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Some would see a contradiction between that impulse and how companies from Y-Combinator might use a tax-reduction scheme. Some could even see a connection betw

by bertil 7y ago

Some would see a contradiction between that impulse and how companies from Y-Combinator might use a tax-reduction scheme. Some could even see a connection between tax lawyers introduced by Y-Combinator to founders and that practice. I’m not saying that _has_ to be the case but "tax-avoidance / tax-optimisation / complex international structure / negotiation with government keen to offer low tax deal" is a common point made against large tech companies. I’m surprised why Sam doesn’t connect that point to his point, or confront that issue directly.

philwelch 7y ago
The connection is extremely indirect. If companies voluntarily pay more tax than they are legally required to, the vast majority of that money will go to Medicare, Social Security, defense, and interest on the national debt, with only a tiny amount going to scientific research. Conversely, if companies use these "loopholes" to reduce their tax liability by $X, they can directly donate all of that money for scientific research. Going beyond that for a moment, some corporations voluntarily foregoing these loopholes will not even be enough for the US federal government to be able to afford their existing obligations, let alone increase spending on research or anything else. Furthermore, in a competitive environment, any company that does forego these loopholes is likely to find itself losing out to a competitor that uses these loopholes to undercut their prices. That leaves closing the loopholes altogether, which is something the government would have to do. But that's not even enough to address the deficit--the government would have to either cut spending or raise taxes elsewhere. And it's entirely possible that closing corporate tax loopholes isn't even a good idea regardless. Corporations are legal straw men that, in most cases, ultimately pass on their earnings to their shareholders. A corporate tax effectively taxes all shareholders the same--in other words, the retired grandmother pays the same amount as the billionaire investor. In other words, corporate taxes can actually be far less progressive than individual taxes.
- bertil 7y ago
  I would have loved Sam to make that argument explicitly: it’s not his style to talk about government money as if it grows on trees. I suspect he wouldn’t have looked at the overall distribution but where to assign marginal tax revenues.
  - philwelch 7y ago
    Corporate taxes are only 4.4% of US tax revenue[1], there's no possible way that corporate tax avoidance would make a significant difference. Especially compared to what most successful startups end up doing, which is to employ people and pay them salaries that are within the upper tax brackets. Respectfully, you seem to be trying to draw a strong connection here where it's not obvious that one exists. [1] https://taxfoundation.org/us-tax-revenue-by-tax-type-2020/ https://taxfoundation.org/us-tax-revenue-by-tax-type-2020/
    - bertil 7y ago
      > there's no possible way that corporate tax avoidance would make a significant difference Citation needed.
      - philwelch 7y ago
        I already provided one, what are you talking about?
        bertil 7y ago
        You are saying that what’s left after tax optimisation is small. Not that the potential revenue if corporate benefits were taxed effectively is small. Do you have an estimate of the revenue that is declared in low-tax jurisdiction?

by bertil 7y ago

philwelch 7y ago

The connection is extremely indirect. If companies voluntarily pay more tax than they are legally required to, the vast majority of that money will go to Medicare, Social Security, defense, and interest on the national debt, with only a tiny amount going to scientific research. Conversely, if companies use these "loopholes" to reduce their tax liability by $X, they can directly donate all of that money for scientific research. Going beyond that for a moment, some corporations voluntarily foregoing these loopholes will not even be enough for the US federal government to be able to afford their existing obligations, let alone increase spending on research or anything else. Furthermore, in a competitive environment, any company that does forego these loopholes is likely to find itself losing out to a competitor that uses these loopholes to undercut their prices. That leaves closing the loopholes altogether, which is something the government would have to do. But that's not even enough to address the deficit--the government would have to either cut spending or raise taxes elsewhere. And it's entirely possible that closing corporate tax loopholes isn't even a good idea regardless. Corporations are legal straw men that, in most cases, ultimately pass on their earnings to their shareholders. A corporate tax effectively taxes all shareholders the same--in other words, the retired grandmother pays the same amount as the billionaire investor. In other words, corporate taxes can actually be far less progressive than individual taxes.

bertil 7y ago
I would have loved Sam to make that argument explicitly: it’s not his style to talk about government money as if it grows on trees. I suspect he wouldn’t have looked at the overall distribution but where to assign marginal tax revenues.
- philwelch 7y ago
  Corporate taxes are only 4.4% of US tax revenue[1], there's no possible way that corporate tax avoidance would make a significant difference. Especially compared to what most successful startups end up doing, which is to employ people and pay them salaries that are within the upper tax brackets. Respectfully, you seem to be trying to draw a strong connection here where it's not obvious that one exists. [1] https://taxfoundation.org/us-tax-revenue-by-tax-type-2020/ https://taxfoundation.org/us-tax-revenue-by-tax-type-2020/
  - bertil 7y ago
    > there's no possible way that corporate tax avoidance would make a significant difference Citation needed.
    - philwelch 7y ago
      I already provided one, what are you talking about?
      - bertil 7y ago
        You are saying that what’s left after tax optimisation is small. Not that the potential revenue if corporate benefits were taxed effectively is small. Do you have an estimate of the revenue that is declared in low-tax jurisdiction?