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Re: the term "abuse" rather than a more concrete term like "violation." About 10 years back, Bono (of U2) was being interviewed on irish tv. They asked about U

Re: the term "abuse" rather than a more concrete term like "violation." About 10 years back, Bono (of U2) was being interviewed on irish tv. They asked about U2's business interests (real estate and hotels), taxes, and overseas holding companies... with a "why don't you pay taxes in ireland" implication. Bono started with a generic "U2 is a Businezss" answer but he ended with a (IMO) an honest point that people avoid making.. because it's kind of an admission of guilt: "Look... We (ireland) manipulate our tax rules for all sorts of gain^. How can it be ok for the country but not U2?" We're an extreme example, but not that extreme. American politicians have also been big believers in complex tax reforms/policies as a way of tweaking all sorts of economic results. We can't have it both ways. Either we have a "the rules are the rules" approach or we have a principled approach. You can't appeal to the "spirit" of a soulless ruleset. ^We have a highly "engineered" tax system, designed to encourage foreign revenue to be silmultaneously booked and not booked in ireland. >30% of ireland's gdp is Leprechaun money, according to Paul Krugman & some oecd economists. It's here, but not real. Try to touch it, and it will vanish. A lot of these rules relate to IP which is why the biggest companies utlizing irish tax shenanigans are apple, google and other techcos. Music is also IP.

viivaux 8y ago
> "Look... We (ireland) manipulate our tax rules for all sorts of gain^. How can it be ok for the country but not U2?" I'll answer that Bono - because no one in Ireland asked for us to be run by leprechaun economics; that decision was taken by blatantly corrupt political parties that form a golden circle fueled by brown envelopes, protected by even more blatantly by corrupt police and state / billionaire owned media. Normal people in Ireland :pay their fucking taxes: and he should too.
- lostlogin 8y ago
  > no one in Ireland asked for us to be run by leprechaun economics; that decision was taken by blatantly corrupt political parties Irish one though surely? What makes them win elections?
  - ianmcgowan 8y ago
    Money
  - viivaux 8y ago
    Historical dominance coupled with a captive media owned by a billionaire (Denis O Brien, good friend of the Clintons) who despite being proved corrupt after a €200+ million tribunal continues to get (highly legally questionable) contracts and deep discounts from the state. For example, we've gone through multiple Garda Comissioners (head of police), a Taoiseach (head of state) and a justice minister over the treatment of a police whistleblower who was smeared as a child molester - twice, by police and the government agency in charge of childcare. But there was only one paper that remotely properly covered it, and this paper was then bought up. It was insane. And just one example of many. Still, the two parties I speak of are on a long scale downward trend to the point where they're propping each other up with the help of a couple "independents" to stay in power.
    - deleted 8y ago
      [deleted]
  - dalbasal 8y ago
    We'll soon see, there's one coming up. Usually, irish politics has a lot of subtly. It's a competitive scene rhetoric-wise. I disagree with the OP though. Leprechaun economics isn't something people brag about, but it was and is quite popular, quietly. People think we're getting one over.
    - viivaux 8y ago
      Are you from an upper middle class area of Dublin / well-to-do family in the shtix? In the nicest way I can say this, might you be in a bit of a bubble? For example, did you pay your Irish Water bill and assume everyone else did too?
      - deleted 8y ago
        [deleted]
pushpop 8y ago
Tax reforms to tweak economic growth isn’t really the same thing as using loopholes in tax rules to avoid paying tax. One serves to better the country by adapting to a changing economy, while the other serves a self interest and takes money out of the economy. However if you’re talking about tax reforms lead by corrupt politicians and lobbyists - then that’s a different matter. But I’d argue that was another tangent entirely.
- appleiigs 8y ago
  Taxes or loop holes don't take money out of the economy. It just changes who directs the money, either the government or the individual. (Don't need to get into which is better here)
  - pushpop 8y ago
    When you look at the bigger picture financials it does take money out of the economy because money invested in public services drives more jobs. Money hoarded by an individual only creates wealth for that individual. Sure they might reinvest that wealth but often not in a way that directly nor indirectly grows the economy - or at least not in worthwhile way for those who it matters the most to. This is part of the reason (albeit just a small part) why the rich and poor divide grows wider year on year. If it were as simple as you described, that wouldn’t happen.
    - appleiigs 8y ago
      No, you have a lot of pop culture myths in your comment that are just not correct.
      - pushpop 8y ago
        If that were the case you’d have easily disproved them instead of making meta comments
        appleiigs 8y ago
pradn 8y ago
There is a difference between manipulating tax rules for a company and for a country. It's possible to set up rules in a way that a broad chunk of one country benefits (perhaps at the detriment of another country.) But any abuse of tax rules by a company serves only its own interests. (Sans certain companies and industries being in the national interest, etc.)
baddox 8y ago
> You can't appeal to the "spirit" of a soulless ruleset. This is a great point that I always try to inject into conversations about “tax avoidance.” People often claim that taking advantage of “loopholes” is ethically equivalent to straight up illegal tax evasion, but that claim implies that companies need to “know” the “correct ethical amount” for them to contribute.
- SolarNet 8y ago
  Yea which is one benefit of simple tax systems. If the tax rate is 10% across the board, then there is a simple "spirit" there to appeal to.
  - jhbadger 8y ago
    But that's not really a fair system because poor people need their income to live on while rich people paying more taxes just means they will have one less yacht or mansion.
    - SolarNet 8y ago
      I never said it was fair, just that that was a benefit of it. Also, an alternative is a higher tax rate but use a UBI so poor people always have an effective negative tax rate. Constant offset, multiplicative tax rate. Ensures a floor of income such that people can always survive and that there are always consumers.
    - Mattasher 8y ago
      How is it unfair for people making twice as much, to pay twice as much? If anything, "fairness" would favor a system where (absolute) taxes went up slower than income, as I doubt consumption of government services increases linearly with income (modulo rent seeking by the very rich and powerful).
      - zaksoup 8y ago
        Taxes are explicitly and intentionally not fair. It's not fair that I pay taxes to public schooling when I could just send my kids to a private school. It's not fair that I pay taxes to the roads when I drive significantly less than average. It's not fair that I pay taxes to subsidize the USPS when I don't ever mail things. Nothing about taxation is fair because it's not intended to be fair. We agree that society as a whole benefits from every child having access to a high quality education. We agree that society as a whole benefits from free and easy travel. I read an economic report a while back (still trying to find it) that posited that a significant contributor to the US's current economic success and high rate of entrepreneurial system was the USPS. The ability for everybody to mail anything anywhere on the cheap allowed for an untold number of companies to exist and be competitive. To pretend like taxes should be associated with the consumption of government services is a-historical, fallacious, and based on any number of lies that vilify the poor for being poor.
stefan_ 8y ago
You realize that these quotes relate directly to Ireland setting itself up as a tax haven for these big companies in order to siphon off tax money that would otherwise go to their EU neighbors? That has nothing to do with the US tax system.
- appleiigs 8y ago
  You're looking at the tree, and he's looking at the forest. Hence his quote: 'Either we have a "the rules are the rules" approach or we have a principled approach.' The worlds tax systems are very related when you are dealing with the ultra-rich.
- bluGill 8y ago
  They are specifically about Ireland, but they apply in a generic way to ALL tax systems.
Funes- 8y ago
Great comment. >"Look... We (ireland) manipulate our tax rules for all sorts of gain^. How can it be ok for the country but not U2?" Be that as it may (an admission of guilt, indeed), I find the argument to be absolutely reasonable. To my mind, the most efficient way to enforce any tax-related measure coming from the government is to have the more powerful citizens and entities abide by it systematically; then, they become the social moderators of the measure, increasing the value in respecting it.
conistonwater 8y ago
Can you explain, how does this apply to the article, though? These people structured transactions that violated both the spirit (definitely) and the letter (quite likely), but the complexity of the transactions let them survive challenges by the IRS because the IRS wasn't set up to deal with them. I don't see what "We can't have it both ways" refers to here, among other things you said. I think people do sometimes overstate the amount of legal and ethical complexity in all this.
- jdsully 8y ago
  Sometimes the spirit of the tax code is to protect a specific entity in a congressman’s state. The tax code has no moral authority as it’s already corrupt. We can’t have it both ways. If loopholes are being intentionally put in we can’t blame people for taking advantage of loopholes. I’d love a fair tax code but until we have one I won’t begrudge anyone for being smart about how they pay.
- dalbasal 8y ago
  What makes me think it applies is the term "abuse." If it was clearly rulebreaking, they would have called it a "violation," I assume. What I'm arguing is that the rules themselves don't have a spirit. Not all rules, but most tax rulesets. The complexity of transactions is largely a factor because of the complexity of the rules. They're complex because tax rules are constantly being fiddled with to benefit someone, encourage something or shield something. It's the kind of ruleset you end up with specifically because you're not being principled. The spirit of the tax rules that U2 is taking advantage of is exactly the type of whats-good-for-me-is-good-for-me spirit that he was being accused of. If there's a loophole in the rules to protect some industry or district that happened to have been politically important or connected at some point and some other groups manage to take advantage of it... For principled rules (don't rape, murder or steal) it makes sense to appeal to the spirit. It's not necessarily inarguable but it exists. We can debate whether something constitutes theft sensibly, and appeal to the spirit of the rule. But, if there were weird rules specifically defining stealing commercial vehicles "not theft" because in the early 90s some economists theorized this would help balance insurance company finances somehow... the "spirit" of the "no stealing" rule becomes meaningless. All you have at that point is the rules in ink. I'm not even talking about ethical complexity, mostly. This bleeds into empirical reality pretty directly. Where we have complicated and unprincipled tax rules we tend to have complicated and unprincipled avoidance, tax structuring, planning or pick your euphemism.
colanderman 8y ago
> You can't appeal to the "spirit" of a soulless ruleset Here's a simple razor: if the people who wrote the rules, upon learning of what you are doing, would likely have written the rules differently to make illegal what you are doing, it's against the "spirit" of the rules. Example: if some tax code says, people who make below $100k must pay $10k in taxes, and people who make above $100k must pay $20k, paying someone $99,999 to avoid extra taxes is a foreseeable consequence and therefore not an unethical loophole. However, paying someone exactly $100k so they fall in neither bracket and thus need not pay any taxes is probably not what the policymakers intended; they would surely have amended the rules had they had this pointed out to them before enacting this tax code. Of course, this requires being a judge of intent, but what ethical framework doesn't have grey areas?
- kevin_thibedeau 8y ago
  Even simpler test: If I as an individual can't use a double-Irish scheme to eliminate my personal income tax liability why should a corporation be able to?
  - LoSboccacc 8y ago
    having taxes on earnings and not gains multiply taxes on products that have long manufacturing chains, or at least that's the theory. the result is that you can shift earnings and inflate costs to reduce gains dodging taxes. people should be able to claim expenses even for luxuries, but then nobody would have savings because those are capital inefficient. so there are two different drives that make the tax code asymmetrical, even in principle, before those schemes for dodging fair taxation.
    - deleted 8y ago
      [deleted]
  - refurb 8y ago
    Because they are different entities with different needs? Should corporations be able take allowances for their dependents? Each entity is treated differently because they are different.
Wowfunhappy 8y ago
> We can't have it both ways. Either we have a "the rules are the rules" approach or we have a principled approach. You can't appeal to the "spirit" of a soulless ruleset. Sure you can. A judge could rule that you're breaking the spirit of the law issue appropriate fines. If this became common practice, people and companies would stop utilizing so many "loopholes".
- Mirioron 8y ago
  Or maybe the law could be written in a way where it says what it supposedly means, so that people don't have to find out from a judge what a rule they need to live life by means.

viivaux 8y ago

> "Look... We (ireland) manipulate our tax rules for all sorts of gain^. How can it be ok for the country but not U2?" I'll answer that Bono - because no one in Ireland asked for us to be run by leprechaun economics; that decision was taken by blatantly corrupt political parties that form a golden circle fueled by brown envelopes, protected by even more blatantly by corrupt police and state / billionaire owned media. Normal people in Ireland :pay their fucking taxes: and he should too.

lostlogin 8y ago
> no one in Ireland asked for us to be run by leprechaun economics; that decision was taken by blatantly corrupt political parties Irish one though surely? What makes them win elections?
- ianmcgowan 8y ago
  Money
- viivaux 8y ago
  Historical dominance coupled with a captive media owned by a billionaire (Denis O Brien, good friend of the Clintons) who despite being proved corrupt after a €200+ million tribunal continues to get (highly legally questionable) contracts and deep discounts from the state. For example, we've gone through multiple Garda Comissioners (head of police), a Taoiseach (head of state) and a justice minister over the treatment of a police whistleblower who was smeared as a child molester - twice, by police and the government agency in charge of childcare. But there was only one paper that remotely properly covered it, and this paper was then bought up. It was insane. And just one example of many. Still, the two parties I speak of are on a long scale downward trend to the point where they're propping each other up with the help of a couple "independents" to stay in power.
  - deleted 8y ago
    [deleted]
- dalbasal 8y ago
  We'll soon see, there's one coming up. Usually, irish politics has a lot of subtly. It's a competitive scene rhetoric-wise. I disagree with the OP though. Leprechaun economics isn't something people brag about, but it was and is quite popular, quietly. People think we're getting one over.
  - viivaux 8y ago
    Are you from an upper middle class area of Dublin / well-to-do family in the shtix? In the nicest way I can say this, might you be in a bit of a bubble? For example, did you pay your Irish Water bill and assume everyone else did too?
    - deleted 8y ago
      [deleted]

pushpop 8y ago

Tax reforms to tweak economic growth isn’t really the same thing as using loopholes in tax rules to avoid paying tax. One serves to better the country by adapting to a changing economy, while the other serves a self interest and takes money out of the economy. However if you’re talking about tax reforms lead by corrupt politicians and lobbyists - then that’s a different matter. But I’d argue that was another tangent entirely.

appleiigs 8y ago
Taxes or loop holes don't take money out of the economy. It just changes who directs the money, either the government or the individual. (Don't need to get into which is better here)
- pushpop 8y ago
  When you look at the bigger picture financials it does take money out of the economy because money invested in public services drives more jobs. Money hoarded by an individual only creates wealth for that individual. Sure they might reinvest that wealth but often not in a way that directly nor indirectly grows the economy - or at least not in worthwhile way for those who it matters the most to. This is part of the reason (albeit just a small part) why the rich and poor divide grows wider year on year. If it were as simple as you described, that wouldn’t happen.
  - appleiigs 8y ago
    No, you have a lot of pop culture myths in your comment that are just not correct.
    - pushpop 8y ago
      If that were the case you’d have easily disproved them instead of making meta comments
      - appleiigs 8y ago

pradn 8y ago

There is a difference between manipulating tax rules for a company and for a country. It's possible to set up rules in a way that a broad chunk of one country benefits (perhaps at the detriment of another country.) But any abuse of tax rules by a company serves only its own interests. (Sans certain companies and industries being in the national interest, etc.)

baddox 8y ago

> You can't appeal to the "spirit" of a soulless ruleset. This is a great point that I always try to inject into conversations about “tax avoidance.” People often claim that taking advantage of “loopholes” is ethically equivalent to straight up illegal tax evasion, but that claim implies that companies need to “know” the “correct ethical amount” for them to contribute.

SolarNet 8y ago
Yea which is one benefit of simple tax systems. If the tax rate is 10% across the board, then there is a simple "spirit" there to appeal to.
- jhbadger 8y ago
  But that's not really a fair system because poor people need their income to live on while rich people paying more taxes just means they will have one less yacht or mansion.
  - SolarNet 8y ago
    I never said it was fair, just that that was a benefit of it. Also, an alternative is a higher tax rate but use a UBI so poor people always have an effective negative tax rate. Constant offset, multiplicative tax rate. Ensures a floor of income such that people can always survive and that there are always consumers.
  - Mattasher 8y ago
    How is it unfair for people making twice as much, to pay twice as much? If anything, "fairness" would favor a system where (absolute) taxes went up slower than income, as I doubt consumption of government services increases linearly with income (modulo rent seeking by the very rich and powerful).
    - zaksoup 8y ago
      Taxes are explicitly and intentionally not fair. It's not fair that I pay taxes to public schooling when I could just send my kids to a private school. It's not fair that I pay taxes to the roads when I drive significantly less than average. It's not fair that I pay taxes to subsidize the USPS when I don't ever mail things. Nothing about taxation is fair because it's not intended to be fair. We agree that society as a whole benefits from every child having access to a high quality education. We agree that society as a whole benefits from free and easy travel. I read an economic report a while back (still trying to find it) that posited that a significant contributor to the US's current economic success and high rate of entrepreneurial system was the USPS. The ability for everybody to mail anything anywhere on the cheap allowed for an untold number of companies to exist and be competitive. To pretend like taxes should be associated with the consumption of government services is a-historical, fallacious, and based on any number of lies that vilify the poor for being poor.

stefan_ 8y ago

You realize that these quotes relate directly to Ireland setting itself up as a tax haven for these big companies in order to siphon off tax money that would otherwise go to their EU neighbors? That has nothing to do with the US tax system.

appleiigs 8y ago
You're looking at the tree, and he's looking at the forest. Hence his quote: 'Either we have a "the rules are the rules" approach or we have a principled approach.' The worlds tax systems are very related when you are dealing with the ultra-rich.
bluGill 8y ago
They are specifically about Ireland, but they apply in a generic way to ALL tax systems.

Funes- 8y ago

Great comment. >"Look... We (ireland) manipulate our tax rules for all sorts of gain^. How can it be ok for the country but not U2?" Be that as it may (an admission of guilt, indeed), I find the argument to be absolutely reasonable. To my mind, the most efficient way to enforce any tax-related measure coming from the government is to have the more powerful citizens and entities abide by it systematically; then, they become the social moderators of the measure, increasing the value in respecting it.

conistonwater 8y ago

Can you explain, how does this apply to the article, though? These people structured transactions that violated both the spirit (definitely) and the letter (quite likely), but the complexity of the transactions let them survive challenges by the IRS because the IRS wasn't set up to deal with them. I don't see what "We can't have it both ways" refers to here, among other things you said. I think people do sometimes overstate the amount of legal and ethical complexity in all this.

jdsully 8y ago
Sometimes the spirit of the tax code is to protect a specific entity in a congressman’s state. The tax code has no moral authority as it’s already corrupt. We can’t have it both ways. If loopholes are being intentionally put in we can’t blame people for taking advantage of loopholes. I’d love a fair tax code but until we have one I won’t begrudge anyone for being smart about how they pay.
dalbasal 8y ago
What makes me think it applies is the term "abuse." If it was clearly rulebreaking, they would have called it a "violation," I assume. What I'm arguing is that the rules themselves don't have a spirit. Not all rules, but most tax rulesets. The complexity of transactions is largely a factor because of the complexity of the rules. They're complex because tax rules are constantly being fiddled with to benefit someone, encourage something or shield something. It's the kind of ruleset you end up with specifically because you're not being principled. The spirit of the tax rules that U2 is taking advantage of is exactly the type of whats-good-for-me-is-good-for-me spirit that he was being accused of. If there's a loophole in the rules to protect some industry or district that happened to have been politically important or connected at some point and some other groups manage to take advantage of it... For principled rules (don't rape, murder or steal) it makes sense to appeal to the spirit. It's not necessarily inarguable but it exists. We can debate whether something constitutes theft sensibly, and appeal to the spirit of the rule. But, if there were weird rules specifically defining stealing commercial vehicles "not theft" because in the early 90s some economists theorized this would help balance insurance company finances somehow... the "spirit" of the "no stealing" rule becomes meaningless. All you have at that point is the rules in ink. I'm not even talking about ethical complexity, mostly. This bleeds into empirical reality pretty directly. Where we have complicated and unprincipled tax rules we tend to have complicated and unprincipled avoidance, tax structuring, planning or pick your euphemism.

colanderman 8y ago

> You can't appeal to the "spirit" of a soulless ruleset Here's a simple razor: if the people who wrote the rules, upon learning of what you are doing, would likely have written the rules differently to make illegal what you are doing, it's against the "spirit" of the rules. Example: if some tax code says, people who make below $100k must pay $10k in taxes, and people who make above $100k must pay $20k, paying someone $99,999 to avoid extra taxes is a foreseeable consequence and therefore not an unethical loophole. However, paying someone exactly $100k so they fall in neither bracket and thus need not pay any taxes is probably not what the policymakers intended; they would surely have amended the rules had they had this pointed out to them before enacting this tax code. Of course, this requires being a judge of intent, but what ethical framework doesn't have grey areas?

kevin_thibedeau 8y ago
Even simpler test: If I as an individual can't use a double-Irish scheme to eliminate my personal income tax liability why should a corporation be able to?
- LoSboccacc 8y ago
  having taxes on earnings and not gains multiply taxes on products that have long manufacturing chains, or at least that's the theory. the result is that you can shift earnings and inflate costs to reduce gains dodging taxes. people should be able to claim expenses even for luxuries, but then nobody would have savings because those are capital inefficient. so there are two different drives that make the tax code asymmetrical, even in principle, before those schemes for dodging fair taxation.
  - deleted 8y ago
    [deleted]
- refurb 8y ago
  Because they are different entities with different needs? Should corporations be able take allowances for their dependents? Each entity is treated differently because they are different.

Wowfunhappy 8y ago

> We can't have it both ways. Either we have a "the rules are the rules" approach or we have a principled approach. You can't appeal to the "spirit" of a soulless ruleset. Sure you can. A judge could rule that you're breaking the spirit of the law issue appropriate fines. If this became common practice, people and companies would stop utilizing so many "loopholes".

Mirioron 8y ago
Or maybe the law could be written in a way where it says what it supposedly means, so that people don't have to find out from a judge what a rule they need to live life by means.