right? Well, not really. Tax haven jurisdictions basically allow you to park money which you've obtained via your tax avoidance system in an account nearly indefinitely. You'll generally need to pay for a resident or residents to sit on the board of your tax haven jurisdiction corporation board, which lets them scalp 50-250k a year from you, but if you're hoarding billions, it's irrelevant. IF you're a normal joe, however, the accounting, legal and director fees kill you. Oddly, if you look at the leadership structures in place in most tax havens, they look a lot like a bunch of banker expatriates from various financial hubs (hi London!) took over a country that has good weather and nothing else going for it.
The locals receive the windfall of money via directorships and other ancillary financial services, the rich get to hide their money, the companies get to defer tax payments for as long as they want. The only people who don't benefit are the people left holding the tax bag.
Oh wait, that's most of us.
All of these things are beneficial.
If you treat this like a game and try to win it, though, the 'building block' of legal personhood can be broken. The mechanics aren't perfect.
You can book profits to one entity, then losses to another by creating 'fake' intercompany transactions, despite the fact that your organization as a whole is net even. We have rules that attempt to deal with these problems in arms-length transactions - regulators get to check if the contract payment amounts make sense.
If you do this with IP, which is hard to value, tax offices have significant issues disputing the value of the inter-company contracts. You use this issue to toss losses between various national corporations to take advantage of problems with individual tax regimes. The double irish/dutch sandwich technique is a great example.
But eventually the chickens need to come home to roost, right? Well, not really. Tax haven jurisdictions basically allow you to park money which you've obtained via your tax avoidance system in an account nearly indefinitely. You'll generally need to pay for a resident or residents to sit on the board of your tax haven jurisdiction corporation board, which lets them scalp 50-250k a year from you, but if you're hoarding billions, it's irrelevant. IF you're a normal joe, however, the accounting, legal and director fees kill you. Oddly, if you look at the leadership structures in place in most tax havens, they look a lot like a bunch of banker expatriates from various financial hubs (hi London!) took over a country that has good weather and nothing else going for it.
The locals receive the windfall of money via directorships and other ancillary financial services, the rich get to hide their money, the companies get to defer tax payments for as long as they want. The only people who don't benefit are the people left holding the tax bag.
Oh wait, that's most of us.
Thank you, this is one of the most insightful explanations on the subject of shell companies in less than 300 words!
Based on your name handle, are you happen to be one of the lawyers for these oversea tax heavens ;-)
Based on your name handle, are you happen to be one of the lawyers for these oversea tax heavens ;-)
So the profits would go to the offshore corporation, while the losses would go to the US one? But wouldn't the IRS grow suspicious of seeing losses every year?
My understanding is as follows: the Dutch shell company is a parent (holding) company which basically holds shares in a subsidiary. If the holding company owns more than 95% of the shares of its subsidiary it acts as a single fiscal unit, allowing it to be taxed as one. Now, if the parental company has multiple subsidiaries it enables the holding to settle costs of the one, with the profits of the other.
But, the main thing that the Dutch tax system enable, is that you can sell the shares of a subsidiary and hold the profits within the parental company (for the purpose of re-investing) without the need to pay taxes. This enables companies to quickly 'move' subsidiaries around the world without any tax consequences.
This opens up an enormous amount of opportunity for creative tax lawyers who thrive in this grey area. International tax rules are so complex and the stakes so high that in the end they can just negotiate an 'acceptable' tax rate on a government level. Where, in the end, if the government does not agree, they can just 'move' their business somewhere else.
But, the main thing that the Dutch tax system enable, is that you can sell the shares of a subsidiary and hold the profits within the parental company (for the purpose of re-investing) without the need to pay taxes. This enables companies to quickly 'move' subsidiaries around the world without any tax consequences.
This opens up an enormous amount of opportunity for creative tax lawyers who thrive in this grey area. International tax rules are so complex and the stakes so high that in the end they can just negotiate an 'acceptable' tax rate on a government level. Where, in the end, if the government does not agree, they can just 'move' their business somewhere else.
Maybe revenue laundering using borrowed credit? I wouldn't be surprised if some day we discover that many corporations the tech space have been engaged in some kind of global credit laundering scheme using shell companies as a filter to systematically separate credit from debt in order to generate artificial revenue for big tech corporations... Money extracted straight from the big banks.
They should refer to this scheme as a 'Clam farming' because they just load up the shell companies with bank loans then extract the meat and toss away the shell.
They should refer to this scheme as a 'Clam farming' because they just load up the shell companies with bank loans then extract the meat and toss away the shell.
What kind of bank makes business loans without encumbering any collateral?
Why not just create intangible collateral out of thin air? E.g. crypto? Then you just use some of the credit to pump up the value of the collateral to meet the bank's expectation.
That's called fraud. You would need to find an especially stupid bank.
You can certainly do that, but if you're wiling to commit crimes there are much easier ways to make money.
You can certainly do that, but if you're wiling to commit crimes there are much easier ways to make money.
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Maybe they don’t make a loss in every jurisdiction.
Different countries/jurisdictions have very different tax laws. Not all of them tax based on profit alone.
Well Travis got paid...
Individuals are subjected to "alternative minimum tax". Why not corporations?
The trump tax changes actually did. IIRC, a US corporation is taxed either 20% of US net income or 10% of global net income with credits for overseas taxes paid, whichever is more. Corrections welcome, I likely misremembered something. The idea being if you paid at least 10% on the income in the jurisdiction where it was earned, great; if not, you'll pay it at home.
This replaced a higher rate on US net income and global net income that lands in the US.
This replaced a higher rate on US net income and global net income that lands in the US.
Incorporate in a low/zero-tax jurisdiction.
Form a second corporation that resells your product to your US customers at an insignificant markup. It pays tax only on said insignificant markup.
The company it buys from has no US operations or dealings of any kind, therefore does not even file US returns.
Form a second corporation that resells your product to your US customers at an insignificant markup. It pays tax only on said insignificant markup.
The company it buys from has no US operations or dealings of any kind, therefore does not even file US returns.
Looking up “transfer pricing regulations” to see why this doesn’t really work.
Taxing corporations is one of those things that seems pretty obvious until you really dig into the details, at which point you end up with some uncomfortable conclusions. Thus there is this endless handwringing about corporations paying so little yet at the end of the day, the solutions (those that work) are quite unpopular.
Let's walk down this rabbit hole:
So you want to tax corporate profits. Well, trouble is, it's easy to hide profits. For example, interest payments are subtracted from profits, which allows investors to lend money to corporations as loans, and the interest is only taxed by the recipient, but if you lend money to the corporation by purchasing equity, that is taxed twice. This asymmetric tax treatment incentivizes taking on debt and thus financial fragility and short-term thinking. OK, you say, let's treat interest and dividends the same. Then you have this issue with massive executive compensation, which is untaxed as it is treated as an expense. You'd like for that to not be tax-exempt as well. Thus you decide to tax value add -- that is revenue net of your cost of goods. That way, you catch cheaters, since if corp A reports something as a cost (payment to B), then B better record it as a revenue. B can't hide. Except now comes the foreign sector. What if B is a foreign company? There's the rub. One option is to say the foreign company also has to pay you taxes based on what it sells to A. This would effectively put an end to all the shell company shenanigans. To be fair, you can give credit for income paid to other jurisdictions so you don't end up double-taxing (like we do), but that's minor. So now you are happy with your system. You survey the landscape and what have you accomplished? A sales tax! This is just a value added tax, or VAT, which is another form of sales tax. But sales tax is regressive! And very unpopular. So there is this problem where Americans don't want a national sales tax of, say 20%, but they do want a corporate profit tax of, say 40%. And they are really angry when they see the effective corporate tax being so low, say 5%.
This reveals a cold truth, which is that corporations are effectively pass through entities for the human owners of the corporations. So why tax them twice? Well, because we have so many tax loopholes and such large trade deficits that 40% of our corporations are owned by foreigners that don't pay US taxes and 40% are owned by pension funds and tax-advantaged retirement accounts so that only 20% of US equities are subject to any tax at all. So this thrashing around about corporations reveals yet another uncomfortable truth, which is that our massive outsourcing has resulted in an erosion of the tax base just as much as it has destroyed middle class jobs.
This brings us back to a new variant of the old trilema, which is that you can't have free flow of capital (or equivalently, trade) across borders, a floating currency, and your own interest rate policy.
You can only have two of these. Except the tax version of this is that you can't have free flow of capital (that is trade), a floating currency, and your own corporate tax policy. The best you can do is a national sales tax for goods sold to your own citizens. If you try to tax corporations, you will run into the two-headed hydra that your corporations are owned by overseas investors and that your corporations have set up overseas businesses that sell them valuable inputs, so valuable that all the value is routed overseas.
So what happens is people create a tax policy that tries to also avoid tariffs on trade and foreign capital flows, and then they are shocked when corporations arbitrage that away.
Let's walk down this rabbit hole:
So you want to tax corporate profits. Well, trouble is, it's easy to hide profits. For example, interest payments are subtracted from profits, which allows investors to lend money to corporations as loans, and the interest is only taxed by the recipient, but if you lend money to the corporation by purchasing equity, that is taxed twice. This asymmetric tax treatment incentivizes taking on debt and thus financial fragility and short-term thinking. OK, you say, let's treat interest and dividends the same. Then you have this issue with massive executive compensation, which is untaxed as it is treated as an expense. You'd like for that to not be tax-exempt as well. Thus you decide to tax value add -- that is revenue net of your cost of goods. That way, you catch cheaters, since if corp A reports something as a cost (payment to B), then B better record it as a revenue. B can't hide. Except now comes the foreign sector. What if B is a foreign company? There's the rub. One option is to say the foreign company also has to pay you taxes based on what it sells to A. This would effectively put an end to all the shell company shenanigans. To be fair, you can give credit for income paid to other jurisdictions so you don't end up double-taxing (like we do), but that's minor. So now you are happy with your system. You survey the landscape and what have you accomplished? A sales tax! This is just a value added tax, or VAT, which is another form of sales tax. But sales tax is regressive! And very unpopular. So there is this problem where Americans don't want a national sales tax of, say 20%, but they do want a corporate profit tax of, say 40%. And they are really angry when they see the effective corporate tax being so low, say 5%.
This reveals a cold truth, which is that corporations are effectively pass through entities for the human owners of the corporations. So why tax them twice? Well, because we have so many tax loopholes and such large trade deficits that 40% of our corporations are owned by foreigners that don't pay US taxes and 40% are owned by pension funds and tax-advantaged retirement accounts so that only 20% of US equities are subject to any tax at all. So this thrashing around about corporations reveals yet another uncomfortable truth, which is that our massive outsourcing has resulted in an erosion of the tax base just as much as it has destroyed middle class jobs.
This brings us back to a new variant of the old trilema, which is that you can't have free flow of capital (or equivalently, trade) across borders, a floating currency, and your own interest rate policy.
You can only have two of these. Except the tax version of this is that you can't have free flow of capital (that is trade), a floating currency, and your own corporate tax policy. The best you can do is a national sales tax for goods sold to your own citizens. If you try to tax corporations, you will run into the two-headed hydra that your corporations are owned by overseas investors and that your corporations have set up overseas businesses that sell them valuable inputs, so valuable that all the value is routed overseas.
So what happens is people create a tax policy that tries to also avoid tariffs on trade and foreign capital flows, and then they are shocked when corporations arbitrage that away.
Well presumably you tax corps on profit and if they have no profit, there would be no AMT.
Cause they're not people. Oh wait...
Individuals can't pretend to be based in Ireland to not pay US taxes. US taxes global individual income, but not global corporate profits.
>US taxes global individual income...
Always wondered why US citizens do not make a bigger deal out of this. If I understand correctly, if you are a US citizen, but live somewhere else in the world, IRS still expects to be paid tax from your individual income in that foreign country (possibly in addition to the tax you pay in your country of residence) right? I assume there are minimum income thresholds but still...
Are there even any other countries that do this?
Always wondered why US citizens do not make a bigger deal out of this. If I understand correctly, if you are a US citizen, but live somewhere else in the world, IRS still expects to be paid tax from your individual income in that foreign country (possibly in addition to the tax you pay in your country of residence) right? I assume there are minimum income thresholds but still...
Are there even any other countries that do this?
US citizens make something of a deal out of it, as you can see from expat forums every spring when tax-filing season comes. However, relatively few American citizens abroad choose to renounce their citizenship because they find it useful to retain it. The minimum income threshold to pay income taxes (otherwise you just file) is ~$100,000, so that generally means most middle-class people don’t have to pay.
The real pain is for people who don’t really think of themselves as US expats, but who have US citizenship through an accident of birth and perhaps haven’t thought of that in years. For them, it is when e.g. a bank in their country suddenly doesn’t want to accept them as a customer due to the onerous reporting requirements, that they are aghast at the situation.
> Are there even any other countries that do this?
Reportedly Eritrea.
The real pain is for people who don’t really think of themselves as US expats, but who have US citizenship through an accident of birth and perhaps haven’t thought of that in years. For them, it is when e.g. a bank in their country suddenly doesn’t want to accept them as a customer due to the onerous reporting requirements, that they are aghast at the situation.
> Are there even any other countries that do this?
Reportedly Eritrea.
> However, relatively few American citizens abroad choose to renounce their citizenship because they find it useful to retain it.
Also because the US government will not allow you to renounce your citizenship if you are doing so for tax reasons.
Also because the US government will not allow you to renounce your citizenship if you are doing so for tax reasons.
Not really. Most US expats who would want to renounce their citizenship, know to tell the consul at the renunciation appointment a vague "I have citizenship of country X now and I no longer identify with my American citizenship," and not, "I don’t want to file US taxes anymore."
> The minimum income threshold to pay income taxes (otherwise you just file) is ~$100,000, so that generally means most middle-class people don’t have to pay.
I wanted to know this, thank you!
I wanted to know this, thank you!
> Always wondered why US citizens do not make a bigger deal out of this.
It affects a relatively small set of people (those with substantial income who live abroad in a lower-tax jurisdiction), and it'd be politically difficult to change.
> I assume there are minimum income thresholds but still...
None other than the normal thresholds for income taxes.
The one ameliorating factor is the foreign tax credit: you get a credit for taxes you've already paid to your local jurisdiction. So, in the likely case that you live somewhere with higher taxes, you won't pay any net US income tax. If you live somewhere with lower taxes, you'll pay the difference to the US.
It affects a relatively small set of people (those with substantial income who live abroad in a lower-tax jurisdiction), and it'd be politically difficult to change.
> I assume there are minimum income thresholds but still...
None other than the normal thresholds for income taxes.
The one ameliorating factor is the foreign tax credit: you get a credit for taxes you've already paid to your local jurisdiction. So, in the likely case that you live somewhere with higher taxes, you won't pay any net US income tax. If you live somewhere with lower taxes, you'll pay the difference to the US.
> > I assume there are minimum income thresholds but still...
> None other than the normal thresholds for income taxes.
That's not right. There is a specific foreign earned income exclusion: https://www.irs.gov/individuals/international-taxpayers/fore...
It's around $100k (increasing with inflation) for individuals.
> However, you may qualify to exclude your foreign earnings from income up to an amount that is adjusted annually for inflation ($103,900 for 2018, $105,900 for 2019, $107,600 for 2020, and $108,700 for 2021).
> None other than the normal thresholds for income taxes.
That's not right. There is a specific foreign earned income exclusion: https://www.irs.gov/individuals/international-taxpayers/fore...
It's around $100k (increasing with inflation) for individuals.
> However, you may qualify to exclude your foreign earnings from income up to an amount that is adjusted annually for inflation ($103,900 for 2018, $105,900 for 2019, $107,600 for 2020, and $108,700 for 2021).
I stand corrected; thank you for the clarification.
> None other than the normal thresholds for income taxes.
That’s false. First $100k of foreign income is exempt.
That’s false. First $100k of foreign income is exempt.
For the most part it doesn’t matter except for more paperwork. If you live in a country with higher taxes (most countries) you pay $0 in US tax.
If you live in a country with lower taxes you exempt a bunch of income, deduct housing costs and get credit for any taxes paid in your original country. You end up paying very little US taxes.
If you live in a country with lower taxes you exempt a bunch of income, deduct housing costs and get credit for any taxes paid in your original country. You end up paying very little US taxes.
I guess people think having US citizenship is worth the price of filing extra taxes - otherwise they would renounce the citizenship.
It costs money to maintain the meaning of a citizenship. I don’t think it’s unreasonable to ask people to pay for it.
It costs money to maintain the meaning of a citizenship. I don’t think it’s unreasonable to ask people to pay for it.
It’s actually rather difficult and costly to renounce citizenship —- you must pay for that privilege. The passport fee should be more than enough (as it is for literally every other country), especially for a passport that barely cracks the top 20 to top 10 in various indices of passport strength. We are being exploited and there’s really no good reason.
> The passport fee should be more than enough (as it is for literally every other country)
The US does have an extremely good network of embassies, and the US is also probably the most effective country on earth at being able to evacuate their citizens from areas that turn hostile.
And of course... a passport is nothing without the state to back it up. That requires more funding than just a passport fee.
The US does have an extremely good network of embassies, and the US is also probably the most effective country on earth at being able to evacuate their citizens from areas that turn hostile.
And of course... a passport is nothing without the state to back it up. That requires more funding than just a passport fee.
>The US does have an extremely good network of embassies
The only reason most citizens would go to an embassy is to renew their passport, so these embassies are needed once every 5-10 years. Do you really think that US embassies offer such high level of service coverage and quality that it is worth paying through the nose for?
>US is also probably the most effective country on earth at being able to evacuate their citizens from areas that turn hostile.
This is hardly a real benefit if you don't actively travel to unstable areas. How often does the need for evacuation from hostile areas come as a total surprise?
The only reason most citizens would go to an embassy is to renew their passport, so these embassies are needed once every 5-10 years. Do you really think that US embassies offer such high level of service coverage and quality that it is worth paying through the nose for?
>US is also probably the most effective country on earth at being able to evacuate their citizens from areas that turn hostile.
This is hardly a real benefit if you don't actively travel to unstable areas. How often does the need for evacuation from hostile areas come as a total surprise?
> the US is also probably the most effective country on earth at being able to evacuate their citizens from areas that turn hostile
Countries turning hostile is a low risk for expats. And whenever major natural disasters have occurred in recent decades, it is often reported that smaller European countries evacuated their citizens better and more kindly than the US.
Countries turning hostile is a low risk for expats. And whenever major natural disasters have occurred in recent decades, it is often reported that smaller European countries evacuated their citizens better and more kindly than the US.
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> if you are a US citizen, but live somewhere else in the world, IRS still expects to be paid tax from your individual income in that foreign country (possibly in addition to the tax you pay in your country of residence) right?
Does anyone know more about this? Do American pasport holders abroad pay taxes twice?
Does anyone know more about this? Do American pasport holders abroad pay taxes twice?
Only if you make more than about $100k (individual) and your foreign tax rate is actually lower than the US's (uncommon).
(You still file twice even if you don’t end up owing tax. You also must report any foreign bank accounts for which you have signatory control that contained > $10k or equivalent at any time in past year. If not you are subject to fines of 50% their balance.)
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Because individuals don’t have the ability to author the tax code like corporations do.
I find tax avoidance stories/headlines that focus on revenue numbers (which aren’t taxed), vs profits (which are), grating.
I get that the trick being used is to move some of the profits into loan payments or license fees to reduce profitability but you can’t expect people who care about business to care about headlines like this.
If somebody tells me “X paid Y in taxes on Z revenues”, I’m just figuring out their margins. Telling me that 50% of their cost base is a loan or license fee to a parent or sister company tells me a lot more…
I get that the trick being used is to move some of the profits into loan payments or license fees to reduce profitability but you can’t expect people who care about business to care about headlines like this.
If somebody tells me “X paid Y in taxes on Z revenues”, I’m just figuring out their margins. Telling me that 50% of their cost base is a loan or license fee to a parent or sister company tells me a lot more…
I always feel a bit sad when I read my home country is used for these kind of things. Most of the time the companies still are depending on services of these countries to be able to be in business but don't pay their fair share.
Does the Netherlands get any benefits by offering these "services"? Is the gratitude of those using them beneficial? To whom exactly?
And if not, then why is it not stopped? It is not exactly a poor county, that has no choice but to let things like this happen for some dirty dollars on the side. It should not be too difficult to at least catch the biggest fish playing this game.
And if not, then why is it not stopped? It is not exactly a poor county, that has no choice but to let things like this happen for some dirty dollars on the side. It should not be too difficult to at least catch the biggest fish playing this game.
> I always feel a bit sad when I read my home country is used for these kind of things.
Het is toch echt andersom. Nederland doet dit al jaren om in de ‘good graces’ van Amerika te zijn.
Are you surprised when you see this news?
Het is toch echt andersom. Nederland doet dit al jaren om in de ‘good graces’ van Amerika te zijn.
Are you surprised when you see this news?
That's true. Personally, I wouldn't mind if these kind of constructions are being stopped by the government but I don't see that happen anytime soon.
Not surprised about the news at all. Just don't like if these kind of constructions are used in such manner. I understand you want to lower the tax burden but this is going a bit too far imho. Of course, Uber is not the only one.
Not surprised about the news at all. Just don't like if these kind of constructions are used in such manner. I understand you want to lower the tax burden but this is going a bit too far imho. Of course, Uber is not the only one.
But hey, maybe NL will get proper FANG companies instead of Uber and Amazon.
Large multinational Corp takes advantage of legal tax loopholes. Nothing new here.
You forgot the added icing of "new kid on the block company wanting to disrupt the world uses good old scam technology to evade taxes".
Gotta give credit to travis, we all appreciate respect for traditions
Gotta give credit to travis, we all appreciate respect for traditions
It has also managed to:
- avoid taxi regulation and taxes by claiming it is not a taxi operator
- avoid other taxes by claiming its employees are independent contractors
- avoid taxi regulation and taxes by claiming it is not a taxi operator
- avoid other taxes by claiming its employees are independent contractors
I hate to say this but I really wish harm on this company. Whatever hacker group decides to have fun with them will bring me great joy.
They should be held to account, but legitimately, legally. Their whole business model is based on crime. I don't understand why we don't see not only prosecution of their leaders, but RICO charges against their investors too.
Because they created the best service so far. Taxi was a shit show before Uber.
Sort of like Jobs and smartphones.
Sort of like Jobs and smartphones.
Nah there's a world of difference between Uber and Apple. Uber blatantly admitted wanting to wipe the old market and get a monopoly. They clean used big pockets to flood cities with low prices and harm old businesses. When issues arose they pushed the burden onto drivers and users.
The only way to stop this, is to create income (eg. 1-2%) based tax regulations instead of profit based. No way to cheat.
Some industries are very low margin while others are extremely high, I don't think this is viable without breaking a huge chunk of the economy.
Depends on how it is structured.
One way for example could be akin to a cash (and equivalents) tax on holding large amounts.
It would incentize spending the cash in r&d , acquisitions , dividends etc. Low margin companies will not be too badly affected
One way for example could be akin to a cash (and equivalents) tax on holding large amounts.
It would incentize spending the cash in r&d , acquisitions , dividends etc. Low margin companies will not be too badly affected
That's not a revenue tax anymore.
That just forces companies to minimize their cash stockpiles through investment, inventory, dividends, etc. How does that make the tax system fairer?
That just forces companies to minimize their cash stockpiles through investment, inventory, dividends, etc. How does that make the tax system fairer?
All those categories have already taxes associated with them
Expenses -( VAT/GST etc)
R&D/salaries - income tax for employees
Divendent - income and other taxes
Acquisitions/investments - seller pays capital gain tax etc
Disincentizing savings to boost the economy is not only applicable for regular people it also applies for companies.
Low interest rates are really today applicable for us. Companies with billions of dollars are getting enough returns to keep cash rather than spend it.
Expenses -( VAT/GST etc)
R&D/salaries - income tax for employees
Divendent - income and other taxes
Acquisitions/investments - seller pays capital gain tax etc
Disincentizing savings to boost the economy is not only applicable for regular people it also applies for companies.
Low interest rates are really today applicable for us. Companies with billions of dollars are getting enough returns to keep cash rather than spend it.
As other people have pointed low margin businesses like fintech would get skewered with this. For example, payment processing companies recognize the value of the transaction as revenue even though their cut is 1-2%.
You would shift the gaming of system from happening on the net income level to gaming of the system happening on the revenue level.
You would shift the gaming of system from happening on the net income level to gaming of the system happening on the revenue level.
Most countries already levy VAT/sales tax. But almost everybody believes that those are all paid by consumers while corporate taxes are all paid by business owners (mental picture: Bezos/Gates/top hat wearing Monopoly dude, not poor old lady drawing on small pension).
Honestly it’s hard to blame companies for doing this. When all your competitors are doing it, you would be putting yourself at a distinct disadvantage by paying more taxes.
That's a very convenient excuse by CEOs and board members, I don't buy the propaganda. Let's be critical here: if a big company has no or little adversaries, do they start paying more taxes? Of course not, everyone enjoys profit. So if the behavior does not change according to their adversaries, it's reasonable to say that this is just an excuse exploitative attitudes.
This is the definition of hacking: using a system (in this case the global financial system) in ways it was not intended to be used.
'Hacking' kinda loses its novelty when almost every single large multinational corporation is doing it, though. How boring...
The equivalent of script kiddies.
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Bookmarked. For the time when Dutch politicians start lecturing other countries in EU about "solidarity" again.
The most interesting part of the article for me is not that Uber dodged $6bln of taxes, but in which countries it decided not to dodge. USA and China. USA, probably because that's where this money goes, but China?
The most interesting part of the article for me is not that Uber dodged $6bln of taxes, but in which countries it decided not to dodge. USA and China. USA, probably because that's where this money goes, but China?
Doing anything the Chinese government doesn’t like is not advised, given it will soon be the most valuable consumer market in the world, and Uber has a multi-billion dollar stake in Didi Chuxing.
You can play games with the European and American systems since their rules are slow to change and predictable.
You cannot play games with China. They will kill your business and access to their market on a whim, and will send your Chinese employees and their families to labor camps (I’m not exaggerating, this has happened a lot).
Hence why Apple is forced to look like a massive hypocrite whenever they talk about privacy, because they have no such protections for their users in China.
You can play games with the European and American systems since their rules are slow to change and predictable.
You cannot play games with China. They will kill your business and access to their market on a whim, and will send your Chinese employees and their families to labor camps (I’m not exaggerating, this has happened a lot).
Hence why Apple is forced to look like a massive hypocrite whenever they talk about privacy, because they have no such protections for their users in China.
Note: Dutch shell != Dutch Shell https://en.wikipedia.org/wiki/Royal_Dutch_Shell
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I don't see how this would stop if the US somehow gets a global min tax rate. The power to do something is in the US hands and doesn't require any foreign countries to change anything.
These companies want to operate in the US. Just force them to pay what ever rate you find right irregardless what some islands tax rate might be.
Huawei is blocked from operating in the US. Not because of taxes but they would pay whatever if they could get access to the market.
These companies want to operate in the US. Just force them to pay what ever rate you find right irregardless what some islands tax rate might be.
Huawei is blocked from operating in the US. Not because of taxes but they would pay whatever if they could get access to the market.
Lol of course Uber did it. If not them then whom?
Companies pay taxes on profits not on revenue. This is meaningless outragebait.
While that is true (depending on the jurisdiction), I find it weird that this is so readily acceptable when talking about a corporation when all of us are taxed on our income before it even reaches our bank account.
If it's more fair to tax profits than revenues, we should be advocating for individuals to be treated in the more fair way, rather than advocating for corporations to be treated in the less fair way, don't you think?
Besides, corporations generally have outside sources of funding other than income, while people generally don't. Thus corporations can run at a deficit, sometimes for a long time, while they figure out how to turn a profit. Do you think there's really a societal benefit to drive new businesses into bankruptcy before they get their footing by taxing them while they're losing money?
Besides, corporations generally have outside sources of funding other than income, while people generally don't. Thus corporations can run at a deficit, sometimes for a long time, while they figure out how to turn a profit. Do you think there's really a societal benefit to drive new businesses into bankruptcy before they get their footing by taxing them while they're losing money?
Individuals are broadly taxed like companies in most western countries, it just turns out that most individuals don't actually incur many expenses in producing their income.
The vast majority of W-2 workers can't deduct unreimbursed employee expenses. So it’s not even that they don’t incur them, but rather that “employees” aren’t eligible
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> Besides, corporations generally have outside sources of funding other than income, while people generally don't
What do you think credit cards and mortgages are?
What do you think credit cards and mortgages are?
Completely different from a VC firm giving you $100 million in exchange for some equity with the understanding that they just might lose it all and get nothing back.
What do you think a tax deduction for mortgage interest is, if not a way to avoid taxing individuals on part of their revenue?
What do you think a tax deduction for mortgage interest is, if not a way to avoid taxing individuals on part of their revenue?
Your personal income is for yourself. A corporation's revenue that goes towards expenses is for the customer. Say you buy a gold at $700, and turn it into gold jewelry that you sell it for a $1000. If the tax rate is 30%, and the jeweler is taxed on the revenue, the jeweler would have made no money at all! If you do tax the expenses, it would have to be passed straight to the consumer.
One way to look at it is that all corporate income is ‘capital gains’, and taxed more like capital gains than wage income.
The idea that companies and billionaires will ever pay taxes properly is absurd, when this is the amount of money you can save the resources you can use to save that become astronomical.
Wish more people would realize this.
Wish more people would realize this.
Honest question: Who here will stop using Uber because of this? Anyone?
Plenty of companies do this, especially successful companies. Google, Apple are all doing the same sort of thing this isn't unique to Uber by any means.
Stop using them too, then. I already did.
Stopped using them a long time ago
I won't... But only because, to be able to stop using them, I would have to have used them.
Give me an alternative that is better or comparable and I'll think.
Not using them. A cab. Your own car. A rental car. That other ride sharing company. Or the other one. Or the other one. Your buddy with a car. The next door neighbor with a car.
Walk. A bike. The train. Move somewhere else.
Or just keep whining about how the world is oppressing you and Uber has saved you from your own misery.
Walk. A bike. The train. Move somewhere else.
Or just keep whining about how the world is oppressing you and Uber has saved you from your own misery.
It's nuts to me that our government lets this happen, yet strives to vilify the upper middle class as the "billionaire class" and tax the shit out of them.
I’ve never heard the upper middle class called the “billionaire class.” Can you give an example?
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Not to be confused with Royal Dutch Shell company!
Who cares? The Federal government doesn’t need tax revenue to fund expenditures.
Really, the income tax, both corporate and personal, should be abolished. Any success towards legally minimizing income tax liability should be welcomed by any one who believes in minimizing the power of the state to violate the rights of private citizens, and favors more economic growth.
And they also fired 200 Dutch people from their Amsterdam office.
Way to show gratitude, Uber.
Way to show gratitude, Uber.
I don't understand why it's taking ages to close these loopholes
Probably due to manifold opinions on those topics, a rather slow law creation system, lobbying forces, competing EU governments, prioritisation and corruption.
There should be a jury of 50 people who can put the leaders of these companies in jail for a lifetime. These cunts leading these companies do not respect equal taxes at all. But this will never happen of course.
Survival of the fittest at its finest.
What's so amazing about those tax dodging stories, is how there are no protest about it. It's so complex that you get into arguments with market fundamentalist who will answer with economic theories, and the debate gets lost because of the low attention span of the audience.
The problem is not capitalism, the problem is that it's rotten from the inside. Honestly, it seems the same thing happened to the Soviet Union. In my view it's quite concerning to hear people say communism is evil just by quoting the history of the soviet union, while dismissing both the political AND economic problems of capitalism.
What's so amazing about those tax dodging stories, is how there are no protest about it. It's so complex that you get into arguments with market fundamentalist who will answer with economic theories, and the debate gets lost because of the low attention span of the audience.
The problem is not capitalism, the problem is that it's rotten from the inside. Honestly, it seems the same thing happened to the Soviet Union. In my view it's quite concerning to hear people say communism is evil just by quoting the history of the soviet union, while dismissing both the political AND economic problems of capitalism.
there are no longer any effective checks and balances against corporate power.
More proof that we don't need to increase taxes. We just need to enforce our existing taxes better.
Kudos to Uber.
Business and corporate taxes are an endless exercise in futility. We need to just completely get rid of them. Businesses and corporations will never pay, and there is no magical sequence of words to formulate a bulletproof tax scheme.
If we get rid of business and corporate taxes we can also get rid of special rates for capital gains, and treat all income the same.
Then if you really want to get crazy, get rid of all the deductions and credits. But you’ll have to fight off all the special interests on both sides of the aisle.
If we get rid of business and corporate taxes we can also get rid of special rates for capital gains, and treat all income the same.
Then if you really want to get crazy, get rid of all the deductions and credits. But you’ll have to fight off all the special interests on both sides of the aisle.
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Please deflame the headline. Tax avoidance is not tax dodging.
What's the difference? Legality? If so, I'm not sure anybody really cares about whether it's legal (in an intellectual sense). People are much more interested in morality and whether a system is working well for society.
Do people really want to have a debate on the ethics and morality of forcibly taking property, income, and labor from people or businesses under the threat of violence? Aka taxation?
Property ownership doesn't exist without threat of violence. What's to stop me taking the phone you're holding? It's the threat of violence from you or society in general.
Money and taxes are just abstractions on top of the property ownership one, if you want to get rid of taxes you'll need to get rid of property ownership. Many cultures were this way.
Money and taxes are just abstractions on top of the property ownership one, if you want to get rid of taxes you'll need to get rid of property ownership. Many cultures were this way.
syshum(1)
This should be stamped out and severely penalised. I'd even go as far as banning such company from operating in the country until they close entire tax avoidance network.
If you wanted to create a local Uber clone, you just won't be able to compete because from the start you'll have to pay probably order of magnitude more tax than a big corporation.
Then less competition means less innovation, consumers are worse off and capital is drained off the country.
Another problem is that in many western countries anti corruption bodies just drain the tax payer and do nothing.
I can see plenty of examples of blatant corruption, but I have not heard of anyone being charged let alone if there was any investigation going on.
I wouldn't be so harsh, but I would stop allowing them to sue in US court for some things. Sorry, your IP is in the Netherlands, go file there. See how quick many companies pull their IP back.
Not many I expect. Needing to hire Dutch lawyers is not such a big hurdle when you are saving billions.
"That's a Dutch verdict you're waving around there. We'll do something about the IP violation you're claiming when you have one from this jurisdiction... And we'll see that case once you've registered the IP in question here."
Instead of blaming the corporations for having good attorneys and accountants how about we simplify corporate taxes and close the loopholes? The previous administration tried to do it, but quite honestly I don't think democrats have any interest in simplifying taxes. Their platform seems to be blame corporations for not paying their fair share, while wealthy democrats utilize loopholes and intentional tax complexity for their own gain.
88% of the cost of the US Fed gov is paid for by taxes by workers (income taxes). Less than 12% comes from all corp/business taxes combined with capital gains (taxing the rich 1%). Business shifting tax burden to workers is a massive scale problem. $3.5 Trillion = US Tax Revenues (2019) and 88% came from workers.