4 ms·

I don't know why you are convinced it is legal. Google and Apple are currently making settlements with pretty much every government in Europe. Apple may well ha

I don't know why you are convinced it is legal. Google and Apple are currently making settlements with pretty much every government in Europe. Apple may well have to pay Ireland several billion dollars in taxes because the deal they did is likely to be ruled illegal.

sokoloff 11y ago
The difference is that tax avoidance is defined as legal and tax evasion defined as illegal (at least in the US). If it's a legal activity aimed at minimizing taxes, it's avoidance. Likewise, if it's avoidance, it's legal, and if it's not legal, it's not avoidance. From the IRS manual, section 25.1.1.2.4 .1 & .2 [0] [1] Avoidance of tax is not a criminal offense. Taxpayers have the right to reduce, avoid, or minimize their taxes by legitimate means. One who avoids tax does not conceal or misrepresent, but shapes and preplans events to reduce or eliminate tax liability within the parameters of the law. Evasion involves some affirmative act to evade or defeat a tax, or payment of tax. Examples of affirmative acts are deceit, subterfuge, camouflage, concealment, attempts to color or obscure events, or make things seem other than they are. If I move to Florida or Texas to escape paying state income tax on my earnings, that's avoidance. If I earned the money in Massachusetts and simply decide to not declare and pay tax on it, that's evasion. What's happening to some of the multi-nationals is that their attempts at structuring their affairs are being judged on the wrong side of the line. While it may not be being called evasion legally in all cases, it's exceeded the bounds of avoidance, resulting in settlements. [0] - https://www.irs.gov/irm/part25/irm_25-001-001.html#d0e299 https://www.irs.gov/irm/part25/irm_25-001-001.html#d0e299 (light emphasis mine) [1] - That section numbering scheme itself gives a clue as to how complex the tax code is.
- justincormack 11y ago
  The tax code is so complex, and prosecuting would be very expensive. That does not mean that the techniques being used are legal. Mostly people just get asked to pay the tax back with penalties rather than prosecute. But I would not assume it is all clearly legal.
bonzini 11y ago
That is a bit different. European rules forbid State help to corporations, and the EU ruled that some special tax agreements between states and Apple/Google were indistinguishable from State help. This is neither tax avoidance (though it made tax avoidance more effective indeed) nor tax evasion, in other words.
- justincormack 11y ago
  In the Irish case yes, not I think in the UK case, the French case, the Italian case...

sokoloff 11y ago

The difference is that tax avoidance is defined as legal and tax evasion defined as illegal (at least in the US). If it's a legal activity aimed at minimizing taxes, it's avoidance. Likewise, if it's avoidance, it's legal, and if it's not legal, it's not avoidance. From the IRS manual, section 25.1.1.2.4 .1 & .2 [0] [1] Avoidance of tax is not a criminal offense. Taxpayers have the right to reduce, avoid, or minimize their taxes by legitimate means. One who avoids tax does not conceal or misrepresent, but shapes and preplans events to reduce or eliminate tax liability within the parameters of the law. Evasion involves some affirmative act to evade or defeat a tax, or payment of tax. Examples of affirmative acts are deceit, subterfuge, camouflage, concealment, attempts to color or obscure events, or make things seem other than they are. If I move to Florida or Texas to escape paying state income tax on my earnings, that's avoidance. If I earned the money in Massachusetts and simply decide to not declare and pay tax on it, that's evasion. What's happening to some of the multi-nationals is that their attempts at structuring their affairs are being judged on the wrong side of the line. While it may not be being called evasion legally in all cases, it's exceeded the bounds of avoidance, resulting in settlements. [0] - https://www.irs.gov/irm/part25/irm_25-001-001.html#d0e299 https://www.irs.gov/irm/part25/irm_25-001-001.html#d0e299 (light emphasis mine) [1] - That section numbering scheme itself gives a clue as to how complex the tax code is.

justincormack 11y ago
The tax code is so complex, and prosecuting would be very expensive. That does not mean that the techniques being used are legal. Mostly people just get asked to pay the tax back with penalties rather than prosecute. But I would not assume it is all clearly legal.

bonzini 11y ago

That is a bit different. European rules forbid State help to corporations, and the EU ruled that some special tax agreements between states and Apple/Google were indistinguishable from State help. This is neither tax avoidance (though it made tax avoidance more effective indeed) nor tax evasion, in other words.

justincormack 11y ago
In the Irish case yes, not I think in the UK case, the French case, the Italian case...