Google used ‘double-Irish’ to shift $75.4B in profits out of Ireland(irishtimes.com)
irishtimes.com
Google used ‘double-Irish’ to shift $75.4B in profits out of Ireland
https://www.irishtimes.com/business/technology/google-used-double-irish-to-shift-75-4bn-in-profits-out-of-ireland-1.4540519
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Do you believe all ethical behavior should be codified in law, or just taxes?
Please don't take HN threads further into flamewar. It makes discussion noticeably crappier.
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What is ethical about paying taxes? Genuinely curious.
Taxes pay for all sorts of things in society. They pay for childhood education, they build roads, they pay for services like fire departments.
If you don't pay taxes, then it wouldn't really be fair for you to be sending your kids to public schools, driving on roads to get around, or calling the fire department when your house is burning down, since you haven't contributed anything to their upkeep.
If you don't pay taxes, then it wouldn't really be fair for you to be sending your kids to public schools, driving on roads to get around, or calling the fire department when your house is burning down, since you haven't contributed anything to their upkeep.
So the people earning $20k per year who don't pay any taxes shouldn't get to send their kids to public schools?
That is pretty obviously not what the parent is talking about. The context here is tax avoidance, i.e., avoidance by those financially able to pay. This has nothing to do with those whom the government has exempted due to limited financial means. Policy debates aside, I don't think many people will seriously argue such people have an individual ethical responsibility to pay taxes.
If the government exempts you from paying taxes for low income that’s ok, but if the government exempts you from taxes for performing some kind of behavior they want to incentivize (like reinvesting company profits instead of paying them to shareholders) or structuring your company in a certain way, then you’re supposed to ignore that exemption and pay taxes anyway?
You're leaving out the part where corporations lobby relentlessly and effectively for the tax loopholes that best suit them.
The structure and implementation of corporate taxes in the USA strikes me as needlessly complicated and corrupt, and I think corporate influence over the tax code is deeply unethical in many ways. At the same time, I wouldn't tell any individual or company that they're ethically obligated to forgo tax relief that's legally available to them. These two things are not in contradiction.
The structure and implementation of corporate taxes in the USA strikes me as needlessly complicated and corrupt, and I think corporate influence over the tax code is deeply unethical in many ways. At the same time, I wouldn't tell any individual or company that they're ethically obligated to forgo tax relief that's legally available to them. These two things are not in contradiction.
> corporate influence over the tax code is deeply unethical in many ways.
It is problematic in that corporations have a lot more resources to bring to bear than the average person does.
I don't find it unethical though. People have a right to express their concerns to the government and advocate for their interests, even if those people group themselves together into a legal entity such as a corporation.
It would be more unethical to single out certain groups of people and say "everyone else is allowed to talk to the government and advocate for their interests, but you are not".
Edit to add:
It's the government's job to listen to everybody's concerns and balance the interests of different groups against each other. If we're unhappy with the job they're doing, we should elect a different government that will do a better job, not just silence groups we don't like. They are not passive elements in this who are just helplessly acted on by outside forces.
It is problematic in that corporations have a lot more resources to bring to bear than the average person does.
I don't find it unethical though. People have a right to express their concerns to the government and advocate for their interests, even if those people group themselves together into a legal entity such as a corporation.
It would be more unethical to single out certain groups of people and say "everyone else is allowed to talk to the government and advocate for their interests, but you are not".
Edit to add:
It's the government's job to listen to everybody's concerns and balance the interests of different groups against each other. If we're unhappy with the job they're doing, we should elect a different government that will do a better job, not just silence groups we don't like. They are not passive elements in this who are just helplessly acted on by outside forces.
> everyone else is allowed to talk to the government and advocate for their interests, but you are not
In practice, this is exactly the problem with revolving-door politics and regulatory capture.
> we should elect a different government that will do a better job
Agreed, and I would add that one of the most important functions of journalism like the OP is to inform the voters about these situations.
In practice, this is exactly the problem with revolving-door politics and regulatory capture.
> we should elect a different government that will do a better job
Agreed, and I would add that one of the most important functions of journalism like the OP is to inform the voters about these situations.
[deleted]
So you are saying lobbying by these companies is unethical?
Is all lobbying unethical?
Is all lobbying unethical?
No, not categorically, but there's definitely a point at which I'd say the influence of lobbyists over government becomes unethical. Some examples off the top of my head:
- Correctional officers unions lobbying for harsh drug laws to ensure a steady supply of prison inmates.
- AccuWeather lobbying congress to prohibit NOAA and NWS from providing weather data to the public, so that AccuWeather can charge money for it.
- Intuit lobbying to prevent states and the IRS from providing free tax filing facilities.
When the question becomes, "what do we do about it", I'm well out of my depth, but I think the fight is worth having, and the practical effect of corporate lobbying is certainly a worthy subject for journalism like the OP.
- Correctional officers unions lobbying for harsh drug laws to ensure a steady supply of prison inmates.
- AccuWeather lobbying congress to prohibit NOAA and NWS from providing weather data to the public, so that AccuWeather can charge money for it.
- Intuit lobbying to prevent states and the IRS from providing free tax filing facilities.
When the question becomes, "what do we do about it", I'm well out of my depth, but I think the fight is worth having, and the practical effect of corporate lobbying is certainly a worthy subject for journalism like the OP.
For example, given that Google successfully litigated the Oracle Java API copyright case in the public court system, it seems that it gains advantages from public institutions. Simple reciprocity indicates that they should support institutions from which they benefit.
Mutatis mutandis for, eg, roads so that employees can get to work, etc.
Mutatis mutandis for, eg, roads so that employees can get to work, etc.
But the employees pay taxes on their salaries. And Google’s corporate profit is taxed through taxes on dividends imposed on shareholders. The only tax that Google can evade is the double taxation on profits that will be taxed again when distributed. Although it is true that this tax rate is lower than income tax.
Just like with income taxes - it doesn't change the tax wedge at equalibrium but it feels better and that's what's important. It's like going to a store where everything is eternally 40% off.
Google has never paid a dividend.
“Double taxation” refers to taxation post distribution not prior (source: I was a corporate tax accountant).
Finally, “evasion” is illegal. “Avoidance” is a legal tax strategy.
“Double taxation” refers to taxation post distribution not prior (source: I was a corporate tax accountant).
Finally, “evasion” is illegal. “Avoidance” is a legal tax strategy.
Those taxes also pay for guns and missiles and much worse stuff. Is it ethical to pay for these things?
The point that the parent is making is that there's a legal obligation to pay taxes, but it's not an ethical one - the government says what you owe, and you pay that. It's muddied by companies lobbying to set the laws, but I would have to agree paying taxes the laws say you owe is not an ethical question.
The point that the parent is making is that there's a legal obligation to pay taxes, but it's not an ethical one - the government says what you owe, and you pay that. It's muddied by companies lobbying to set the laws, but I would have to agree paying taxes the laws say you owe is not an ethical question.
> Taxes pay for all sorts of things in society. They pay for childhood education, they build roads, they pay for services like fire departments.
What's the government doing by just collecting its citizens hard earned money? It should also invest in companies and other ventures and make its own money. It also has natural resources (oil, natural gas, etc.) at its disposal. Only if those are not enough can it ask its citizens to pitch in.
What's the government doing by just collecting its citizens hard earned money? It should also invest in companies and other ventures and make its own money. It also has natural resources (oil, natural gas, etc.) at its disposal. Only if those are not enough can it ask its citizens to pitch in.
You are paying for what you use. You think it’s ethical to use something and someone else should pay for it??
Or don’t you use roads, police, education, services, etc..,
Or don’t you use roads, police, education, services, etc..,
I mean, not everyone uses the same things at the same amount.
Let's also bear in mind that you can benefit from something without "using" it.
I once talked to a guy who was furious that his property taxes funded public schools b/c he didn't have kids. But ... I think we'd all be worse off if there were no public schools and there was an illiterate underclass.
I don't have a car and rarely drive on highways, but I have no idea where my groceries would come from if public roads were not present.
I don't expect to collect social security, but I pay into it with the knowledge that all my elderly family members collect it.
On the other hand, by paying our taxes, we Americans maintain thousands of nuclear weapons, and the largest and most elaborate military on the planet. So ... not all of what we pay for is "good".
On the other hand, by paying our taxes, we Americans maintain thousands of nuclear weapons, and the largest and most elaborate military on the planet. So ... not all of what we pay for is "good".
> What is ethical about paying taxes? Genuinely curious.
What's ethical about playing in a poker tournament and paying the entry fee? Just curious.
If you are getting rich in this country, taxes are paying for what enabled you to get rich in the first place: the human capital.
What's ethical about playing in a poker tournament and paying the entry fee? Just curious.
If you are getting rich in this country, taxes are paying for what enabled you to get rich in the first place: the human capital.
One quite popular and compelling family of ethical theories is utilitarianism, wherein "ethical" roughly means "resulting in the greatest happiness and well-being for all". Taxes and the public infrastructure and spending they support are clearly tied up in the well-being of most if not all in society. Taxes paid or not paid by corporations presumably impacts prices to customers, returns to investors, the success, failure or extent of public programs, and future decisions of taxes levied against individuals.
How are taxes _not_ a thicket of ethical issues?
However, I think a really ambiguous question is whether we should actually care about _corporate_ taxes over questions like treating capital gains income on the same footing as wage income. One expects that when corporations don't pay taxes, their shareholders eventually reap those savings as capital gains income ... so isn't it eventually taxed?
I'm assuming here that only large multinationals engage in this sort of scheme; if there were a whole economy among rich individuals who always push their transactions through Bermudan-Irish shell companies, then perhaps it might never get taxed at any rate?
How are taxes _not_ a thicket of ethical issues?
However, I think a really ambiguous question is whether we should actually care about _corporate_ taxes over questions like treating capital gains income on the same footing as wage income. One expects that when corporations don't pay taxes, their shareholders eventually reap those savings as capital gains income ... so isn't it eventually taxed?
I'm assuming here that only large multinationals engage in this sort of scheme; if there were a whole economy among rich individuals who always push their transactions through Bermudan-Irish shell companies, then perhaps it might never get taxed at any rate?
No. However, paying tax is hardly an ethical matter.
Am I unethical to choose standard deduction because it reduces my tax more than choosing itemized deduction? No? Yes? Maybe?
Am I unethical to choose standard deduction because it reduces my tax more than choosing itemized deduction? No? Yes? Maybe?
Do you think media / social media shaming companies for performing elaborate tax dodges helps or hurts put pressure for political action?
No idea.
But it doesn't seem to help much.
For example, many Dems shout "tax billionaires" for years. This rallies a lot of people. "Yeah!!! Let's tax them more" we all chant.
Then, when Dems is elected, they are raising tax on salaried employees who earn more than 400k a year. (Not sure if they has gone through with it yet)
I didn't know I was categorised as a billionnaire.
But it doesn't seem to help much.
For example, many Dems shout "tax billionaires" for years. This rallies a lot of people. "Yeah!!! Let's tax them more" we all chant.
Then, when Dems is elected, they are raising tax on salaried employees who earn more than 400k a year. (Not sure if they has gone through with it yet)
I didn't know I was categorised as a billionnaire.
I suspect people think about wealth on a log scale - in my mind $90 billion and $100 billion are basically the same number despite being rather different. Thinking in terms of orders of magnitude - $400k is a lot closer to $1,000k than the US median income of around 40k.
Politics isn't about precise language. They just mean wealthy people. I thought they were pretty up-front about that.
Politics isn't about precise language. They just mean wealthy people. I thought they were pretty up-front about that.
That's quite ingenuous.
It's of course easier to charge more taxes for moderately wealthy employees who don't have a clever tax setup and may need to.
Really rich people with clever tax setups will just move out and you'll get no more revenue.
It's of course easier to charge more taxes for moderately wealthy employees who don't have a clever tax setup and may need to.
Really rich people with clever tax setups will just move out and you'll get no more revenue.
One of only two Independent senators in Congress shouted "tax billionaires" for years, then when he didn't win the presidency, the billionaires just carried on unmolested.
There was Warren, too, but your point stands. If we can't hold a president to account for their own campaign promises, it hardly makes sense to hold them to account for the promises of the candidates they defeated...
400k a year is still an obscene amount of money. Likely top 1% in the US and top 0.01% on the planet.
Billionaires don't pay income tax, that's why Dems are raising the corporate tax rate too. They're also looking at increasing estate tax and capital gains tax, and those almost exclusively effect the ultra rich
Billionaires don't pay income tax, that's why Dems are raising the corporate tax rate too. They're also looking at increasing estate tax and capital gains tax, and those almost exclusively effect the ultra rich
>400k a year is still an obscene amount of money.
Some people more likely have an obscene amount of envy to those who are more successful.
Some people more likely have an obscene amount of envy to those who are more successful.
Please. I work in tech too and get the same crazy salary everyone else does. You really wondering if someone on HN is a secret poor person because they're willing to admit they're overpaid?
I grew up broke and understand how fortunate I am. I'm completely fine with paying a few percent more marginal tax rate. I have thousands of disposable income a month like most of us here. I doubt I would even notice.
I grew up broke and understand how fortunate I am. I'm completely fine with paying a few percent more marginal tax rate. I have thousands of disposable income a month like most of us here. I doubt I would even notice.
No, I'm not wandering. I just don't understand the self hate or the constant obsession with ranking people based on paychecks.
Why would you ever think 400k is obscene or crazy amount of money? Companies that those developers work for, earn 10 times as much per developer. I wish every developer could be payed as much or more if possible. Do you find it shameful when other people find value in what developers do and are ready to pay them a lot of money for that value? I'm sure your company will gladly pay you less if you feel overpaid.
Why would you ever think 400k is obscene or crazy amount of money? Companies that those developers work for, earn 10 times as much per developer. I wish every developer could be payed as much or more if possible. Do you find it shameful when other people find value in what developers do and are ready to pay them a lot of money for that value? I'm sure your company will gladly pay you less if you feel overpaid.
If the nation decided tax laws for you and you are following the law's intention, I'd say there's nothing unethical about it.
If you can call up a senator and say "You had better increase standard deduction to $X for married couples in Montana with three kids and a small business, or I'll have to rethink my campaign contribution," and you happen to be married in Montana with three kids and a small business, I'd say it's clearly unethical.
I think companies like Google fall in the latter category.
If you can call up a senator and say "You had better increase standard deduction to $X for married couples in Montana with three kids and a small business, or I'll have to rethink my campaign contribution," and you happen to be married in Montana with three kids and a small business, I'd say it's clearly unethical.
I think companies like Google fall in the latter category.
Taxes area already codified in law, so it makes sense for the targeted behaviors to also be codified.
One view is that the only ethics that really matters is what the law says is legal.
Laws are derived by the people and encode their ethical permissibility within them.
Laws are derived by the people and encode their ethical permissibility within them.
Is that your view? Is it a particularly common view?
Otherwise, why is it worth discussing?
Otherwise, why is it worth discussing?
Paying a fair amount of taxes definitely has a big ethical component to it, AND the laws around it probably ought to be changed, but that doesn't imply that they should be changed strictly because of the ethical reasons.
Specifically, collecting a reasonable amount of taxes is key to the function of governments as they're set up.
It would be unethical to sell somebody a car that secretly has no motor, but ethics isn't the only reason cars need motors.
Specifically, collecting a reasonable amount of taxes is key to the function of governments as they're set up.
It would be unethical to sell somebody a car that secretly has no motor, but ethics isn't the only reason cars need motors.
It is worth noting that what is "reasonable" and who owes it is one of the largest pieces of the work of a government.
[deleted]
What's "fair share"? This keep getting repeated without any quantification.
In France it’s codified at the constitutional level, it’s a varying tax rate (ie marginal tax rate with slices)
Taxes long ago stopped being the main way governments fund themselves.
If taxes were about financing the government there would just be one tax called the-cost-of-government-tax and that's it. There would be no need to tax everything you do, and at different rates and on some days but not others, but when the moon is full on tuesday you pay double except if you lived on 72nd street during 2008...
Taxes are about control, about influence, and about corruption. The loopholes are there becasue someone put them there, they are not hidden. The tax-code is so complex because someone made it that complex, someone doesn't want it to be easy.
If taxes were about financing the government there would just be one tax called the-cost-of-government-tax and that's it. There would be no need to tax everything you do, and at different rates and on some days but not others, but when the moon is full on tuesday you pay double except if you lived on 72nd street during 2008...
Taxes are about control, about influence, and about corruption. The loopholes are there becasue someone put them there, they are not hidden. The tax-code is so complex because someone made it that complex, someone doesn't want it to be easy.
> Taxes long ago stopped being the main way governments fund themselves.
No they didn’t. Most governments are mostly funded by taxes.
(The rest of your post doesn’t support this thesis, but instead the thesis that funding government. operations isn’t the exclusive purpose of taxes, which I don’t think anyone would dispute, and which is orthogonal to whether governments are mainly funded by taxes.)
No they didn’t. Most governments are mostly funded by taxes.
(The rest of your post doesn’t support this thesis, but instead the thesis that funding government. operations isn’t the exclusive purpose of taxes, which I don’t think anyone would dispute, and which is orthogonal to whether governments are mainly funded by taxes.)
Most countries finance themselves with the always convenient "future-taxes" excuse, in other words, debt. It is the reason congress has to keep raising the debt ceiling, so they can keep borrowing money.
Last year, the US collected $3.42 trillion in taxes, but spent $6.55 trillion for a record deficit of $3.13 trillion. This year is projected to break that record.
https://www.thebalance.com/fy-2020-federal-budget-summary-of...
Last year, the US collected $3.42 trillion in taxes, but spent $6.55 trillion for a record deficit of $3.13 trillion. This year is projected to break that record.
https://www.thebalance.com/fy-2020-federal-budget-summary-of...
Would be worse without taxes though, no?
Since you mentioned the debt ceiling, that’s another concept that doesn’t make any sense (except as yet another thing more politics can be piled on to). It’s like first the congress votes on the size of the budget, and then separately on the size of the door that it has to fit through.
Since you mentioned the debt ceiling, that’s another concept that doesn’t make any sense (except as yet another thing more politics can be piled on to). It’s like first the congress votes on the size of the budget, and then separately on the size of the door that it has to fit through.
> Most countries finance themselves with the always convenient "future-taxes" excuse, in other words, debt.
No, most countries finance themselves primarily by taxes; they typically also use debt financing, especially (in relative terms) countercyclically in economic downturns.
> Last year, the US collected $3.42 trillion in taxes, but spent $6.55 trillion for a record deficit of $3.13 trillion.
So, even the best single example you could come up with is...financed primarily by taxes, even in the one year you tried to pull as a counterexample?
No, most countries finance themselves primarily by taxes; they typically also use debt financing, especially (in relative terms) countercyclically in economic downturns.
> Last year, the US collected $3.42 trillion in taxes, but spent $6.55 trillion for a record deficit of $3.13 trillion.
So, even the best single example you could come up with is...financed primarily by taxes, even in the one year you tried to pull as a counterexample?
Paying taxes has nothing to do with ethics. It is the government's job to set the tax rate and tell you how much you owe. It's not like "you are legally obligated to pay this much, but there is an ethical obligation to add another X% as well"
Charging taxes is unethical and a violation of the non aggression principle.
I pay taxes because the alternative is fines and eventually jail. That's theft, that's coercion.
The less taxes you pay the more power to you - and I'd appreciate if you shared how.
I pay taxes because the alternative is fines and eventually jail. That's theft, that's coercion.
The less taxes you pay the more power to you - and I'd appreciate if you shared how.
Please don't take HN threads further into ideological flamewar. You've done it more than once recently, and we want the opposite here.
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Living up to your account name with this hilarious response!
Comments like this will get you banned here, regardless of how wrong someone else is or you feel they are. Please review https://news.ycombinator.com/newsguidelines.html and stick to the rules.
These laws are enormously complex and there will always be loopholes.
You can prosecute someone for maliciously exploiting your computing system, even though technically "they're just using the rules you wrote", because there will never not be such rules that allow for exploitation.
You can prosecute someone for maliciously exploiting your computing system, even though technically "they're just using the rules you wrote", because there will never not be such rules that allow for exploitation.
Then, close the obvious one first. This double Dutch Irish thing. It's so obvious that we even have a nick name for it.
The law is hardly perfect as it is. Will never be. Just because there are more holes. It's not the reason to not close the most obvious/impactful one.
The law is hardly perfect as it is. Will never be. Just because there are more holes. It's not the reason to not close the most obvious/impactful one.
The double irish was closed on January 1st 2020, after a five year grace period for the multinationals to restructure.
This is why the UK ended up with a General Anti-Avoidance Rule (in the UK this rule is named the "Anti-Abuse Rule" but it's a General Anti-Avoidance Rule just with a different name)
The way a general anti-avoidance rule works is it says you can't do things that are just to avoid paying tax.
The tricky part, obviously, is figuring out how a jury can decide if it was really just to avoid paying tax.
The UK's approach is a Double Reasonableness test. The jurors are asked to consider not merely what they, personally might think would be reasonable, but anything any conceivable reasonable person might think is reasonable. So maybe you can't personally imagine why anybody would want multiple sports cars, but you can imagine somebody else who might think it's reasonable to buy them, so the person who avoided tax by purchasing sixty sports cars passes the Double Reasonableness test.
On the other hand, you may be unable to conceive of any person who could think that it was reasonable to open over 4000 bank accounts and then deposit £99999 into each account, if not for the fact that it avoided a tax on larger deposits and so that fails the Double Reasonableness test.
[These examples are hypotheticals, feel free to go dig up actual schemes which have passed or failed the test]
This provides appropriate latitude. And even if your strategy fails the Double Reasonableness test, you don't go to jail or anything, you just don't avoid taxes, you owe taxes exactly as if your behaviour didn't result in a favourable tax outcome. Which, if you really didn't do it just to avoid taxes as you've claimed, should surely be fine...
The other trick which was introduced at the same time imposes a duty on tax avoidance lawyers. If you help people plan to avoid taxes, that's cool but you have to explain how your scheme works to the taxman. You likely charge for your help, that's legal, and you keep that money even if the scheme doesn't actually work (that's legal and it's just smart business) but your duty ensures that the taxman already knows about the scheme before it's used, and can decide if they want government to legislate to close it next year, if they want to go to court to claim it doesn't work (because of GAAR), or if they just let it carry on.
The way a general anti-avoidance rule works is it says you can't do things that are just to avoid paying tax.
The tricky part, obviously, is figuring out how a jury can decide if it was really just to avoid paying tax.
The UK's approach is a Double Reasonableness test. The jurors are asked to consider not merely what they, personally might think would be reasonable, but anything any conceivable reasonable person might think is reasonable. So maybe you can't personally imagine why anybody would want multiple sports cars, but you can imagine somebody else who might think it's reasonable to buy them, so the person who avoided tax by purchasing sixty sports cars passes the Double Reasonableness test.
On the other hand, you may be unable to conceive of any person who could think that it was reasonable to open over 4000 bank accounts and then deposit £99999 into each account, if not for the fact that it avoided a tax on larger deposits and so that fails the Double Reasonableness test.
[These examples are hypotheticals, feel free to go dig up actual schemes which have passed or failed the test]
This provides appropriate latitude. And even if your strategy fails the Double Reasonableness test, you don't go to jail or anything, you just don't avoid taxes, you owe taxes exactly as if your behaviour didn't result in a favourable tax outcome. Which, if you really didn't do it just to avoid taxes as you've claimed, should surely be fine...
The other trick which was introduced at the same time imposes a duty on tax avoidance lawyers. If you help people plan to avoid taxes, that's cool but you have to explain how your scheme works to the taxman. You likely charge for your help, that's legal, and you keep that money even if the scheme doesn't actually work (that's legal and it's just smart business) but your duty ensures that the taxman already knows about the scheme before it's used, and can decide if they want government to legislate to close it next year, if they want to go to court to claim it doesn't work (because of GAAR), or if they just let it carry on.
Both of those are fascinating. Thanks for the additional context!
That sounds incredibly logical and intuitive. It seems so weird that something like that hasn't been proposed for the US (or i haven't heard of it if it was at least).
To me it sounds double subjective, which, in my view, is the opposite of "logical", perhaps not so for "intuitive".
I really think if you need complicated (and entirely subjective!) thought experiments like this to apply the law, your law is far too complex and unfair and should probably be scrapped.
I really think if you need complicated (and entirely subjective!) thought experiments like this to apply the law, your law is far too complex and unfair and should probably be scrapped.
To me that british tax law that he described is incredibly simple compared to the loop hole filled tangle that the united states has. Companies like google in the posted article wouldn't be able to spend millions of dollars to find these loop holes. I would think that most people would agree that their actions are clearly an effort to dodge taxes and that law would stop this and similar behavior. Relying on a captured congress to intricately craft incredibly complex tax laws where loop holes are left in a way that affords plausible deniability hasn't seemed to work so far.
It is because of a Supreme Court decision that ruled that citizens have the right to do everything in their power to avoid paying taxes. Therefore it is only the letter of the law that can be enforced, not the spirit of the law. This makes tax code different from all other legal domains. It also means that intent is a moot point since tax evasion isn't illegal.
Was it this one [1]? It sounds weird that tax law would be interpreted differently than other types of law and would be interested to know their rationale.
[1] https://en.wikipedia.org/wiki/Gregory_v._Helvering
[1] https://en.wikipedia.org/wiki/Gregory_v._Helvering
Why shouldn't companies do things just to avoid taxes? I'm sure most individuals would do whatever they can to pay less.
About this law, what it really creates is an insane amount of insecurity. When other people get to decide whether what you do is reasonable or not, the only question that matters is who gets to make the decision.
And you should not have to waste precious time explanting anything to a bureocrat. Maybe Faang companies get to have that luxury
About this law, what it really creates is an insane amount of insecurity. When other people get to decide whether what you do is reasonable or not, the only question that matters is who gets to make the decision.
And you should not have to waste precious time explanting anything to a bureocrat. Maybe Faang companies get to have that luxury
"When other people get to decide whether what you do is reasonable or not, the only question that matters is who gets to make the decision."
Why is HN always full of people advocating that companies should be above the law?
You harm someone in self-defence and a judge of jury decides whether what you did was reasonable. We just have a stack of case law that says 'in the past, X was found reasonable".
On the other hand, when Boeing killed hundreds of people, no one was even charged. If any individual commits the acts corporates do regularly, they'd be in jail in no time.
Why is HN always full of people advocating that companies should be above the law?
You harm someone in self-defence and a judge of jury decides whether what you did was reasonable. We just have a stack of case law that says 'in the past, X was found reasonable".
On the other hand, when Boeing killed hundreds of people, no one was even charged. If any individual commits the acts corporates do regularly, they'd be in jail in no time.
>Why is HN always full of people advocating that companies should be above the law?
May be I am not reading it correctly. It is perfectly legal and within the law so no one is advocating they are above the law.
May be I am not reading it correctly. It is perfectly legal and within the law so no one is advocating they are above the law.
> Why is HN always full of people advocating that companies should be above the law?
I've seen folks claim that HN has a significant population of investors and founders. There's probably a fair share of people who aspire to belong to that group, too. It's probably a concentration of the greater pattern of Americans seeing themselves as temporarily embarrassed billionaires.
I've seen folks claim that HN has a significant population of investors and founders. There's probably a fair share of people who aspire to belong to that group, too. It's probably a concentration of the greater pattern of Americans seeing themselves as temporarily embarrassed billionaires.
Just a naive reply, but seeing you are taxed on profits, wouldn't a way to be taxed less be to pay your employees more, invest more in R&D, pay off debt or just plain accrue assets such as real estate or even other businesses for future growth or do these somehow not count? I mean ultimately you are growing the value of the business which should show up in the share price, and you could cash out when the Republicans return to power and deflate the tax rate "again"
On an added note, in these times of looming climate crisis, a carbon tax or something associated with companies using/polluting "free" resources (air/water/petroleum products) seems like a good idea
On an added note, in these times of looming climate crisis, a carbon tax or something associated with companies using/polluting "free" resources (air/water/petroleum products) seems like a good idea
But paying off debt doesn't reduce your taxable income and why would the government care if you avoid a corporate taxes by giving money to an individual who pays 32% tax on it.
Amazon did that for quite some time
Yes, except certain group still advocating they should pay their tax. Unless they want to change the tax code to tax revenue, none of it make sense.
The taxes are there so that they don't have to contend with roving bandits ransacking their property. It's paying back for the benefit of a stable, regulated society.
[deleted]
There’s an additional level on top of this: those same politicians often actually participate in the design of tax structures that enable the same companies to be chastised for utilizing those structures and “not paying their fair share.”
Surely you don't accuse developers of being in cahoots with the attackers that use their bugs? Now, we fix our bugs, so there's a difference...
The politicians are provably benefitting from the loopholes they help legislate. Individuals working at companies are very rarely (or never) benefitting from malicious actors attacking their company.
> Politicians should just do it.
Read the whole article, they did.
> Instead, they (Dems mostly) parade around publicly shaming companies who reduces tax in a legal way.
I'm not aware if google specifically has done this, but the associated problem here is that typically massive companies pay lobbyists to get the government to create (and keep) these loopholes.
Read the whole article, they did.
> Instead, they (Dems mostly) parade around publicly shaming companies who reduces tax in a legal way.
I'm not aware if google specifically has done this, but the associated problem here is that typically massive companies pay lobbyists to get the government to create (and keep) these loopholes.
Can someone explain to me why lobbyists are permitted? Surely politicians should be representing the needs of people who voted for them. Lobbyists appear to enable exactly the opposite behaviour.
Lobbying is at it's core just talking to politicians, whenever you write or call your Rep or Senator you're lobbying. So it's hard to draw a line between and legislate the difference citizen groups getting together and spending to have someone professionally try to influence policy (generally good) and companies doing the same thing. Citizens United decided that companies (since we treat them as people for legal convenience) get the same 1st amendment protections individuals do. Personally I think that's a mistake but I'm not sure how to solve it without causing more issues.
Because generally you want lobbyists. You can say many things about politicians, but they don't know anything about how most of the economy and country works, just like you and me don't. They don't understand either inner cities or the countryside, they don't understand how mining works, they don't understand ad auctions, ... (occasionally you'll have one politician who understands one/a few of these, I get it, but ...)
So what happens once elected is essentially that interest groups (ideally multiple), amongst other companies, industry associations, unions, pension funds, government representatives, ... see the elected representatives, quite literally teach them, in a biased way, even write legislation for them (this means hiring a team of sometimes hundreds of lawyers and putting them at their disposal), and the general idea is because multiple interest groups participate you get a somewhat reasonable negotiated outcome.
You don't want oil industry legislation to be written by Greenpeace. You also don't want it written by ExxonMobil. So what to do? Lock whoever they send to represent them in a room, have someone to check for guns at the door, and have them fight it out.
Of course, none of these interest groups are playing fair. That can (and generally does) lead to very biased laws. However, when it comes to contentious issues, the interest groups that win are actually popular citizen-based interest groups (e.g. in climate change legislation it's clearly not one-sided, at least attempting a compromise between multiple parties, when it comes to police power, clearly someone's providing counterweights to police requests, and so on)
So the general idea of democracy is: we have many idiots, not just one, to hopefully get at least "average" intelligence and decision making, then we have them listen to anybody who wants attention and then collectively take a decision. They make too many mistakes or stop listening? We replace them. Does it give ideal outcomes? No. Is it a million times better than forcing one interest group's opinion 100%? Yes. Does a mountain of money really help in making yourself heard better? Yes.
It's better than an idiot who knows nothing about anything taking control of everything, which is what most alternative systems boil down to.
So what happens once elected is essentially that interest groups (ideally multiple), amongst other companies, industry associations, unions, pension funds, government representatives, ... see the elected representatives, quite literally teach them, in a biased way, even write legislation for them (this means hiring a team of sometimes hundreds of lawyers and putting them at their disposal), and the general idea is because multiple interest groups participate you get a somewhat reasonable negotiated outcome.
You don't want oil industry legislation to be written by Greenpeace. You also don't want it written by ExxonMobil. So what to do? Lock whoever they send to represent them in a room, have someone to check for guns at the door, and have them fight it out.
Of course, none of these interest groups are playing fair. That can (and generally does) lead to very biased laws. However, when it comes to contentious issues, the interest groups that win are actually popular citizen-based interest groups (e.g. in climate change legislation it's clearly not one-sided, at least attempting a compromise between multiple parties, when it comes to police power, clearly someone's providing counterweights to police requests, and so on)
So the general idea of democracy is: we have many idiots, not just one, to hopefully get at least "average" intelligence and decision making, then we have them listen to anybody who wants attention and then collectively take a decision. They make too many mistakes or stop listening? We replace them. Does it give ideal outcomes? No. Is it a million times better than forcing one interest group's opinion 100%? Yes. Does a mountain of money really help in making yourself heard better? Yes.
It's better than an idiot who knows nothing about anything taking control of everything, which is what most alternative systems boil down to.
I have given this a lot of thought and I believe that lobbyists are to law making what automated test suites are to the software development.
If you plan to introduce a change in your code, if you have automated tests, they will tell you what exactly might break if you go through.
If you plan to introduce a new law, lobby groups will cry depending on how hard they are hit. You can then change your law (or go through with it).
If you plan to introduce a change in your code, if you have automated tests, they will tell you what exactly might break if you go through.
If you plan to introduce a new law, lobby groups will cry depending on how hard they are hit. You can then change your law (or go through with it).
At least here in the US, the Supreme Court has interpreted the free speech clause of the first amendment to include monetary contributions in politics as speech (see Citizens United v. FEC[1]), and therefore a constitutionally protected right.
1: https://en.wikipedia.org/wiki/Citizens_United_v._FEC
1: https://en.wikipedia.org/wiki/Citizens_United_v._FEC
Companies should contribute to society, they benefit off the public and legal infrastructure.
Companies don't make money by performing activities which are outside the society.
A trash company makes money but collecting trash, a car company makes money by providing cars to people, a law firm makes money by providing legal representation to people.
You're acting like society and its infrastructure is a teat which different companies milk and other people out of their own generosity fill up, so its only fair that they give something back to the society, when this is now how it works.
This infrastructure isn't created so that the CEOs can get rich, it is created so that they can run companies which provide value to the people (and not so that they can pay taxes which, as claimed, is the only utility a company has).
A trash company makes money but collecting trash, a car company makes money by providing cars to people, a law firm makes money by providing legal representation to people.
You're acting like society and its infrastructure is a teat which different companies milk and other people out of their own generosity fill up, so its only fair that they give something back to the society, when this is now how it works.
This infrastructure isn't created so that the CEOs can get rich, it is created so that they can run companies which provide value to the people (and not so that they can pay taxes which, as claimed, is the only utility a company has).
You or someone pay to companies with your money for the value they provide. However companies dont pay for the services goverment give them, like the security of police enforcement and the roads and public transport for their workers to come to work, or the justice system to ensure their rights are protected. In fact, without the goverment the business probably couldnt even be a ble to operate.
> the justice system to ensure their rights are protected
The only way a corporation can protect its property from the whims of the majority is with the help of lobbyist. In fact, US is one of the few countries where the corporations are allowed to formally influence the politicians (and just see how much people who just want to take it all from them in the name of 'fair share' hate this).
In other countries, this system is informal, so in Mexico, the corporations simply have to influence the politicians in an opaque way.
The only way a corporation can protect its property from the whims of the majority is with the help of lobbyist. In fact, US is one of the few countries where the corporations are allowed to formally influence the politicians (and just see how much people who just want to take it all from them in the name of 'fair share' hate this).
In other countries, this system is informal, so in Mexico, the corporations simply have to influence the politicians in an opaque way.
I think that's why parent advocated for closing the loopholes.
And I tend to agree. Would be great if we could just rely on companies to pay as much tax as they can to 'contribute', but why leave it to the honor system? Close the loopholes and codify it. It's the only sustainable, efficient way.
And I tend to agree. Would be great if we could just rely on companies to pay as much tax as they can to 'contribute', but why leave it to the honor system? Close the loopholes and codify it. It's the only sustainable, efficient way.
I cannot even rely on myself paying more tax than I'm legally required to.
I'm sure you don't intentionally over pay your tax either.
If you want more tax, just codify it.
I'm sure you don't intentionally over pay your tax either.
If you want more tax, just codify it.
They should, but companies tend towards amorality the larger they become. I think you're right to care about the issue, but we should forget about using shame as a tactic. We think of companies as institutions comprised of people who can be reasoned with, but it's more effective to think of companies as a bacterial growth on a petri dish named Earth. If you want a large company to pay taxes you have to make well-defined laws and enforce them.
Intent is a part of the law, not only actions. If you use an exploit in computer systems to get unauthorized access you cant just say "well, thats how its designed, write better programs next time".
Retroactive taxes should apply here, what was written in the law was wrong with the actual intent of the lawmaker, we shouldnt encourage this stupid cat and mouse games, just pay your taxes.
Retroactive taxes should apply here, what was written in the law was wrong with the actual intent of the lawmaker, we shouldnt encourage this stupid cat and mouse games, just pay your taxes.
I agree with your ideology but you're describing how the world should be whereas I'm describing how the world is [0]. If you want to change the world, you have to accept how the world is.
[0] https://www.youtube.com/watch?v=PwuckTkE7T4
[0] https://www.youtube.com/watch?v=PwuckTkE7T4
What if companies contribute best to society by following the law?
There's at least one major party in the US that wouldn't see it as particularly ethical for companies to pay more than what the law requires. One Presidential candidate for that party, when challenged on using every loophole allowed to him, quipped he does it "because I'm smart."
Then he was elected President, and his administration oversaw the spending of tax dollars Congress authorized it.
There's at least one major party in the US that wouldn't see it as particularly ethical for companies to pay more than what the law requires. One Presidential candidate for that party, when challenged on using every loophole allowed to him, quipped he does it "because I'm smart."
Then he was elected President, and his administration oversaw the spending of tax dollars Congress authorized it.
They do. They pay employees money
This is a different point, which is worth its own debate.
My point is: if you want them to not use loophole, then codify it.
This is like your company doesn't write what your job's responsibility is.
My point is: if you want them to not use loophole, then codify it.
This is like your company doesn't write what your job's responsibility is.
I'm sorry but you're a bit wrong. Give this propublica series a read. https://www.propublica.org/series/gutting-the-irs
Dems are also the only ones at least proposing & trying to pass changes - even if not enough. Infra bill would be paid for by restoring higher corporate tax rate and a few law changes on foreign tax.
To me it's not all bluster. But I agree here in the loopholes are hard to close with entrenchment. The paid for definitely rests on way more sound math than republican 'job growth -> gdp' magic.
There is quite a lot but just a few things I quickly googled:
- calculate 21% tax on country-by-country basis, eliminate tax-free 10% foreign point of return - make it harder to invert by acquiring/merging foreign companies to offshore profit - eliminate tax benefits for “Foreign Derived Intangible Income” (e.g. shift IP abroad i think apple does this?). I think this one also moves those incentives stateside which would be good
https://www.cnbc.com/2021/03/31/biden-infrastructure-plan-to...
https://www.whitehouse.gov/briefing-room/statements-releases...
To me it's not all bluster. But I agree here in the loopholes are hard to close with entrenchment. The paid for definitely rests on way more sound math than republican 'job growth -> gdp' magic.
There is quite a lot but just a few things I quickly googled:
- calculate 21% tax on country-by-country basis, eliminate tax-free 10% foreign point of return - make it harder to invert by acquiring/merging foreign companies to offshore profit - eliminate tax benefits for “Foreign Derived Intangible Income” (e.g. shift IP abroad i think apple does this?). I think this one also moves those incentives stateside which would be good
https://www.cnbc.com/2021/03/31/biden-infrastructure-plan-to...
https://www.whitehouse.gov/briefing-room/statements-releases...
They had their chance when the corporate tax rates were 35% or higher. We know the game, nothing is going to change with higher tax rates, except more money being wasted.
Actually, they didn't. Democrats have only had majority control of congress and the presidency for 5 of the last 40 years. The rest of the time, Republicans can block any bills they don't like.
And they really don't like huge corporations paying taxes.
And they really don't like huge corporations paying taxes.
Obama had a supermajority and didn't do anything (except the lobbyist hellscape that is the current US healthcare system). He could've passed tax reform.
I agree that Obama squandered opportunities and I think Biden is trying to learn from those mistakes. The primary one is believing that Republicans will negotiate in good faith, let alone do anything bipartisan; the obstruction has reached untenable levels.
One interesting thing too is the timeline of super majority - while there was 60 for a bit - wasn't as long as implied or as simple given the geriatrics being out of commission.
If we ever get a super majority again - or get rid of filibuster - I personally want to see DC statehood as #1 priority, maybe PR and Guam too.
https://scontent.fapa1-1.fna.fbcdn.net/v/t31.18172-8/324260_...
One interesting thing too is the timeline of super majority - while there was 60 for a bit - wasn't as long as implied or as simple given the geriatrics being out of commission.
If we ever get a super majority again - or get rid of filibuster - I personally want to see DC statehood as #1 priority, maybe PR and Guam too.
https://scontent.fapa1-1.fna.fbcdn.net/v/t31.18172-8/324260_...
ourmandave(1)
Because part of those money flow back to the government, while middle class and small business are left paying the bill for the entire of society.
That said, I'd rather have the government disappear and be replaced by companies providing insurance, protection and lawmaking - than these companies to start paying taxes.
That said, I'd rather have the government disappear and be replaced by companies providing insurance, protection and lawmaking - than these companies to start paying taxes.
If Dems had no intention to fix these loopholes why would they waste time making a bunch of hoopla about it? Words imply intent. Would you rather they say nothing and look away, as the Republicans are?
Dems are at least doing something besides electing a billionaire who dropped the corporate tax to the lowest it's been since the 1930's.
Dems are at least doing something besides electing a billionaire who dropped the corporate tax to the lowest it's been since the 1930's.
Yes, because right now they say one thing but do the other.
Would your rather they deceive than saying nothing?
Would your rather they deceive than saying nothing?
What is the other thing they're doing? Nothing I've seen in their tax bills affects average americans
One example is taxing the billionaire. They are telling shouting shaming.
Then, Dems will actually tax salaried employees who earn more 400k a year.
Now this doesn't impact average American, sure. But they could have been upfront about taxing salaried employees.
Another example is exactly this news. They are shaming yelling at the companies for not paying more tax.
Yet they don't codify the tax law to get companies to pay more tax.
Based on their yelling, they could have just added "no double Irish practice" into the tax law. No? There are many similar laws that handle extreme complex situation like "no money laundering", "no market manipulation". It's not perfect, but we still manage to handle them.
At best, Dems are misleading the public. My guess is that they can't close that loophole without negative impact on other areas. But Dems never explain this at all. They try hard to say companies are evil. Yet they are the ones with power who do nothing.
This is like you starting a new job, and nobody codifies your responsibility, and you are constantly yelled at for not fulfilling your obligation.
Sure, Dems is the lesser of the two evils when comparing to Republicans. But let's not act like they are not deceptive here.
Then, Dems will actually tax salaried employees who earn more 400k a year.
Now this doesn't impact average American, sure. But they could have been upfront about taxing salaried employees.
Another example is exactly this news. They are shaming yelling at the companies for not paying more tax.
Yet they don't codify the tax law to get companies to pay more tax.
Based on their yelling, they could have just added "no double Irish practice" into the tax law. No? There are many similar laws that handle extreme complex situation like "no money laundering", "no market manipulation". It's not perfect, but we still manage to handle them.
At best, Dems are misleading the public. My guess is that they can't close that loophole without negative impact on other areas. But Dems never explain this at all. They try hard to say companies are evil. Yet they are the ones with power who do nothing.
This is like you starting a new job, and nobody codifies your responsibility, and you are constantly yelled at for not fulfilling your obligation.
Sure, Dems is the lesser of the two evils when comparing to Republicans. But let's not act like they are not deceptive here.
>> If I have a way to reduce tax, I'll do so as well.
Please do enlighten the rest of us here, on how to reduce our taxes down to single-digit percentages, or millions/billions in absolute.
Please do enlighten the rest of us here, on how to reduce our taxes down to single-digit percentages, or millions/billions in absolute.
Yes! I wish I could do double Irish loophole as well, but I can't.
Do we want to close the loophole or extend the loophole to everyone?
I'm confused now.
Do we want to close the loophole or extend the loophole to everyone?
I'm confused now.
That’s exactly my point, that you can’t do it. Individuals rarely have any avenues to construct such elaborate tax reduction schemes. I think it’s disingenuous to say that it’s similar to how one normally looks for legal tax remedies. Instead, it’s clearly a loophole invented for their own benefit.
My main point is that we all know what the loop hole is. We even have a nickname for it.
I almost always spend the best of my ability to reduce tax.
If this loop hole applied to me, I would have done it as well.
Not sure why it is disingenuous.
Why can't we either close it or extend it to everybody? Dems led governments for years during Obama's era. What's with the yelling and no action?
I almost always spend the best of my ability to reduce tax.
If this loop hole applied to me, I would have done it as well.
Not sure why it is disingenuous.
Why can't we either close it or extend it to everybody? Dems led governments for years during Obama's era. What's with the yelling and no action?
> Nobody is against closing the loop hole.
Nobody? Including those who benefit from it, you mean?
Nobody? Including those who benefit from it, you mean?
I meant the perceived majority seen by the amount of yelling on twitter Reddit and etc., at least.
I haven't seen much of people supporting the "let's not close the loophole" movement.
I'm sure my 0.5 year old baby is neither for nor against this loophole. I asked but I didn't get the answer.
Come on, man.
I haven't seen much of people supporting the "let's not close the loophole" movement.
I'm sure my 0.5 year old baby is neither for nor against this loophole. I asked but I didn't get the answer.
Come on, man.
I normally find the Hacker News audience to be balanced on issues, but for tax policy, seems like strong opinions are held without a basic understanding of facts.
In this instance don't have strong opinions if:
* You have no idea what transfer pricing is
* You have no idea what companies have to do to comply with transfer pricing laws (remember that these are international transactions and they need to comply with two sets of tax authorities, both with different sets of rules)
* You have no idea what laws congress created related to these transactions
* You have no idea that these laws have been updated over the years (if you have no idea about what changed in Section 482-7T)
Comments like "companies should just pay their taxes" are like when laypeople say "companies should have websites that always work instantaneously & never have any downtime". Reality is complicated and your opinion isn't that valuable if you don't know any basic facts.
In this instance don't have strong opinions if:
* You have no idea what transfer pricing is
* You have no idea what companies have to do to comply with transfer pricing laws (remember that these are international transactions and they need to comply with two sets of tax authorities, both with different sets of rules)
* You have no idea what laws congress created related to these transactions
* You have no idea that these laws have been updated over the years (if you have no idea about what changed in Section 482-7T)
Comments like "companies should just pay their taxes" are like when laypeople say "companies should have websites that always work instantaneously & never have any downtime". Reality is complicated and your opinion isn't that valuable if you don't know any basic facts.
Half the outrage is the claim that these companies are paying no U.S. taxes. Is that claim substantially incorrect? There are all these details you mention, but if Google is avoiding paying US taxes on billions in profit then how much detail do people really need to know?
Well the key detail is that Google used the "Double Irish Sandwich" to push profits from the european market towards Bermuda instead of paying taxes on those profits in the european union. That might be a somewhat relevant detail for that whole outrage about not paying taxes in the USA.
Taxation on international IP licensing is regulated in complex web of bilateral "no double taxation" contracts between nations and the whole Bermuda thing worked because ireland accepted "taxed elsewhere" but elsewhere was a tax haven with 0%. It is probably not a coincidence that trumps "tax cuts" create a tax rate that is slightly lower then the corporate tax rate in ireland. So it is better to move profits from the EU market towards the USA instead of taxing them in the EU. However the multinationals have likely already found a new way again to avoid both.
The article is right that the multinationals can't move money from these offshore accounts into the USA without getting taxed and they can't move them back into the EU without getting taxed either, but there still were, are and will be opportunities to use those tropical island shell company treasure chests with no or minimal taxation. Like for example for investing into companies and assets worldwide. As far as i know many multinationals only transferred a small part of their existing offshore money to the USA and used most of that to buy back stocks and pay dividends. The article doesn't mention how much money had been "repatriated" to the USA from these accounts.
It is correct that the whole idea of offshore shells holding intellectual properties for international licensing thing is done and over thanks to reforms in the EU killing the double-irish tax avoidance scheme and the USA introducing GILTI as a general measure against US companies sending oversea profits to a tax havens instead of the parent company. So the "intellectual property assets" are moving back to the USA. However i think the IP licenses also got a lot cheaper now that they are taxed, but i have no details on that. The european parts of the conglomerate will probably invest in some new data centers or a robotics company, lowering their taxable profits, instead of moving these profits to the USA.
I know that Google moved €19.9B towards Bermudas in 2017, €21.8B in 2018 and €63B in 2019, the last year of the 0% tax scheme. (note: these numbers are different then the articles) Google EU did not grow 200% in 2019, they put off investments and stored the profits while they could avoid taxes. I would love to see some numbers that tell how much revenue they made per region of the world and how much taxes they paid in those regions and how much cash they move between tax regions to abuse the complex international web of tax laws.
One side note: I do not know how much was initially invested to set up these global operations, if that investment money "leaving" even had any economic effect on the US market back then, if the investors got something, like shares of the privately traded international subsidiaries, and if the "repatriation" of money has an economic effect now. It is also completely unclear how big of a cut the US treasury got from all of that. As in: did the USA collect significantly more taxes in 2020 then in 2019 thanks to the "tax cuts" incentivizing moving money from oversea subsidiaries into the USA?
So yes, the claim is substantially incorrect because it argues that the USA could get a lot more taxes IF multi-national companies would send all their global profits to the USA. While that is technically the truth, it is also nonsensical, they won't ever do that. Being outraged about that is a misunderstanding on how multinational mega-corporations function.
And one last thing: only a hardcore american nationalists can truly believe that whenever someone in europa, india, south-east-asia or elsewhere uses the google pay app for a transaction in their own currency the american government is somehow entitled to get a cut because they collect taxes on the licensing fees of the google branding. How do they sayeth? No taxation without representation! (throws android phone into harbor)
Taxation on international IP licensing is regulated in complex web of bilateral "no double taxation" contracts between nations and the whole Bermuda thing worked because ireland accepted "taxed elsewhere" but elsewhere was a tax haven with 0%. It is probably not a coincidence that trumps "tax cuts" create a tax rate that is slightly lower then the corporate tax rate in ireland. So it is better to move profits from the EU market towards the USA instead of taxing them in the EU. However the multinationals have likely already found a new way again to avoid both.
The article is right that the multinationals can't move money from these offshore accounts into the USA without getting taxed and they can't move them back into the EU without getting taxed either, but there still were, are and will be opportunities to use those tropical island shell company treasure chests with no or minimal taxation. Like for example for investing into companies and assets worldwide. As far as i know many multinationals only transferred a small part of their existing offshore money to the USA and used most of that to buy back stocks and pay dividends. The article doesn't mention how much money had been "repatriated" to the USA from these accounts.
It is correct that the whole idea of offshore shells holding intellectual properties for international licensing thing is done and over thanks to reforms in the EU killing the double-irish tax avoidance scheme and the USA introducing GILTI as a general measure against US companies sending oversea profits to a tax havens instead of the parent company. So the "intellectual property assets" are moving back to the USA. However i think the IP licenses also got a lot cheaper now that they are taxed, but i have no details on that. The european parts of the conglomerate will probably invest in some new data centers or a robotics company, lowering their taxable profits, instead of moving these profits to the USA.
I know that Google moved €19.9B towards Bermudas in 2017, €21.8B in 2018 and €63B in 2019, the last year of the 0% tax scheme. (note: these numbers are different then the articles) Google EU did not grow 200% in 2019, they put off investments and stored the profits while they could avoid taxes. I would love to see some numbers that tell how much revenue they made per region of the world and how much taxes they paid in those regions and how much cash they move between tax regions to abuse the complex international web of tax laws.
One side note: I do not know how much was initially invested to set up these global operations, if that investment money "leaving" even had any economic effect on the US market back then, if the investors got something, like shares of the privately traded international subsidiaries, and if the "repatriation" of money has an economic effect now. It is also completely unclear how big of a cut the US treasury got from all of that. As in: did the USA collect significantly more taxes in 2020 then in 2019 thanks to the "tax cuts" incentivizing moving money from oversea subsidiaries into the USA?
So yes, the claim is substantially incorrect because it argues that the USA could get a lot more taxes IF multi-national companies would send all their global profits to the USA. While that is technically the truth, it is also nonsensical, they won't ever do that. Being outraged about that is a misunderstanding on how multinational mega-corporations function.
And one last thing: only a hardcore american nationalists can truly believe that whenever someone in europa, india, south-east-asia or elsewhere uses the google pay app for a transaction in their own currency the american government is somehow entitled to get a cut because they collect taxes on the licensing fees of the google branding. How do they sayeth? No taxation without representation! (throws android phone into harbor)
I'm not sure why you need to understand the facts to have an opinion. If kicking puppies was legal, you can still dislike people that kick puppies.
What if you’re kicking a puppy that’s biting your leg?
Understanding of facts is very relevant to form proper opinions. Without it you’re very easily manipulated via emotions.
Understanding of facts is very relevant to form proper opinions. Without it you’re very easily manipulated via emotions.
I don't understand any of what you listed, but I believe corporations should pay a mandatory minimum tax. Also, I believe people can have opinions even if someone is being condescending to them.
They can, but those opinions ought to carry very little weight with regards to policy or other people's opinions.
I don't follow. If someone is being condescending to you, your opinion doesn't carry weight?
You don't have to understand any of the OP's post to have a reasonable opinion on this topic - corporations should pay their fair share of taxes.
You don't have to understand any of the OP's post to have a reasonable opinion on this topic - corporations should pay their fair share of taxes.
Sorry, I was unclear. I didn't mean the opinions should carry little weight because someone is being condescending; I meant they should carry little weight if the holder doesn't understand the fundamentals that MrPowers described.
It's a bit like having a strongly-held opinion on garbage collection without knowing the definition of "mark-and-sweep" or "generational GC" (or, perhaps more significantly, lacking knowledge of the concept of memory leaks and use-after-free).
Tax law is very messy and detail-heavy, and absolutely full of tradeoff-based choices. It's very rare that a clear moral best-approach presents itself if one knows how we got where we are today.
It's a bit like having a strongly-held opinion on garbage collection without knowing the definition of "mark-and-sweep" or "generational GC" (or, perhaps more significantly, lacking knowledge of the concept of memory leaks and use-after-free).
Tax law is very messy and detail-heavy, and absolutely full of tradeoff-based choices. It's very rare that a clear moral best-approach presents itself if one knows how we got where we are today.
[deleted]
>Comments like "companies should just pay their taxes" are like when laypeople say "companies should have websites that always work instantaneously & never have any downtime".
I don't understand the analogy. Websites that 'always work instantaneously and never have any downtime' is technically infeasible, though you can get closer by pumping more money into the web side of your business. No company deliberately injects downtime into their website, but they do think it may not be the biggest priority, and hence there will be more downtime.
On the other hand, you need to actively look for loopholes, and get access to tax lawyers and accountants in order to do something like a 'double-Irish'. That's not a failure to pump money into your accountancy division in the same way downtime is a failure to pump money into your web division. In fact, it's exactly the opposite - doing a 'double-Irish' would seem to require more money to be pumped into the tax law part of your business.
The equivalent in your analogy would actually be exactly the opposite - if Google hired something like 'downtime lawyers' who would find the optimal way to inject downtime into their website. If Google sought out downtime, and actively pursued downtime.
Pump more money into the web side of your business and you get less downtime. Pump more money into the tax lawyer side of your business and you avoid more taxes. The analogy is bankrupt.
Reality is complicated, but even more complicated than reality is the tasks Google has set its tax lawyers to concoct to avoid paying taxes. I'm sure you yourself have a great many opinions, moral or otherwise, on subjects you don't know the technical intricacies of, but you hold those opinions because of a principle that applies to the base facts of those subjects.
Along the lines of another commenter, I don't need to understand the current debate in moral epistemology and animal rights in order to have good reason to think kicking puppies is immoral, and I need even less knowledge to know that I don't want to see puppy kicking in society. I can dislike puppy-kicking, even if it turns out that puppy kicking is legal, or even moral - and I have a feeling you would too.
I don't understand the analogy. Websites that 'always work instantaneously and never have any downtime' is technically infeasible, though you can get closer by pumping more money into the web side of your business. No company deliberately injects downtime into their website, but they do think it may not be the biggest priority, and hence there will be more downtime.
On the other hand, you need to actively look for loopholes, and get access to tax lawyers and accountants in order to do something like a 'double-Irish'. That's not a failure to pump money into your accountancy division in the same way downtime is a failure to pump money into your web division. In fact, it's exactly the opposite - doing a 'double-Irish' would seem to require more money to be pumped into the tax law part of your business.
The equivalent in your analogy would actually be exactly the opposite - if Google hired something like 'downtime lawyers' who would find the optimal way to inject downtime into their website. If Google sought out downtime, and actively pursued downtime.
Pump more money into the web side of your business and you get less downtime. Pump more money into the tax lawyer side of your business and you avoid more taxes. The analogy is bankrupt.
Reality is complicated, but even more complicated than reality is the tasks Google has set its tax lawyers to concoct to avoid paying taxes. I'm sure you yourself have a great many opinions, moral or otherwise, on subjects you don't know the technical intricacies of, but you hold those opinions because of a principle that applies to the base facts of those subjects.
Along the lines of another commenter, I don't need to understand the current debate in moral epistemology and animal rights in order to have good reason to think kicking puppies is immoral, and I need even less knowledge to know that I don't want to see puppy kicking in society. I can dislike puppy-kicking, even if it turns out that puppy kicking is legal, or even moral - and I have a feeling you would too.
> you need to actively look for loopholes, and get access to tax lawyers and accountants in order to do something like a 'double-Irish'
What is the alternative? Multinational companies have to file tax returns in tons of different jurisdictions. Tax authorities are heavily biased and don't agree how transactions should be priced (they always want more tax revenue). Tax authorities often fight over the same profits and double tax.
Listen, I'm not saying that "these poor corporations have it so tough". But complying with tax laws for multinationals is ridiculously complex. And these tax structures are needed to lower the compliance burden.
The compliance burden can be huge for smaller companies. I've seen negotiations for small amounts of profit between tax authorities draw on for years. It's can be a massive cost for smaller multinationals.
Do I think there should be something better, yes. But that feeling goes for the entire tax code. I think the US tax code is garbage. Some other countries are even worse.
What is the alternative? Multinational companies have to file tax returns in tons of different jurisdictions. Tax authorities are heavily biased and don't agree how transactions should be priced (they always want more tax revenue). Tax authorities often fight over the same profits and double tax.
Listen, I'm not saying that "these poor corporations have it so tough". But complying with tax laws for multinationals is ridiculously complex. And these tax structures are needed to lower the compliance burden.
The compliance burden can be huge for smaller companies. I've seen negotiations for small amounts of profit between tax authorities draw on for years. It's can be a massive cost for smaller multinationals.
Do I think there should be something better, yes. But that feeling goes for the entire tax code. I think the US tax code is garbage. Some other countries are even worse.
Multinationals have such a ridiculously complex time complying with the tax code so we should accept that they will create structures to pay little or no taxes?
It is only complex because it has been setup that way. If they setup a simple structure they would pay more. So they don't.
It is only complex because it has been setup that way. If they setup a simple structure they would pay more. So they don't.
I believe the point the other person is making is that multinational tax compliance is inherently complicated. Moreover, it does not become simple and easy if a company just adopts a simple structure because the forces that drive that complexity are not a result of the complexity of a company's structure.
Think of it as tax engineering: companies build devices to avoid paying too much taxes. It's a thing, you'd do it too if you had enough money to justify the investment in such engineering :)
It sounds like what the other person is saying the primary motivation for this “engineering” is not to save money just because they could, it’s to avoid disputes and compliance risks as much possible (which incidentally results in them saving money). I can’t comment if that’s true or not, but I can easily imagine that this is the situation.
No, this can't be how the world works. It's good that people have and express opinions about outcomes rather than letting the elite who understand the esoteric mechanisms behind those outcomes do whatever they want.
To be clear, the "esoteric mechanisms" are invented by some relatively low paid IRS tax nerds and then signed into law by congress (people that certainly cannot understand the rules and probably don't even bother reading them). I agree the rules are ridiculous, but don't think they've been created by "the elite".
What do you think lobbyists do? IRS tax nerds write some rules and then loopholes lobbied for by corporations get injected into the final bill.
Just heard the other day from AOC that the new COVID relief bill had such a ridiculous clause that no one even stepped up to claim they put it in, so they just removed it without any resistance. The whole bill authoring model is currently broken, representatives receive ridiculously little time to review what to vote for and massive bills are basically take it or leave it.
Just heard the other day from AOC that the new COVID relief bill had such a ridiculous clause that no one even stepped up to claim they put it in, so they just removed it without any resistance. The whole bill authoring model is currently broken, representatives receive ridiculously little time to review what to vote for and massive bills are basically take it or leave it.
I agree with you. Some tax law is from lobbyists & some is from tax nerds. Congress doesn't have enough time to read laws (and they simply aren't qualified for tax law - some requires CFA-level understanding of accounting / finance).
For the specific tax law that taxpayers have leveraged that the IRS now doesn't like, I'm pretty sure it came from an IRS nerd. The Residual Profit Split Method. That one could only have come from a new grad.
For the specific tax law that taxpayers have leveraged that the IRS now doesn't like, I'm pretty sure it came from an IRS nerd. The Residual Profit Split Method. That one could only have come from a new grad.
> Congress doesn't have enough time to read laws (and they simply aren't qualified for tax law - some requires CFA-level understanding of accounting / finance).
Individual members may not, but they probably have legislative staffers that do, and the staff (majority and minority) of the tax committees, who prepare and distribute analyses of all tax bills, definitely have the skills to read, understand, and explain the implications of tax bills.
Members of Congress may not care, but they definitely have access to a competent understanding of proposed tax laws.
Individual members may not, but they probably have legislative staffers that do, and the staff (majority and minority) of the tax committees, who prepare and distribute analyses of all tax bills, definitely have the skills to read, understand, and explain the implications of tax bills.
Members of Congress may not care, but they definitely have access to a competent understanding of proposed tax laws.
There’s no way you can argue this in good faith. In what world are “IRS nerds” inventing tax laws out of thin air? They’re codifying what lobbyists and politicians want them to.
If you're talking about a healthy balance between elite expertise and proletariat sensibilities, that's hard to argue with. But there's danger in the prospect of destructive laws and regulations based on the popular idea that, say, vaccines cause autism, or 5G causes cancer.
I'm fine with advocating for outcomes but it can be exhausting to hear uninformed policy positions when you have actual education.
Vaguely Relevant Comic: https://www.commitstrip.com/en/2020/05/26/experts/
Vaguely Relevant Comic: https://www.commitstrip.com/en/2020/05/26/experts/
[deleted]
The difference being people are allowed to have opinions and voice them because economy/tax measures affect their lives. Using whatever stack or library does not affect anybody so they don't care. This is just like saying people should not be able to vote because they don't understand geopolitics.
I'm wondering what happens when all these companies relocate their infrastructure in space and suck all the money out of the planet. (only partially kidding)
Is it not enough to understand that this is the double-irish is tax evasion?
edit: tax avoidance* (this changes nothing about the intent of my question, but is literally incorrect)
edit: tax avoidance* (this changes nothing about the intent of my question, but is literally incorrect)
Yes, because tax evasion is illegal while tax avoidance / reduction through legal means is distinctly not. The Double Irish was as illegal at the time doing something like registering your mostly SF based company in Delaware.
I've updated my post, though the legality is irrelevant - I haven't seen anyone complain that this is illegal but that it is unethical.
No, it's not. Tax evasion is a crime. This is just mere tax avoidance: using the tax code to legally avoid paying tax.
Sorry, slipped up there, tax avoidance. So, to restate my question, is it not enough to understand that this is the double-irish is tax avoidance?
I think it's fine to hold the opinion "companies should be taxed more, and loopholes should be closed that allow them to legally avoid paying tax".
But I assume you're trying to head off the usual spate of anger at Google (or whatever company) for taking advantage of these loopholes to legally avoid paying tax. I think that's in general a good idea, though these loopholes are in part shaped by the lobbying that Google (and others) take part in, so I don't think this anger is 100% misplaced.
At the end of the day, though, if you believe companies should be paying more tax, expressing anger at the companies themselves is pointless; call up your elected government representative and give them your thoughts instead.
But I assume you're trying to head off the usual spate of anger at Google (or whatever company) for taking advantage of these loopholes to legally avoid paying tax. I think that's in general a good idea, though these loopholes are in part shaped by the lobbying that Google (and others) take part in, so I don't think this anger is 100% misplaced.
At the end of the day, though, if you believe companies should be paying more tax, expressing anger at the companies themselves is pointless; call up your elected government representative and give them your thoughts instead.
>expressing anger at the companies themselves is pointless
Nah, it is not pointless. It affects the companies' public image.
And when we are talking about a company that built its empire marketing itself as a Do Not Be Evil collective, the anger at swindling us is not misplaced.
Politicians do deserve the ire, but so do the swindlers.
Nah, it is not pointless. It affects the companies' public image.
And when we are talking about a company that built its empire marketing itself as a Do Not Be Evil collective, the anger at swindling us is not misplaced.
Politicians do deserve the ire, but so do the swindlers.
I agree because of the huge gulf of experiences different people have with tax authorities.
From what I can tell, most people have an adversarial relationship with tax authorities, and therefore assume any more beneficial advantage is a "loophole" like something that would even surprise the tax authorities, when a reality is that many people and organizations have a collaborative relationship with tax authorities.
Transfer pricing requires pre-emptive approval from the tax authorities involved. You are basically telling them how you won't pay taxes and they sign off on it, specifically the nature of the transaction and coming to an agreement on how it complies. Greater disdain from the general population can come from understanding how expensive that can be to collaborate with the tax authority, but I don't think that changes anything. It doesn't give a better argument with any nuance.
My tax opinion isn't based on a country passively deserving anything from the mere existence of a transaction, tax authorities aren't operating that way either and neither are the legislatures. My understanding of the tax topics seems to be more compatible and effective than what I hear from most people, just like the lawyers and CFOs of these fortune 500 companies.
From what I can tell, most people have an adversarial relationship with tax authorities, and therefore assume any more beneficial advantage is a "loophole" like something that would even surprise the tax authorities, when a reality is that many people and organizations have a collaborative relationship with tax authorities.
Transfer pricing requires pre-emptive approval from the tax authorities involved. You are basically telling them how you won't pay taxes and they sign off on it, specifically the nature of the transaction and coming to an agreement on how it complies. Greater disdain from the general population can come from understanding how expensive that can be to collaborate with the tax authority, but I don't think that changes anything. It doesn't give a better argument with any nuance.
My tax opinion isn't based on a country passively deserving anything from the mere existence of a transaction, tax authorities aren't operating that way either and neither are the legislatures. My understanding of the tax topics seems to be more compatible and effective than what I hear from most people, just like the lawyers and CFOs of these fortune 500 companies.
Definitely don't agree with "Transfer pricing requires pre-emptive approval from the tax authorities involved". Maybe you're thinking about an Advanced Pricing Agreement. Transfer pricing is the pricing of goods and services between related parties in different tax jurisdictions (multinationals typically).
I am thinking about APAs. Wouldn't transfer pricing involve an APA while APAs can also be for other things.
Ok, but please don't post comments that just put others down. If you know more, great! please share some of what you know, so the rest of us can learn. If you don't want to do that, that's fine, but then please don't post. Supercilious dismissals don't help and aren't nice.
https://hn.algolia.com/?dateRange=all&page=0&prefix=true&sor...
I know it's frustrating when others are wrong on the internet, but the portion of the internet that isn't wrong has measure zero—a fact we all have to make peace with, or else we end up making things worse.
https://news.ycombinator.com/newsguidelines.html
https://hn.algolia.com/?dateRange=all&page=0&prefix=true&sor...
I know it's frustrating when others are wrong on the internet, but the portion of the internet that isn't wrong has measure zero—a fact we all have to make peace with, or else we end up making things worse.
https://news.ycombinator.com/newsguidelines.html
The thing that confuses me is that as far as I can tell there's no way to establish true market value of internal IP that's licensed between subsidiaries. It's not like FAANGs rent out their source code or internal services.
Sure; the paperwork all gets done that convinces a tax official that transfer prices make sense in some way, but the fact remains that global companies pay a lower tax by choosing specific transfer prices despite not having any visible external changes (employing people in the same countries as they always have, doing business where they always did), and that's what annoys most people.
> Comments like "companies should just pay their taxes" are like when laypeople say "companies should have websites that always work instantaneously & never have any downtime". Reality is complicated and your opinion isn't that valuable if you don't know any basic facts.
Yes, the politicians are the ones to blame, and they seem to be taking their sweet time to fix the issues. That doesn't mean it's unrealistic to say "companies should just pay their taxes". It's more like saying "health care should just be available to people that need it" which is a truism that nonetheless isn't achieved in the U.S. to a large extent, but isn't the direct fault of individual actors in the health care system.
Sure; the paperwork all gets done that convinces a tax official that transfer prices make sense in some way, but the fact remains that global companies pay a lower tax by choosing specific transfer prices despite not having any visible external changes (employing people in the same countries as they always have, doing business where they always did), and that's what annoys most people.
> Comments like "companies should just pay their taxes" are like when laypeople say "companies should have websites that always work instantaneously & never have any downtime". Reality is complicated and your opinion isn't that valuable if you don't know any basic facts.
Yes, the politicians are the ones to blame, and they seem to be taking their sweet time to fix the issues. That doesn't mean it's unrealistic to say "companies should just pay their taxes". It's more like saying "health care should just be available to people that need it" which is a truism that nonetheless isn't achieved in the U.S. to a large extent, but isn't the direct fault of individual actors in the health care system.
"Poorly researched but strongly held opinions" are really unhelpful and perhaps too common on HN.
> Comments like "companies should just pay their taxes"
*HOWEVER* it's very cheeky to selectively demand better opinions while also taking a side.
> Comments like "companies should just pay their taxes"
*HOWEVER* it's very cheeky to selectively demand better opinions while also taking a side.
Thank you for tell us what to think. We are genuine idiots, we feel more secure in our lives now.
Just a friendly reminder that as far as I understand it, publicly traded companies are required by law to maximize their profits (which is what's happening here).
Then there are always politicians shouting about companies following that, instead of trying to do something to fix the problem. Problem which won't be fixed by companies and must be fixed by governments.
edit: or rather maximize shareholders value, which basically means profits on the long run, which still means paying as little tax as you can legally
Then there are always politicians shouting about companies following that, instead of trying to do something to fix the problem. Problem which won't be fixed by companies and must be fixed by governments.
edit: or rather maximize shareholders value, which basically means profits on the long run, which still means paying as little tax as you can legally
> "maximize shareholders value, which basically means profits on the long run, which still means paying as little tax as you can legally"
Nope. Directors are required to act in the interests of the company, and that can include maximising the company's reputation for ethics (which is also financially justifiable, in order to attract the best staff and customers long-term).
Nope. Directors are required to act in the interests of the company, and that can include maximising the company's reputation for ethics (which is also financially justifiable, in order to attract the best staff and customers long-term).
This. No company anywhere is going to pay a cent more in taxes than they're legally required to; the proper places to attack this kind of abuse is changing the laws.
That's false. You're only legally required to act in the interest of shareholders. That can mean a lot of things.
Not even that: directors are required to act in the interests of the company.
Acting in the interests of shareholders is problematic, as different shareholders have different interests (especially minority vs majority).
And by keeping the duty to act in the interests of the company, directors are not required to focus on short-term profitability and shareholder dividends; decisions can be justified as being in the long-term interests of the company, and better for the company's reputation and culture, even if they don't deliver shareholders the maximum short-term gains.
Acting in the interests of shareholders is problematic, as different shareholders have different interests (especially minority vs majority).
And by keeping the duty to act in the interests of the company, directors are not required to focus on short-term profitability and shareholder dividends; decisions can be justified as being in the long-term interests of the company, and better for the company's reputation and culture, even if they don't deliver shareholders the maximum short-term gains.
OK. John takes over Google and pays more taxes when the current scheme is legal.
How is that rationalized? Why not pay even more?
Building goodwill or other intangibles.
Goodwill with the government? That $5 Billion or whatever will last, what, 4 seconds in Capitol Hill?
Name a US company that lost market share for not paying more taxes than required.
They should invest more when it comes to good causes, yeah.
Name a US company that lost market share for not paying more taxes than required.
They should invest more when it comes to good causes, yeah.
> Goodwill with the government?
No, with the people. What you could do is a direct deposit in each American bank account in a very public way.
180M adults * 10USD = 1.8B
Not a joke but also not that much for Google to build long lasting goodwill among the public
In one swoop you delegitimize politicians by doing direct payments (maybe even a PR campaign with "money for nothing" as soundtrack) and win the public favor.
"UBI-light" offered by Google..so many PR angles to think this thing through
No, with the people. What you could do is a direct deposit in each American bank account in a very public way.
180M adults * 10USD = 1.8B
Not a joke but also not that much for Google to build long lasting goodwill among the public
In one swoop you delegitimize politicians by doing direct payments (maybe even a PR campaign with "money for nothing" as soundtrack) and win the public favor.
"UBI-light" offered by Google..so many PR angles to think this thing through
No such thing. Governments are inherently extractive same as any other monopoly.
No law I am aware of requires public companies to maximize profits for shareholders. I think it only applies when a company is for sale
> publicly traded companies are required by law to maximize their profits
Is that really true, though?
"[...] there is no legal requirement for for-profit companies to maximize returns to shareholders. When a company is for sale, its directors are required to do all they can to maximize its value. At any other time, corporate law simply dictates that directors are supposed to help the company prosper and do nothing to benefit themselves at the company’s expense. But no law requires corporations to maximize returns to shareholders."[0]
[0] https://www.washingtonpost.com/opinions/harold-meyerson-the-...
Is that really true, though?
"[...] there is no legal requirement for for-profit companies to maximize returns to shareholders. When a company is for sale, its directors are required to do all they can to maximize its value. At any other time, corporate law simply dictates that directors are supposed to help the company prosper and do nothing to benefit themselves at the company’s expense. But no law requires corporations to maximize returns to shareholders."[0]
[0] https://www.washingtonpost.com/opinions/harold-meyerson-the-...
Of course it's not true, it's just an easy excuse to abdicate any responsibility.
Don’t believe it’s legally required.
Reference: https://skeptics.stackexchange.com/questions/8146/are-u-s-co...
Reference: https://skeptics.stackexchange.com/questions/8146/are-u-s-co...
There is no such law.
> companies are required by law to maximize their profits
No, US court rulings say that mgmt. has "wide latitude" in how the company is managed. It's up to shareholders and the board to step in if they disagree, but since they appointed mgmt., it's rare for major disagreements.
Which makes sense in a capitalist country, as there is little central planning outside of certain industries like defense and banking (regulated.)
(In both the US and UK, the govt. tells industry how many airplane or ship builders they want, and who has to merge. After WW2, this caused concentration in the airplane industry. My understanding is that Northrop was told to drop the F-20 (an upgrade on the F-5 and a challenger for the F-16) to focus on their bomber contract, and then still told to merge.)
I'm not going to comment in detail about offshore tax structuring like Ireland except to say that it is an abuse of tax avoidance.
No, US court rulings say that mgmt. has "wide latitude" in how the company is managed. It's up to shareholders and the board to step in if they disagree, but since they appointed mgmt., it's rare for major disagreements.
Which makes sense in a capitalist country, as there is little central planning outside of certain industries like defense and banking (regulated.)
(In both the US and UK, the govt. tells industry how many airplane or ship builders they want, and who has to merge. After WW2, this caused concentration in the airplane industry. My understanding is that Northrop was told to drop the F-20 (an upgrade on the F-5 and a challenger for the F-16) to focus on their bomber contract, and then still told to merge.)
I'm not going to comment in detail about offshore tax structuring like Ireland except to say that it is an abuse of tax avoidance.
Of course we know that these same people advocate to raise taxes on _other_ people, who then must actually pay the taxes or go to prison.
You hate to see it, but we all know this is the way it works from the private jet view.
You hate to see it, but we all know this is the way it works from the private jet view.
Everyone, almost, advocates to spend other's people money, the tax the rich movement is literally that. Now, this is obviously a couple of degrees more obscene but only because of the magnitude of the numbers not because of the conduct. The conduct is sadly the norm.
It was legal. They'd be remiss not to do it.
Ireland changed its tax law which is why Google is ending it's use of the Double Irish.
It's not just Google of course. Apple apparently started it.
Here's a list of other giant companies using the exact same loop hole.
https://en.wikipedia.org/wiki/Double_Irish_arrangement#Multi...
Double Irish
Major companies in Ireland known to employ the Double Irish BEPS tool, include:
Apple Inc. original user, and known in operation since the late 1980s[19][54][55][171]
Abbott Laboratories[172][173][174]
Adobe Systems[175]
Airbnb[176][177]
Apple Inc.[19]
Eli Lilly and Company[175]
Facebook[138][178][179][180]
Forest Laboratories[175]
General Electric[178]
Gilead[181]
Google[32][39][178][182]
IBM[183]
Johnson & Johnson[178]
Medtronic Inc.[184]
Microsoft[175][185][186]
News Corp[175]
Oracle Corp.[139][175]
Pfizer Inc.[175]
Starbucks[178]
Yahoo![187]
Single malt
Major companies in Ireland known to employ the single-malt BEPS tool, include:
Microsoft (LinkedIn), using Malta[64]
Allergan (Zeitiq), using Malta[64]
Teleflex, using Malta[63]
Capital allowances for intangible assets
Major companies in Ireland known to employ the capital-allowances for intangible assets ("CAIA") BEPS tool, include:
Apple Inc., started in 2015[104] with the leprechaun economics affair
Accenture, started in 2009[94]
It's not just Google of course. Apple apparently started it.
Here's a list of other giant companies using the exact same loop hole.
https://en.wikipedia.org/wiki/Double_Irish_arrangement#Multi...
Double Irish
Major companies in Ireland known to employ the Double Irish BEPS tool, include:
Apple Inc. original user, and known in operation since the late 1980s[19][54][55][171]
Abbott Laboratories[172][173][174]
Adobe Systems[175]
Airbnb[176][177]
Apple Inc.[19]
Eli Lilly and Company[175]
Facebook[138][178][179][180]
Forest Laboratories[175]
General Electric[178]
Gilead[181]
Google[32][39][178][182]
IBM[183]
Johnson & Johnson[178]
Medtronic Inc.[184]
Microsoft[175][185][186]
News Corp[175]
Oracle Corp.[139][175]
Pfizer Inc.[175]
Starbucks[178]
Yahoo![187]
Single malt
Major companies in Ireland known to employ the single-malt BEPS tool, include:
Microsoft (LinkedIn), using Malta[64]
Allergan (Zeitiq), using Malta[64]
Teleflex, using Malta[63]
Capital allowances for intangible assets
Major companies in Ireland known to employ the capital-allowances for intangible assets ("CAIA") BEPS tool, include:
Apple Inc., started in 2015[104] with the leprechaun economics affair
Accenture, started in 2009[94]
Didn't you just say
"Apple apparently started it."
"Accenture, started in 2009[94]"
Google started [using] it [the double-irish-dutch-sandwich scheme] in 2004
https://www.euroweeklynews.com/2021/01/13/google-funnelled-e...
https://www.euroweeklynews.com/2021/01/13/google-funnelled-e...
Apple invented it in the 80's
Those reference two different tax avoidance schemes. Apple started using the double Irish in 1980s. The Accenture point is about the capital-allowances for intangible assets scheme.
High income taxes including Corporate ones are unenthical IMO. Just tax land value and goods/services at the point of consumption, aka VAT, if the end goals is equitable consumption, aka realized wealth, not vague notions of unrealizable wealth and influence which completely fail to account for the equivalent value in discretionary power held by politicians and beaurcrats.
Corporate taxes in particular is just a way for politicians to hide the true tax wedge just like when they tax your income from you and your employer.
Corporate taxes in particular is just a way for politicians to hide the true tax wedge just like when they tax your income from you and your employer.
There's another option. Look up how Islam solved this issue over 1400 years ago in a much more affordable and superior manner by means of Zakat. No income tax, no corporate tax, not VAT.
To save people a Google: Zakat | Islamic tax | Britannica
https://www.britannica.com
› ... › Banking & Business Zakat, Arabic zakāt, an obligatory tax required of Muslims, one of the five Pillars of Islam. The zakat is levied on five categories of property—food grains; fruit; camels, cattle, sheep, and goats; gold and silver; and movable goods—and is payable each year after one year's possession.
https://www.britannica.com
› ... › Banking & Business Zakat, Arabic zakāt, an obligatory tax required of Muslims, one of the five Pillars of Islam. The zakat is levied on five categories of property—food grains; fruit; camels, cattle, sheep, and goats; gold and silver; and movable goods—and is payable each year after one year's possession.
How can google shift billions worth of patents from one country to another without having to pay taxes on this move?
If I bought all their patents for $1 from them, I'd have to pay a huge amount based on some estimated valuation as this is seen as massively undervalued = a gift.
Are there tricks like moving a whole company from one country to another?
I think it's way too easy to shift paper values around the globe which makes these kinds of insane tax saving tricks way too low risk.
Imagine Ireland saying "we won't let you export this as some of this has security implications".
This is deeply amoral and even if in the strict sense of the law it's obviously legal that does not mean one has to let them get away with it too easily.
If I bought all their patents for $1 from them, I'd have to pay a huge amount based on some estimated valuation as this is seen as massively undervalued = a gift.
Are there tricks like moving a whole company from one country to another?
I think it's way too easy to shift paper values around the globe which makes these kinds of insane tax saving tricks way too low risk.
Imagine Ireland saying "we won't let you export this as some of this has security implications".
This is deeply amoral and even if in the strict sense of the law it's obviously legal that does not mean one has to let them get away with it too easily.
How? The article explains exactly how. They followed the law.
Ah I thought they were actually moving patents but they're just cancelling an intermittent licensing agreement and then license it directly from the US. That makes it a lot more difficult to stop, yes.
By September 2018, US–controlled corporates were 25 of Ireland's 50 largest companies, paid 80% of Irish business taxes,[126] and directly employed 25% of the Irish labour force,[127] and created 57% of Irish value-add.
From here:
https://en.wikipedia.org/wiki/Double_Irish_arrangement#Conce...
From here:
https://en.wikipedia.org/wiki/Double_Irish_arrangement#Conce...
A great deal for Ireland, a terrible deal for Europe.
Ultimately I think there will need to be some kind of international agreements on taxation to prevent these kinds of tax dodges. They'll just find the next loophole now that this is closed.
Ultimately I think there will need to be some kind of international agreements on taxation to prevent these kinds of tax dodges. They'll just find the next loophole now that this is closed.
It’ll have to be a highly concentrated effort, as (to my understanding) taxation policy is pretty much prisoners dilemma. One state has incentive to have slightly lower taxes than all the others to get companies to incorporate there, and then it’s a race to bottom.
That assumes countries have to accept that the licensing fees are tax deductible.
Putting some tariffs on licensing intellectual property seems like a non-prisoners dillema solution
Putting some tariffs on licensing intellectual property seems like a non-prisoners dillema solution
Not sure I follow. If US Multinational charges license to Italian Subsidiary, then the pricing impacts the profit allocation between the two entities. The IRS will say "the license should be really high" so the profits in the US are higher. The Italian tax authorities will say "the license should be low" so they get more tax revenue.
For a complicated technology that's licensed, remember that neither taxing authority has any clue as to what it's actually worth. They don't care. They just want tax revenue. Remember to think about both taxing authorities when analyzing these transactions and imagine the ridiculous situations multinationals are put in.
For a complicated technology that's licensed, remember that neither taxing authority has any clue as to what it's actually worth. They don't care. They just want tax revenue. Remember to think about both taxing authorities when analyzing these transactions and imagine the ridiculous situations multinationals are put in.
This is exactly the goal of the global minimum tax rate the US is pushing for right now.
And yet it hasn't been that. Plenty of countries with 0 corporate tax, Why aren't all the companies incorporated there? Plenty of places with 0 income tax too, why isn't everyone moving there?
The truth is balanced and properly planed taxes with a stable economy are only a minor part of doing business.
ralusek(1)
There are international agreements on taxation. Tax authorities can also work with taxpayers and agree on the transfer price for goods and services in advance.
Tax loopholes typically refer to ambiguous rules. In this case, the IRS was excruciatingly detailed on how to price related party intellectual property transfers. I always laugh about how congress / citizens get angry at when taxpayers follow their laws.
Yes, I agree the laws are ridiculous, but no more ridiculous than the standard deduction the mortgage interest deduction and a myriad of other arbitrary tax laws.
Tax loopholes typically refer to ambiguous rules. In this case, the IRS was excruciatingly detailed on how to price related party intellectual property transfers. I always laugh about how congress / citizens get angry at when taxpayers follow their laws.
Yes, I agree the laws are ridiculous, but no more ridiculous than the standard deduction the mortgage interest deduction and a myriad of other arbitrary tax laws.
It would be easier to abolish corporation tax and shift to taxing capital gains and dividends as normal income.
There's a reason for having many different taxes: it makes it more difficult to dodge them all and also reduces the payout of dodging any given one.
It doesn’t seem to be making it difficult to dodge this one.
You are missing the point.
No, I got the point, I just didn't think it was a good one.
> They'll just find the next loophole now that this is closed.
No, a "loophole" that stays is place for years and allows enormous tax evasion is not a glitch. A legitimate "bug" in a legal system can be fixed in weeks.
Legislators work together with lobbyists to create these loopholes when needed. These are not glitches, they are the legal equivalent of backdoors.
No, companies will not simply "just find another one". There's a clear political intention behind creating new loopholes or not doing so.
No, a "loophole" that stays is place for years and allows enormous tax evasion is not a glitch. A legitimate "bug" in a legal system can be fixed in weeks.
Legislators work together with lobbyists to create these loopholes when needed. These are not glitches, they are the legal equivalent of backdoors.
No, companies will not simply "just find another one". There's a clear political intention behind creating new loopholes or not doing so.
You may be right, but I'm inclined, especially with government, to not attribute to malice that which can be adequately explained by incompetence.
Interestingly, the party is not yet over? https://www.bloomberg.com/news/articles/2021-03-05/irish-eco...
Or did companies decide to stay in Ireland now that they have to pay taxes? Maybe the pandemic has made it difficult for them to move.
Or did companies decide to stay in Ireland now that they have to pay taxes? Maybe the pandemic has made it difficult for them to move.
Next libertarian candidate should run on this message:
"Billionaires such as Bezos already pay 0% tax! Companies such as Amazon and Google already pay a 0% tax! Let's have a 0% flat tax for everybody to even the playing field!!!"
You'd get a sizable part of the BernieBros, as well as the Yang Gang if you also concede some form of UBI financed via selling/renting Federal Land (which you'd have to do anyway to pay down the debt given that you won't be collecting taxes anymore).
Libertarians should really get on it and start taking advantage of the class warfare, which can be really powerful.
So maybe Adam Kokesh can think about it...or Vermin Supreme or JoJo whoever will run as Libertarian
"Billionaires such as Bezos already pay 0% tax! Companies such as Amazon and Google already pay a 0% tax! Let's have a 0% flat tax for everybody to even the playing field!!!"
You'd get a sizable part of the BernieBros, as well as the Yang Gang if you also concede some form of UBI financed via selling/renting Federal Land (which you'd have to do anyway to pay down the debt given that you won't be collecting taxes anymore).
Libertarians should really get on it and start taking advantage of the class warfare, which can be really powerful.
So maybe Adam Kokesh can think about it...or Vermin Supreme or JoJo whoever will run as Libertarian
From here:
https://en.wikipedia.org/wiki/Double_Irish_arrangement#Contr...
The 2014–16 EU investigation into Apple in Ireland (see below), showed that the Double Irish existed as far back as 1991.
Early U.S. academic research in 1994 into U.S. multinational use of tax havens identified profit shifting accounting techniques.[7][36] U.S. congressional investigations into the tax practices of U.S. multinationals were aware of such BEPS tools for many years.[37]
However, the U.S. did not try to force the closure of the Double Irish BEPS tool, instead it was the EU which forced Ireland to close the Double Irish to new schemes in October 2014.[38]
Nevertheless, existing users of the Double Irish BEPS tool (e.g. Apple, Google, Facebook, Microsoft, amongst many others), were given five more years until January 2020, before the tool would be fully shut-down to all users.[29][39]
tl;dr It was the EU that shut down the Double Irish. The US gave them until 2020, so they milked it as long as they could.
https://en.wikipedia.org/wiki/Double_Irish_arrangement#Contr...
The 2014–16 EU investigation into Apple in Ireland (see below), showed that the Double Irish existed as far back as 1991.
Early U.S. academic research in 1994 into U.S. multinational use of tax havens identified profit shifting accounting techniques.[7][36] U.S. congressional investigations into the tax practices of U.S. multinationals were aware of such BEPS tools for many years.[37]
However, the U.S. did not try to force the closure of the Double Irish BEPS tool, instead it was the EU which forced Ireland to close the Double Irish to new schemes in October 2014.[38]
Nevertheless, existing users of the Double Irish BEPS tool (e.g. Apple, Google, Facebook, Microsoft, amongst many others), were given five more years until January 2020, before the tool would be fully shut-down to all users.[29][39]
tl;dr It was the EU that shut down the Double Irish. The US gave them until 2020, so they milked it as long as they could.
Ireland is the Delaware of Europe.
Delaware has a healthy corporate tax rate. Incorporations are popular there because of the extensive case law, which means few surprises.
South Dakota has no corporate income tax and might be a better analogy if it worked harder to court large companies. South Dakota is popular with certain kinds of companies and individuals (libertarians, for example, who are willing to go to lengths to have South Dakota plates so they don't have to pay tax on the vehicle.)
South Dakota has no corporate income tax and might be a better analogy if it worked harder to court large companies. South Dakota is popular with certain kinds of companies and individuals (libertarians, for example, who are willing to go to lengths to have South Dakota plates so they don't have to pay tax on the vehicle.)
Lots of envious people in this thread.
In the end the envy can be described as:
"Larry&Sergey number is higher than my own number and the ego boost they get by looking at their number is bigger than the ego boost I get looking at my own number"
These guys, they don't spend money, don't surrond themselves with luxury, they are pretty down to earth in their behavior and consumption, don't seek fame.
Alphabet inc is like Mozart's Sonata n12 and Larry&Sergey are like Wolfgang Amadeus Mozart keeping the foot on the gas opposed to go and party like an animal using the fame which his opera gave it to him.
People are envious of a number
In the end the envy can be described as:
"Larry&Sergey number is higher than my own number and the ego boost they get by looking at their number is bigger than the ego boost I get looking at my own number"
These guys, they don't spend money, don't surrond themselves with luxury, they are pretty down to earth in their behavior and consumption, don't seek fame.
Alphabet inc is like Mozart's Sonata n12 and Larry&Sergey are like Wolfgang Amadeus Mozart keeping the foot on the gas opposed to go and party like an animal using the fame which his opera gave it to him.
People are envious of a number
This article is pointless - how do you even talk about this without talking about worldwide vs territorial based systems of taxation and the US’s history with them + the recently enacted TCJA
I keep seeing things like 'Google pays 0% taxes' yet they reported an effective tax rate of 16.2% in their 2020 10-K filing.
How feasible is it for a regular jack off like me to create similar arrangement? Would I need to create a corporation of myself and a holding company to pay me? Would it not work because how the IRS already knows what my employer pays me?
Clueless of course, but kind of curious if corporate tax shenanigans could be replicated at scale for individuals.
Clueless of course, but kind of curious if corporate tax shenanigans could be replicated at scale for individuals.
Probably the cost to set it up is high and fix, and you need a lot of revenue to justify the setup.
Alternatively you have a much cheaper options: collect in crypto or cash.
Alternatively you have a much cheaper options: collect in crypto or cash.
Ah, the fine slogan, “Corruption for everybody!”
[https://spectator.us/topic/corruption-for-everybody-slavoj-z...]
[https://spectator.us/topic/corruption-for-everybody-slavoj-z...]
well the need for this has mostly gone away due to the 2017 TCJA.
The short version is you can't do this because as a US (assuming?) individual you are subject to worldwide taxation (unlike the rest of the world (well except Eritrea)).
But the wikipedia article on the double Irish is actually pretty interesting if you are interested in such things and lays out the steps:
1) A U.S. corporate (CORP) develops new software in the U.S. costing $1 million to build;
2) CORP sells it to its wholly owned Bermuda company (BER1) for $1 million (at cost, ideally);
3) BER1 revalues it to $1 billion (as an intangible asset under GAAP), and books gain in Bermuda (tax-free);
4) An Irish subsidiary, IRL1, purchases this intangible asset from BER1, for $1 billion;
5) Under the CAIA rules, IRL1 can write-off the $1 billion paid for this group intangible asset against Irish tax;
6) Additionally, BER1 gives IRL1 a $1 billion 10-year inter-group loan to buy the intangible asset, at an interest rate of circa 7%;
7) Over the next 10 years IRL1 claims tax relief on both the $1 billion purchase (under CAIA), and the inter-group loan interest;
8) During the 10 years, IRL1 charges out this asset to end-customers globally (as per step v. in the Double Irish), accumulating profits;
9) During the 10 years, CORP in line with its product cycle, has created new software and repeated step i. to iii. above;
10) At the end of the 10 years, IRL1 has shielded $1.7 billion of Irish profits against Irish tax;
11) At the end of the 10 years, BER1, who received the $1 billion purchase price, and $0.7 billion in loan interest, has paid no tax;
12) At the end of the 10 years, IRL1, repeats steps iv. to ix. above, and buys a new intangible asset from BER1 for $1 billion.
https://en.wikipedia.org/wiki/Double_Irish_arrangement
The short version is you can't do this because as a US (assuming?) individual you are subject to worldwide taxation (unlike the rest of the world (well except Eritrea)).
But the wikipedia article on the double Irish is actually pretty interesting if you are interested in such things and lays out the steps:
1) A U.S. corporate (CORP) develops new software in the U.S. costing $1 million to build;
2) CORP sells it to its wholly owned Bermuda company (BER1) for $1 million (at cost, ideally);
3) BER1 revalues it to $1 billion (as an intangible asset under GAAP), and books gain in Bermuda (tax-free);
4) An Irish subsidiary, IRL1, purchases this intangible asset from BER1, for $1 billion;
5) Under the CAIA rules, IRL1 can write-off the $1 billion paid for this group intangible asset against Irish tax;
6) Additionally, BER1 gives IRL1 a $1 billion 10-year inter-group loan to buy the intangible asset, at an interest rate of circa 7%;
7) Over the next 10 years IRL1 claims tax relief on both the $1 billion purchase (under CAIA), and the inter-group loan interest;
8) During the 10 years, IRL1 charges out this asset to end-customers globally (as per step v. in the Double Irish), accumulating profits;
9) During the 10 years, CORP in line with its product cycle, has created new software and repeated step i. to iii. above;
10) At the end of the 10 years, IRL1 has shielded $1.7 billion of Irish profits against Irish tax;
11) At the end of the 10 years, BER1, who received the $1 billion purchase price, and $0.7 billion in loan interest, has paid no tax;
12) At the end of the 10 years, IRL1, repeats steps iv. to ix. above, and buys a new intangible asset from BER1 for $1 billion.
https://en.wikipedia.org/wiki/Double_Irish_arrangement
What's in it for Ireland and Bermuda?
Nobody is against closing the loop hole. We all know what the loop hole is.
Politicians should just do it.
Instead, they (Dems mostly) parade around publicly shaming companies who reduces tax in a legal way.