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The fix can certainly involve appealing to morals and human responsibility. A company is, after all, just a group of people. This should be a very strong tactic
by Clanan 9y ago
The fix can certainly involve appealing to morals and human responsibility. A company is, after all, just a group of people. This should be a very strong tactic considering how liberal Silicon Valley is. The major players preach constantly about progressive ideals, yet fail to do more than the minimum when push comes to shove. My business partner and I purposefully pay normal taxes, avoiding accountants' crazy tax reduction schemes, because we think it's the right thing to do. We're a tiny speck compared to Apple, but the principle still applies. If the big players made it the norm, their investors would suck it up and deal with it.
- billmalarky 9y ago"My business partner and I purposefully pay normal taxes, avoiding accountants' crazy tax reduction schemes, because we think it's the right thing to do. We're a tiny speck compared to Apple, but the principle still applies. If the big players made it the norm, their investors would suck it up and deal with it." I suspect that you and your partner have significantly more control over your enterprise than the officer of a public company does though. If you didn't your investors wouldn't suck it up, they would do as they see fit, which may be agree with your position or may be replace you. Public companies are controlled by their share price more than they like to admit. Even if you are like Zuck and maintain complete management control of your public company, if that share price takes a huge hit it becomes very hard to attract and maintain talent/future investment/etc. Everyone has some authority to answer to.
- arca_vorago 9y agoWhich is why I think the current scheme of publicly traded companies at base is flawed. Earlier this week someone posted something along the lines of, once you become public your product is stock, not whatever you produce. I think we ought to use the power of the executive to straight up revoke charters to businesses that are American that engage in these schemes. Something I learned about while reading about the British and Dutch east India companies.
- amag 9y ago> if that share price takes a huge hit it becomes very hard to attract and maintain talent/future investment/etc. OTOH, by paying taxes you make sure there is a talent pool to recruit from in the future.
- TheCondor 9y agoCould shareholders sue if Apple “opted out” of their legal tax avoidance strategy? We are talking about some very material money here, not an executive bonus pool sized chunk of cash, but like national GDP sized money.
- deleted 9y ago[deleted]
- pwinnski 9y agoShareholders can sue for any reason. They would not win.
- valuearb 9y agoIt would be illegal and unethical for Apple to pay more taxes than it owes. That money doesn’t belong to Tim Cook, but to Apple shareholders.
- dontreact 9y agoTim Cook has made statements in the past that they stick to the letter and the spirit of the law. The least they could do is report these tax loopholes: post them publicly to make it easier for the government to close them. Instead, they are kept a secret. Why do you think that is?
- sjwright 9y agoOkay, let's start there: pass a law to require companies to report these tax loopholes.
- pc86 9y agoPlease explain the difference between "tax loophole" and "tax law."
- rescripting 9y agoExactly. Tax loopholes are like exploits. If they were all enumerated somewhere nicely then we could just patch them up. If you're planning on using exploits, you keep try and them secret. Once they are common knowledge they get patched (hopefully).
- valuearb 9y agoWhat Apple does is exactly what the US Tax code wants them to do, nothing secret about it. If it were to repatriate it's foreign earnings every year, it's tax rate would skyrocket from it's current 24.6% to around 50% (leaving less than 30% for shareholders after dividend taxes).
- cmiles74 9y agoThis is going to be tough. I think a big advantage of something like a board or a committee is the diffusion of responsibility. I'm not going so far as to say these constructions are immoral, but they definitely make it easier for their members to distance themselves from their decisions.
- tskaiser 9y agoIANAL but it is my understanding that if those tax reduction schemes are legal many companies are legally bound by their stock holders to exploit them, or else be found negligent in their duties.
- pavlov 9y ago>... if those tax reduction schemes are legal many companies are legally bound by their stock holders to exploit them, or else be found negligent in their duties. That's not the case. There is no way a company's management could be sued for "gross negligence in tax planning". If shareholders are unhappy about this issue, their recourse is the same one that's always available to them: elect a new Board of Directors and hire new management that will follow the board's guidance on tax evasion schemes.
- dijit 9y agoWhat if they've done that already though. What if the reason big companies avoid tax is that the shareholders ensure someone values fiscal results over supporting the country they earned the finance in is in the directors chair.
- pavlov 9y agoYes, that's exactly why American corporations do the things they do. It's not a legal obligation though. Shareholders could choose to have corporations managed differently. That kind of "pro-tax" activist shareholders don't exist, but it's not inconceivable that large public funds (pensions etc.) could become such.
- Flenser 9y agoPerhaps if governments started penalising corporate tax avoidance by confiscating a percentage of a company's shares the shareholders would be incentivised to make sure whoever is running the company will pay taxes fairly.
- jimbokun 9y agoCan you seriously look at the state of politics and business and tax evasion in 2017 and really believe most executives, even in Silicon Valley, are susceptible to "moral persuasion"? If they were, they would already be acting in the way you think they should.
- Melchizedek 9y agoTrue, but what then can stop this evil entity called Apple and all the rest of them? Only children and the very slow still believe in "democracy", which is obviously just another name for the rule of those who own the media and/or are rich enough to bribe politicians. What other recourse is left but the threat of violence to the physical individuals that in reality control the imaginary legal persons called corporations? Too bad what passes for the "left" these days is busy fawning over Tim Cook's homosexuality while the sick become homeless and the globalists vacuum the earth for profits. It almost makes me long for the days when the left was Marxist and we had the Red Army Faction and the Red Brigades, instead of blue hair lesbians and postmodern identity politics.
- libertyEQ 9y ago>Only children and the very slow still believe in "democracy", which is obviously just another name for the rule of those who own the media and/or are rich enough to bribe politicians. As a citizen of the USA, this is quite a scary thing to read. We may not have attained perfection (or even satisfaction), but it is a process. Each iteration has ultimately improved the world and the underlying principles are sound. It's all about optimization priorities, and I'd prefer to optimize for liberty, not authority. Government has a monopoly on sanctioned violence, and the only reason it is justified is because of democracy. "We the people," are the first words in the US Constitution. If you want to give up on democracy, move to a dictatorship. The earth does not have to have the same forms of government in every country/state. edit: Tell me what you are for, instead of what you are against?
- simonh 9y ago>The fix can certainly involve appealing to morals and human responsibility... Are you really suggesting the management and board of every major company in the world should meet to decide how much tax they should choose to pay each year? Even if they did, where should they choose to pay it? Should Apple Pay more tax in China where the phones are assembled? In America where they are designed? In the countries where they are sold? What criteria do they use to decide? That might conceivably work for one company, on some tax issues, for a while. These are companies that operate simultaneously in multiple countries with different tax systems. They can’t be expected to choose to pay more tax here or there. I do agree these companies pay too little tax, but expecting them to pay more voluntarily is never going to work.
- qznc 9y agoMy (ultra-simplistic) idea would to only tax land and VAT. Abolish all other taxes. Unfortunately, governments like fine-grained taxes because it gives them the illusion of control.
- eggpy 9y agoThat's not true. Here's just one example: fine-grained taxes are used to help influence behavior, improving public health. Mexico increased taxes on sugar [0], with the result being a fall in consumption. Raising this tax has caused a verifiable reduction in consumption, which has a direct impact on public health[1]. That's just one example, many more exist for all sorts of reasons. It's why cigarettes and alcohol are taxed differently than broccoli. Obviously not all taxes are in the public interest, but neither are they just to give some government official a feeling of empowerment. [0] https://www.theguardian.com/society/2017/feb/22/mexico-sugar-tax-lower-consumption-second-year-running https://www.theguardian.com/society/2017/feb/22/mexico-sugar... [1] http://journals.plos.org/plosone/article?id=10.1371/journal.pone.0151460 http://journals.plos.org/plosone/article?id=10.1371/journal....
- newlyretired 9y agoMany people believe this is an overstep on the government's part. These people believe it's not the government's job to be paternalistic and nudge people into the "right direction". This is based on the complete abhorrence of "scope creep" mixed with near total surveillance and control over the use of force. Those with that much power should not be able to enforce social mores, even if they reflect the will of the people at the time.
- aaomidi 9y agoWhat management wants is not what shareholders want. What you’re saying is impossible and the law needs to fix this, not appeal to emotion.
- unixhero 9y agoThat is where you are wrong. A cannot be thought of as a "group of people". A company is a legal entity, which can do absolutely ANYTHING within the law. It, the corporation, will by default do everything in its power to maximize shareholder value and that is it. Beyond that, there's Corporate Social Responsibility, but of course that is downstream from the corporation's main objective, which is to maximize profits. The corporation is to be understood as an "individual" and is legally so, but one which has limited legal liability.
- specialist 9y agoOnce upon a time, corporations were chartered, to better serve the public good. Our (USA) founding fathers suffered under the yoke of corporations (eg East India Company, Boston Tea Party) and were wise to limit their power. Then some yahoo slipped in some legal precedent declaring corporations were legally natural persons, weaponizing the 14th amendment. And here we are today pretending that corporations are super persons, with more rights than actual people, but none of those profit sapping responsibilities.
- libertyEQ 9y ago~"Capitalism is the worst system ever devised except for all the others." ;) Until we get to a Star Trek-like unlimited resources, it is the best way to allocate our resources to properly incentivize progress and innovation.
- specialist 9y agoThe rhetorical trap we’ve fallen into is conflating capitalism with corporatism.
- libertyEQ 9y agoThat's a distinction I haven't thought much about because I'm not sure I've contemplated the pure definitions. Without knowing how you mean these words, I would say starting from first principles, we optimize for liberty (at least in the US, YMMV). Then we consider factionalism, and it's usual cause: inequality (or it's mis-perception).
- eggpy 9y agoA company is not just a group of people. At least, any publicly-traded company has a legal obligation to it's shareholders. The job of the Board of Directors is to ensure that the company is performing as optimally as possible to earn as much as possible for the shareholders. Morals aren't a part of the equation, it's all exploiting the confines of the law.
- JabavuAdams 9y agoThis is oft-stated, but not really true in a practical sense. If in 2018 parking lots are more profitable than manufacturing, will you see Apple go into the parking lot business? There's a huge amount of wiggle room and discretion possible even within the obligations to share-holders.
- eggpy 9y agoWhile I understand your point, that is a massive overstatement. Apple doesn't go into the parking lot business because it isn't in their corporate charter[0], which outlines the companies' objectives, structure, and operations. If Apple decided they could benefit by building parking lots then they very well might as long as they could justify the expense. [0] https://www.investopedia.com/terms/c/corporatecharter.asp https://www.investopedia.com/terms/c/corporatecharter.asp
- mikeash 9y agoIf all the air molecules in a box spontaneously moved to one side of it at the same time, you could defeat entropy. This is no more likely to happen than the big players making it the norm to avoid tax reduction schemes. In a box filled with air, molecules moving to one side leave a gap which results in increased pressure for molecules to move the other way. The same is true of big companies and taxes. You might be able to find some companies who would do this, and investors who prefer money to vague morality (and there's a lot of them) would abandon those companies and put more money into companies who avoid taxes as much as legally possible. If we want to stop this behavior, the solution must be to make it illegal. Appealing to morality isn't going to get it done. Consider that many industries literally kill people by poisoning the air or water. Not killing people as a moral principle is a lot more universally held than the idea of paying more tax than you're legally required to, but moral pressure didn't work there. Laws did.