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Why is this a surprise to anyone? The bigger the company, the more incentive it has to create a tax-avoidance strategy, and the more resources it has to do so s

• grecy 7y ago
  It's a clear indicator we need to change the laws so it isn't legal.
  • unreal37 7y ago
    It's impossible. We live in a global world. How can the US enact a law that a company in Seychelles is forced to follow?
    • grecy 7y ago
      They could easily make laws about how much tax a company has to pay in the US if it wants to do business and earn revenue/profits in the US, regardless of where it's headquartered.
    • opless 7y ago
      Well I don't know about the US, but the UK enacted new legislation to stop a citizen doing certain (abhorrent) things in countries where it was quite legal to do so. This was after a huge media outrage about a certain pop star allegedly being a sexual predator in countries where it was legal. The EU also forced those cookie notices on pages and GPDR about movement of data globally. Being a holocaust denier will get you arrested in Germany, even if you broke that law in another country. That's just three examples off the top of my head.
• mLuby 7y ago
  Legality doesn't imply morality, as in this case where avoiding taxes is legal but immoral.
  • deleted 7y ago
    [deleted]
  • kube-system 7y ago
    I'm just about ready to file my taxes -- which deductions are the immoral ones?
    • DangitBobby 7y ago
      The ones that you lobbied for and that ultimately cause significant underfunding and dysfunction at all levels of government.
      • deleted 7y ago
        [deleted]
    • z3t4 7y ago
      Move (on paper) to a country that doesn't tax offshore, then base your company on some island. Have offices in every major city, then send all net income to your offshore company. Make max tax reduction in the countries you operate and get financial aid from the tax money others pay.
      • kube-system 7y ago
        Avoiding taxes by relocating is not just for big businesses. It’s super easy to do today in the golden age of remote work. Plenty of people have left CA for UT/NV to do the same.
        • ivalm 7y ago
          But then that’s a physical move. Plenty of companies have their executives/leadership in a location that is different from the taxable entity. If all the headquarters and executives physically resided in Caiman islands or Ireland or even Delaware, it would be different.
• chaps 7y ago
  Can you explain your reasoning why you think it's not immoral? Edit: why was this downvoted? HN is a site where not explaining yourself thoroughly often leads to mod intervention. The parent post didn't explain themselves even remotely.
  • listenallyall 7y ago
    Because nothing about taxes has anything to do with morality. In the USA Texas, Nevada, Wyoming and a handful of other states do not levy a state tax on corporations. Are corps in these states less "moral" than companies in California or New Jersey? In 2017 Hungary lowered its corporate tax rate from 19% to 9%. Did Hungarian companies become 52% less moral overnight? https://tradingeconomics.com/hungary/corporate-tax-rate https://tradingeconomics.com/hungary/corporate-tax-rate
    • GcVmvNhBsU 7y ago
      “Only a Sith deals in absolutes”. If businesses operated in a vacuum from politics, then maybe you could have an argument that taxes have “nothing” to do with morality. In the real world, businesses are lobbying for changes to the tax codes to benefit them, holding disingenuous or rigged contests to extract the maximum concessions from tax authorities, relocating or transferring intellectual property and licensing it back to subholdings to min/max gains and losses, and a myriad of other schemes. To directly answer the questions you posed: Corporations which incorporate in a state like South Dakota or Delaware to take advantage of incorporation policies, with no intention of operating primarily in those states, the majority of their business conducted in a higher tax state like California, and trying to avoid contributing back to the society of the states that they primarily operate in - yes, those corporations are less moral. They are less moral than companies which are incorporated in e.g. South Dakota where the owner lives in South Dakota, and serves primarily South Dakota residents. Hungary is harder to answer. Did the corporations of Hungary lobby for lower taxes which resulted in that tax decrease? Does the tax decrease adversely impact Hungary as a whole, or was there a budget surplus which allows the state to lower the rate? Does the relaxed rate improve the lives of “normal” Hungarians? The answers to those, and probably more, questions would guide the answer to the question of morality. Anyway, this is a long winded way of saying that morality is not a binary choice. It’s the perception of right and wrong guided by context.
• adamsea 7y ago
  Why is it not immoral? My first thought would be, it is. Only a naive reading of the law reaches the conclusion that "if it's legal, it must be moral." And morality 101 is kind of, "with great power comes great responsibility." And these big corporations have great power. Therefore, avoiding their responsibility to contribute to society via taxes, even if legal, is immoral. I don't mean to imply this is black-and-white. I'm sure these corporations are smart enough to figure out a reasonable balance between paying as little as legally possible, versus as much as legally possible. I'm curious to hear your logic why it is not immoral for a major corporation to attempt to pay as little tax as possible. Especially when we consider that, via lobbying, corporations have a huge influence on the laws to which they are subject! Not only do they have great latitude within the law, they also have significant influence in creating the laws which govern them! More influence than the citizens of the U.S. where many of these corporations operate.
• oblib 7y ago
  It may not be illegal, but could certainly be immoral. Consider... If I pay for a politician to run for office and they get elected and then I write a bill that lowers my taxes for him to push through into law, and then I donate to all (or even just enough of) those in congress to vote for it and it gets passed that may not illegal (right now) but many (me included) would certainly consider it immoral. For example... if that reduction in taxes collected was offset by firing hundreds of workers in, say, the Center for Disease Control, and then we are left unprepared for a serious and deadly viral disease outbreak and 100s of 1000s of citizens die as a result... yeah, that qualifies as immoral for me.
  • unreal37 7y ago
    It would seem the solution would be to remove the ability to "pay for" politicians. The influence of money on politics is the blame here.
    • fma 7y ago
      Nah - the problem is the money is coming from the wrong source. Today, corporations are giving enough money to incentivize politicians to work for them. What we need is for citizens to give enough politicians to incentivize them to work for us. That is the premise of Andrew Yang's Democracy dollars. Every American gets $100 to donate to a campaign.
  • opless 7y ago
    Companies are amoral optimising for shareholder value/return. It's not that they don't want to pay tax, it's just better for shareholder value that they don't.
    • GaryNumanVevo 7y ago
      If I'm a company whose value is hypothetically tied to the number of people I kill. No hard feelings, companies are amoral. If I kill you, that's just business.
      • 7y ago
• elgfare 7y ago
  I don't know about immoral, but it's quite obviously "wrong" on some level.
  • listenallyall 7y ago
    If you live in the US... is it immoral when you take the standard deduction on your 1040? Or deduct for each dependent living in your household? Or take the mortgage interest deduction? Or deduct health expenses?
    • elgfare 7y ago
      https://en.m.wikipedia.org/wiki/Letter_and_spirit_of_the_law https://en.m.wikipedia.org/wiki/Letter_and_spirit_of_the_law
• happytoexplain 7y ago
  The "why are people surprised" line is a huge red flag for me that a person is not arguing in good faith. Accusing people of being "surprised" as an implication of naivete seems to be a very common tool of redirection when people are defending something perceived by others to be immoral or otherwise harmful. I'm not sure why such a particular angle became so common, since it seems so obvious to me that what they are calling "surprise" is indignation/anger. It seems to be exaggerated from the general notion that the stronger a reaction is, the newer it is, but obviously that's faulty. I may hear the same story of wealthy and powerful people behaving badly every day, but it doesn't make the behavior any more acceptable with each occurrence, and so my anger does not subside, no matter how un-surprised I am.
  • wutbrodo 7y ago
    > The "why are people surprised" line is a huge red flag for me that a person is not arguing in good faith. Accusing people of being "surprised" as an implication of naivete seems to be a very common tool of redirection when people are defending something perceived by others to be immoral or otherwise harmful. This is a bizarrely uncharitable take. Posting an article implies some form of novelty, which is why we don't see articles posted saying things like "if you don't water your plants, they die" or "companies with large valuations tend to have high profits or revenue". The parent comment isn't claiming that the lack of novelty makes an otherwise-bad thing acceptable; he's saying that any reasonable model of the current state of corporate taxation should already have assumed something like this. He _separately_ makes the claim that legally minimizing one's tax burden isn't immoral; this is a claim that you can disagree with, but pretending that he's dismissing this entirely due to its lack of novelty is a bizarre non sequitur.
    • mebr 7y ago
      I side with the comment above yours. The model you are talking about in my mind has no such assumption, from the experience of owning a tiny company. So this make me angry and is novel every time I read more about it.
• HarryHirsch 7y ago
  Avoiding taxes by legal means, is neither illegal nor immoral That's an assertion. Getting your congressman to treat you more favourably than others will certainly benefit you, but it's not guaranteed that everyone else will also benefit.
• rubber_duck 7y ago
  > Avoiding taxes by legal means, is neither illegal nor immoral. No matter where you stand in the hypothetical debates on taxation and public spending in the real world it boils down to government will spend tax money, taxes should adjust for the ability to participate and avoiding them just shifts the burden from people that should be able to afford them to others - I think this is immoral by most accounts. And IMO, arguing that it's not not worsens the problem, laws have a limited impact and will always have flaws - morality and social judgment (as absurd as these things are getting these days) are another correction mechanism for undesirable behaviour.
  • listenallyall 7y ago
    >> shifts the burden This argument falls apart when you recognize how and why companies become eligible for tax deductions. The top 3, according to the CBO, are exclusions stemming from providing health insurance, pension contributions, and capital gains & dividends. By doing so, companies actually accept a huge burden that would otherwise be left to taxpayers, like paying healthcare costs and providing an income for eligible retirees & spouses. Cap gains & dividends -- while they certainly enrich corporate management and wealthy owners -- are the primary means through which massive public pension funds (like CalPERS) provide the benefits promised to public employees. And if you want to take it further, probably the biggest incentive to get people to work in the public sector at all, is the promise of a generous pension post-retirement. (and even further -- all that money is taxed at the individual level, albeit at a different rate, but certainly not tax-free) One might even make the argument that a company that refused to provide any retirement benefits, refused to offer health insurance, and which refused to return any capital to investors, is the one that is immoral. https://www.cbo.gov/publication/52493 https://www.cbo.gov/publication/52493
    • rubber_duck 7y ago
      Tax incentives are created to stimulate one behaviour, so using them is good - but abusing those tax incentives - avoiding the behaviour they were supposed to stimulate but avoiding taxes is the immoral part. I'm seeing a decent amount of this with the recent crisis tax reliefs
• amelius 7y ago
  > Why is this a surprise to anyone? Why are you assuming that anyone is surprised? Sometimes research is conducted to confirm what we already suspect.
• mirimir 7y ago
  I agree that "[a]voiding taxes by legal means, is neither illegal nor immoral". And if that were the whole story, it'd be no surprise that those with more taxable income and resources would pay lower tax rates. It's true for individuals too. However, that's not the whole story. It all depends on tax systems that are complex and gameable. And that in turn depends on political systems that are gameable, where big players can create the tax systems that they can game. Somewhere in there we at least get to immoral.
  • listenallyall 7y ago
    The ironic part about your comment is that the exact reason the tax system is so "complex and gameable", is politicians inserting their moral values into the code. Create a pension system to provide income stability for longtime employees? Good for you, take a tax credit. Give money to charity? Good, take a tax credit. Offer health insurance? Tax credit. Invest in green energy? Tax credit. Build a factory or office in a distressed community? Tax credit. Pay for employees to go to school? Tax credit. etc. etc.
    • mirimir 7y ago
      Sure, there are many reasons to introduce tax credits and other complexity. But that doesn't mean that they're all the same.
• pas 7y ago
  Shifting more tax burden off oneself than the amount of extra tax income one's economic growth (due to the lessened tax burden) creates is immoral, because it's basically freeloading on others.
  • listenallyall 7y ago
    If you spend $10 million providing health insurance to employees, then take a tax credit of $2.1 million (based on current US corp tax rate of 21%), how exactly are you freeloading? And would your employees be better off if you abandoned that practice?
    • pas 7y ago
      Shifting is meant to be taken in a very general sense. It should include the efforts to change tax laws, to exploit loopholes in the international tax system, and so on. And, in similar vein, determining how much value one created is again a general problem. Economics is full of these problems, where the theorem/definition/principle is easy to state, but hard to compute. That said, it's not impossible to estimate these things and use those to guide policy.
      • listenallyall 7y ago
        sorry, I missed the part where you pointed out the freeloading