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Surely this is more about political coercion than tax? Amongst all US companies that offshore profits, including the likes of Halliburton, Facebook has been sin

Surely this is more about political coercion than tax? Amongst all US companies that offshore profits, including the likes of Halliburton, Facebook has been singled out because the US administration wants the company to do it's bidding regarding policy and algorithms for political advertising? Especially considering all the other political reprisals and pardons that are in the news, following the impeachment acquittal. I expect this story to quietly disappear, or some mild fine to result, followed by a not-so-mysterious tweak to how political advertising is handled on the platform. I don't expect it reduce large corporation tax evasion as much as people are crowing here.

kaliali 7y ago
Damned if you do, damned if you don't. Might as well get $9 Billion to go with it.
linuxftw 7y ago
> US administration wants the company to do it's bidding regarding policy and algorithms for political advertising? Unfounded conspiracy theory? Just because they haven't gone after other companies, doesn't mean they shouldn't go after Facebook. They might believe the other companies are guilty but don't have enough evidence to win the trial. Facebook is clearly a US company. Founded and HQ'd in the US, so they should be paying US taxes.
- harryh 7y ago
  Facebook does pay US taxes. That is not in dispute. But facebook does business all over the world. The question is about the proper handling of overseas income. How much of that should face local tax rates vs US tax rates? It's a complex area of tax accounting and there are a lot of judgement calls to be made. This lawsuit is about one of those judgement calls.
- deleted 7y ago
  [deleted]
- speleding 7y ago
  > Facebook is clearly a US company. Founded and HQ'd in the US, so they should be paying US taxes. If most of the advertisers are outside the US, most of the users are outside the US, and most of the servers are outside the US, I think you will agree that it's not reasonable to say ALL of the profit should be taxed in the US. Which part of the profit should go where is an endless debate among pundits, politicians and academics.
  - raiyu 7y ago
    Except Facebook makes most of its money from US users not from international users. Also hard to argue that their campus that houses the majority of their employees in the US isn’t the one generating the IP.
    - speleding 7y ago
      > Except Facebook makes most of its money from US users not from international users. Source? 96.75% of the world population is outside the US, of Facebook users it will be a smaller percentage, but it seems highly unlikely that most of the revenue will come from such a narrow base.
      - thfuran 7y ago
        Does China use facebook? Don't they have their own thing?
      - luckylion 7y ago
        What a weird way to approach that claim. The population inside or outside the USA plays a tiny role. a) China and Russia aren't involved, so strike 2bn from that b) it's not about people "existing", it's about people being a customer (or product, whatever view you prefer), facebook is obviously more widespread in a first world, high tech society where practically everyone has a smartphone than in some thirld world country where electricity is rare and unstable and c) revenue per user. statista [1] claims it's much, much higher than in the rest of the world. With that coming in at a 3:1 or 4:1 or even 5:1, that alone would make the US a heavy weight in revenue. [1] https://www.statista.com/statistics/251328/facebooks-average-revenue-per-user-by-region/ https://www.statista.com/statistics/251328/facebooks-average...
- Mirioron 7y ago
  The more I learn about what goes on in the world the more I ask myself "who does this benefit?" and many conspiracy theories seem to make a lot more sense. Governments and other large organizations have such a long and common history of doing shady things that it's really hard to give them the benefit of the doubt.
znpy 7y ago
> Surely this is more about political coercion than tax? What's the difference? It good anyway for the US because it would set an important precedent for future litigation on the matter of profit offshoring.
- dnadler 7y ago
  I think the problem is the precedent would effectively be "Do what the president says or we'll single you out for punishment".
  - foolinaround 7y ago
    and it was'nt this case in previous administrations?
Shorel 7y ago
With companies that huge, everything is political. It comes with the size.
JumpCrisscross 7y ago
> including the likes of Halliburton Halliburton uses a different scheme. Its assets are physically offshore, though there are R&D and depreciation shenanigans (buy out of American profits, depreciate against onshore expenses, and tax the production where it happens). Facebook, on the other hand, claims most of its assets, which are principally intangible, live in Ireland. Its American sub is charged massive licensing fees by the Irish sub, thereby shifting away profits. Legally speaking, apples and oranges.
- andrewprock 7y ago
  This literally sounds like apples and apples to me, unless you really think "cloud computing" occurs in space or something. If the servers are in Ireland, then their physical assets are offshore.
  - JumpCrisscross 7y ago
    > If the servers are in Ireland, then their physical assets are offshore This is correct. But the fraction of assets which are physical are high for Halliburton and low for Facebook.
    - andrewprock 7y ago
      Data is a physical asset. I'm pretty sure that is their largest asset class.
  - ahouse101 7y ago
    Except, the vast majority of Facebook's servers aren't in Ireland. They couldn't be for the platform to work. There is a datacenter in Ireland, but there are 11 datacenters in the US. I guarantee the majority of data and compute power is in those US datacenters.
jliptzin 7y ago
As is usually the case with this administration, sometimes you can agree on things they do but it is never for the right reasons.
complianceowl 7y ago
A lot of unfounded speculation in your comment. It seems more politically-motivated than rooted in facts. Secondly, have you done your research? Surely Facebook is not the only company being targeted by the government right now. I can assure you that, surely there are more. Thirdly, as much as I might dislike an administration, I won't take the giant, speculative leap as to assume that I know exactly what they're thinking. Fourthly, if this "quietly disappears", why would you automatically assume the administration's involvement? Again, there are presidents I strongly dislike, but part of remaining objective requires grounding your position in fact. Facebook has world class lawyers. Having worked in the legal field for numerous years, I am more than positive that Facebook has made many things "quietly disappear" on their own.
- davidw 7y ago
  Good comment, and good way of looking at things. However, currently it's not possible to obtain a lot of facts about the inner workings of this administration, since it is effectively above the law in terms of things like subpoenas.
  - hugh4life 7y ago
    The subpoenas you're talking about were purposely not taken to court.
    - AaronFriel 7y ago
      Some were, and based on the timeline provided by the District Court it was clear that it would be nearly impossible for the matter to be resolved expediently. i.e.: before the next election, which the President was alleged to have abused his power to interfere in. It would rely on Congress trusting that the Supreme Court would deviate extraordinarily from its normal process and decide a matter in a very short time. And on top of this, Congress has the power to grant subpoenas. The Supreme Court has affirmed this right since the 19th Century and it's absurd that defenders of the President keep insisting that every subpoena must be fought in court, all the way up to final appeal, in order to be valid. That is expressly not what Courts have said in the past. See: https://www.scotusblog.com/2019/07/cases-and-controversies-congress-the-subpoena-power-and-a-legislative-purpose/ https://www.scotusblog.com/2019/07/cases-and-controversies-c...
jakemal 7y ago
Does the US administration have the authority over the IRS to file and pull the suits at their will?
- adventured 7y ago
  No. That won't stop accusations of influence however. Each side believes that when the other side is in the White House they use the IRS to go after political enemies. Republicans particularly were very loud in accusing Clinton and Obama of using the IRS to go after people and groups. For example: https://en.wikipedia.org/wiki/IRS_targeting_controversy https://en.wikipedia.org/wiki/IRS_targeting_controversy
- three_seagrass 7y ago
  The IRS is a part of the Dept. of Treasury, which is run by Steven Mnuchin, a member of Donald Trump's cabinet.
- jellicle 7y ago
  Yes. The commissioner of the IRS is appointed by the President (current one appointed by Trump) and can be dismissed at any time without cause. So if you want to continue in that role, you will do what the President wishes. You can always resign if you find the instructions not to your liking, of course. Richard Nixon demanded that the IRS investigate his enemies, but the IRS commissioner at the time refused to do so and eventually testified against Nixon on this issue.
sp332 7y ago
It was started under the last administration. After going for four years, it's a bit late to "quietly disappear". https://money.cnn.com/2016/07/29/technology/facebook-irs-penalty/index.html https://money.cnn.com/2016/07/29/technology/facebook-irs-pen...
krtong 7y ago
i disagree on pretty much every underlying supposition here: the tax evasion whataboutism, “why facebook when everybody evades taxes?” US allowing these other companies to offshore profits, as if the IRS has the ability to, at any point, ask for that money back; The government having any use for the facebook; facebook being capable of coercion/ memes and advertising having any effect on the way people vote. We know people read what they want into political media. the content may affect your experience on facebook but Facebook has not been proven to have any effect on the ballots. Facebook was probably caught in the act. IRS probably found some legal loophole to actually sue facebook and has not yet found one for google, etc. whats more important to the irs? Getting facebook to change its content policies which would have zero effect on this upcoming election given everyone already knows how theyre going to vote, or 9 billion dollars?
wpietri 7y ago
Are you saying Facebook isn't doing its bidding on political advertising? From what I've seen, FB has been the most welcoming of the social media platforms.
gowld 7y ago
Not the same ballpark. https://www.macrotrends.net/stocks/charts/HAL/halliburton/net-income https://www.macrotrends.net/stocks/charts/HAL/halliburton/ne... https://www.macrotrends.net/stocks/charts/FB/facebook/net-income https://www.macrotrends.net/stocks/charts/FB/facebook/net-in... https://www.macrotrends.net/stocks/stock-comparison?s=net-income&axis=single&comp=HAL:FB https://www.macrotrends.net/stocks/stock-comparison?s=net-in...
mc32 7y ago
Don’t you think if it were political they’d go after Twitter or Reddit who are stricter about suspending and banning accounts and so on?
- ahouse101 7y ago
  Twitter has already banned political advertising, and Reddit simply doesn't have the audience that Facebook does (and being a pseudonymous platform is a different paradigm).
  - mc32 7y ago
    I think they banned paying for political ads but not political ads that I or anyone might share (like sharing a Sanders clip)? The latter would of course be a serious infringement on expression.
markus_zhang 7y ago
Guys, everything at that level, regardless of reasons, are political...it has nothing to do with right and wrong, just interests. Of course it has to be packaged with good reasons otherwise people won't buy it, but again very often they don't bother to give good reasons and push through anyway. That said, I do believe that tackling offshore revenue is a good move.
pgt 7y ago
$9B looks pretty economically-focused to me.
deleted 7y ago
[deleted]
onetimemanytime 7y ago
Not sure about your accusation, it might be true, I can't rule it out. After all, agencies can pick and choose who to target, and we are all seeing the political climate today. BUT, on the other hand, IRS has to win this one case and all others will start negotiating. Once this is declared illegal, it's over for all. So they had to pick one case.
throwawaymanbot 7y ago
Agree 100%.
6510 7y ago
If any company does it they all must do it. Punishment has to start some place.
StreamBright 7y ago
Are you implying in the US the law is uphold only on political basis?
101404 7y ago
> The lawsuit was originally filed in 2016 and widely discussed at that time. What was the "coercion" in 2016 about? Tin foil hats?

kaliali 7y ago

Damned if you do, damned if you don't. Might as well get $9 Billion to go with it.

linuxftw 7y ago

> US administration wants the company to do it's bidding regarding policy and algorithms for political advertising? Unfounded conspiracy theory? Just because they haven't gone after other companies, doesn't mean they shouldn't go after Facebook. They might believe the other companies are guilty but don't have enough evidence to win the trial. Facebook is clearly a US company. Founded and HQ'd in the US, so they should be paying US taxes.

harryh 7y ago
Facebook does pay US taxes. That is not in dispute. But facebook does business all over the world. The question is about the proper handling of overseas income. How much of that should face local tax rates vs US tax rates? It's a complex area of tax accounting and there are a lot of judgement calls to be made. This lawsuit is about one of those judgement calls.
deleted 7y ago
[deleted]
speleding 7y ago
> Facebook is clearly a US company. Founded and HQ'd in the US, so they should be paying US taxes. If most of the advertisers are outside the US, most of the users are outside the US, and most of the servers are outside the US, I think you will agree that it's not reasonable to say ALL of the profit should be taxed in the US. Which part of the profit should go where is an endless debate among pundits, politicians and academics.
- raiyu 7y ago
  Except Facebook makes most of its money from US users not from international users. Also hard to argue that their campus that houses the majority of their employees in the US isn’t the one generating the IP.
  - speleding 7y ago
    > Except Facebook makes most of its money from US users not from international users. Source? 96.75% of the world population is outside the US, of Facebook users it will be a smaller percentage, but it seems highly unlikely that most of the revenue will come from such a narrow base.
    - thfuran 7y ago
      Does China use facebook? Don't they have their own thing?
    - luckylion 7y ago
      What a weird way to approach that claim. The population inside or outside the USA plays a tiny role. a) China and Russia aren't involved, so strike 2bn from that b) it's not about people "existing", it's about people being a customer (or product, whatever view you prefer), facebook is obviously more widespread in a first world, high tech society where practically everyone has a smartphone than in some thirld world country where electricity is rare and unstable and c) revenue per user. statista [1] claims it's much, much higher than in the rest of the world. With that coming in at a 3:1 or 4:1 or even 5:1, that alone would make the US a heavy weight in revenue. [1] https://www.statista.com/statistics/251328/facebooks-average-revenue-per-user-by-region/ https://www.statista.com/statistics/251328/facebooks-average...
Mirioron 7y ago
The more I learn about what goes on in the world the more I ask myself "who does this benefit?" and many conspiracy theories seem to make a lot more sense. Governments and other large organizations have such a long and common history of doing shady things that it's really hard to give them the benefit of the doubt.

znpy 7y ago

> Surely this is more about political coercion than tax? What's the difference? It good anyway for the US because it would set an important precedent for future litigation on the matter of profit offshoring.

dnadler 7y ago
I think the problem is the precedent would effectively be "Do what the president says or we'll single you out for punishment".
- foolinaround 7y ago
  and it was'nt this case in previous administrations?

Shorel 7y ago

With companies that huge, everything is political. It comes with the size.

JumpCrisscross 7y ago

> including the likes of Halliburton Halliburton uses a different scheme. Its assets are physically offshore, though there are R&D and depreciation shenanigans (buy out of American profits, depreciate against onshore expenses, and tax the production where it happens). Facebook, on the other hand, claims most of its assets, which are principally intangible, live in Ireland. Its American sub is charged massive licensing fees by the Irish sub, thereby shifting away profits. Legally speaking, apples and oranges.

andrewprock 7y ago
This literally sounds like apples and apples to me, unless you really think "cloud computing" occurs in space or something. If the servers are in Ireland, then their physical assets are offshore.
- JumpCrisscross 7y ago
  > If the servers are in Ireland, then their physical assets are offshore This is correct. But the fraction of assets which are physical are high for Halliburton and low for Facebook.
  - andrewprock 7y ago
    Data is a physical asset. I'm pretty sure that is their largest asset class.
- ahouse101 7y ago
  Except, the vast majority of Facebook's servers aren't in Ireland. They couldn't be for the platform to work. There is a datacenter in Ireland, but there are 11 datacenters in the US. I guarantee the majority of data and compute power is in those US datacenters.

jliptzin 7y ago

As is usually the case with this administration, sometimes you can agree on things they do but it is never for the right reasons.

complianceowl 7y ago

A lot of unfounded speculation in your comment. It seems more politically-motivated than rooted in facts. Secondly, have you done your research? Surely Facebook is not the only company being targeted by the government right now. I can assure you that, surely there are more. Thirdly, as much as I might dislike an administration, I won't take the giant, speculative leap as to assume that I know exactly what they're thinking. Fourthly, if this "quietly disappears", why would you automatically assume the administration's involvement? Again, there are presidents I strongly dislike, but part of remaining objective requires grounding your position in fact. Facebook has world class lawyers. Having worked in the legal field for numerous years, I am more than positive that Facebook has made many things "quietly disappear" on their own.

davidw 7y ago
Good comment, and good way of looking at things. However, currently it's not possible to obtain a lot of facts about the inner workings of this administration, since it is effectively above the law in terms of things like subpoenas.
- hugh4life 7y ago
  The subpoenas you're talking about were purposely not taken to court.
  - AaronFriel 7y ago
    Some were, and based on the timeline provided by the District Court it was clear that it would be nearly impossible for the matter to be resolved expediently. i.e.: before the next election, which the President was alleged to have abused his power to interfere in. It would rely on Congress trusting that the Supreme Court would deviate extraordinarily from its normal process and decide a matter in a very short time. And on top of this, Congress has the power to grant subpoenas. The Supreme Court has affirmed this right since the 19th Century and it's absurd that defenders of the President keep insisting that every subpoena must be fought in court, all the way up to final appeal, in order to be valid. That is expressly not what Courts have said in the past. See: https://www.scotusblog.com/2019/07/cases-and-controversies-congress-the-subpoena-power-and-a-legislative-purpose/ https://www.scotusblog.com/2019/07/cases-and-controversies-c...

jakemal 7y ago

Does the US administration have the authority over the IRS to file and pull the suits at their will?

adventured 7y ago
No. That won't stop accusations of influence however. Each side believes that when the other side is in the White House they use the IRS to go after political enemies. Republicans particularly were very loud in accusing Clinton and Obama of using the IRS to go after people and groups. For example: https://en.wikipedia.org/wiki/IRS_targeting_controversy https://en.wikipedia.org/wiki/IRS_targeting_controversy
three_seagrass 7y ago
The IRS is a part of the Dept. of Treasury, which is run by Steven Mnuchin, a member of Donald Trump's cabinet.
jellicle 7y ago
Yes. The commissioner of the IRS is appointed by the President (current one appointed by Trump) and can be dismissed at any time without cause. So if you want to continue in that role, you will do what the President wishes. You can always resign if you find the instructions not to your liking, of course. Richard Nixon demanded that the IRS investigate his enemies, but the IRS commissioner at the time refused to do so and eventually testified against Nixon on this issue.

sp332 7y ago

It was started under the last administration. After going for four years, it's a bit late to "quietly disappear". https://money.cnn.com/2016/07/29/technology/facebook-irs-penalty/index.html https://money.cnn.com/2016/07/29/technology/facebook-irs-pen...

krtong 7y ago

i disagree on pretty much every underlying supposition here: the tax evasion whataboutism, “why facebook when everybody evades taxes?” US allowing these other companies to offshore profits, as if the IRS has the ability to, at any point, ask for that money back; The government having any use for the facebook; facebook being capable of coercion/ memes and advertising having any effect on the way people vote. We know people read what they want into political media. the content may affect your experience on facebook but Facebook has not been proven to have any effect on the ballots. Facebook was probably caught in the act. IRS probably found some legal loophole to actually sue facebook and has not yet found one for google, etc. whats more important to the irs? Getting facebook to change its content policies which would have zero effect on this upcoming election given everyone already knows how theyre going to vote, or 9 billion dollars?

wpietri 7y ago

Are you saying Facebook isn't doing its bidding on political advertising? From what I've seen, FB has been the most welcoming of the social media platforms.

gowld 7y ago

Not the same ballpark. https://www.macrotrends.net/stocks/charts/HAL/halliburton/net-income https://www.macrotrends.net/stocks/charts/HAL/halliburton/ne... https://www.macrotrends.net/stocks/charts/FB/facebook/net-income https://www.macrotrends.net/stocks/charts/FB/facebook/net-in... https://www.macrotrends.net/stocks/stock-comparison?s=net-income&axis=single&comp=HAL:FB https://www.macrotrends.net/stocks/stock-comparison?s=net-in...

mc32 7y ago

Don’t you think if it were political they’d go after Twitter or Reddit who are stricter about suspending and banning accounts and so on?

ahouse101 7y ago
Twitter has already banned political advertising, and Reddit simply doesn't have the audience that Facebook does (and being a pseudonymous platform is a different paradigm).
- mc32 7y ago
  I think they banned paying for political ads but not political ads that I or anyone might share (like sharing a Sanders clip)? The latter would of course be a serious infringement on expression.

markus_zhang 7y ago

Guys, everything at that level, regardless of reasons, are political...it has nothing to do with right and wrong, just interests. Of course it has to be packaged with good reasons otherwise people won't buy it, but again very often they don't bother to give good reasons and push through anyway. That said, I do believe that tackling offshore revenue is a good move.

pgt 7y ago

$9B looks pretty economically-focused to me.

deleted 7y ago

[deleted]

onetimemanytime 7y ago

Not sure about your accusation, it might be true, I can't rule it out. After all, agencies can pick and choose who to target, and we are all seeing the political climate today. BUT, on the other hand, IRS has to win this one case and all others will start negotiating. Once this is declared illegal, it's over for all. So they had to pick one case.

throwawaymanbot 7y ago

Agree 100%.

6510 7y ago

If any company does it they all must do it. Punishment has to start some place.

StreamBright 7y ago

Are you implying in the US the law is uphold only on political basis?

101404 7y ago

> The lawsuit was originally filed in 2016 and widely discussed at that time. What was the "coercion" in 2016 about? Tin foil hats?