7 ms·

> The tax strategy, known as the “Double Irish, Dutch Sandwich”, is legal Hey, at least it's got a fun name. I can't imagine anyone is too surprised by this.

> The tax strategy, known as the “Double Irish, Dutch Sandwich”, is legal Hey, at least it's got a fun name. I can't imagine anyone is too surprised by this. Personally I'm happy to pay my tax burden. I grew up in America, went to public schools and benefited from public services. Corporate tax evasion like this seems like fixation on a local maxima. There's no way to account for the return on your mandatory tax investment, but their is a return and it's important for everyone.

aportnoy 8y ago
The singular of maxima is maximum.
justincormack 8y ago
It was invented by Apple originally.
wongarsu 8y ago
Taxes are very similar to the Prisoner's Dilemma: for any individual it pays of to dodge taxes and hope everyone else pays, but when nobody pays everyone is much worse off than when everyone pays. In theory this is solved by government action to make legal schemes illegal and prosecute anyone using illegal tax avoidance schemes. In practice lobbying against this is often cheaper than paying, so you end up with giant loopholes and defunded tax collection agencies. At least this hole is getting closed, but that's a minor victory in the grand scheme of things
- fixermark 8y ago
  And most "tax avoidance strategies" (this one included) take advantage of the lack of one world government, and therefore lack of one global legal framework for "fairness" in taxation. So countries compete for business by offering different tax incentives, and companies move to find a balance between retaining as much money as they can and as much of the other things they need (like competent employees, which come from specific countries) as they can. The problem isn't that these strategies are unfair; the problem is that authorities can't agree on a uniform concept of "fair" because it's in their best interest to get the most business in their territory. Prisoner's Dilemma again, in the opposite direction.
fixermark 8y ago
Keep in mind that the "evasion" in question is the US government trying to grab taxes on money paid to a company by foreign nationals in a foreign market. It's unclear why that money would be owed to the US ethically. These companies are, ostensibly, already paying their fare share in payroll taxes, real estate taxes, sales taxes, commercial use taxes, etc.
- donkeyd 8y ago
  > the "evasion" in question is the US government trying to grab taxes on money paid to a company by foreign nationals in a foreign market It's not just this, It's also evasion of taxes that could've been paid in these countries. (Could've, because what they're doing is legal, so they have no obligation to.) What they do, is most easily explained with the Starbucks example: Starbucks has one subsidiary, based in the Netherlands, that holds the rights to sell coffee with the name 'Frappuccino'. All Starbucks stores are owned by another subsidiary. Whenever a store sells a 'Frappuccino', they pay a $1 royalty on that name. Because royalties aren't taxed in the Netherlands, this $1 is pure profit. This is from memory, so It's probably not completely right, but in the end they really do evade foreign taxes, not just a double tax in the US.
  - fixermark 8y ago
    Correct. And they do so by working within the cross-national legal frameworks, and the Netherlands lets them get away with this because they want (to torture the analogy) the Starbucks subsidiary to be doing business at all in their country, and they fear if they started taxing name royalties Starbucks would pack up and leave, taking their franchise rights and the jobs they bring with them. ... and that's before we even touch on the ethical framework around which anybody gets to charge any taxes at all on "right to a name;" the companies we're talking about are already paying sales tax, real estate tax for land, payroll taxes, etc., etc., etc. ... it comes back to the ethics and morality of "Can you tax intangible goods" in the first place, and that's where things get really exciting. For what is the value of a piece of software, and how do you measure it? ;)
- tossaccount123 8y ago
TulliusCicero 8y ago
This is tax avoidance, which is legal. Tax evasion implies illegality. When you put money into a 401k, that's tax avoidance.
- sokoloff 8y ago
  I'd argue the 401(k) is more tax deferral than avoidance.
  - deleted 8y ago
    [deleted]

aportnoy 8y ago

The singular of maxima is maximum.

justincormack 8y ago

It was invented by Apple originally.

wongarsu 8y ago

Taxes are very similar to the Prisoner's Dilemma: for any individual it pays of to dodge taxes and hope everyone else pays, but when nobody pays everyone is much worse off than when everyone pays. In theory this is solved by government action to make legal schemes illegal and prosecute anyone using illegal tax avoidance schemes. In practice lobbying against this is often cheaper than paying, so you end up with giant loopholes and defunded tax collection agencies. At least this hole is getting closed, but that's a minor victory in the grand scheme of things

fixermark 8y ago
And most "tax avoidance strategies" (this one included) take advantage of the lack of one world government, and therefore lack of one global legal framework for "fairness" in taxation. So countries compete for business by offering different tax incentives, and companies move to find a balance between retaining as much money as they can and as much of the other things they need (like competent employees, which come from specific countries) as they can. The problem isn't that these strategies are unfair; the problem is that authorities can't agree on a uniform concept of "fair" because it's in their best interest to get the most business in their territory. Prisoner's Dilemma again, in the opposite direction.

fixermark 8y ago

Keep in mind that the "evasion" in question is the US government trying to grab taxes on money paid to a company by foreign nationals in a foreign market. It's unclear why that money would be owed to the US ethically. These companies are, ostensibly, already paying their fare share in payroll taxes, real estate taxes, sales taxes, commercial use taxes, etc.

donkeyd 8y ago
> the "evasion" in question is the US government trying to grab taxes on money paid to a company by foreign nationals in a foreign market It's not just this, It's also evasion of taxes that could've been paid in these countries. (Could've, because what they're doing is legal, so they have no obligation to.) What they do, is most easily explained with the Starbucks example: Starbucks has one subsidiary, based in the Netherlands, that holds the rights to sell coffee with the name 'Frappuccino'. All Starbucks stores are owned by another subsidiary. Whenever a store sells a 'Frappuccino', they pay a $1 royalty on that name. Because royalties aren't taxed in the Netherlands, this $1 is pure profit. This is from memory, so It's probably not completely right, but in the end they really do evade foreign taxes, not just a double tax in the US.
- fixermark 8y ago
  Correct. And they do so by working within the cross-national legal frameworks, and the Netherlands lets them get away with this because they want (to torture the analogy) the Starbucks subsidiary to be doing business at all in their country, and they fear if they started taxing name royalties Starbucks would pack up and leave, taking their franchise rights and the jobs they bring with them. ... and that's before we even touch on the ethical framework around which anybody gets to charge any taxes at all on "right to a name;" the companies we're talking about are already paying sales tax, real estate tax for land, payroll taxes, etc., etc., etc. ... it comes back to the ethics and morality of "Can you tax intangible goods" in the first place, and that's where things get really exciting. For what is the value of a piece of software, and how do you measure it? ;)
tossaccount123 8y ago

TulliusCicero 8y ago

This is tax avoidance, which is legal. Tax evasion implies illegality. When you put money into a 401k, that's tax avoidance.

sokoloff 8y ago
I'd argue the 401(k) is more tax deferral than avoidance.
- deleted 8y ago
  [deleted]