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This has nothing to do with taxes or business efficiency. The IRS is saying that Facebook undervalued their assets when transferring them to Ireland. It's the

This has nothing to do with taxes or business efficiency. The IRS is saying that Facebook undervalued their assets when transferring them to Ireland. It's the implications of that deal that are being discussed

sp332 10y ago
This is 100% about taxes. The only reason the IRS cares about valuing assets is for the amount of tax they can levy on them. And saving $5B sounds darn efficient to me.
- jsprogrammer 10y ago
  It is stealing, if it was intentionally undervalued to avoid a tax.
  - jonhankok 10y ago
    Do you consider it stealing if a bakery takes back bread that was stolen from their store? Taxes are theft by force. Try to skip paying and see how quickly the authorities steal it straight out of your accounts.
    - edanm 10y ago
      You're using the word "theft" in a way that's unlike what almost anyone else means. And you're trying to convey a complex philosophical point in two sentences by doing it.
    - jsprogrammer 10y ago
      No. The money was given to Facebook under the assumption that they would deal fairly.
- koralatov 10y ago
  I know for sure that if I underdeclare the value of my holdings or my income, I'll be punished when caught, and I don't consider that unfair. I might disagree with the amount I'm taxed, but I don't disagree that I should contribute something to society through paying tax. The difference as I see it is that companies usually operate as if they believe they shouldn't pay any tax. I realise that minimising tax burden is a form of efficiency, but the challenging part here is deciding where 'efficient' ends and 'dishonest' starts. I honestly don't know, but I'd say it's pretty clear that, at some point, underdeclaring the value of corporate holdings starts being dishonest.
  - edanm 10y ago
    People think of these issues too much in terms of black and white. You should think of it as a negotiation. Many transactions, even on a smaller scale, are complex, and deciding on the "true value" is often impossible. So the tax authorities are negotiating with Facebook, and Facebook's report is simply its opening offer. You wouldn't consider a salesmen who overpriced his product to be doing something necessarily unethical (assuming they weren't outright committing fraud or otherwise doing something illegal). Disclaimer: Not a lawyer or accountant, and I'm totally generalizing here from other transactions I know more about. I actually know almost nothing specific about the US tax system or this situation with Facebook, I'm trying to convey the general attitude that most companies have.
    - koralatov 10y ago
      Oh, I absolutely realise I'm oversimplifying it, but the point stands that, in most cases, it's in Facebook's interest to massively underreport value as part of that negotiation. For example, say they invent a new way of compressing jpegs which saves them bandwidth and storage costs. Facebook could report that as costing them money: "Oh, that cost us $120,000 in programmer time to devise and implement". It's entirely possible that this is true, but it's only half the picture: that new compression algorithm might have saved them twice that or more in bandwidth costs. In this instance, it's 'efficient' for Facebook to report one part and then conveniently ignore the other. But the question remains is it honest? Surely the value of that technology is somewhere between the cost to create and the costs it's saved?
  - derefr 10y ago
    > where 'efficient' ends and 'dishonest' starts Companies don't know from 'dishonest.' The only question is where 'efficient' ends and illegal starts. Other than that, companies don't care. (...and even then, in countries with corporate liability protection and simple fines for most corporate crimes, "illegal" is just another name for an economic cost going into the efficiency calculus.)

sp332 10y ago

This is 100% about taxes. The only reason the IRS cares about valuing assets is for the amount of tax they can levy on them. And saving $5B sounds darn efficient to me.

jsprogrammer 10y ago
It is stealing, if it was intentionally undervalued to avoid a tax.
- jonhankok 10y ago
  Do you consider it stealing if a bakery takes back bread that was stolen from their store? Taxes are theft by force. Try to skip paying and see how quickly the authorities steal it straight out of your accounts.
  - edanm 10y ago
    You're using the word "theft" in a way that's unlike what almost anyone else means. And you're trying to convey a complex philosophical point in two sentences by doing it.
  - jsprogrammer 10y ago
    No. The money was given to Facebook under the assumption that they would deal fairly.
koralatov 10y ago
I know for sure that if I underdeclare the value of my holdings or my income, I'll be punished when caught, and I don't consider that unfair. I might disagree with the amount I'm taxed, but I don't disagree that I should contribute something to society through paying tax. The difference as I see it is that companies usually operate as if they believe they shouldn't pay any tax. I realise that minimising tax burden is a form of efficiency, but the challenging part here is deciding where 'efficient' ends and 'dishonest' starts. I honestly don't know, but I'd say it's pretty clear that, at some point, underdeclaring the value of corporate holdings starts being dishonest.
- edanm 10y ago
  People think of these issues too much in terms of black and white. You should think of it as a negotiation. Many transactions, even on a smaller scale, are complex, and deciding on the "true value" is often impossible. So the tax authorities are negotiating with Facebook, and Facebook's report is simply its opening offer. You wouldn't consider a salesmen who overpriced his product to be doing something necessarily unethical (assuming they weren't outright committing fraud or otherwise doing something illegal). Disclaimer: Not a lawyer or accountant, and I'm totally generalizing here from other transactions I know more about. I actually know almost nothing specific about the US tax system or this situation with Facebook, I'm trying to convey the general attitude that most companies have.
  - koralatov 10y ago
    Oh, I absolutely realise I'm oversimplifying it, but the point stands that, in most cases, it's in Facebook's interest to massively underreport value as part of that negotiation. For example, say they invent a new way of compressing jpegs which saves them bandwidth and storage costs. Facebook could report that as costing them money: "Oh, that cost us $120,000 in programmer time to devise and implement". It's entirely possible that this is true, but it's only half the picture: that new compression algorithm might have saved them twice that or more in bandwidth costs. In this instance, it's 'efficient' for Facebook to report one part and then conveniently ignore the other. But the question remains is it honest? Surely the value of that technology is somewhere between the cost to create and the costs it's saved?
- derefr 10y ago
  > where 'efficient' ends and 'dishonest' starts Companies don't know from 'dishonest.' The only question is where 'efficient' ends and illegal starts. Other than that, companies don't care. (...and even then, in countries with corporate liability protection and simple fines for most corporate crimes, "illegal" is just another name for an economic cost going into the efficiency calculus.)