46 ms·

What about paying fair share of taxes that are expected to be paid by the society? Just like loopholes are legal, most of the time being not nice to people is

What about paying fair share of taxes that are expected to be paid by the society? Just like loopholes are legal, most of the time being not nice to people is legal. Meaning, nothing stops YC companies to sign a treaty that paying taxes is part of being nice and decent citizens of the world. I'm talking about Dropbox, for an example. Very often the moral police stops when it impacts you or your wallet. It's called a sacrifice for a reason.

muninn_ 9y ago
Great comment and exactly right. Kudos. Look at all these companies, Google and company who seek to "do no evil" except they don't want to pay their fair share of taxes using every loophole and deduction available. When I donate to charity I don't take tax deductions. It never made sense to me. I donate because it's right. Not because it will reduce my taxable income.
Taek 9y ago
If you are paying taxes optionally that your competitor is choosing not to pay, you are at a disadvantage. If you want companies to pay taxes, you have to make sure that doing so doesn't make it harder to compete. That includes competing with international companies.
philwelch 9y ago
I'm not a libertarian anymore, but I still don't really buy into this criticism, for a few reasons. Taxes are a legal obligation. If taxes aren't high enough, it's the government's job to fix that. Paying more taxes than you are legally obligated to pay is a disservice to shareholders, which in the case of a YC company includes almost all of your investors and employees. Corporate taxes in particular are economically inefficient. Corporations are just straw men. Any money that a corporation earns is either paid out as dividends (at which point it's taxable as individual income) or reinvested into growing the company (at which point it turns into things like "salary", which is taxable as individual income). The US in particular has exceptionally high corporate tax rates--among the highest in the developed world. And if you're going to choose a tax to avoid paying, US federal corporate tax is pretty much an ideal choice. Very little of that money goes to things like schools (which are paid for on the local and state level) or Medicare (which is paid for with payroll taxes). The biggest chunk of it pays for the US military, and a huge chunk of US military spending is pork for defense contractors. In other words, US federal corporate taxes are largely a mechanism to redistribute money from corporations like Dropbox towards corporations like Blackwater and Lockheed Martin. And you think it's nice and decent of Dropbox to play along with this scheme?
- Retric 9y ago
  Nameplate tax rate is basically meaningless. US effective corporate tax rate after deductions is lower than the OECD average. Though by how much is up for debate. PS: You can debate various points, but it's only 11% of total federal tax revenue.
  - gnicholas 9y ago
    You're correct that the nominal rate is much higher than the effective rate for most US corporations. This is especially true for tech companies, which have R&D tax credits and are able to shift much of their income offshore because their profits are based largely on intangibles (which can be moved by signing some contracts, as opposed to factories or restaurants, which are geographically fixed).
  - adventured 9y ago
    The US effective corporate tax rate is not lower than the OECD average in fact. The most authoritative, recent report on the matter by the CBO: https://www.cbo.gov/sites/default/files/115th-congress-2017-2018/reports/52419-internationaltaxratecomp.pdf https://www.cbo.gov/sites/default/files/115th-congress-2017-... It clearly makes the case that the US is non-competitive with other G20 nations on the corporate tax rate. The US average corporate income tax rate for 2012, was 29%. In Canada it was 16%; Brazil 22%; China 19%; UK 10%; Germany 14.5%; Australia 17%; South Korea 20%; France 20%. How much more non-competitive can the US get exactly? And when it comes to the OECD, the US is once again far from competitive: "The most recent estimate comes from the World Bank and International Finance Commission, which put the United States’ effective rate for 2014 at 27.9 percent. That’s second-highest behind New Zealand among OECD countries and 15th-highest among the 189 countries measured." http://www.politifact.com/punditfact/statements/2014/sep/09/eric-bolling/does-us-have-highest-corporate-tax-rate-free-world/ http://www.politifact.com/punditfact/statements/2014/sep/09/...
    - Retric 9y ago
      Sanity check, What is total US corporate profit before taxes per year? And what's 27.9 percent of that. Or from GAO: http://www.gao.gov/assets/660/654957.pdf http://www.gao.gov/assets/660/654957.pdf "For tax year 2010 (the most recent information available), profitable U.S. corporations that filed a Schedule M-3 paid U.S. federal income taxes amounting to about 13 percent of the pretax worldwide income that they reported in their financial statements" https://en.wikipedia.org/wiki/Repatriation_tax_holiday https://en.wikipedia.org/wiki/Repatriation_tax_holiday dropped actual tax rate to 5.25% in 2004. Companies are more than happy to wait for the next one. PS: Also of note a lot of overseas profit is anything as it's easy to pretend US operations only break even by shifting around costs on paper.
Powerofmene 9y ago
I think you are confusing tax avoidance, which is a perfectly legal strategy with tax evasion, an illegal action. When you make the strategic decision to make a charitable contribution in December in order to pass the threshold for deductibility and thereby reduce your personal taxes, that is legal avoidance. Businesses do the same in order to maximize returns to all stakeholders. There is nothing unscrupulous or immoral in doing so. Paying taxes is not synonymous with being nice. Filing a business tax return and paying all taxes owed is a legal obligation. Filing a personal return, if you owe taxes, is a personal obligation. If you do not owe taxes, you are not obligated to file a return; however, it is required if you would like to receive the refund you are owed. There is no legal obligation to run your business in a way that maximizes taxes due to the government and no business operates in such a manner. I seriously doubt you could find many, if any, personal returns where a filer completes their return in a manner to pay the most taxes they can by ignoring legal deductions, credits, etc. Nice has nothing to do with it.
- cisanti 9y ago
  It has everything to do with nice. If you use loopholes then you're not nice, you just know how to make more profit. It doesn't make you nice, only less noble and honest. Something being legal doesn't mean it's nice.
  - botnik 9y ago
    Surely, the same can be said 'it doesn't make you not nice, by doing something which the state considers illegal'. The assumption that the state has everyones best interest at heart is nonsense. In the UK it's becoming more apparent that the state is a considerable part of the problem. Arbitrary rules set by states is not a moral barometer.
  - valuearb 9y ago
    It's nice and honest to follow the law. Paying the minimum amount of taxes possible is following the law.
  - Powerofmene 9y ago

muninn_ 9y ago

Great comment and exactly right. Kudos. Look at all these companies, Google and company who seek to "do no evil" except they don't want to pay their fair share of taxes using every loophole and deduction available. When I donate to charity I don't take tax deductions. It never made sense to me. I donate because it's right. Not because it will reduce my taxable income.

Taek 9y ago

If you are paying taxes optionally that your competitor is choosing not to pay, you are at a disadvantage. If you want companies to pay taxes, you have to make sure that doing so doesn't make it harder to compete. That includes competing with international companies.

philwelch 9y ago

I'm not a libertarian anymore, but I still don't really buy into this criticism, for a few reasons. Taxes are a legal obligation. If taxes aren't high enough, it's the government's job to fix that. Paying more taxes than you are legally obligated to pay is a disservice to shareholders, which in the case of a YC company includes almost all of your investors and employees. Corporate taxes in particular are economically inefficient. Corporations are just straw men. Any money that a corporation earns is either paid out as dividends (at which point it's taxable as individual income) or reinvested into growing the company (at which point it turns into things like "salary", which is taxable as individual income). The US in particular has exceptionally high corporate tax rates--among the highest in the developed world. And if you're going to choose a tax to avoid paying, US federal corporate tax is pretty much an ideal choice. Very little of that money goes to things like schools (which are paid for on the local and state level) or Medicare (which is paid for with payroll taxes). The biggest chunk of it pays for the US military, and a huge chunk of US military spending is pork for defense contractors. In other words, US federal corporate taxes are largely a mechanism to redistribute money from corporations like Dropbox towards corporations like Blackwater and Lockheed Martin. And you think it's nice and decent of Dropbox to play along with this scheme?

Retric 9y ago
Nameplate tax rate is basically meaningless. US effective corporate tax rate after deductions is lower than the OECD average. Though by how much is up for debate. PS: You can debate various points, but it's only 11% of total federal tax revenue.
- gnicholas 9y ago
  You're correct that the nominal rate is much higher than the effective rate for most US corporations. This is especially true for tech companies, which have R&D tax credits and are able to shift much of their income offshore because their profits are based largely on intangibles (which can be moved by signing some contracts, as opposed to factories or restaurants, which are geographically fixed).
- adventured 9y ago
  The US effective corporate tax rate is not lower than the OECD average in fact. The most authoritative, recent report on the matter by the CBO: https://www.cbo.gov/sites/default/files/115th-congress-2017-2018/reports/52419-internationaltaxratecomp.pdf https://www.cbo.gov/sites/default/files/115th-congress-2017-... It clearly makes the case that the US is non-competitive with other G20 nations on the corporate tax rate. The US average corporate income tax rate for 2012, was 29%. In Canada it was 16%; Brazil 22%; China 19%; UK 10%; Germany 14.5%; Australia 17%; South Korea 20%; France 20%. How much more non-competitive can the US get exactly? And when it comes to the OECD, the US is once again far from competitive: "The most recent estimate comes from the World Bank and International Finance Commission, which put the United States’ effective rate for 2014 at 27.9 percent. That’s second-highest behind New Zealand among OECD countries and 15th-highest among the 189 countries measured." http://www.politifact.com/punditfact/statements/2014/sep/09/eric-bolling/does-us-have-highest-corporate-tax-rate-free-world/ http://www.politifact.com/punditfact/statements/2014/sep/09/...
  - Retric 9y ago
    Sanity check, What is total US corporate profit before taxes per year? And what's 27.9 percent of that. Or from GAO: http://www.gao.gov/assets/660/654957.pdf http://www.gao.gov/assets/660/654957.pdf "For tax year 2010 (the most recent information available), profitable U.S. corporations that filed a Schedule M-3 paid U.S. federal income taxes amounting to about 13 percent of the pretax worldwide income that they reported in their financial statements" https://en.wikipedia.org/wiki/Repatriation_tax_holiday https://en.wikipedia.org/wiki/Repatriation_tax_holiday dropped actual tax rate to 5.25% in 2004. Companies are more than happy to wait for the next one. PS: Also of note a lot of overseas profit is anything as it's easy to pretend US operations only break even by shifting around costs on paper.

Powerofmene 9y ago

I think you are confusing tax avoidance, which is a perfectly legal strategy with tax evasion, an illegal action. When you make the strategic decision to make a charitable contribution in December in order to pass the threshold for deductibility and thereby reduce your personal taxes, that is legal avoidance. Businesses do the same in order to maximize returns to all stakeholders. There is nothing unscrupulous or immoral in doing so. Paying taxes is not synonymous with being nice. Filing a business tax return and paying all taxes owed is a legal obligation. Filing a personal return, if you owe taxes, is a personal obligation. If you do not owe taxes, you are not obligated to file a return; however, it is required if you would like to receive the refund you are owed. There is no legal obligation to run your business in a way that maximizes taxes due to the government and no business operates in such a manner. I seriously doubt you could find many, if any, personal returns where a filer completes their return in a manner to pay the most taxes they can by ignoring legal deductions, credits, etc. Nice has nothing to do with it.

cisanti 9y ago
It has everything to do with nice. If you use loopholes then you're not nice, you just know how to make more profit. It doesn't make you nice, only less noble and honest. Something being legal doesn't mean it's nice.
- botnik 9y ago
  Surely, the same can be said 'it doesn't make you not nice, by doing something which the state considers illegal'. The assumption that the state has everyones best interest at heart is nonsense. In the UK it's becoming more apparent that the state is a considerable part of the problem. Arbitrary rules set by states is not a moral barometer.
- valuearb 9y ago
  It's nice and honest to follow the law. Paying the minimum amount of taxes possible is following the law.
- Powerofmene 9y ago