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Big tech companies have been at the cutting edge of corporate tax avoidance
- acchow 7y agoFrom the source: "The Silicon Six and their $100 billion global tax gap, which examines the tax conduct of Facebook, Apple, Amazon, Netflix, Google and Microsoft over the last decade." One third of their companies are not based in Silicon Valley.
- Elof 7y agoI think the author is using Silicon Valley as a tech coverall. Which is silly, but doesn’t ruin the point IMO
- Y_Y 7y agoOf course, those are clearly all Irish companies.
- crantefula 7y agoPopulation of potential US customers: 650 million Population of potential world customers(minus US): 7.1 billion But sure, let's pretend worldwide subsidiaries of those companies should not turn a profit outside the US.
- cp9 7y agoI'm sure that's the point the article is making, not that these companies have been stealing from the american taxpayer for a decade
- paggle 7y ago“Silicon Valley” is a metonym for the technology and Internet industries and has been for some decades now.
- deadmetheny 7y agoNext you'll tell me that Wall Street companies aren't actually on Wall Street.
- AcerbicZero 7y agoBest case - Politicians made rules. Companies took the most economically favorable (to them) interpretation of those rules as they could get away with. Worst case - Politicians made rules. Companies bought ("Lobbied") politicians and changed those rules to make them as favorable as possible. There seems to be something similar in both cases.
- pc86 7y agoI used to be married to a lobbyist, and the actual events are closer to this: Company lobbyists take a group of legislators out for dinner and drinks approaching the cost of rent for most Americans. Company lobbyists and attorneys (the venn diagram here is almost a perfect circle) write rules. Company lobbyists give company-written rules to legislative staffers on a relevant subcommittee. Company lobbyists attend 4- or 5-figure political fundraiser for legislators and discuss desired rules. The next day, legislator sees the agenda for the week, with a topic relevant to Company, and "draft legislation" already available. Company then takes the most economically favorable interpretation of rules written ~90% by them in the first place.
- bsanr2 7y agoThis is why the Tea Party wave was so devastating: not because of their ideology, but because they swept into office with little experience in policy or the topics they were then appointed to committees to govern. Compare to, say, AOC: much maligned, but who sits on an economics committee and has a degree in... economics (albeit a BA). It's really, really important that our representatives have at least a modicum of knowledge, or else you get a rubber stamp machine instead of a republic.
- stevehawk 7y agoI bet no one on here is mad at the tax break companies get by offering RSUs, which is how a lot of Silicon Valley dodges taxes as well.
- option 7y agopeople who get RSUs in California pay about 50% (state plus federal) tax on it. Where is that tax break again?
- traviscj 7y agoMy read was that the _companies_ get the tax break. The employees get taxed to shit, but it's still better than not getting the RSUs.
- outside1234 7y agoI don't think that's true, other than the value of the RSUs being counted as an expense against earnings (like Salary would be).
- jcranmer 7y agoI wouldn't be surprised if RSUs were not included in payroll taxes.
- drharby 7y agoReminds me of that episode of futurama where they almost become rich from being acquired by Mom. "I suddently have an opinion about the capital gains tax!" The tax bill paid by new grads for their rsus is usually their first experience with non-income tax flavored taxes, and I think we have an incentive to ask for cash in leiu of rsus for that exact reason. Of course, not going to complain too mich.
- myvoiceismypass 7y agoWhat tax breaks do companies get by offering RSUs instead of cash?
- turk73 7y agoIt's not just SV. One major company I worked for had only one validation requirement on the code we checked in which was the ensure that the copyright header saying that the code was owned by the subsidiary in Lucerne, Switzerland was present. That had to be for IP and tax purposes because nothing else makes any sense to me why that would be so important. It was not a Swiss company. So all the code and business products of value were offshored to some tax-friendly locale. Although I never thought of Switzerland as being particularly tax friendly.
- halfjoking 7y agoThe press likes to single out tech companies lately... but it's well-known every industry is doing the same. Walmart, Exxon and Pfizer are just a few companies that tax-dodge just as much as Google. It's estimated $700 billion in taxes are dodged yearly[1] so singling out "Silicon Valley" seems strange. [1] https://americansfortaxfairness.org/corporate-tax-chartbook-how-corporations-rig-the-rules-to-dodge-the-taxes-they-owe/ https://americansfortaxfairness.org/corporate-tax-chartbook-...
- reaperducer 7y agoThe press points this out because it's a new phenomenon. It's the new in "news." Just because Walmart, Exxon and others are bad doesn't mean SV isn't bad. It just means tech companies also get to be called out when they misbehave.
- Analemma_ 7y agoTechnology companies are able to dodge much larger amounts of taxes because their IP-heavy nature allows them to use constructions like the "Double Irish", which Walmart and Exxon can't do. It's worth mentioning that tax dodging is widespread, but also worth pointing out that tech companies can engage in the same behavior to a greater degree.
- kelnos 7y ago> ... singling out "Silicon Valley" seems strange. Not to mention that two of the companies in their subtitle (Amazon and Microsoft) are not Silicon Valley companies.
- shadow-banned 7y agoOther industries employ a significantly larger amount of people. Ford has 85,000 employees. Facebook has 35,000. It's a wealth concentration issue.
- malandrew 7y agoThe SCOTUS decision in Gregory v. Helvering supports tax minimization. There is zero obligation for any individual or company to pay any more tax than they owe. These companies all pay the taxes they owe. https://en.wikipedia.org/wiki/Gregory_v._Helvering https://en.wikipedia.org/wiki/Gregory_v._Helvering
- chatmasta 7y agoFrankly, I’m happy as long as money is out of the government’s hands. Politicians have repeatedly demonstrated they can spend money way faster than they can generate it. What’s the point of paying more taxes if they’re just going to waste the money? Leave it in the economy and let the market sort it out.
- davidw 7y agoIt's not "out of their hands", they're just borrowing it.
- jnathsf 7y agoSeems like an overly simplistic view. If you take your logic to the extreme why have taxes/government at all. It’s interesting to see people complain about government but never take action on making their government better. The saying you get the government you deserve rings true here.
- chatmasta 7y agoI mean, I wouldn’t mind taking it closer to that extreme. Do we really need the hundreds of federal agencies and bureaucrats that are infesting our government right now? Or a defense budget orders of magnitude larger than other nations? Or billions of dollars in foreign aid? Let’s not forget income tax was introduced originally as a temporary solution to raise funds for World War I. Long term, it’s only increased since then. At what point do we say enough is enough, no more tax increases?
- codyb 7y agoUsing words like infesting is what people who’re demonizing others do. We’re currently living in the most peaceful era of human history, so maybe American hegemony isn’t terrible? There’s certainly been far less regional conflicts than ever before, I’d be hard pressed to find a decent reason how the world’s preeminent superpower wouldn’t play into that dynamic despite it’s missteps and overreaches which are very easy to point at. And income tax rates, especially for the extremely wealthy have been consistently declining since their highs post WWII which also coincided with one of America’s most egalitarian and balanced periods socioeconomically. Of course, now we have extremely low income tax rates for the wealthiest among us and near banana republic levels of wealth inequality with staggering statistics like the fact that 400 families own as much wealth in America as the bottom 150 million of it’s citizens. If we look at current trends in the Democratic party, which tends to represent more individuals than the Republican party despite the latter’s outsized share of privilege thanks to the Senate, gerrymandering, and the electoral college, we’re seeing large sentiments of exactly the opposite “at what point do we say enough is enough, no more tax cuts?”.
- TheSoftwareGuy 7y agoWell I'd just love for congress to increase the IRS budget again and then maybe they could actually audit a few of those companies
- chanbam 7y agoYang2020.com Google Andrew Yang
- oarabbus_ 7y agoI do like that he seems to be the only candidate who talks about incentivizing corporations to give back, rather than talking about enacting punitive measures on corporations.
- jwally 7y agoMaybe I'm missing something super obvious, or I'm preaching to the choir; but why wouldn't it make sense to eliminate all corporate taxes; but also eliminate capital-gains-tax-rates? I'm not sure you'd have a 100% wash, but it feels like it would be close enough that you could re-jigger rates to capture any short-falls (or drop them if you bring in too much). It seems like it would: - Eliminate the need for corporate tax firms / accountants - Reduce the incentives for industrial lobbying - Encourage hiring - Enable Businesses to save for "rainy days"
- bryanrasmussen 7y agoI think you might be missing the super obvious that it would take a law to do this thing that would reduce the incentives for industrial lobbying?
- jwally 7y agoSo I shouldn't hold my breath for term limit legislation to pass anytime soon either...? :-)
- MuffinFlavored 7y agoHow would corporations get taxed if you eliminated corporate taxes? You wouldn't want corporations to get taxed on their income/revenue/profits?
- jwally 7y agoInstead of taxing the income twice at lower rates with loopholes (corporate tax rate => capital gains rate) it would only get taxed once, but at a higher rate (marginal tax rate) with relatively fewer shenanigans.
- Youden 7y agoI'm not the OP but it's fairly simple: corporations wouldn't get taxed. Instead, shareholders would be taxed, as they're the ones who own the company and ultimately profit from the company's activities. You could do this by increasing the tax rate on capital gains (dividends are already income if I remember US taxes right).
- jeffdavis 7y agoA 401(k) is also "avoidance". Are we next going to talk about all of the retirees and how much they "owe" us? If the author wants to suggest a new law, then suggest a new law that would be a net improvement.
- jeffdavis 7y ago"Imagine what sort of world we could have if the Silicon Six [gave the government more of the $15 trillion]." The modern concept of wealth doesn't work that way. If you transfer money from someone not likely to spend it any time soon (tax shelter) to someone who is going to spend it right now (the government), it works almost exactly like inflation. And often the money isn't held in cash anyway. So, moving it to the government requires divestment. That divestment has consequences that are complex, and it's far from clear that the government would spend it better in every case.
- bsanr2 7y agoThat's only with a limited supply of product. Instead, I see a throwaway culture, where we have a surfeit of product such that anything not perfect is thrown away (safe but expired food, appliances with dents in them, electronics with a single broken component, etc.). Likewise, Americans suffer through services that run inefficiently, or go without services that don't exist because there isn't a critical mass of demand for them. People are pretty good at coming up with good uses for an influx of money without crashing the entire system. That's the whole point of a market-based economy, right?
- jeffdavis 7y agoIf what you want is inflation... why not just inflate the money supply more directly? What's the point of trying to do so through the tax system?
- bsanr2 7y agoLet me flip that: why would you create more money when there's already plenty to go around, just that it's locked up in tax havens, and only used to allow the wealthy to live, effectively, for free? If inflation is a menace, why would we risk the absolute calamity that would occur if disappeared wealth was repatriated after we'd created a bunch more money?