9 ms·

> Why should tax payers bail out a tax avoiding company? I think that depends on our answer to the prior question, "Why should tax payers bail out any company?

> Why should tax payers bail out a tax avoiding company? I think that depends on our answer to the prior question, "Why should tax payers bail out any company?" If the answer is "because we like them and we feel a patriotic/moral/righteous duty to help them", then the distinction between tax-paying and tax-avoiding companies does seem relevant. But if the answer is "to help workers keep their jobs", then the distinction might not be relevant.

sanderjd 7y ago
What if the answer is "to strike a balance between many workers being able to keep their jobs and disincentivizing tax-avoidance"?
- oconnor663 7y ago
  That could be the real answer, for sure. Or the aggregate answer, maybe, in the sense of "we need to do X, but can't do too much of Y, because then voters will notice and get angry." In that case, it might not be a deliberate choice at all, just the reality of politics in a democracy. If it was a deliberate choice, my instinct would be that designing one policy with a dual mandate sounds a lot more complicated and less effective than designing two policies. It's a lot simpler to target a bailout to saving jobs only, say, and then separately change the tax code to disincentivize tax havens. That would also separate the part that needs to be done urgently, from the part we could do whenever.
- jmckib 7y ago
  The best way to disincentive tax avoidance would be to not allow it in the first place. A one-off policy like this punishes tax avoidance without necessarily discouraging it in the future. It depends on how likely businesses think it is for something like this to happen again.
  - cies 7y ago
    I think there is a lot of lobbying for tax avoidance. But maybe that's just my perception of govts using democracy as a banner while in reality policy is much more influenced by lobby effort than voters sentiment.
    - jmckib 7y ago
      I'm sure you're right. Lobbying for tax avoidance is a classic example of rent-seeking. I'm just trying to point out that this is an empty gesture from the government. It makes people feel good but it doesn't really prevent tax avoidance in the future. If that was the goal, there's a much more direct way to do it.
komali2 7y ago
The government has unilateral ability to invent jobs and even invent money if the goal is to help workers keep their jobs and/or remain fed and housed. So I feel that no company should get a bailout. If they fail, they fail, and the government can scoop up the workers and create an agency or just government-staked company that does the same thing, find some work in the country that needs doing and put the workers on it, or stipend the workers until they find a new job. Of course, that means the failed company's executive board has to also find a way to actually add value...
- Certhas 7y ago
  For historic reasons states have built systems that prevent normal governments from inventing money at scale: Independent Central Banks. It's of course an important ongoing debate in economics whether this is still appropriate, but it's unrealistic to expect governments to so dramatically alter the fundamental structure of monetary policy. That said, of course it's even more unrealistic to expect them to do so absent a massive external shock.
  - cies 7y ago
    > For historic reasons states have built systems that prevent normal governments from inventing money at scale: Independent Central Banks. Could you explain this? I think the CB system does not quite prevent money creation, it just makes it less transparent. Inventing a jargon to nice sounding words to hide the creation of money (yes I look at you "quantative easing") also does not help. If govts wanted to limit their power to create money, they could have made some constitutional law or smth. I feel the CB system is more an invention by the bank(er)s, than by govts. If you look at the timing and trickery involved in singing the CBs into law all over the world, you will see this is not something done with full governmental/public awareness and consent. To the contrary.
    - kortilla 7y ago
      QE still is recognized as a liability on the balance sheet and funds have to be raised and repaid via treasury bonds. That’s actually quite a long ways away from arbitrary printing.
kleiba 7y ago
There is some truth to that line of thought. Either it is legal to avoid taxes, then no distinction should be made. Or it is illegal, in which they should be persecuted. But making this distinction as a means to "punish" certain companies seems to conflate two unrelated issues.
- klyrs 7y ago
  Bailouts are a reward. Not getting a reward is not a punishment. If you buy a lottery ticket and win, your neighbor was not punished for not buying a ticket.
  - oconnor663 7y ago
    The point I'm trying to drive at is that bailouts are not a reward. If they were a reward, we wouldn't wait until emergencies to issue them. Rather, they're an emergency response, and in that sense they should really be optimized for effectively addressing the emergency, regardless of what feels fair.
    - snovv_crash 7y ago
      It's not that. The issue is that companies have figured out that ups and downs happen, so if they sail close enough to the wind they capture the upside while their limited liability and bailouts protect them from the downside. Privatize profit, socialize risk. The people they are placing that risk onto are not obliged to accept it.
    - int_19h 7y ago
      Just like there aren't enough masks and ventilators to go around for the patients, there's also not enough money to bail everybody out. Hence, triage.
  - deleted 7y ago
    [deleted]
  - kleiba 7y ago
    That's just semantics. Whether you see it as a reward for some or a punishment for others is besides the point. The argument is about companies getting treated unequally with no just cause.
Entalpi 7y ago
Because keeping jobs is important as it is harder to create them. Joblosses are talent moving away. Shops that will never reopen.
arcticbull 7y ago
> "because we like them and we feel a patriotic/moral/righteous duty to help them" Sounds like an abusive relationship. Again, if a company wants to be bailed out by the tax payer, I don't think it's a stretch to ask that they pay taxes. Otherwise it's like me, a foreigner with no connection to Denmark other than that I've 'helped the economy' when I went on vacation there last year asking for a bailout. > But if the answer is "to help workers keep their jobs", then the distinction might not be relevant. In many European countries, social safety nets exist so you don't have to reward cancerous businesses for terrible business practices, while still ensuring individuals are looked after in the event things go sideways.
- arcticbull 7y ago
  Just replying to myself, I was incredulous that cruise lines were requesting a bailout from the US taxpayer. They've been registering their ships in Panama, the BVI and Liberia to avoid minimum wage law, labor laws and paying taxes. They make staff work 8-20 hours a day 7 days a week for months on end, paying well below market wages. [1] Need a bailout? Ask the Liberians. Similarly, these companies should be asking for bailouts from the tax havens in which they are registered. Surely all those "registration fees" they've been paying to avoid taxes are being kept safely for just such an occasion. None of this is making me feel super patriotic/moral/righteous duty for them. [1] https://www.businessinsider.com/cruise-line-workers-reveal-grueling-schedules-2019-2 https://www.businessinsider.com/cruise-line-workers-reveal-g...
  - Aunche 7y ago
    > I was incredulous that cruise lines were requesting a bailout from the US taxpayer. Why wouldn't you expect them to ask for free money? It doesn't cost them anything. They didn't receive the bailouts for the reasons you mentioned.
    - arcticbull 7y ago
      I mean I can ask for anything I want, that doesn't make it a good look haha.
bialpio 7y ago
I think "to help workers keep their jobs" is not a good enough reason. I might be wrong but to me the main beneficiaries of companies staying open are not regular workers, but the owners / CEOs / shareholders.
SkyBelow 7y ago
>But if the answer is "to help workers keep their jobs", then the distinction might not be relevant. But this sets up a relationship where now the company can use the employee's employment as a form of hostage.
- cies 7y ago
  > this sets up a relationship where now the company can use the employee's employment as a form of hostage. Well, at least in this occasion there is an external factor at play. So the hostage situation is not premeditated as much as when a company uses the hostages as leverage when negotiating tax break.

sanderjd 7y ago

What if the answer is "to strike a balance between many workers being able to keep their jobs and disincentivizing tax-avoidance"?

oconnor663 7y ago
That could be the real answer, for sure. Or the aggregate answer, maybe, in the sense of "we need to do X, but can't do too much of Y, because then voters will notice and get angry." In that case, it might not be a deliberate choice at all, just the reality of politics in a democracy. If it was a deliberate choice, my instinct would be that designing one policy with a dual mandate sounds a lot more complicated and less effective than designing two policies. It's a lot simpler to target a bailout to saving jobs only, say, and then separately change the tax code to disincentivize tax havens. That would also separate the part that needs to be done urgently, from the part we could do whenever.
jmckib 7y ago
The best way to disincentive tax avoidance would be to not allow it in the first place. A one-off policy like this punishes tax avoidance without necessarily discouraging it in the future. It depends on how likely businesses think it is for something like this to happen again.
- cies 7y ago
  I think there is a lot of lobbying for tax avoidance. But maybe that's just my perception of govts using democracy as a banner while in reality policy is much more influenced by lobby effort than voters sentiment.
  - jmckib 7y ago
    I'm sure you're right. Lobbying for tax avoidance is a classic example of rent-seeking. I'm just trying to point out that this is an empty gesture from the government. It makes people feel good but it doesn't really prevent tax avoidance in the future. If that was the goal, there's a much more direct way to do it.

komali2 7y ago

The government has unilateral ability to invent jobs and even invent money if the goal is to help workers keep their jobs and/or remain fed and housed. So I feel that no company should get a bailout. If they fail, they fail, and the government can scoop up the workers and create an agency or just government-staked company that does the same thing, find some work in the country that needs doing and put the workers on it, or stipend the workers until they find a new job. Of course, that means the failed company's executive board has to also find a way to actually add value...

Certhas 7y ago
For historic reasons states have built systems that prevent normal governments from inventing money at scale: Independent Central Banks. It's of course an important ongoing debate in economics whether this is still appropriate, but it's unrealistic to expect governments to so dramatically alter the fundamental structure of monetary policy. That said, of course it's even more unrealistic to expect them to do so absent a massive external shock.
- cies 7y ago
  > For historic reasons states have built systems that prevent normal governments from inventing money at scale: Independent Central Banks. Could you explain this? I think the CB system does not quite prevent money creation, it just makes it less transparent. Inventing a jargon to nice sounding words to hide the creation of money (yes I look at you "quantative easing") also does not help. If govts wanted to limit their power to create money, they could have made some constitutional law or smth. I feel the CB system is more an invention by the bank(er)s, than by govts. If you look at the timing and trickery involved in singing the CBs into law all over the world, you will see this is not something done with full governmental/public awareness and consent. To the contrary.
  - kortilla 7y ago
    QE still is recognized as a liability on the balance sheet and funds have to be raised and repaid via treasury bonds. That’s actually quite a long ways away from arbitrary printing.

kleiba 7y ago

There is some truth to that line of thought. Either it is legal to avoid taxes, then no distinction should be made. Or it is illegal, in which they should be persecuted. But making this distinction as a means to "punish" certain companies seems to conflate two unrelated issues.

klyrs 7y ago
Bailouts are a reward. Not getting a reward is not a punishment. If you buy a lottery ticket and win, your neighbor was not punished for not buying a ticket.
- oconnor663 7y ago
  The point I'm trying to drive at is that bailouts are not a reward. If they were a reward, we wouldn't wait until emergencies to issue them. Rather, they're an emergency response, and in that sense they should really be optimized for effectively addressing the emergency, regardless of what feels fair.
  - snovv_crash 7y ago
    It's not that. The issue is that companies have figured out that ups and downs happen, so if they sail close enough to the wind they capture the upside while their limited liability and bailouts protect them from the downside. Privatize profit, socialize risk. The people they are placing that risk onto are not obliged to accept it.
  - int_19h 7y ago
    Just like there aren't enough masks and ventilators to go around for the patients, there's also not enough money to bail everybody out. Hence, triage.
- deleted 7y ago
  [deleted]
- kleiba 7y ago
  That's just semantics. Whether you see it as a reward for some or a punishment for others is besides the point. The argument is about companies getting treated unequally with no just cause.

Entalpi 7y ago

Because keeping jobs is important as it is harder to create them. Joblosses are talent moving away. Shops that will never reopen.

arcticbull 7y ago

> "because we like them and we feel a patriotic/moral/righteous duty to help them" Sounds like an abusive relationship. Again, if a company wants to be bailed out by the tax payer, I don't think it's a stretch to ask that they pay taxes. Otherwise it's like me, a foreigner with no connection to Denmark other than that I've 'helped the economy' when I went on vacation there last year asking for a bailout. > But if the answer is "to help workers keep their jobs", then the distinction might not be relevant. In many European countries, social safety nets exist so you don't have to reward cancerous businesses for terrible business practices, while still ensuring individuals are looked after in the event things go sideways.

arcticbull 7y ago
Just replying to myself, I was incredulous that cruise lines were requesting a bailout from the US taxpayer. They've been registering their ships in Panama, the BVI and Liberia to avoid minimum wage law, labor laws and paying taxes. They make staff work 8-20 hours a day 7 days a week for months on end, paying well below market wages. [1] Need a bailout? Ask the Liberians. Similarly, these companies should be asking for bailouts from the tax havens in which they are registered. Surely all those "registration fees" they've been paying to avoid taxes are being kept safely for just such an occasion. None of this is making me feel super patriotic/moral/righteous duty for them. [1] https://www.businessinsider.com/cruise-line-workers-reveal-grueling-schedules-2019-2 https://www.businessinsider.com/cruise-line-workers-reveal-g...
- Aunche 7y ago
  > I was incredulous that cruise lines were requesting a bailout from the US taxpayer. Why wouldn't you expect them to ask for free money? It doesn't cost them anything. They didn't receive the bailouts for the reasons you mentioned.
  - arcticbull 7y ago
    I mean I can ask for anything I want, that doesn't make it a good look haha.

bialpio 7y ago

I think "to help workers keep their jobs" is not a good enough reason. I might be wrong but to me the main beneficiaries of companies staying open are not regular workers, but the owners / CEOs / shareholders.

SkyBelow 7y ago

>But if the answer is "to help workers keep their jobs", then the distinction might not be relevant. But this sets up a relationship where now the company can use the employee's employment as a form of hostage.

cies 7y ago
> this sets up a relationship where now the company can use the employee's employment as a form of hostage. Well, at least in this occasion there is an external factor at play. So the hostage situation is not premeditated as much as when a company uses the hostages as leverage when negotiating tax break.