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It's difficult to apply this argument consistently without claiming that any company who decides to operate in China is compromised. A great deal of American co

by tmotwu 6y ago

It's difficult to apply this argument consistently without claiming that any company who decides to operate in China is compromised. A great deal of American companies do operate in China and will be subject with the same legal requirements expected of domestic companies. Journalists may not, but many American business executives perfectly understand how it works. If you read the suit, in this instance, it appears TikTok claims it is indeed a U.S. company, and thereby protected by the Constitution, safeguarded by due process, and not immediately subject to IEEPA or CFIUS actions. I personally think they are no where near being a U.S. company, but that is a crux of their argument and we will see if the judge clarifies their position.

munk-a 6y ago
The act of being a "US Company" in the modern world is meaningless, every company that operates in the US is a US company and every company that operates in China is a Chinese company - that's the truest way to view things and it makes corporate nationality meaningless. The barrier to move HQs and the like is so insanely low for large corporations that companies will gladly do it for even the most marginal tax benefits - a company might even consider hosting a "beauty contest" where they try to get cities to outbid each other in a sick game that deprives everyone of their tax revenue. Of course such an act (both on the company's side, and on the side of cities who decide to participate) is a clear signal of moral bankruptcy - but that's no surprise since America considers cheating other people to be the greatest virtue.
- throwaway0a5e 6y ago
  >The barrier to move HQs and the like is so insanely low for large corporations that companies will gladly do it for even the most marginal tax benefits So why is so much tech stuck on the west coast then? If it were that simple they'd have all moved (moved their operations and headcount) to lower tax areas by now.
  - creato 6y ago
    Haven't they? The whole point here is that where the HQ legally is located really has nothing to do with where the people actually are.
  - czzr 6y ago
    The location of your Corporate headquarters is different to the physical location of your company.
    - throwaway0a5e 6y ago
      Payroll and property taxes follow the state of the employees, not the company. Taxes on profit are easy for a BigCo to dodge with good accounting.
      - munk-a 6y ago
        It's only easy to dodge them due to the current rules of accounting - we can work on fixing that component or enforcing minimal VAT taxes down-chain. For instance the US could require that a VAT of at least 20% be paid before reaching the US, then collect any taxes left on the table by, say, the bahamas when they only collect a 2% VAT - the US could gate goods entry based on a 18% fee on the difference. This applies only to actual goods value (and doesn't look at capturing out-of-band transactions like online orders of virtual goods) but it's a really dead simple and easy to enforce law that'd kill a lot of tax dodging dead. The real issue isn't that it's hard to tax these companies - it's that there isn't a significant political will in taxing these companies.
  - davedx 6y ago
    They’re all incorporated in Delaware not Palo Alto
- remarkEon 6y ago
  I think what we're arguing about is whether or not this distinction should remain meaningless, since one player in this game clearly does not see it that way.
  - munk-a 6y ago
    I think that's one side of the discussion, yes. But I think that it's impossible to force corporate citizenship without either 1. A voluntary international accord (that could be broken by any dissenting voices) 2. A single country setting the rules for corporate residency and enforcing them (i.e. the unilateral we don't need no diplomacy approach). Instead I think the whole idea of primary residence for corporations is utterly unenforceable - I think what countries need to start doing is levying appropriate VAT taxes on added value to companies and possibly force all domestic activity to be executed by domestic labour only. I think, if we actually fixed the loopholes around international tax dodging, we'd be in a position where countries would be quite aware of how much value they have over a given company (i.e. Apple might derive 60% of their value from the US) and then use that proportionality to leverage political pressure on companies as needed. And, just to clarify, this is essentially the road the CCP has taken and precisely why they seem to have such an outsized amount of control over companies - every country other than China is voluntarily declining to flex their muscles.
    - remarkEon 6y ago
      I like this idea a lot. It would force an explicit decision from these companies to formalize their (today implicit) relationships with nation-states.
Natsu 6y ago
> claiming that any company who decides to operate in China is compromised This, honestly, is the correct approach. For example, it's hard to see otherwise why the NBA is banning anyone affiliated with them from supporting Hong Kong.
- bllguo 6y ago
  1. Who has been banned? AFAIK the league has actually incurred large monetary losses for their position on China. 2. On the contrary, it is very easy to see why the NBA is cautious. The Chinese care about it and so the NBA does not want to spark any more controversy. Can you explain how this isn't just common sense re: operating in a foreign country? Are international companies operating in the US "compromised" if they don't comment on US affairs?
  - Natsu 6y ago
    > Who has been banned? Various fans have been banned - https://www.buzzfeednews.com/article/skbaer/hong-kong-nba-fans-signs-protests https://www.buzzfeednews.com/article/skbaer/hong-kong-nba-fa... Daryl Morey (disputed) - https://qz.com/1730643/china-asked-nba-to-fire-daryl-morey-for-hong-kong-tweet/ https://qz.com/1730643/china-asked-nba-to-fire-daryl-morey-f... There was also Adrian Wojnarowski but I'm not sure about counting that because there were other factors in play. There may be others that I have missed. > Can you explain how this isn't just common sense re: operating in a foreign country? The fact that China makes it in their financial interests to restrict people on being able to comment on matters of international importance is exactly the problem, because this is a classic chilling effect. And, as pointed out, given our lax privacy laws, now China has all of the info they do. Given that they're happy to roll out, e.g. facial recognition and social credit scores, this isn't something to be happy about. China is a beautiful country with many wonderful people. But I doubt I'll ever visit it as long as I could end up locked up for an old internet comment, like say, this one. > Are international companies operating in the US "compromised" if they don't comment on US affairs? You'll find no shortage of criticism of the US government from foreign companies and their workers in private capacity. To make this comparable, imagine if we had CFIUS rules whereby nobody operating in a foreign-owned company (including yours truly, a US citizen) could criticize, say, Trump or any other part of the government without risking their ability to do business. I don't think anyone would say that it's "common sense" that I can't criticize Trump or the US government while working for a foreign-owned company subject to CFIUS rules, would you? I think there would, rightfully, be a backlash if Trump tried to change these rules and the companies were put under a chilling effect. So I don't see why Xi should get a pass for that.
fermienrico 6y ago
I totally disagree. Given how insidious the relationship between big corp and CCP in China can be, the default position should be 'distrust' unless otherwise proven. The western concepts of 'trust' by default does not apply in a nation that is inherently, even internally for domestic affairs, is primarily based on the distrustful corporate affairs. I've audited about 200 suppliers in China in last 10 years, it is a repeating motif to 'distrust by default' from small to large companies. Yes, they're not big corporations but the idea that we should treat Chinese companies and German companies in identical trust-worthy fashion, especially when it comes to engagement with the CCP, is an extremely deluded, out-of-touch and misinformed stance.

by tmotwu 6y ago

munk-a 6y ago

The act of being a "US Company" in the modern world is meaningless, every company that operates in the US is a US company and every company that operates in China is a Chinese company - that's the truest way to view things and it makes corporate nationality meaningless. The barrier to move HQs and the like is so insanely low for large corporations that companies will gladly do it for even the most marginal tax benefits - a company might even consider hosting a "beauty contest" where they try to get cities to outbid each other in a sick game that deprives everyone of their tax revenue. Of course such an act (both on the company's side, and on the side of cities who decide to participate) is a clear signal of moral bankruptcy - but that's no surprise since America considers cheating other people to be the greatest virtue.

throwaway0a5e 6y ago
>The barrier to move HQs and the like is so insanely low for large corporations that companies will gladly do it for even the most marginal tax benefits So why is so much tech stuck on the west coast then? If it were that simple they'd have all moved (moved their operations and headcount) to lower tax areas by now.
- creato 6y ago
  Haven't they? The whole point here is that where the HQ legally is located really has nothing to do with where the people actually are.
- czzr 6y ago
  The location of your Corporate headquarters is different to the physical location of your company.
  - throwaway0a5e 6y ago
    Payroll and property taxes follow the state of the employees, not the company. Taxes on profit are easy for a BigCo to dodge with good accounting.
    - munk-a 6y ago
      It's only easy to dodge them due to the current rules of accounting - we can work on fixing that component or enforcing minimal VAT taxes down-chain. For instance the US could require that a VAT of at least 20% be paid before reaching the US, then collect any taxes left on the table by, say, the bahamas when they only collect a 2% VAT - the US could gate goods entry based on a 18% fee on the difference. This applies only to actual goods value (and doesn't look at capturing out-of-band transactions like online orders of virtual goods) but it's a really dead simple and easy to enforce law that'd kill a lot of tax dodging dead. The real issue isn't that it's hard to tax these companies - it's that there isn't a significant political will in taxing these companies.
- davedx 6y ago
  They’re all incorporated in Delaware not Palo Alto
remarkEon 6y ago
I think what we're arguing about is whether or not this distinction should remain meaningless, since one player in this game clearly does not see it that way.
- munk-a 6y ago
  I think that's one side of the discussion, yes. But I think that it's impossible to force corporate citizenship without either 1. A voluntary international accord (that could be broken by any dissenting voices) 2. A single country setting the rules for corporate residency and enforcing them (i.e. the unilateral we don't need no diplomacy approach). Instead I think the whole idea of primary residence for corporations is utterly unenforceable - I think what countries need to start doing is levying appropriate VAT taxes on added value to companies and possibly force all domestic activity to be executed by domestic labour only. I think, if we actually fixed the loopholes around international tax dodging, we'd be in a position where countries would be quite aware of how much value they have over a given company (i.e. Apple might derive 60% of their value from the US) and then use that proportionality to leverage political pressure on companies as needed. And, just to clarify, this is essentially the road the CCP has taken and precisely why they seem to have such an outsized amount of control over companies - every country other than China is voluntarily declining to flex their muscles.
  - remarkEon 6y ago
    I like this idea a lot. It would force an explicit decision from these companies to formalize their (today implicit) relationships with nation-states.

Natsu 6y ago

> claiming that any company who decides to operate in China is compromised This, honestly, is the correct approach. For example, it's hard to see otherwise why the NBA is banning anyone affiliated with them from supporting Hong Kong.

bllguo 6y ago
1. Who has been banned? AFAIK the league has actually incurred large monetary losses for their position on China. 2. On the contrary, it is very easy to see why the NBA is cautious. The Chinese care about it and so the NBA does not want to spark any more controversy. Can you explain how this isn't just common sense re: operating in a foreign country? Are international companies operating in the US "compromised" if they don't comment on US affairs?
- Natsu 6y ago
  > Who has been banned? Various fans have been banned - https://www.buzzfeednews.com/article/skbaer/hong-kong-nba-fans-signs-protests https://www.buzzfeednews.com/article/skbaer/hong-kong-nba-fa... Daryl Morey (disputed) - https://qz.com/1730643/china-asked-nba-to-fire-daryl-morey-for-hong-kong-tweet/ https://qz.com/1730643/china-asked-nba-to-fire-daryl-morey-f... There was also Adrian Wojnarowski but I'm not sure about counting that because there were other factors in play. There may be others that I have missed. > Can you explain how this isn't just common sense re: operating in a foreign country? The fact that China makes it in their financial interests to restrict people on being able to comment on matters of international importance is exactly the problem, because this is a classic chilling effect. And, as pointed out, given our lax privacy laws, now China has all of the info they do. Given that they're happy to roll out, e.g. facial recognition and social credit scores, this isn't something to be happy about. China is a beautiful country with many wonderful people. But I doubt I'll ever visit it as long as I could end up locked up for an old internet comment, like say, this one. > Are international companies operating in the US "compromised" if they don't comment on US affairs? You'll find no shortage of criticism of the US government from foreign companies and their workers in private capacity. To make this comparable, imagine if we had CFIUS rules whereby nobody operating in a foreign-owned company (including yours truly, a US citizen) could criticize, say, Trump or any other part of the government without risking their ability to do business. I don't think anyone would say that it's "common sense" that I can't criticize Trump or the US government while working for a foreign-owned company subject to CFIUS rules, would you? I think there would, rightfully, be a backlash if Trump tried to change these rules and the companies were put under a chilling effect. So I don't see why Xi should get a pass for that.

fermienrico 6y ago

I totally disagree. Given how insidious the relationship between big corp and CCP in China can be, the default position should be 'distrust' unless otherwise proven. The western concepts of 'trust' by default does not apply in a nation that is inherently, even internally for domestic affairs, is primarily based on the distrustful corporate affairs. I've audited about 200 suppliers in China in last 10 years, it is a repeating motif to 'distrust by default' from small to large companies. Yes, they're not big corporations but the idea that we should treat Chinese companies and German companies in identical trust-worthy fashion, especially when it comes to engagement with the CCP, is an extremely deluded, out-of-touch and misinformed stance.