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Those are not "weird tricks". Those are tax incentives whose intent is obvious (make the environment better) and where your friend's using the tax incentive dir

Those are not "weird tricks". Those are tax incentives whose intent is obvious (make the environment better) and where your friend's using the tax incentive directly aligns with why that tax rule is there. Your friend and the tax law are clearly doing what they are clearly designed to do, which benefits not just him but us all. However, if your friend's "weird trick" is something like a double Irish [1], then it's not at all clear that the applicable tax laws are intended to be used that way or that your friend's choice to use that loophole is good for anyone but your friend. [1]: https://en.wikipedia.org/wiki/Double_Irish_arrangement https://en.wikipedia.org/wiki/Double_Irish_arrangement

AnthonyMouse 7y ago
> Your friend and the tax law are clearly doing what they are clearly designed to do, which benefits not just him but us all. As we know the mortgage interest tax deduction was intended to promote home ownership. A lot of people who would have bought a home anyway then go out and take a bigger home loan in order to use the money they would have put down as principal to e.g. buy a car. The tax provision clearly wasn't intended to promote car ownership, so all of those people should be in jail, right? > However, if your friend's "weird trick" is something like a double Irish [1], then it's not at all clear that the applicable tax laws are intended to be used that way or that your friend's choice to use that loophole is good for anyone but your friend. Being not at all clear is the circumstance where you most have to look at the details, not where you get to ignore them based on whether you like the accused. Money is fungible. International profit doesn't have a clearly defined jurisdiction. This isn't trivial. "Do what I meant not what I said" is a cop out. If you want better tax laws, change them instead of pretending the existing ones aren't what they are. But governments don't actually want to do that, because if you had clear tax laws that caused international corporations to pay more tax for operating in your jurisdiction, that would give them a major financial incentive to move somewhere else. Everybody wants to eat their cake and have it too. Pass laws that let corporations avoid your high nominal tax rates which makes them stay in your country, then get offended when they use them.
- jeremysalwen 7y ago
  > The tax provision clearly wasn't intended to promote car ownership, so all of those people should be in jail, right? That's a red herring. Once he receives the money from the tax break (the reward) in exchange for buying a house (the incentivized activity), what he does with that money is completely irrelevant, unless it somehow involves reducing home ownership.
  - AnthonyMouse 7y ago
    But it wasn't in exchange for buying a house. He was buying the house anyway, what he did was to take out a larger home loan and use the extra money to buy a car. This is the same general problem as assigning a jurisdiction to profits. Money is fungible. If you take out a $30,000 "home loan" and buy a $30,000 car, did you borrow $30,000 to buy a house or to buy a car? If you pay a million dollars to develop software in the US and then license it for ten million dollars in Europe, do you have a nine million dollar profit in the US or in Europe? Notice how the US is going to want to claim it's in the US and Europe is going to want to claim it's in Europe, and the company is going to want to claim it's wherever the tax rate is lower, but none of that is an answer to the question.

AnthonyMouse 7y ago

> Your friend and the tax law are clearly doing what they are clearly designed to do, which benefits not just him but us all. As we know the mortgage interest tax deduction was intended to promote home ownership. A lot of people who would have bought a home anyway then go out and take a bigger home loan in order to use the money they would have put down as principal to e.g. buy a car. The tax provision clearly wasn't intended to promote car ownership, so all of those people should be in jail, right? > However, if your friend's "weird trick" is something like a double Irish [1], then it's not at all clear that the applicable tax laws are intended to be used that way or that your friend's choice to use that loophole is good for anyone but your friend. Being not at all clear is the circumstance where you most have to look at the details, not where you get to ignore them based on whether you like the accused. Money is fungible. International profit doesn't have a clearly defined jurisdiction. This isn't trivial. "Do what I meant not what I said" is a cop out. If you want better tax laws, change them instead of pretending the existing ones aren't what they are. But governments don't actually want to do that, because if you had clear tax laws that caused international corporations to pay more tax for operating in your jurisdiction, that would give them a major financial incentive to move somewhere else. Everybody wants to eat their cake and have it too. Pass laws that let corporations avoid your high nominal tax rates which makes them stay in your country, then get offended when they use them.

jeremysalwen 7y ago
> The tax provision clearly wasn't intended to promote car ownership, so all of those people should be in jail, right? That's a red herring. Once he receives the money from the tax break (the reward) in exchange for buying a house (the incentivized activity), what he does with that money is completely irrelevant, unless it somehow involves reducing home ownership.
- AnthonyMouse 7y ago
  But it wasn't in exchange for buying a house. He was buying the house anyway, what he did was to take out a larger home loan and use the extra money to buy a car. This is the same general problem as assigning a jurisdiction to profits. Money is fungible. If you take out a $30,000 "home loan" and buy a $30,000 car, did you borrow $30,000 to buy a house or to buy a car? If you pay a million dollars to develop software in the US and then license it for ten million dollars in Europe, do you have a nine million dollar profit in the US or in Europe? Notice how the US is going to want to claim it's in the US and Europe is going to want to claim it's in Europe, and the company is going to want to claim it's wherever the tax rate is lower, but none of that is an answer to the question.