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"You cannot build your entire business plan on the avoidance of taxes," said Assemblyman Charles Calderon, D- Whittier, author of Assembly Bill 155 That would b

by hsmyers 16y ago

"You cannot build your entire business plan on the avoidance of taxes," said Assemblyman Charles Calderon, D- Whittier, author of Assembly Bill 155 That would be 'news' to GE...

tzs 16y ago
GE does not build its entire business plan on tax avoidance.
- GoldenMonkey 16y ago
  0 taxes on $5B in US revenue is at least a major business strategy. 975 employees dedicated to tax avoidance.
  - anamax 16y ago
    > 0 taxes on $5B in US revenue is at least a major business strategy. No, it's a result. (And, it's 0 income taxes. There are other taxes.) > 975 employees dedicated to tax avoidance. No again - compliance. Like you, GE is not obligated to pay any more taxes than the law requires. The law is complicated, GE's biz is complicated, therefore they need a lot of folks to make sure that they're complying. Unlike you, GE gets to "help" write tax laws and regulations. That's possible because "the people" want the tax system to encourage some behaviors and discourage others. The only way to stop GE from gaming the system is to stop trying to use the tax system to achieve social goals.
  - fr0sty 16y ago
    "tax avoidance" is a synonym for "tax compliance". Do you take your allowed deductions on your tax return? or use tax-deferred investment vehicles like IRAs or 401Ks? Do you report your investment losses? If so, why is your tax avoidance acceptable and GE's not?
bittermang 16y ago
One. GE didn't. http://news.yahoo.com/s/ac/20110326/bs_ac/8148778_new_york_times_gives_false_information_on_general_electrics_zero_income_tax_bill http://news.yahoo.com/s/ac/20110326/bs_ac/8148778_new_york_t... Two. Amazon didn't either. It's been the same story for ages with catalog orders, phone orders, or any other intrastate commerce. States either 1) looked the other way, because the sales weren't large enough to bother with, or 2) passed laws making the state residents responsible for tracking their sales and paying the appropriate tax, not the business. Two things changed. The Internet became a Big Deal, and the volume of sales became large enough to get legislator's attention for how they could get their hand in to the flow of money. Then, Amazon actually started doing business inside of these states in the form of affiliate programs and warehouses. It is on these two points that the fight is being contested, which state governments claim absolves them of the long standing taxation between states issue, and makes Amazon liable for sales tax revenue. They didn't intentionally build their model around dodging taxes. That was the law of the land. Don't like it? Change the law.
- kenjackson 16y ago
  That GE link though doesn't really dispute the gist of the NY Times story. Which is that they didn't pay any tax on their profit in the US. That link just goes and says that it pays payroll and sales tax, and tax in other countries. But never actually points out where GE pays tax on profits in the US. UPDATE: Much better link here http://www.propublica.org/article/setting-the-record-straight-on-ges-taxes http://www.propublica.org/article/setting-the-record-straigh... GE hasn't filed their 2010 taxes yet, but appears they will have a small tax liability. How small? We probably won't know unless they tell us, according to the article (which seems odd for a public company).
- thwarted 16y ago
  Then, Amazon actually started doing business inside of these states in the form of affiliate programs and warehouses. It is on these two points that the fight is being contested When I was involved with on-line retail, the existence of a warehouse in a state constituted having a presence in the state. We had a warehouse in NJ that we shipped from, and that was the only state we had to collect sales tax for. We delayed opening another warehouse because of the sales tax implications, but finally opened up up in NV in order to reduce shipping time and cost to the west coast. We only had to collect sales tax for those two states (I know because I wrote the code for it). Now, from what I understand, Amazon tries to get around even that by having their warehouses owned/run by a subsidiary or other entity that is not strictly Amazon but ships Amazon's items to other states (not to the state itself, otherwise this sub-company would have to collect and pay sales tax). Strictly speaking, Amazon still doesn't have a presence in the state in terms of warehouses, so until the state laws are changed to recognize these shipping/warehousing-only companies as one and the same as Amazon, there's still no sales tax to collect on a pure existence-of-business-entity in the state in the form of a warehouse. Amazon effectively outsources their warehousing and shipping to other companies -- this is actually pretty common (along with drop-shipping) in the mailorder business because running a warehouse is an expensive, capital intensive operation. Affiliate programs are outsourced services also, outsourced marketing (lead generation). Really, this comes down to an attempt to tax outsourced operations. Maybe a better way for the states to fight it is to change the zoning and the tax laws so that warehouses are taxed more aggressively (especially if they ship things out of state -- warehouses that ship intrastate would have to collect sales tax, warehouses that ship interstate would pay higher business or property taxes). IANAL and IANA-Tax-Collector.
deleted 16y ago
[deleted]
iwwr 16y ago
"You cannot build a state budget on onerous taxes." Whatever happened to saving in the good years to spend in the lean years? Wait, was it all spent on bribes and political promises?
- cagey 16y ago
  > Whatever happened to saving in the good years to spend in the lean years? Companies and families (including individuals) surely do, but has ANY government ever "saved for the lean years"? > Wait, was it all spent on bribes and political promises? I suspect an awful lot went (in)directly into corrupt government employees'/officials' pockets: remember Bell, CA? http://www.scpr.org/news/2011/03/24/former-bell-city-administrator-rizzo-arraigned-cor/ http://www.scpr.org/news/2011/03/24/former-bell-city-adminis... Power (the largely unchecked ability to spend OPM) corrupts? P.S. (from the above linked article) quick, name the party affiliation of those arraigned! I think they must be "Independents" all.
  - daniel-cussen 16y ago
    Companies and families (including individuals) surely do, but has ANY government ever "saved for the lean years"? I believe some kings have, back in the absolute monarchy days.
- Semiapies 16y ago
  Well, one way or another it was blown on spending that couldn't be sustained in a downturn.

by hsmyers 16y ago

"You cannot build your entire business plan on the avoidance of taxes," said Assemblyman Charles Calderon, D- Whittier, author of Assembly Bill 155 That would be 'news' to GE...

tzs 16y ago

GE does not build its entire business plan on tax avoidance.

GoldenMonkey 16y ago
0 taxes on $5B in US revenue is at least a major business strategy. 975 employees dedicated to tax avoidance.
- anamax 16y ago
  > 0 taxes on $5B in US revenue is at least a major business strategy. No, it's a result. (And, it's 0 income taxes. There are other taxes.) > 975 employees dedicated to tax avoidance. No again - compliance. Like you, GE is not obligated to pay any more taxes than the law requires. The law is complicated, GE's biz is complicated, therefore they need a lot of folks to make sure that they're complying. Unlike you, GE gets to "help" write tax laws and regulations. That's possible because "the people" want the tax system to encourage some behaviors and discourage others. The only way to stop GE from gaming the system is to stop trying to use the tax system to achieve social goals.
- fr0sty 16y ago
  "tax avoidance" is a synonym for "tax compliance". Do you take your allowed deductions on your tax return? or use tax-deferred investment vehicles like IRAs or 401Ks? Do you report your investment losses? If so, why is your tax avoidance acceptable and GE's not?

bittermang 16y ago

One. GE didn't. http://news.yahoo.com/s/ac/20110326/bs_ac/8148778_new_york_times_gives_false_information_on_general_electrics_zero_income_tax_bill http://news.yahoo.com/s/ac/20110326/bs_ac/8148778_new_york_t... Two. Amazon didn't either. It's been the same story for ages with catalog orders, phone orders, or any other intrastate commerce. States either 1) looked the other way, because the sales weren't large enough to bother with, or 2) passed laws making the state residents responsible for tracking their sales and paying the appropriate tax, not the business. Two things changed. The Internet became a Big Deal, and the volume of sales became large enough to get legislator's attention for how they could get their hand in to the flow of money. Then, Amazon actually started doing business inside of these states in the form of affiliate programs and warehouses. It is on these two points that the fight is being contested, which state governments claim absolves them of the long standing taxation between states issue, and makes Amazon liable for sales tax revenue. They didn't intentionally build their model around dodging taxes. That was the law of the land. Don't like it? Change the law.

kenjackson 16y ago
That GE link though doesn't really dispute the gist of the NY Times story. Which is that they didn't pay any tax on their profit in the US. That link just goes and says that it pays payroll and sales tax, and tax in other countries. But never actually points out where GE pays tax on profits in the US. UPDATE: Much better link here http://www.propublica.org/article/setting-the-record-straight-on-ges-taxes http://www.propublica.org/article/setting-the-record-straigh... GE hasn't filed their 2010 taxes yet, but appears they will have a small tax liability. How small? We probably won't know unless they tell us, according to the article (which seems odd for a public company).
thwarted 16y ago
Then, Amazon actually started doing business inside of these states in the form of affiliate programs and warehouses. It is on these two points that the fight is being contested When I was involved with on-line retail, the existence of a warehouse in a state constituted having a presence in the state. We had a warehouse in NJ that we shipped from, and that was the only state we had to collect sales tax for. We delayed opening another warehouse because of the sales tax implications, but finally opened up up in NV in order to reduce shipping time and cost to the west coast. We only had to collect sales tax for those two states (I know because I wrote the code for it). Now, from what I understand, Amazon tries to get around even that by having their warehouses owned/run by a subsidiary or other entity that is not strictly Amazon but ships Amazon's items to other states (not to the state itself, otherwise this sub-company would have to collect and pay sales tax). Strictly speaking, Amazon still doesn't have a presence in the state in terms of warehouses, so until the state laws are changed to recognize these shipping/warehousing-only companies as one and the same as Amazon, there's still no sales tax to collect on a pure existence-of-business-entity in the state in the form of a warehouse. Amazon effectively outsources their warehousing and shipping to other companies -- this is actually pretty common (along with drop-shipping) in the mailorder business because running a warehouse is an expensive, capital intensive operation. Affiliate programs are outsourced services also, outsourced marketing (lead generation). Really, this comes down to an attempt to tax outsourced operations. Maybe a better way for the states to fight it is to change the zoning and the tax laws so that warehouses are taxed more aggressively (especially if they ship things out of state -- warehouses that ship intrastate would have to collect sales tax, warehouses that ship interstate would pay higher business or property taxes). IANAL and IANA-Tax-Collector.

deleted 16y ago

[deleted]

iwwr 16y ago

"You cannot build a state budget on onerous taxes." Whatever happened to saving in the good years to spend in the lean years? Wait, was it all spent on bribes and political promises?

cagey 16y ago
> Whatever happened to saving in the good years to spend in the lean years? Companies and families (including individuals) surely do, but has ANY government ever "saved for the lean years"? > Wait, was it all spent on bribes and political promises? I suspect an awful lot went (in)directly into corrupt government employees'/officials' pockets: remember Bell, CA? http://www.scpr.org/news/2011/03/24/former-bell-city-administrator-rizzo-arraigned-cor/ http://www.scpr.org/news/2011/03/24/former-bell-city-adminis... Power (the largely unchecked ability to spend OPM) corrupts? P.S. (from the above linked article) quick, name the party affiliation of those arraigned! I think they must be "Independents" all.
- daniel-cussen 16y ago
  Companies and families (including individuals) surely do, but has ANY government ever "saved for the lean years"? I believe some kings have, back in the absolute monarchy days.
Semiapies 16y ago
Well, one way or another it was blown on spending that couldn't be sustained in a downturn.