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I read her plan to tax businesses with $100m in profit is easily sidestepped by spinning off child-subsidiaries of your businesses right around that $100m mark
by MuffinFlavored 7y ago
I read her plan to tax businesses with $100m in profit is easily sidestepped by spinning off child-subsidiaries of your businesses right around that $100m mark and report back "womp womp, no over $100m profits here".
- MichaelApproved 7y agoAnd that's easily countered by saying "total profits, including subsidiaries."
- tick_tock_tick 7y agoEven she wouldn't be stupid enough to try that.
- munk-a 7y agoIndeed, we should all cower in fear to avoid offending the lobbyists.
- hervature 7y agoAnd that's easily countered by having franchises and not subsidiaries
- enraged_camel 7y agoAnd that's easily countered by saying, "total profits, including subsidiaries and franchises." See, we can play this game all day. The fundamental point is this: just because people might break a law (directly or in spirit) is not an argument against having said law.
- arcticbull 7y agoI for one look forward to finding out which of the 595 Apple subsidiaries I'll be doing business with moving forward. I guess what I'm saying is that yes, it's possible that some companies will put in the legwork to restructure into a few subsidiaries, but this tax wouldn't have applied to them in the current regime anyways. The biggest ones, on the other hand, are unlikely to do the leg-work. Either way the plan can be adjusted, as my sibling says, to include the revenue from subsidiaries so let's not be defeatist :)
- luckylion 7y ago> I for one look forward to finding out which of the 595 Apple subsidiaries I'll be doing business with moving forward. None of them. You'll be doing business with Apple CustomerCare or whatever it's called, and they're going to pay license fees for some logo, software or what have you to those 595 companies. It's how Amazon & Co funnel their money out of Europe without hardly paying any taxes, too.
- eximius 7y agoI think you have it backwards. The biggest companies that are already avoiding taxes can justify the lawyer costs to do it again. Besides, they typically already have dozens of subsidiaries that are largely invisible to most employees and business partners. This is just adding more reasons to do so. (Source: have worked on subsidiary taxonomy of large companies before, not for tax purposes, and from the outside there is often little information, at face value, why these subsidiaries exist. Even if you asked them, it wouldn't be hard to come up with legal reasons.)
- arcticbull 7y agoYou know how your bank is required to report any transaction to FinCEN in excess of $10,000 on what's called a CTR, or currency transaction report? Some enterprising criminals decided to break up their deposits into two $5000 transactions to avoid this. So naturally, they made that a crime called structuring [1]. I don't see why it wouldn't be illegal to break up your company into a thousand subsidiaries to evade taxes. My point is, this is solve-able, but we have to make the first move. [1] https://en.wikipedia.org/wiki/Structuring https://en.wikipedia.org/wiki/Structuring
- rando444 7y agoIf businesses started creating child companies (for any reason) it would result in substantial job creation.. so this sounds like a win-win to me.
- kortilla 7y agoPresumably you’ve never heard of shell corporations. Child companies do not imply jobs.
- tempestn 7y agoCan you elaborate? It seems to me that if a single corporation just split their operations into multiple separate child corps, it wouldn't necessarily result in job creation. (Duplicated positions could just be contracted to a single company in the group, for instance.)
- inetknght 7y agoI don't see any guarantee here that splitting a business will create jobs. 1) Business A has 1B in profits with X number of employees, gets taxed. 2) Business B splits into 10 businesses with 100M in profits and X/10 number of employees per business unit, and doesn't get taxes.
- cronix 7y agoSounds like Business B is going to need 9 new buildings. Are they built already?
- Causality1 7y agoAlways strange to me they tax corporate profit instead of corporate revenue. "We spent all our money so we don't pay any taxes."
- jacquesm 7y agoVAT is corporate revenue tax, but between businesses you can claim it back in the EU.
- DanBC 7y agoNo, VAT is a tax paid by consumers.
- leetcrew 7y agoare you making a claim about tax incidence or who literally pays the tax?
- DanBC 7y agoI'm saying who literally pays the tax. A business buying from another business can reclaim the VAT. The end usually consumer cannot. VAT is a consumption tax.
- jacquesm 7y agoThe tax is levied on the businesses who collect it on behalf of the government, it is a direct function of the amount of the invoice. So if you charge your customer less for your goods or services the tax paid goes down. VAT is short for 'Value Added Tax', in other words that which a business produces. But if your business provides no value then magically you still have to charge VAT, so clearly there is a relationship with turnover. By your logic you could reason that eventually all tax is paid by consumers because they pay the companies for the products and that includes corporate income tax and so on but whenever sales tax is low you will find that companies are more than happy to absorb the surplus as profits. VAT is the closest governments get to taxing businesses directly on their revenue streams.
- rockinghigh 7y agoPublic corporations in the US have to provided consolidated financial statements including all majority-owned subsidiaries.
- deleted 7y ago[deleted]
- cr0sh 7y agoOne would think there'd be a way to combat that ala structuring, like they do with reporting cash transfers of $10k and over. In other words, if you try to do multiple $9999.00 transfers in an attempt to "fly under the radar" - you will be caught out.