4 ms·

You are absolutely right, and none should be doing it.

by m_b 8y ago

ApolloFortyNine 8y ago
Then change the rules.
fixermark 8y ago
Why not? I've seen it asserted multiple times in this thread, by multiple people, that these tax strategies are an inherent bad, but I haven't seen explanation as to why.
- consp 8y ago
  Generally the way these constructions work is that they use local resources (infrastructure, public education, subsidies, etc) and pay zero to no tax on the usage of it. Google has a presence in both the Netherlands and Ireland but pays very little taxes in both (if not none). Basically what google does here is avoid general taxes in multiple countries (with the structure mentioned they can pay almost none in other countries as well) and still have offices and people working there. You could argue those people get paid, but since most countries (at least in Europe) burden both the employer and employee with the cost of almost everything public, it is unfair to the employee to let the employer not pay taxes due on usage of the infrastructure and public works and let the employer (the corporation) take advantage of it. The American view (I get) is that you are on your own and should arrange this for yourself as well, but due to this requiring quite substantial resources to pull of, it is unbalanced in favor of the corporations. You might consider it fair if they pay taxes as soon as the money is transferred to a person, but due to these schemes it never sees the light of day in any of the countries it was transferred from and thus doesn't go where it was supposed to go. There are methods for people to do this as well in the two countries in the system mentioned, but it is way more difficult in terms of effort required and gains gained and impossible if you are an employee and not an owner of a (one man) business.
  - fixermark 8y ago
    I'm not sure where you're getting your information on how much tax corporations pay---Google paid 163.8 million Euros in 2016 (https://www.rte.ie/news/business/2017/1129/923762-google-ireland-paid-163-8m-in-tax-for-2016/ https://www.rte.ie/news/business/2017/1129/923762-google-ire...). That's nothing like "very little." The real issue people appear to have with it is that Ireland's tax rate is low relative to other countries, and they get to shift a lot of what some would consider taxable income generated in other nations to be claimed via their Irish subsidiary. This could be "solved" either by Ireland increasing its tax rate or by other countries changing their laws to no longer allow for exfiltration of money to Ireland from their economies. But they won't do these things for their own (cross-national competition) reasons. Odd to blame the company when it's the countries that don't want to change, though. If, on the other hand, a company is actually breaking international law, as Apple has apparently done (https://www.nytimes.com/2016/08/31/technology/apple-tax-eu-ireland.html https://www.nytimes.com/2016/08/31/technology/apple-tax-eu-i...), that's a different story altogether.

You are absolutely right, and none should be doing it.

by m_b 8y ago

You are absolutely right, and none should be doing it.

ApolloFortyNine 8y ago

Then change the rules.

fixermark 8y ago

Why not? I've seen it asserted multiple times in this thread, by multiple people, that these tax strategies are an inherent bad, but I haven't seen explanation as to why.

consp 8y ago
Generally the way these constructions work is that they use local resources (infrastructure, public education, subsidies, etc) and pay zero to no tax on the usage of it. Google has a presence in both the Netherlands and Ireland but pays very little taxes in both (if not none). Basically what google does here is avoid general taxes in multiple countries (with the structure mentioned they can pay almost none in other countries as well) and still have offices and people working there. You could argue those people get paid, but since most countries (at least in Europe) burden both the employer and employee with the cost of almost everything public, it is unfair to the employee to let the employer not pay taxes due on usage of the infrastructure and public works and let the employer (the corporation) take advantage of it. The American view (I get) is that you are on your own and should arrange this for yourself as well, but due to this requiring quite substantial resources to pull of, it is unbalanced in favor of the corporations. You might consider it fair if they pay taxes as soon as the money is transferred to a person, but due to these schemes it never sees the light of day in any of the countries it was transferred from and thus doesn't go where it was supposed to go. There are methods for people to do this as well in the two countries in the system mentioned, but it is way more difficult in terms of effort required and gains gained and impossible if you are an employee and not an owner of a (one man) business.
- fixermark 8y ago
  I'm not sure where you're getting your information on how much tax corporations pay---Google paid 163.8 million Euros in 2016 (https://www.rte.ie/news/business/2017/1129/923762-google-ireland-paid-163-8m-in-tax-for-2016/ https://www.rte.ie/news/business/2017/1129/923762-google-ire...). That's nothing like "very little." The real issue people appear to have with it is that Ireland's tax rate is low relative to other countries, and they get to shift a lot of what some would consider taxable income generated in other nations to be claimed via their Irish subsidiary. This could be "solved" either by Ireland increasing its tax rate or by other countries changing their laws to no longer allow for exfiltration of money to Ireland from their economies. But they won't do these things for their own (cross-national competition) reasons. Odd to blame the company when it's the countries that don't want to change, though. If, on the other hand, a company is actually breaking international law, as Apple has apparently done (https://www.nytimes.com/2016/08/31/technology/apple-tax-eu-ireland.html https://www.nytimes.com/2016/08/31/technology/apple-tax-eu-i...), that's a different story altogether.